Extraction Archives - Green Market Report

StaffApril 1, 2022
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In 2020, SpaceX announced it would be supplying cannabis and vaporization devices to astronauts on its Mars missions with the company citing several groundbreaking studies on the positive impacts of cannabis in zero gravity,

“We have been improving our understanding of every system necessary to carry both crew and cargo on long-duration interplanetary flights, and help humanity return to the Moon, and travel to Mars and beyond,” noted SpaceX CEO Elon Musk. “In doing so, we have identified mental health as a critical success factor in long-term travel. From a weight-to-efficacy perspective, cannabis is the least expensive and most effective method to solve for this concern.”

successful 2021 collaboration between Tesla Motors (TSLA) and Prrl Labs, Inc. to incorporate their proprietary NBT (no-burn tech) into Tesla’s automotive climate control system in 2021 made it possible to easily integrate the same technology into SpaceX’s Starship launch vehicle.

“It was a real pleasure working with the engineers at SpaceX,” said Prrl Labs CEO Mark Lewis, a former rocket scientist himself. “Developing the additions of the BFP and BFP Heavy to the line of Terp Surfer smokeless pipes with their engineers and having them stress-tested by some of Elon’s celebrity friends is an experience we will always remember. Carl Sagan would be so proud of our space program right now.”

Astrophysicist Neil DeGrasse Tyson seems to be on board with the idea saying

“The problem with space travel is that so many things can kill you. One can see how altering your understanding of reality for short periods of time, especially during long flights, could improve your mental health. Why not lock yourself in your cabin, get high, play a little Bowie, and enjoy the trip if all of your other responsibilities are complete?”

“We are excited to make humankind an interplanetary species, but what’s the point if you aren’t having some fun along the way?” Musk added.


Debra BorchardtFebruary 2, 2022
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Agrify Corporation (Nasdaq: AGFY)  is buying the distillation company Lab Society in a deal valued at $8 million. Agrify said in a statement that Lab Society’s annual revenue for 2021 was approximately $10 million, and the acquisition is expected to be accretive in early 2022. The acquisition is part of Agrify’s strategy to expand beyond just lighting and cultivation software. 

“We are ecstatic to add Lab Society to our portfolio of high-quality extraction solutions,” said  Raymond Chang, Chairman, and CEO of Agrify. “As federal legalization edges closer to reality, we believe the United States government will likely increase its role in setting the quality,  consistency, and safety standards for medical and recreational cannabis products. By owning  the top key solutions that produce the highest quality and the widest range of extracted cannabis  products at scale, we expect it will provide Agrify with a significant competitive differentiation,  enhanced customer value-add, superior industry leadership position and significant growth  opportunities globally.” 

Since September 2021, Agrify has been on a tear buying up companies in the extraction space. These acquisitions include Precision Extraction Solutions, which is involved in developing and producing high-quality hydrocarbon extraction solutions, Cascade Sciences which is known for developing and producing high-quality vacuum purge ovens and decarboxylation ovens, and also PurePressure, a maker of high-quality solventless extraction solutions. Lab Society brings distillation and solvent separation extraction solutions to the table.

Despite a recent short-seller report, Agrify stock has been moving higher over the past few days. Shares were lately selling at $6.39, moving up from a recent low of $5.28.

Purchase Details

The purchase price for Lab Society consists of $4 million in cash and $4 million in unregistered shares of Agrify common stock, subject to adjustments as set forth in the definitive agreement. There is also an additional earn-out opportunity of up to $3.5 million if the revenue generated from Lab Society’s products reaches certain milestones in 2022 and 2023. 

Lab Society was founded in 2015 and is headquartered in Boulder, Colorado. The company has a proprietary software, called EliteLab that provides the comprehensive ability to maximize hardware utilization featuring control of temperature control units (TCUs), pressure controllers and gauges, balances, and scales, and agitation stir controllers. The company said that the ability to take cannabis compounds distilled into their pure forms, and then recombine them into specific,  purposeful end-products could have significant potential for the pharmaceutical industry in the future. 

“We are excited to be a part of Agrify’s extraction division,” said Michael Maibach Jr., Founder  and CEO of Lab Society. “With a much larger sales team and additional resources, we are  excited to be in a position to drive rapid growth and future innovative product development.”

 


Debra BorchardtJanuary 26, 2022
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Icanic Brands Company, Inc. (CSE: ICAN)(OTCQB: ICNAF) is buying California-based extraction company LEEF Holdings, Inc. in a deal valued at approximately $120 million. The acquisition is expected to close in the first quarter of 2022. Leef is one of the largest cannabis extraction companies in the state of California and is a leading provider of bulk concentrates for many of the largest brands in the state. Leef’s manufacturing capabilities include a 12,000 sq. ft state of the art extraction and manufacturing facility with up to 45 tons of biomass throughput per month and up to 3,000 liters of distillate extraction capability per month.

“Today represents a huge milestone for Icanic. Our ability to come together as one with an amazing company like LEEF will only further enhance our position in the market. Micah and the rest of the team have done an amazing job building one of the leaders in the California market and we couldn’t be prouder to call them our partners” said Brandon Kou, CEO of Icanic Brands. “This marriage will allow us to accomplish our collective goals quicker and I am proud to say that the combined teams have already been hard at work analyzing the synergies and identifying efficiencies allowing us to build towards a singular infrastructure.”

Leef is Headquartered in Willits, California, and its core manufacturing competencies include ethanol extraction (Type 6 manufacturing license), hydrocarbon extraction (Type 7 manufacturing license), and solventless extraction. Leef also has an edibles production line and is in the process of building out a 45,000 sq.ft mid-stream processing facility which will allow it to dry its own product and provide additional services including processing, distribution and delivery to its customers. Leef also recently received a 186.7-acre cultivation land use permit, which will make it the owner of one of the largest cannabis cultivation sites in California. The site sits on over 1,900 acres of prime California real estate.

Micah Anderson, CEO of Leef said, “I am incredibly excited to be taking LEEF into the next stage of its development and together with our new partners at Icanic. We look forward to continuing to build significant shareholder value for many years to come. It’s because of the relentless hard work of LEEF’s employees that we have found ourselves at what I believe is the starting point to the next chapter. I have been in the cannabis industry for many years and, along with the other founding partners of LEEF, have devoted our entire lives to building our company. Winning is the result of having the right people working together with the right vision and Icanic’s management team only strengthens the talents and relationships LEEF brings to the table. I look forward to working with the Icanic team to add tremendous value to the combined organization as it continues to expand and grow in the coming years.”

Icanic Brands is a leading cannabis branded products manufacturer based in California & Nevada. The company’s brands include GonjaGold and Taylor’s. The company has been under management cease trade order by the British Columbia Securities Commission due to a delay in filing the company’s financial statements. Icanic said it expects to file the Annual Filings and the Interim filings for the period ended October 31, 2021, on or before January 29, 2022. “During the MCTO, the general investing public will continue to be able to trade in the Company’s listed common shares. However, the Company’s chief executive officer and the chief financial officer will not be able to trade in the Company’s shares.”


Julie AitchesonDecember 10, 2021
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In the cannabis industry, branding (which includes packaging, product makeup and thoughtful analysis of the target consumer among other things) has proven to be a major factor in promoting customer loyalty across a wide range of products. Headset’s latest report, “Cannabis Brand Loyalty: A Look At California Vapor Pens”, leads off by invoking the archival image of a plastic baggy full of musty weed traded off in parking lots and clubs. But today’s cannabis product packaging runs the gamut from the utilitarian to the wildly creative. With the horizons of the cannabis market constantly expanding, it is crucial for companies to identify the ideal consumers for their products and how to market towards them for maximum profits. 

The report defines brand loyalty as the tendency of a customer to continue to purchase from one brand loyalty is the tendency of a customer to purchase from the same brand over time. To this end, using California Vapor Pen brands as a model (a product sector that sees a high amount of brand loyalty), Headset’s report investigates three different ways to measure brand loyalty. Using real-time sales reporting, Headset’s data comes directly from partner retailers. This specific report looks at purchase patterns (or how a customer shops over time) and uses the results to paint a picture of customer loyalty. The report is careful to note that both high and low brand loyalty have their merits, citing companies who have the goal of reaching new customers in the market as those with a deliberate low brand loyalty strategy that can still yield solid profits.

Chart provided by Headset

Headset’s first strategy for measuring brand loyalty was looking at repeat purchase rates or the percentage of customers that repurchase a brand in a set time period. In California, 45% of customers re-purchase their products after 6 months. 12.6% of these customers will only re-purchase from a particular brand while 32.6% will purchase other brands in addition to their previously chosen brand. The report highlights this as significant given that people have such varied tastes and there are so many products to choose from. STIIIZY and Plug Play two vape pen brands with markedly high brand loyalty hardware are highlighted here as they both have proprietary hardware that pushes customers to repurchase their brands. However, over 50% of both brands still purchase from other brands even if they have to purchase different batteries, reflecting the aforementioned desire for variety among consumers.

Next, the report measures brand loyalty by looking at switching behaviors, which is when a customer chooses to buy a product from a brand similar to the initial brand chosen. This is a valuable metric as it helps businesses understand their own brands, how they are perceived by their, who their greatest competitors are and why. Headset’s report looks at Legion of Bloom customers and what other brands they are purchasing. The analysis showed that nearly a quarter of Legion of Bloom’s customers purchased a STIIIZY product- valuable information for both brands when considering branding strategies and how to make themselves more competitive. 

Finally, the Headset report sought to measure brand loyalty by exploring wallet share across product categories, which is the percentage of a customer’s cannabis spending that goes towards a specific brand. Nearly 40% of the average Vapor Pen consumer’s wallet share is spent on their top brand, which reinforces the high rate of brand loyalty in this product category and may prompt vape pen brands to consider strategies like proprietary technologies to capitalize on this particular market dynamic.

 


Debra BorchardtNovember 15, 2021
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TILT Holdings Inc. (NEO:TILT) (OTCQX: TLLTF) reported its financial results for the three months ending September 30, 2021 with revenue increasing 37% to $53.4 million driven by growth in both cannabis and inhalation and accessory revenue. Cannabis revenue increased 19% to $11.2 million and inhalation and accessory revenue increased 42% to $42.1 million. The net loss increased sequentially to $7.1 million from the second quarter’s $3.9 million and was higher than last year’s net loss of $4.6 million.

“TILT’s B2B strategy originated from our belief that the rising supply of wholesale cannabis in multiple markets across the U.S. would require a differentiated approach, shifting away from bulk flower sales towards branded packaged goods,” said Gary Santo, CEO of TILT. “When we launched our strategy at the start of the year, we envisioned that marketplace transition would take 12 to 18 months as new cultivation came online. In the third quarter, we saw that timeline accelerate along with macro-economic pressure impacting consumers.”

“Competition for shelf space is accelerating. Compressing margins are forcing MSOs and SSOs to focus on their own branded products while still maintaining a portion of that shelf space for a curated portfolio of high-demand third-party products. This is the space where TILT plays, and although we are still early in scaling our operations to meet brand partner demand, our top-line performance during the quarter demonstrates that by establishing partnerships with the right brands at the right price points, TILT can support retailers while expanding the reach of independent brands.”

The total operating expenses were $16.3 million versus $14.5 million. At September 30, 2021, cash and cash equivalents were $6.7 million compared to $7.4 million at December 31, 2020.

Tilt reiterated its 2021 revenue guidance of $205-$210 million, expecting to come in at the lower end of the range primarily as a result of unexpected delays in obtaining new product approvals in Pennsylvania. “This, coupled with higher freight costs associated with the Company’s inhalation and accessories business and expanding cultivation in Massachusetts, has resulted in the Company revising its 2021 adjusted EBITDA outlook to range between $24-$26 million, representing a 42%-54% increase compared to 2020.”
“While we expect ongoing improvements in our efficiency and margin profile in our cannabis business as we ramp cultivation, Jupiter continues to lead the way in cannabis inhalation devices with record revenue during the quarter. Our supply chain management expertise has been on full display throughout the year, and while there has been a near-term impact to our margins due to higher freight costs, our ability to strategically deploy working capital to ensure availability of product has benefitted our customers while attracting the business of our competitors’ customers.”

StaffOctober 19, 2021
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Greenlane Holdings, Inc., (Nasdaq: GNLN) is buying vape companyDaVinci for an undisclosed amount. The deal is expected to close in the fourth quarter of 2021.

“DaVinci leads the way in innovative portable vaporizers and we are thrilled to bring them into our owned brand portfolio,” said Nick Kovacevich, CEO of Greenlane. “This acquisition perfectly illustrates our mission of elevating all elements of the consumption experience, and we look forward to building on our recent success of acquiring strategic and accretive brands. As we continue to execute on our robust pipeline of acquisition targets, we aim to ensure our customers have a best-in-class product selection, while driving profitability and shareholder value by increasing our higher-margin owned brand offerings. The team at DaVinci shares our commitment to providing curated, convenient experiences to consumers, and we look forward to welcoming them to Greenlane and to working together to bring more innovative products to our customers.”

DaVinci is an industry leading brand differentiated through its groundbreaking Clean First™ innovation, which employs medical grade materials and total quality manufacturing processes to ensure the cleanest technology goes into the development of its products. DaVinci’s product line has grown significantly since the launch of its award-winning IQ vaporizer in 2016 to include new innovative models such as the MIQRO, the world’s smallest premium loose-leaf vaporizer, IQ2, the world’s first on-device dosage control, and the IQC, equipped with a patented ShareSafe™ mouthpiece created from an FDA-approved antimicrobial polymer.

 

“At DaVinci we have been committed to approaching product development with vision and imagination, and we are thrilled to join Greenlane as strong partners in innovation. We are excited to join a team that shares our drive to harness new and changing technologies to engineer consumer experiences that align with the evolving needs of a dynamic, growing cannabis industry,” said Cortney Smith, Founder and CEO of DaVinci.

DaVinci is an industry-leading brand differentiated through its groundbreaking Clean First innovation, which employs medical-grade materials and total quality manufacturing processes to ensure the cleanest technology goes into the development of its products. DaVinci’s offerings include many award-winning vaporizers.


StaffOctober 11, 2021
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In a big “oops we goofed,”  the Food and Drug Administration (FDA)  took back its September 14 Marketing Denial Order for some of Turning Point Brands, Inc.  (NYSE: TPB) vape products. Turning Point said all of its proprietary vape products, including its Solace branded e-liquids, will continue to be marketed while they remain under review. They are currently under a pending Premarket Tobacco Product Applications (“PMTAs”) review.

Turning Point said that in its rescission letter the FDA stated, “Upon further review of the administrative record, FDA found relevant information that was not adequately assessed. Specifically, your applications did contain randomized controlled trials comparing tobacco-flavored ENDS to flavored ENDS as well as several cross-sectional surveys evaluating patterns of use, likelihood of use, and perceptions in current smokers, current ENDS users, former tobacco users, and never users, which require further review.” The letter further clarified that “at present, in light of the unusual circumstances, FDA has no intention of initiating an enforcement action against” the products.

“We are encouraged by the FDA’s decision to reconsider our product applications and look forward to engaging the agency as our PMTAs are reviewed,” said Larry Wexler, President and CEO, Turning Point Brands. “It is important that the PMTA process is transparent, purposeful, and evidence-based. Our organization dedicated significant time and resources in filing our applications in accordance with agency guidance. We remain hopeful that the depth and range of our studies and data will persuade the FDA that the continued marketing of our vapor products is appropriate for the protection of the public health and that the agency will ultimately preserve a diverse vapor market for the more than 30 million American adult smokers who may wish to transition from combustible cigarettes to lower risk alternatives.”

Turning Point had been selling vape products under the label Solace with flavors like Peach, Mango, and Marshmallow Crispy. These sugary flavors have been very popular with underage consumers and were a big selling point for the competitor Juul. Solace noted on its website that Federal law required e-liquid companies to submit a Premarket Tobacco Product Application (PMTA) to the U.S. Food and Drug Administration (FDA) in order to continue selling products in the United States. These applications require that e-liquid companies demonstrate that products are “appropriate for the protection of public health.”

Turning Point has reported spending $14 million in 2020 on the PMTA application according to the company’s annual filing. In 2019, the company spent  $2.2 million on the PMTA. Turning Point also said that as a result of the rescission letter, it withdrew both the petition for relief and motion to stay that it had filed with the 6th Circuit Court of Appeals.


Debra BorchardtOctober 7, 2021
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After the market closed on Tuesday, Humble & Fume Inc.(CSE: HMBL) reported its financial results for the fiscal 2021 fourth quarter and year ending June 30, 2021. For the quarter, Humble delivered revenue of $19.4 million an increase of 33% from last year’s $14.5 million. The company attributed the increase in revenue to strong sales in the U.S. and Canadian accessories wholesale market. Humble’s accessory lines include some of the highest-rated products like Puffco, Storz & Bickel and Ryot.

The company reported that the net loss for the quarter was $88,904, or $0.00 per diluted share, a 99.7% decrease from last year’s net loss of $4.1 million, or $0.08 per share. The company said that the net losses were primarily driven by growth in overall headcount levels primarily to support increased U.S. and Canada sales, higher sales and marketing expense to support brand partnerships and the launch of FUME, and higher freight costs included in the company’s cost of goods sold selling expenses, and higher share-based compensation expense compared to the year-ago period.

“Humble bridges the gap between cannabis brands, accessory producers and the growing retail market in North America to drive increased sales and maximize financial performance for our partners. Throughout fiscal 2021, we significantly increased our new retailer accounts, which helped drive record fiscal year revenue of $74 million. Revenue increased 71% while gross margin increased by 143% year-over-year. We achieved this strong organic growth and margin enhancement while continuing to identify new opportunities to grow profitably,” said Joel Toguri, Chief Executive Officer of Humble. Togiru was recently named the company’s CEO  and was the former Chief Revenue Officer at The Supreme Cannabis Company Inc.

Full Year Results

Humble reported that the revenue for fiscal year 2021 was $74.1 million, an increase of 71% from last year’s $43.4 million. The company attributed the increase in revenue to stronger sales in the U.S. and Canadian markets for the company’s accessories line, an increase in sales from Fume Labs, and increased service fees for Humble Cannabis Solutions. The operating loss declined by 14% as operating expenses as a percentage of revenue improved year-over-year by 50%. The net loss for the fiscal year 2021 was $13.0 million, or $0.20 per diluted share, compared to $15.7 million, or $0.26 per share, for the fiscal year 2020. The change in net losses year-over-year were driven by higher gross margins and sales in 2021 from the company’s core distribution business, as well as one-time charges related to its RTO transaction and the fair value adjustment of the derivative liability for the convertible debenture.

Mr. Toguri added, “As we look ahead to the next few quarters, we are focused on rationalization of the business further to drive profitable growth. In addition to maintaining our rapid growth, we are laser-focused on further improving margins and cash flow by managing expenses, finding efficiencies and streamlining our product procurement and inventory management systems. We believe that we have the vision and capital resources to continue executing during our rapid growth phase and as we move to generate sustainable profit and positive cash flow to deliver long-term shareholder value.”

“Fiscal 2021 resulted in significant milestones for Humble, most notably the successful closing of our go-public transaction, commencing trading on the CSE, and the introduction of new leadership, with Joel Toguri as Chief Executive Officer. As a proven leader, with strong experience in the cannabis industry, the Board is extremely pleased to have Joel at the helm as we streamline operations and continue to focus on retail distribution and sales growth over the coming year,” said Shawn Dym, Executive Chairman of the Board of Humbl


StaffSeptember 20, 2021
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Stem Holdings, Inc., also known as Driven by Stem (OTCQX: STMH) (CSE: STEM), is buying an Oregon-based extraction company called Artifact Extracts and two dispensaries. The deal is valued at $2.9 million and closed last week on September 17th.

The acquisition increases the footprint of fully-owned dispensaries on the West Coast for Stem to six locations. It will expand its Oregon presence with a dispensary in Salem, to be re-named TJ’s on Broadway, and a dispensary in Eugene, to be re-named TJ’s on 7th, flanking its two existing dispensaries in the city.

“Artifact is recognized for the potency and purity of its high-quality line of concentrates that have driven its growth in the Oregon market,” stated Adam Berk, CEO of Stem. “As a result of this strategic acquisition, we will benefit from the expertise and broad capabilities that the Artifact team will provide to our existing extraction team that has specialized in tinctures and edibles, as well as in retail operations. We look forward to integrating Artifact’s operations, dispensaries, and leadership into the Stem family, and quickly expanding product distribution to our full retail customer base for rapid growth.”

The company supported its decision to buy the extractor by noting that the national market for concentrates grew 40% last year. The company said it will integrate Artifact’s premier line of concentrates including budder, badder, shatter, crumble, rosin, THC A crystals, and other popular forms into Stem’s family of brands and product lines.

Jesse Johnson, the lead extractor at Artifact, commented, “We have worked with Stem in the past and trust the quality of the cannabis grown in its facilities. The synergies of this acquisition will build value for the company as we combine our expertise to launch cutting-edge products meeting the needs of this evolving market, as well as increasing their market penetration with an expanded retail and delivery platform,” he concluded.

Last month, Stem reported third-quarter record gross sales of $12.4 million and net sales of $10.6 million, a 104% increase and 103% increase, respectively, over the prior year’s $6.1 million gross sales and $5.2 million net sales. Stem also reported a 19% increase in total dispensary sales, a significant outperform to market particularly in Oregon which grew at 7% in the same period. This effort dovetailed with the launch of the company’s Budee delivery platform in Oregon which occurred on August 9, 2021. A customized app was built from front to back for this official launch, and Budee is now anchored by Stem’s TJ’s on Powell dispensary servicing the Greater Metro Portland area. Stem said it expects that Budee will expand to cover the majority of Oregon beginning with the Eugene metro in October 2021.


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