Glass House To Begin Trading Next Week

The Mercer Park brand SPAC will begin trading next week on July 5 on the NEO exchange in Canada under the name GH Group, Inc. or Glass House Brands. The subordinate, restricted, and limited voting shares and warrants of Glass House were approved for listing on the NEO Exchange under the symbols “GLAS.A.U” and “GLAS.WT.U”, respectively. The symbol on the OTC is MRCQF, but markets are closed in the U.S. on Monday for the Independence Day holiday.

“With one of the strongest retail and wholesale networks in our industry combined with best-in-class cultivation processes and our scaled and highly efficient cost structure, we are exceptionally well-positioned to capitalize on the growing statewide and national consumer packaged goods (“CPG”) opportunity,” said Kyle Kazan, Glass House Chairman, and CEO. “We look forward to leveraging our leadership position in California to introduce high-quality, sustainably grown, craft cannabis to the market to support the health and enjoyment of our consumers, as well as our environment and our community.”

In 2020, Glass House reported that it grew revenue 185% year-over-year to $53 million and generated positive adjusted EBITDA, driven by its expanded cultivation and distribution footprint, improved supply chain and production efficiencies, and enhanced consumer brand profile. Including the assets of the Southern California Greenhouses and proposed Element 7 retail licenses, the combined company expects to generate full-year 2022 revenue and adjusted EBITDA of approximately $326 million and $104 million, respectively.

Glass House Highlights

Glass House currently operates a cultivation footprint of over 500,000 square feet, producing over 110,000 lbs. of biomass per year. Glass House also has an agreement to acquire an additional 5.5 million ft2 state-of-the-art Southern California Greenhouse, an agricultural producer that will transition in phases to cannabis cultivation. This additional capacity is expected to increase Glass House’s current footprint to up to approximately 2.5 million ft2 by 2023. The company’s total targeted long-term footprint of 6 million ft2 is expected to be by far the largest cultivation capacity in California.

On the retail side, Glass House said it has generated 365,000 transactions, an average in-store ticket of $65 and an average delivery ticket of $101 in 2020. In addition to its current four dispensaries, Glass House has entered into an agreement to merge with 17 in-process retail licensed entities from California-based Element 7. These licenses, together with two new recent license awards, are expected to bring Glass House’s retail footprint to a total of 23 open locations by the end of the first half of 2022, representing the highest statewide store count of any single California cannabis operator.

Since beginning its CPG business in early 2020, Glass House added 550 retail doors to its CPG distribution, achieving a $50 million annualized revenue run rate for its wholesale business at year-end. Over the long term, the Company aims to build its wholesale network to over 700 dispensaries statewide.

Kazan’s & Farrar’s Control

Shareholders should note that CEO Kazan’s total voting power based on Equity Shares and MVS is approximately 32.7%. Kazan paid $202.53 (C$249.82) to buy over two million multiple voting shares of Glass House that represented 46.5% of the outstanding MVS.

Kazan bought 3,544,752 subordinate, restricted or limited voting shares of Glass House representing approximately 4.3% of the outstanding equity shares.

Glass House President Graham Farrar’ total voting power based on his equity shares and the MVS is approximately 20.6%. He paid $132.11 (C$162.96) for 1,321,087 MVS, representing approximately 27.8% of the total number of outstanding MVS.

Graham bought 1,224,289 Equity Shares, representing approximately 1.5% of the outstanding equity shares.

 

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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