Financial Archives - Green Market Report

Kaitlin DomangueJune 10, 2021
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Terra Tech Corp. (OTCQX:TRTC) announced their plan to acquire SilverStreak Solutions Inc. The two companies have executed an agreement for the acquisition to take place. The close is expected to occur within 90 to 120 days. After the close, SilverStreak’s CEO, Sterling Harlan, is expected to consult with the company for a period of six months. 

SilverStreak Solutions is a cannabis delivery service serving California areas like Sacramento, Yuba City, Citrus Heights, Roseville, Elk Grove, Stockton, and others. SilverStreak Solutions has 22 company vehicles and about 42,000 monthly customers. As one of the first direct-to-consumer cannabis companies in their area, SilverStreak is experienced in this space and a good move for Terra Tech. 

Terra Tech’s acquisition 

“We are delighted to continue our expansion with the addition of this high-quality and well-run delivery service,” said Frank Knuettel II, CEO of Terra Tech Corp. “We believe the synergies with Unrivaled’s existing brand portfolio and distribution operation makes enormous economic and operational sense. In addition, we expect to expand SilverStreak’s base of operations utilizing our existing assets in Northern and Southern California, with the intent to develop a statewide delivery operation giving us access to millions of California consumers.”

“This is the next step in our rebuilding initiative, and with our anticipated monetization of our Hydrofarm, we expect to expand our base of operations in the near future. I would like to thank Sterling and his team for the work they have done in building SilverStreak and being the next building block in our effort towards becoming the premier West Coast and Southwest operator of cannabis assets,” Knuettel II continued. 

Terra Tech is a vertically integrated cannabis company with operations in California and Nevada. Terra Tech operates two dispensaries and a cultivation facility in California, with two additional cultivation facilities and a dispensary under development. The company operates in Nevada by way of joint ventures, operating a manufacturing and cultivation facility. 

Terra Tech sold property for $2.6 million 

Terra Tech recently sold a Nevada property on N. 4th Street, as local zoning changes prevent any cannabis activity in the area. The company sold the building for $2.6 million, improving their balance sheet by approximately $900,000, even after paying off $1.6 million in mortgages and other related sale costs. 

“Since taking over as CEO a few short months ago, we have continued to review our operations, divest unproductive assets and drive appropriate cost reductions. The successful sale of our N. 4th Street property is another positive step towards doing just that,” Knuettel said. 

“With the sale, we have now added approximately $900K to our balance sheet and alleviated numerous costs associated with its ownership, allowing us to focus our attention on working to position the company for what we believe is a very opportunistic future, including the upcoming anticipated closing of the transaction to acquire Unrivaled. This mutually beneficial transaction is expected to lead to immediate scale, driven by strong brands and revenue growth.”


StaffMay 13, 2021
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ETF Managers Group has launched its latest cannabis ETF (exchange-traded fund) that will once again focus on the cannabis U.S. stocks. The ETFMG U.S. Alternative Harvest ETF (NYSE Arca: MJUS) will begin trading today on the New York Stock Exchange. The company said that the MJUS offers investors exposure to cannabis companies operating in the United States, including multi-state operators (MSOs) directly involved in the cultivation, production, marketing, and distribution of cannabis or cannabis-related products.

 U.S. cannabis single and multi-state operators are currently only available to investors through second-tier, foreign exchanges, which are not widely accessible through U.S. brokerages. This is why U.S.-focused ETFs have proven to be so popular. The ETFMG Alternative Harvest ETF (NYSE Arca: MJ), which debuted in December 2017, has nearly $1.7 Billion assets under management. MJUS seeks to achieve its investment objective by investing in cannabis companies within the Prime U.S. Alternative Harvest Index that derive at least 50% of their net revenue in the United States and in derivatives that have economic characteristics similar to such securities.

 “We are especially proud to be bringing yet another cannabis product to investors, specifically an ETF that captures one of the greatest untapped areas of growth potential in the industry,” says Sam Masucci, founder, and CEO of ETFMG.

As the largest cannabis market globally, legal cannabis sales in the U.S. exceeded $17.5 billion in 2020, representing a 46% increase over 2019’s $12.1 billion of sales. With several factors driving growth in the U.S., including more states legalizing cannabis and more consumers entering the market in existing legal markets, the rapid expansion of the U.S. cannabis industry is expected to continue and ultimately generate $85 billion in sales by 2030.

“With voter support for federal legalization initiatives at an all-time high, combined with the positive economic impact cannabis legalization would provide through job creation and increased tax revenues, it is widely anticipated that the current administration will pass federal legislation providing meaningful cannabis reform, which would greatly benefit existing U.S. cannabis-related businesses,” says Jason Wilson, ETFMG Cannabis Research and Banking Expert.


Kaitlin DomangueApril 15, 2021
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Cannabis data and analytics company, Headset, announced the launch of a report highlighting a long-term forecast into the U.S. and Canadian cannabis markets! Specifically, forecasting the sales, sales volume, and market shares for 2021 and 2022 compared to 2020. 

The cannabis industry during 2020

The cannabis industry held their breath last year when COVID-19 hit. We fully expected to see a dramatic impact on businesses, and at our worst: expected to get shut down and deemed non-essential. For the most part, that didn’t happen and many local governments declared cannabis businesses to be essential. We collectively breathed a sigh of relief, but many physical storefronts were damaged in some of the riots over the summer, forcing some stores to close briefly. Despite that, the industry trudged forward and kept it moving, seeing the end of 2020 and welcoming a hopefully very different 2021. 

Headset’s methodology for this report

Headset says: “These forecasts will include all 13 Canadian provinces and territories and 36 US states* with any level of legalization and across all markets (recreational and medical), and the data will be presented in the aggregate for each calendar year. Typically, Headset only forecasts one forward looking month at a time and in this new framework, forward looking forecasts will cover at minimum five quarters (15 months) and at maximum eight quarters (24 months).” The numbers take New Jersey, New Mexico, and New York’s new legalization into account. 

The data estimates the U.S. cannabis market to reach $23 billion in sales by 2022. Canada’s market is expected to grow twice as fast as the American market from 2020 to 2021, and nearly three times faster from 2021 to 2022. Headset predicts Canada’s annual sales to grow 54.6% in 2021 and 31.9% in 2022. The United States is predicted to see a 23% growth rate in 2021 and 24.4% growth in 2022. Canada’s cannabis market is expected to hit $4 billion in sales in 2022, so significantly lower than the U.S. market, but nonetheless on an incredibly fast-paced rate of growth. Check out the predicted (and last year’s) sales volume in both countries: 

2020

U.S.: $18,504 million 

Canada: $2,624 million 

 

2021 

U.S.: $22,751 million

Canada: $4,057 million 

 

2022

U.S.: $28,308 million 

Canada: $5,351

Per usual, flower is expected to dominate future markets and did dominate 2020’s market. 

  • Flower accounts for a majority of total annual sales, reaching $11 billion and $12 billion in 2021 and 2022 respectively. 
  • Despite flower’s consistent popularity in both markets, edibles, vapor pens, and concentrates hold more market shares than flower in 2020, 2021, and 2022
  • Edibles and concentrates are expected to have larger market shares (at the expense of flower and pre-rolls) in 2022
  • Pre-roll sales are expected to contribute to 20% of Canada’s total sales volume growth in 2022, making for a 2% increase from the prior year 

Tinctures, topicals, capsules, and beverages are consistently among the categories with the lowest sales in both markets, but still accumulating millions of dollars each year and in some cases, sharply rising. 

Category shares for both markets

The report also goes into detail about market shares by category, specifically sales and sales volume. Here are the top performing categories (roughly) in order, it changes depending on country and the year, but all five are consistently at the top:

  1. Flower
  2. Pre-rolls
  3. Vape Pens
  4. Edibles
  5. Concentrates 

Download Headset’s report here


StaffMarch 9, 2021
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While other cannabis industry SPAC’s have seemed to make big splashy entrances to the market, Ibere Pharmaceuticals quietly closed on an upsized offering and listed its shares on the New York Stock Exchange, and began trading on February 26, 2021, under the ticker symbol “IBERU.” At the beginning of February, the company filed for a $100 million offering and that quickly jumped to $120 million before settling on $138 million.

Ibere’s CEO is Osagie Imasogie, the co-founder and senior managing partner of the Philadelphia private equity firm PIPV Capital. Imasogie is also board chairman of Zelira Therapeutics, a therapeutic medicinal cannabis company that has operations in Philadelphia and Australia. While Ibere hasn’t specifically stated it is going to focus on cannabis, the Zelira connection could be a signal of that intention.

Ibere is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. Although Ibere left itself some wiggle room and can pursue an acquisition opportunity in any business or industry, it intends to focus on opportunities in the pharmaceutical and life sciences industries.

Terms

Each unit consists of one Class A ordinary share of the Company and one-half of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one Class A ordinary share at a price of $11.50 per share. Only whole warrants are exercisable and will trade. Once the securities comprising the units begin separate trading, the Class A ordinary shares and warrants are expected to be listed on the NYSE under the symbols “IBER” and “IBERW,” respectively.

Management Team

The company is made up of several GlaxoSmithKline veterans.

The team will be led by Imasogie as CEO,  Lisa Gray will be the Chief Financial Officer,  while Zoltan Kerekes will serve as the Chief Operating Officer.

Mr. Osagie Imasogie has over 35 years of experience in the pharmaceutical and healthcare industries, serving in multiple capacities, including business management, law and finance. He currently serves as a co-founder and Senior Managing Partner of PIPV. Prior to co-founding PIPV, Mr. Imasogie conceptualized and established GlaxoSmithKline Ventures, GlaxoSmithKline’s intellectual property-based venture capital fund, and was its founding Vice President. Mr. Imasogie has held senior commercial and R&D positions within large pharmaceutical companies such as GlaxoSmithKline, SmithKline, DuPont Merck and Endo Pharmaceuticals, Inc. In addition, Mr. Imasogie was a founder and Chairman of Ception Therapeutics, Inc., Trigenesis Therapeutics Inc., iCeutica, Inc. and Churchill Pharmaceuticals LLC.

Ms. Lisa Gray has over 25 years of experience in finance, marketing, business development and operations, primarily within the pharmaceutical industry, and currently serves as a co-founder and Managing Partner of PIPV. In this capacity, Ms. Gray generates and leads investments, manages investor communications, and acts as advisor, chief executive officer or board member for portfolio companies. Previously, Ms. Gray was the Chief Operating Officer of GlaxoSmithKline Ventures, creating value from GlaxoSmithKline’s non-progressed Research and Development assets, and was the primary liaison with the cash-based venture capital community. Prior to her work with GlaxoSmithKline Ventures, Ms. Gray worked in various finance and operational roles within GlaxoSmithKline and SmithKline Beecham (a predecessor company). Ms. Gray began her career as a management consultant and auditor with Coopers & Lybrand and is a Certified Public Accountant and Certified Valuation Analyst.

Mr. Zoltan Kerekes has over 30 years of experience in law, business and the life sciences. Mr. Kerekes is a co-founder and Managing Partner of PIPV. In this capacity, he manages relationships with pharmaceutical companies and sources of capital, leads transactions in the establishment of portfolio companies and acts as an advisor, chairman or board member for portfolio companies. Prior to co-founding PIPV, Mr. Kerekes was a director for GlaxoSmithKline Ventures, where he led various compound and intellectual property transactions.

 

 


Kaitlin DomangueMarch 2, 2021
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Canadian cannabis retailer, High Tide Inc., (TSXV: HITI) (OTCQB: HITIF), announced their Q4 earnings yesterday for 2020. Despite the curveballs 2020 threw, High Tide landed on top, and reported a 118% increase in revenue bringing the total to $24.9 million for the fourth quarter. The revenue increase accounted for a 166% year-over-year growth, and brought the year’s total earnings to $83.3 million. 

High Tide’s revenue by geographic location

  • $20.6 million of total company revenue was earned in Canada in Q4
  • $4.1 million of total revenue was earned in the United States in Q4
  • $0.2 million of total revenue was internationally in Q4

 

  • $68.4 million of total revenue was earned in Canada in fiscal year 2020
  • $14.3 million of total revenue was earned in the United States in fiscal year 2020
  • $0.6 million of total revenue was earned internationally in fiscal year 2020

High Tide’s gross profit increased by 112%

The company’s gross profit increased by 112% to reach $8.7 million in the fourth quarter of 2020, and 172% to $30.8 million for the year. The company’s CEO and President, Raj Grover, said 2020 was their best year yet. “Despite the global slump in retail sales associated with the pandemic, and thanks to the tireless efforts of our team, we closed the year with approximately $8 million in Adjusted EBITDA making 2020 the best year in High Tide’s history,” said Raj Grover, President and Chief Executive Officer. High Tide’s Adjusted EBITDA for the fourth quarter was $3.6 million, and the $8 million represents the fiscal year ended October 31st, 2020. 

High Tide’s cash on hand

The company reported $7.5 million cash on hand as of October 31st, 2020, and a significant cash balance increase to approximately $38 million as of today. 

Revenue segments

  • $22.6 million in total revenue was generated by retail in Q4
  • $2.2 million in total revenue was generated by wholesale in Q4 
  • An immaterial amount by corporate was generated in Q4

 

  • $75 million in total revenue was generated by retail in fiscal year 2020
  • $7.9 million in total revenue was generated by wholesale in fiscal year 2020
  • $0.4 million in total revenue was generated by corporate in fiscal year 2020 

These figures compare to $24 million, $6.69 million, and $0.6 million, respectively, for the previous year.

More thoughts from High Tide’s CEO 

“We continued to run our operations tightly, ending the year off with the record levels of revenue and Adjusted EBITDA.,” said Grover. “We are excited about our trajectory in the United States and continue to prioritize and look for opportunities in that market. Our integrated value chain which includes Cannabis Bricks & Mortar stores, e-commerce platforms for consumption accessories and hemp derived CBD products, along with manufacturing and distribution of licensed and proprietary consumption accessories, experienced sizable growth on all fronts. We plan to continue to further strengthen our chain through organic growth and strategic acquisitions creating even more value for our shareholders.  Since the end of the fiscal year, we have already nearly doubled our size in Canada with the closing of the META Growth acquisition. For the fiscal first quarter of 2021 we expect to report revenue in the range of $37 million to $38 million.”

Operational highlights

In addition to monetary achievements, High Tide made some operational moves last year to set the company up for success in 2021 and beyond. 

  • Canna Cabana (High Tides retailer) opens location in tourist destination Banff, Alberta in August
  • META shareholders overwhelmingly approve High Tide’s acquisition of META Growth Corp. (META. V) in October 2020
  • Over 50% of the company’s brick-and-mortar revenue came from Cabana Club members, emphasizing the brand’s value 

Additional Events

  • High Tides entered a loan agreement for $6.75 million ending on December 31st, 2024 of an undrawn balance on a $20 million credit facility, which was obtained through the acquisition of META
  • Approximately $29 million worth of company debt was converted into common shares after October 31st, 2020
  • Company common shares moved up to the TSX Venture Exchange
  • The company submitted an initial application to be listed on the NASDAQ 
  • High Tides closed on an unsubscribed bought deal equity financing, gross proceeds $23 million 
  • All branded locations have remained operational throughout the COVID-19 crisis, despite difficult issues facing Canada. 

StaffMarch 1, 2021
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Editors Note: This article was submitted by Ashley Elsner Co-Founder and COO of Artery Pay.

On Friday, February 19, 2021, Jim Patterson, the former CEO of Eaze, was charged with and pled guilty to conspiracy to commit bank fraud in connection with credit card processing for cannabis products on the Eaze platform as part of an ongoing criminal trial against Hamid Akhavan and Ruben Weigand. In this article, I explain what is alleged, why it’s illegal, why you should care, and how to protect yourself and your business.

What did Mr. Patterson and his co-conspirators allegedly do?

On March 31, 2020, Hamid Akhavan and Ruben Weigand were charged with conspiracy to commit bank fraud in violation of 18 U.S.C. § 1349. The indictment alleges that, from 2016 through 2019, Akhavan, Weigand, and other, unnamed co-conspirators engaged in a conspiracy, the “Transaction Laundering Scheme,” to deceive banks into processing over $100 million of credit and debit card payments to marijuana retailers by disguising the transactions so as to create the false appearance that they were unrelated to the purchase of marijuana.

-United States v. Akhavan, S3 20-cr-188(JSR), (S.D.N.Y. May. 20, 2020)

Jim Patterson has pleaded guilty to his part in the above criminal indictment. For your reference, below are the definitions of the crimes alleged in the indictment.

18 U.S.C. § 1349 states:

Any person who attempts or conspires to commit any offense under this chapter shall be subject to the same penalties as those prescribed for the offense, the commission of which was the object of the attempt or conspiracy.

The underlying offense here is bank fraud defined in 18 U.S.C. § 1344, which states:

Whoever knowingly executes, or attempts to execute, a scheme or artifice—

(1) to defraud a financial institution; or

(2) to obtain any of the money, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises;

shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

In essence, Akhavan, Weigand, and Patterson are charged with lying to financial institutions about what the transactions on the Eaze platform were for to trick them into processing transactions for cannabis products in the US. 

Why is this illegal?

First, a little background in how card processing works. There are a number of financial institutions that are involved in the processing and clearing of card-based transactions. Each one has to consent to process and clear the transactions. To do this, card networks like Visa, Mastercard, American Express, and Discover, that provide transaction systems, have created specific network rules and category codes that apply to card processing. Card issuing banks, such as Bank of America, Chase, Wells Fargo, Citigroup, and Capital One, underwrite the consumer transactions that the card networks feed them according to those same rules and category codes that they developed in collaboration with one another. Both the card networks and the card-issuing banks have to agree to support transactions for specific products and services so that those specific products and services get a category code. The category code is transmitted at the time of transaction and lets the underwriting bank determine if that transaction can be accepted for the specific consumer for the specific products and services. 

Why is this important? Because neither card networks, that provide the systems, nor card-issuing banks, that provide consumers with the cards that are presently in their wallets, have agreed to process cannabis transactions until federal legalization of cannabis products at the earliest. Large national financial institutions, the card networks, and card-issuing banks included, have taken the position that as defined in their network and institutional rules, the US federal prohibition makes cannabis products illegal, and therefore, they will not process and clear those transactions via their systems and institutions. 

To that end, the card networks have not provided a category code for US cannabis products. In order to trick card networks and card-issuing banks into processing and clearing cannabis product transactions, someone would have to miscode those transactions as an accepted category code. Miscoding financial transactions to a bank in any way is bank fraud. In this case, it is also money laundering because it deliberately hides the true source of the transaction.  

But why should I, a cannabis business owner, care what happened to Jim Patterson from Eaze?

The simple answer is that bank fraud and money laundering cases get prosecuted. To that point, Judge Rakoff, the federal judge hearing the case, refused to grant dismissal against Weigand and Akhavan for 2 arguments that I hear from industry professionals all the time. 

First, and I admit this argument (and it’s inverse that everything is federally illegal so who cares) always makes me laugh, Weigand and Akhavan’s attorneys argued that the Rohrbacher-Farr Amendment to the 2014 congressional spending bill prevents federal prosecutors from going after marijuana operations that comply with state law. Judge Rakoff’s response was that they are accused of bank fraud, not engaging in state-licensed cannabis business. “The Rohrbacher-Farr Amendment does not condone bank fraud by a medical marijuana dispensary any more than it condones murder, robbery, or assault.” I don’t think I can say that any more clearly but I’ll try. Cannabis protections from federal prosecution do not extend to other crimes.

Second, “no harm, no foul”. That is just not true. Financial crime laws are instrumental in protecting the US and its citizens from all kinds of criminal and terrorist organizations. It was money crimes that took down the mafia and made it possible to prove criminal organization. It is money crimes that allow law enforcement to track, monitor, and dismantle terrorist organizations, gangs, and cartels now. Money laws are paramount to public safety so money crimes are not “no harm crimes”. 

I will add that the stability of the US economy and our financial markets is due in large part to the expectation of legal enforcement against fraudulent behavior. Fraud is a crime that does hurt people and businesses. I don’t like to make slippery slope arguments, but this is one of the rare cases where it actually applies. If you let some people get away with fraud, others see that fraud laws are not enforced and start committing fraud too. Then no one can trust anyone anymore and it becomes impossible to engage in free enterprise. Fraud breaks capitalism which relies on legitimate information and intention.

Finally, I’m going to add one more argument that wasn’t put forward but I hear all the time: “I didn’t set up the bank fraud so I’m not responsible for it.” Unfortunately, that’s not true; RICO is why. “RICO” stands for Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. §1961 – §1968.) It is an extremely important tool for law enforcement for dismantling criminal organizations. RICO allows criminal liability for predicate offenses, like bank fraud and money laundering, to be extended to executives that control and order predicate offenses in furtherance of an enterprise. That means that criminal liability for these types of scams can extend to you, the business owner, just for using the scam, and sadly, it doesn’t matter if you know it’s a scam or not. You can still face prosecution. And, RICO requires forfeiture of “ill-gotten gains.” That means that by using the scam, you made legitimate transactions into illegal ones that can be subject to being frozen and seized. 

How can I protect myself and my business from getting into similar trouble?

  1. Never lie to a financial institution about what you do. When you fib, financial institutions always eventually catch you and account shutdowns are substantial disruptions to your business and annoy your customers. If you are a licensed cannabis business that follows your applicable regulations and you don’t take products or money across state or international lines, you are not doing anything wrong. If the bank or processor chooses not to work with you because you are a cannabis business, that is their right. There are other banks and payment systems that will work with you as long as you haven’t fibbed to other banks in the past. It’s not necessarily easy or cheap but getting legitimate, open cannabis banking and cannabis payment platforms is the best thing for you and your business. It’s legal, reliable, and sustainable. 
  2. Due diligence your financial providers and their offerings. You should be able to find out who they are, if they actually have appropriate experience, be able to contact and confirm with their backing banks that they have approved working with cannabis and that they know that your payment platforms are working with cannabis. If you find this to be too difficult, ask your lawyers and accountants to help you. They are your fiduciaries and have legal and moral obligations to make sure that you and your business are protected. 
  3. Don’t use “workarounds”. There are no “workarounds” in finance. Attempts to “workaround” getting direct, verifiable consent from banks, card networks, other financial institutions are a bad idea. Not only can you be held personally criminally liable for misrepresenting your business and your transactions, like what happened to Mr. Patterson, your assets under these scams are freezable and seizable. Using “workarounds” can expose you to other threats to your business as well. For example, when your bank catches you, they can shut down your bank account and will submit your information to the terminated merchant file (TMF). The TMF is used by banks, payment processors, other financial institutions to determine if you are a “bad actor. This status can kill your ability to obtain any financial support in the US, think insurance, lending, banking, payments, listing on stock exchanges, etc. Also, this reputation will follow you and the rest of your executive team to future businesses. It’s not limited to your present company. 

Don’t play games with your money.

Ashley Elsner is a financial lawyer and the Co-Founder and COO of Artery Pay, a payments company making payments and banking easy for cannabis businesses. Artery Pay unifies payments and banking compliance into a single system so that merchants and the banks and credit unions that support them are able to work with each other easily, effectively, and transparently. Whether you want non-cash payments or need help with your cash, Artery Pay can manage all of your transaction needs. Artery Pay is easy, fun, cheap, and legal – the way cannabis should be. For more information, visit www.arterypay.com or contact Ashley directly at ashley@arterypay.com.


StaffDecember 10, 2020
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 Cannabis wholesale marketplace operator LeafLink has closed on a $40 million Series C investment round, led by Founders Fund. Additional participants include Thrive Capital, Nosara Capital, and Lerer Hippeau. This company said that this latest round of investment brings its venture funding to over $90 million and marks Founders Fund’s largest technology investment in the cannabis space.

The proceeds will be used to expand in current markets by bringing on new brands and retailers, as well as capitalizing on new markets that legalized cannabis following the 2020 election. LeafLink said it will also continue to expand its offerings around payments, delivery, and data & analytics.

“This fundraising round is monumental for a technology company like LeafLink as we continue to define a space that shows no signs of slowing down,” said Ryan G. Smith, Co-founder and CEO of LeafLink. “We’re honored to partner with Founders Fund as we scale our marketplace technology across the growing cannabis industry. Our eyes are set on bringing efficiency and innovation to the supply chain and we’re excited for cannabis to serve as a model for more legacy industries in the future.”  

With the latest round of funding, LeafLink said it will continue to accelerate growth beyond its current $3 Billion of annualized Gross Merchandise Value (GMV).  LeafLink’s marketplace makes up an estimated 32% of U.S. wholesale cannabis commerce. Currently, LeafLink serves 27 markets across the U.S. and Canada with offices in New York City, Los Angeles, and Toronto.

“We invested in LeafLink because the team is merging best practices from e-commerce marketplaces with B2B technology to streamline an entire industry’s supply chain and operations,” said Napoleon Ta, Partner at Founders Fund. “We’re excited to make our largest investment in the cannabis space to date in LeafLink.”

LeafLink’s fundraising is notable since it is a private company. According to Viridian Capital Advisors, most of the cannabis capital that has been raised in 2020 has come from publicly traded companies. Of the 280 deals happening so far in 2020, only 49 have been private company raises, while the other 231 have come from public companies.

 


Kaitlin DomangueNovember 30, 2020
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Auxly Cannabis Group Inc., (TSX.V – XLY) (OTCQX: CBWTF), leading consumer packaged goods company in the cannabis space, released their financial results for the three and nine months that ended on September 30th. Except for common shares, all figures mentioned will be in Canadian dollars. 

Net Revenue + Gross Profit

The company reported a total net revenue of $13.4 million for the three months that ended on September 30th. Before excise taxes and research contacts, this figure is $15.2 million. Their reported net revenue represents an 85% increase from the previous quarter, and a 732% increase from the same period last year. Last year’s total revenue clocked out at roughly $1.6 million, representing an approximately $11 million dollar difference. 

Auxly categorizes all of their revenue as stemming from the sales of cannabis products, which is their primary responsibility as a business. In addition to producing cannabis CPGs, they have experts in product development and clinical/scientific research to produce these products. The company’s cannabis brands include Dosecann, Kolab Project, Robinsons, and Foray. 

The company reported a gross profit of $3.8 million. 

Net Loss

Auxly experienced a slightly bigger net loss than the same period last year, reporting a net loss of approximately $17.80 million. Last year’s losses capped out at roughly $17.26, so about a 3% change. 

Cash, Assets, and Debt

Auxly reported $13.57 million in cash and cash equivalents for the three month period leading up to September 30th. This is 69% less than what was reported as of December 31st, 2019. Last year’s cash equivalents totaled $44.13 million. Auxly’s currently claims $381,598 in total assets and $112,358 in debt. 

Expenses

Auxly reported a decrease in selling, general, and administrative expenses – dropping down to approximately $11.36 million from roughly $16.59 million during the same time last year. Also, depreciation and amortization totaled $2.3 million. 

Cost of Sales

Auxly sold $9.5 million worth of finished cannabis products during this three month period, with the nine month period totaling $19.66 million. 

Adjusted EBITDA

Auxly reported an adjusted EBITDA of $6.8 million, decreasing 39% from the same period last year. The nine months ending on September 30th, 2020 saw an adjusted EBITDA of roughly $24.2 million, down 10% from the same nine month period in 2019. 

“Our team entered Q3 committed to driving sales growth, reducing costs and improving product availability. Our efforts resulted in a quarter over quarter increase in net revenues of approximately $5 million and a reduction in SG&A of approximately $2 million. Our improved performance was driven primarily by continued improvements in operational and supply chain capabilities, expanding distribution, better alignment of our resources with our commercial objectives and, of course, our continued focus on understanding our consumers and delivering cannabis products that delight them. We believe that our efforts are resonating with consumers and that Auxly has quickly established itself as one of the leading cannabis companies in Canada,” said Hugo Alves, CEO of Auxly. 


Kaitlin DomangueNovember 9, 2020
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Canadian-based cannabis company, Aurora Cannabis (NYSE: ACB) reported their Q1 earnings this morning. The results were mixed at best, with shares rising 21% on the potential for cannabis legalization under a Biden administration. Unless otherwise stated, these figures are in Canadian dollars. 

The company’s adjusted gross margin before fair value adjustments on total cannabis net revenue didn’t waver much quarter to quarter, with Aurora Cannabis reporting a 48% adjusted gross margin compared to 50% in Q4 2020. Before fair value adjustments, the company’s adjusted gross margin on cannabis net revenue was 52%. 

Consumer Cannabis 

Aurora reported a slight increase in total and net revenue in Q1, with numbers reaching $67.8 million. Q4’s revenue totaled $67.5 million, so while the increase was small, it was there. 

Consumer cannabis net revenue, however, was down 3% quarter over quarter, reaching a stop at $34.3 million. The adjusted gross margin before fair value adjustments on consumer cannabis net revenue was 38% compared to 35% in the prior quarter. Aurora cites sales mix shifting towards higher margin derivative products as the reason for this increase. 

One area where Aurora really shined in Q1 is in consumer cannabis extracts, with the net revenue increasing by $3.6 million sequentially. Aurora says this was driven by their focus on high-growth extracts such as vapes, edibles, and concentrates, plus a $1.1 million increase in US CBD. 

Medical Cannabis

The company reported a 4% sequential increase in medical cannabis net revenue, ultimately capping out at $33.5 million. Aurora primarily attributes this growth to their strong international medical cannabis presence, which grew a whopping 41% quarter over quarter. 

“Our Q1 2021 results are transitional but do highlight successes across a number of diverse profit pools,” said Miguel Martin, CEO of Aurora. “We remain the leader by revenue in the high-margin Canadian medical market, our international medical business experienced more than 40% net revenue growth this quarter, and our CBD brand Reliva is #1 ranked by Nielsen in the U.S. CBD sector.”

The adjusted gross margin on medical cannabis before fair value adjustments was 59% versus 67% in the prior quarter. This is excluding $2.6 million in ramp up costs at Aurora Nordic 1, which is a large cannabis facility located in Denmark. 

EBITDA

Aurora’s adjusted EBITDA loss was $57.9 million in Q1, with the company including restructuring payments such as contract and employee termination costs of $47.4 million. Excluding these impacts, the adjusted EBITDA loss as defined under the term credit facility is $10.5 million. Aurora says they remain on track to achieve a positive adjusted EBITDA next quarter. 

Cash Use

Aurora Cannabis used $25.2 million cash in Q1 to fund company operations, and used $47.4 million for contract and employee termination costs. This is similar to the prior quarter, however, the use of cash showed significant progress. Cash used to pay for capital expenditures in the first quarter was $15 million compared to $32 million in the prior quarter, as many of their projects are now wrapping up and completing. 

Increased net working capital used $37.0 million in the quarter, driven by a $13.8 million increase in accounts receivable and a $25.1 million increase in inventory.

“While we are not satisfied with our past performance in the growing Canadian consumer business, we have a sense of urgency in the execution of our tactical plan to grow profitable market share. Our efforts are directed at delivering the highest quality products, refocusing on our leading premium and ultra-premium brands, better allocating our sales and marketing spend, and executing key account partnerships at both the province and retail levels.”


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