acquisitions Archives - Green Market Report

Debra BorchardtDebra BorchardtJune 25, 2020
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9min19700

Canopy Growth Corporation (NYSE: CGC) and Acreage Holdings, Inc. (OTCQX: ACRGF) stunned markets when the two companies agreed to an unusual deal in 2019. The agreement was that when cannabis was legalized in the U.S., Canopy would buy Acreage. It was called the “triggering event” and was originally valued at $3.4 billion. The price has dropped considerably.

A lot has changed since then and now the deal has changed accordingly.  Acreage shareholders will now get an initial up-front payment of $37.5 million in connection with the modification of Canopy Growth’s rights, including the extension of the term, and give Acreage shareholders the ability to participate in upside potential upon the Triggering Event.

In addition to that CEO Kevin Murphy is resigning from the company.

Deal Changes

These are the major changes to the deal as outlined by the companies:

  • Canopy Growth will pay Acreage shareholders and certain convertible security holders an aggregate of $37.5 million (approximately $0.30 per Existing Share on an as-converted basis), with the final amount to be received by each holder determined based on the number of Existing Shares into which all of the eligible securities are convertible at the close of business on the record date for the distribution.
  • Acreage shareholders’ new Fixed Shares, each of which represents 70% of an Existing Share, will be entitled to receive 0.3048 of a Canopy Growth Share, representing a premium of approximately 120% to the June 24, 2020 closing price of the Existing Shares on the Canadian Securities Exchange.
  • Acreage shareholders will be entitled to participate in the long-term value created by Acreage, and in the U.S. cannabis industry generally, as a result of the Floating Shares which Canopy Growth may acquire in the future upon the occurrence or waiver of the Triggering Event at a price based upon the 30-day volume-weighted average trading price of the Floating Shares on the CSE relative to the trading price of the Canopy Growth Shares on the NYSE at that time, subject to a minimum of $6.41 per Floating Share.
  • There will be a creation of two new classes of shares in the capital of Acreage with each existing Acreage subordinate voting share (an “Existing Share”) being converted into 0.7 of a Fixed Share and 0.3 of a Floating Share (with proportionate adjustments for the existing proportionate voting shares and existing multiple voting shares)

CEO Murphy Out

Mr. Murphy has resigned as CEO but will continue to act as Chairman of the board of directors of Acreage and contribute to the strategic direction of the company. He is listed as owning 10% of the company’s stock. Director Bill Van Faasen, former Chairman, CEO, and President of The Blue Cross Blue Shield of Massachusetts will serve as Acreage’s Interim Chief Executive Officer until a permanent replacement has been identified.

“On behalf of the entire Acreage Board, I sincerely thank Kevin for his passion and commitment to building a leading cannabis enterprise across the United States,” said Douglas Maine, Chair of the Acreage Special Committee. “Kevin is a visionary entrepreneur and positioned Acreage for success in the U.S. cannabis industry. As we move forward with a renewed commitment by Canopy Growth and build upon the vision for the U.S., we are optimistic about the long-term growth prospects for our shareholders.”

“I am excited about this New Agreement and the creation of a pre-eminent and truly global cannabis company upon the occurrence of the Triggering Event. I believe the eventual federal permissibility of cannabis in the United States is inevitable and this New Agreement continues to allow our shareholders to become a part of a leading cannabis company following such changes. Moreover, as the largest shareholder of Acreage, I believe this New Arrangement allows all Acreage shareholders to participate in potential upside to their investments through the fixed exchange component of Canopy Growth stock and importantly the new Floating Shares” said Kevin Murphy, Chair of the Acreage Board.

Canopy Loans Acreage $100 Million

In connection with the New Agreement, Canopy Growth has agreed to loan a wholly-owned subsidiary of Acreage (“Acreage Hempco”), up to $100 million pursuant to a secured debenture.  Canopy Growth will loan Acreage Hempco an initial $50 million on and subject to completion of the New Arrangement.  The remaining $50 million will be subject to the satisfaction of certain conditions by Acreage Hempco. The Debenture will bear interest at a rate of 6.1% per annum.

The United States is going to be a core market for Canopy Growth and this New Agreement solidifies our path forward with Acreage,” said David Klein, Chief Executive Officer of Canopy Growth. “I am excited to bring our relationship with Acreage back to center stage in our U.S. strategy and look forward to a time when the laws in the United States permit us to finalize this transaction as we march toward bringing our exciting beverage products to the US.”

Acreage Tumbled Quickly

Eyes were raised recently when Acreage announced that it agreed to a short term loan with an interest rate of 60%. Those terms rattled shareholders. That type of loan is akin to a payday loan and means the company must have really needed the money badly if it was willing to take those terms. The loan is secured by the company’s cannabis operations in Illinois, New Jersey, and Florida, as well as it’s U.S. intellectual property. If it can pay back the loan, In the event of default, the company is further obligated to pay to Lender an additional fee of $6 million.

Acreage was already selling assets and laying off employees after the company overextended itself in trying to become the largest cannabis company in the country. Acreage said it expects to record a pre-tax, non-cash charge of $80 to $100 million in the quarter ending March 31, 2020.

Canopy Growth’s Troubles

While Acreage has been struggling to right its ship, Canopy isn’t in much better shape. The company announced declining revenues and massive losses for the fourth quarter ending March 31, 2020. The net revenue in the quarter dropped by 13% sequentially to $107 million as the company blamed lower Canadian recreational revenue. Canopy Growth also delivered a staggering net loss of $1.3 billion in the quarter which was attributed to impairment and restructuring charges.


StaffStaffJanuary 13, 2020
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6min11320

Acquisitions continue across the cannabis industry. Here is the latest:

Rogue Station

Rogue Station Companies, Inc. (OTC Pink: RGST) has acquired Brahman LLC, d/b/a Terpp Extractors, a Fort Collins, Colorado-based manufacturer of cannabis processing equipment in an all stock transaction. Rogue Station said it issued 3,000,000 shares of common stock to the owners of Brahman and immediately assumed management and operations.The value was not disclosed, but Rogue Station shares were lately trading at 13 cents, giving the shares an approximate value of $390,000.

Terpp Extractors is a manufacturer of Closed Loop Systems used in hydrocarbon extraction of cannabis concentrates and also re-sells specific scientific equipment, including vacuum and transfer pumps, tubing, storage and evac tanks and other devices necessary for “turn-key” cannabis extraction systems.

Lori Hainkel, CEO of Terpp Extractors stated, “This is an exciting time for all of the employees at Terpp Extractors and we are proud to be part of the team at Rouge Station Companies, Inc. My son Austin, founded Terpp Extractors in 2013 and was a great admirer of, and mentored by Grey Wolf and others at Skunk Pharms Research, during the early development phase and evolution of our hydrocarbon extraction systems. Joining Rogue Station Companies will jump-start our next step forward.”

John Conroy, CEO of Rogue Station Companies, Inc. commented, “We’re building a catalog of known brands in the cannabis space and this acquisition is a perfect fit for us. Terpp Extractors’ history and reputation will be part of the foundation we build on and the extraction equipment space is among the fastest-growing sectors within the cannabis industry. By emphasizing acquisitions in manufacturing, support, infrastructure and other “don’t touch the plant” fields, we expect our business to be scalable and national, regardless of delays in cannabis legalization efforts.

Our first priority related to Terpp Extractors is to increase inventory and our marketing exposure of the great products they produce including the MK3 and MK4 Extractors. These extractors can be used by a variety of customers within the cannabis space, including Extraction and Processing labs, growers, pharmaceutical companies, dispensaries in both the cannabis and hemp markets. Our extractors offer customers extremely high yield and the highest quality output at an affordable price. As the Cannabis and Hemp markets continue to explode, the demand for these extractors will follow market demand”.

Manifest 7

ManifestSeven (formerly known as MJIC) has acquired San Francisco-based legal cannabis delivery service company Lady Chatterley Health, which is focused on high-end women’s products for an undisclosed amount.

The company will be integrated into M7’s retail arm Weden, which has storefront and delivery operations across the state. The acquisition also gives M7 direct entry into the San Francisco market, complementing its licensed operations in Oakland and Brisbane.

“M7’s acquisition of Lady Chatterley Health is an enormous growth opportunity in a critical market, allowing us to directly service more than 640,000 residents over the age of 21, as well as the tens of millions of visitors who come to San Francisco every year,” said Pierre Rouleau, Chief Operating Officer of ManifestSeven. “Delivery is a cornerstone of our range of services, and this highly-scalable asset further expands our reach across California.”

Founded in 2015, Lady Chatterley Health has established a robust database of active retail customers in the highly-coveted Bay Area market, many of whom are women. This acquisition also broadens the market reach of M7’s subsidiary MyJane, created by women, for women, and specializing in curated product boxes.

“We’re thrilled to be joining with M7, a market leader that will allow Lady Chatterley Health to maximize our growth potential and continue to build on the exceptional service we offer,” said Stephen Kerford, Chief Executive Officer of Lady Chatterley Health. “Integrating into this powerful omnichannel platform also gives us access to a new universe of customers who’ll be able to access a wider variety of the safest, highest-quality cannabis products.”


Kaitlin DomangueKaitlin DomangueNovember 6, 2019
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3min13641

TransCanna Holdings Inc. announced it is acquiring California-based Lyfted Farms, Inc. in a deal valued at $6 million. TransCanna is a Canadian-based company with its operations located throughout California. TransCanna operates the largest vertically integrated cannabis facility in the state. 

The agreed-upon total purchase price was approximately $6,150,000. It will consist of: cash payment of $550,000 ($150,000 advanced as a deposit), the purchase of 2,660,750 common shares priced at C$0.80 per share, and an unsecured, non-interest bearing promissory note of $4,000,000. There will be restrictions on trading the shares based on applicable capital markets laws. The promissory note will be repaid if certain equity raises are completed on or before June 30th, 2020. The specified equity raise is dependent on Lyfted Farms completing certain specified production targets.

Upon completion of the agreement, Lyfted Farms will transition to TransCanna’s 196,000 square foot facility and begin production there. Lyfted founder, Bob Blink, said, “Our team is committed to TransCanna and is very excited about the next steps. As most investors have seen sentiment cool in the cannabis space recently, we feel this is the perfect opportunity to build a brand focused company. TransCanna’s business model addresses the problem of cannabis market fragmentation. It is with that in mind that Lyfted shareholders, myself included, have committed to significantly increasing our investment stake in TransCanna.”

“The greatest asset we are acquiring is the talent of Lyfted’s management team,” said Steve Giblin, CEO of TransCanna. “The Lyfted team is working in concert with the SolDaze and Daily teams from previous acquisitions, which has provided an immediate opportunity to substantially increase the scale of our operations. We welcome Bob Blink and his team to TransCanna and we appreciate their vote of confidence by significantly increasing their share position in our company.”

TransCanna provides what they call a “closed-loop ecosystem” for cannabis production. They say their closed-loop ecosystem allows for control of the plant from seed to sale, cost savings from vertical integration, centralized manufacturing, top industry talent in edibles, production, manufacturing, sales and distribution, a consistently high-quality product, and reliability. LyftedFarms is an indoor cannabis cultivation operation located in the Central Valley of California. They provide a hand-trimmed product to their customer base. They say their goal is “to consistently grow high-grade cannabis with only the most exceptional aroma, flavor, and finest quality.” Lyfted Farms products are tested by 2 River Labs in Sacramento. 

 

 


Debra BorchardtDebra BorchardtSeptember 9, 2019
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5min30110

Medicine Man Technologies, Inc. (OTCQX: MDCL) has been on a dispensary buying binge this past couple of weeks. Today the company has added to that list of newly acquired properties. The company said it would be buying four additional dispensaries in Colorado from a leading cannabis retailer. The company’s total dispensary count will grow to 27 upon the successful closing of all the pending acquisitions.

Medicine Man Technologies will spend $50,096,413 for the four dispensaries, which will be a combination of $25,048,206.50 in cash and 4,202,720 shares of its common stock at a price of $2.98 per share, with a deferred cash payment of $12,524,103.25 to be made 12 months following the initial closing date.

“These four dispensaries to be acquired culminate a tremendous run over the last week in which we announced the planned acquisitions of 22 dispensaries in Colorado,” commented Andy Williams, Co-Founder and Chief Executive Officer of Medicine Man Technologies.  “With an estimated 35% EBITDA margin, these retail stores are collectively expected to be some of the most profitable in our portfolio. We seek acquisition targets that meet strict operational and financial criteria, such as having a seasoned management team, commitment to high-quality products and services, and strong revenue growth.”

RootsRx

Last week Medicine Man Technologies said it was buying Roots Rx, a cannabis operator with six dispensaries located in the ski and mountain towns of Colorado. As part of the deal, the company will also get Roots Rx’s outdoor cultivation facilities located outside of Aspen. RootsRx cost $15 million and was also a combination of cash and stock. The six dispensaries that will be acquired in this transaction are located in AspenBasaltEagleVailEdwardsLeadville, and Gunnison.

More Deals

Also last week, the company said it was buying Colorado Harvest Company, which operates two dispensaries in Denver and one in nearby Aurora. That deal cost $12.5 million and was also a combination of cash and stock. Still not done, the company also said it was picking up an additional four unnamed dispensaries for $36 million. Williams added, “This proposed acquisition of these additional dispensaries will continue the expansion of our retail presence in Colorado.”

TJ Joudeh, the Managing Partner of the group of retail operations being acquired by Medicine Man in this transaction, commented, “We are excited to join the Medicine Man Technologies team to create a profitable and vertically integrated cannabis company. Combining our retail experience with the deep product supply of award-winning cannabis products from Medicine Man Technologies will be an incredible development for both companies as well as for consumers.

Starbuds’ five dispensaries were grabbed for $31 million last week as well. “Adding these five dispensaries to our Colorado operations will make our vertical supply strategy more efficient and help us grab additional market share through added retail capacity,” said Williams. “The Starbuds dispensary operations are truly top-tier in terms of brand, revenue-per-location, and profit across the cannabis retail industry.”

 

 


Debra BorchardtDebra BorchardtJune 25, 2019
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4min8890

Surterra Wellness

Surterra Wellness announced the acquisition of Molecular Infusions, a Boston-based biotechnology research and development company that leverages innovative product delivery systems to improve the results of cannabis therapies.  The acquisition expands Surterra’s research and development capabilities and establishes its first international footprint. Mi is a leader in cannabinoid formulation and delivery with proprietary technology platforms in oral, inhalation, and topical cannabis formats, each designed to improve overall user experience, provide market-leading dosing control, and deliver more predictable and targeted health benefits.

“Acquiring Mi reflects Surterra’s intention to aggressively expand our global research and product development capabilities to launch our next wave of cannabis brands that meet patient and consumer needs today and in the future.  We see endless opportunities in cannabis 3.0 – where innovation, global brand building, and ability to scale globally will lead the way,” said Surterra Chief Executive Officer William “Beau” Wrigley, Jr.  “Mi shares our long-term view and can execute in a big way.  We welcome their world-class leadership and elite research teams who have blue-chip reputations and affiliations with top research and educational institutions. We look forward to disrupting the cannabis industry together.”

Driven Deliveries

Driven Deliveries, Inc., (DRVD) completed the acquisition of Ganjarunner, Inc., a cannabis delivery company that provides high-quality lab-tested, pesticide-free medicinal and recreational products throughout California.

In addition to growing Ganjarunner’s customer base, the acquisition of Ganjarunner will allow for Driven to leverage its brand-to-consumer model across virtually the entire state of California. The subsidiary will provide Driven with multiple fulfillment centers, an additional delivery license in California, and a unique technology platform that will allow for improved efficiency. Ganjarunner has shown continuous revenue growth since its inception. During the previous 12 months, the Ganjarunner, Inc. successfully completed 18,854 deliveries to more than 7,748 customers and has experienced year over year revenue growth of 49.3%. As a subsidiary of Driven, Ganjarunner is projected to reach $4.1 million in revenue by the end of 2019.

Nabis Holdings

Nabis Holdings Inc. (CSE:NAB) (OTC: NABIF) completed the purchase of 2,260,500 common shares, representing a 49% interest, of Cannova Medical Ltd., a provider of innovative solutions for cannabis consumption, with the option to acquire the remaining 51% interest.

“Our goal for strategic investments at Nabis is to enter multiple aspects of the cannabis sector including related technology,” said Shay Shnet, CEO & Director of Nabis. “The Cannova team is focused on developing innovative solutions addressing an industry-wide concern to have the ability to better measure cannabis consumption. We are thrilled to have closed our 49% interest acquisition enabling the Cannova team to bring this disruptive technology to market at an increased pace.”

“At Cannova we are developing unique solutions addressing the unmet need for reliable and customized cannabis consumption. The combination of cannabis with smart and innovative technology is key to the future of both medical and recreational cannabis usage,” said Omri Schanin, Founder & CEO of Cannova. “We are excited to work with the Nabis team leveraging their extensive experience and capabilities to help us reach our growth goals faster.”

 

 


Debra BorchardtDebra BorchardtApril 9, 2019
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6min55813

New York State’s Department of Health that oversees the medical marijuana program has yet to approve three outstanding proposed acquisitions. The three deals include the MedMen Enterprises Inc. (MMNFF) acquisition of Pharmacann, The Green Thumbs Industries (GTI) acquisition of Fiorello Pharmaceuticals and the Cresco Labs Inc.(CRLBF) deal with Valley Agriceuticals.

It had looked like New York was fast-tracking full legalization this year, but then at the last minute, cannabis funding was not included in the Governor’s budget. It looked like adult use marijuana was pushed off to another year. Then Governor Cuomo said that wasn’t the case and that in fact, negotiations were continuing. As all the back and forth continues, these companies have to wait patiently for the state to figure out its next moves.

The Department would only say in response to questions, “The New York State Department of Health is currently reviewing MedMen’s formal merger request with PharmaCann, which they submitted in January. The Department initially denied requests from Valley Agriceuticals/Cresco and Fiorello/GTI. Both have recently resubmitted their requests, which are currently under review.”

A GTI spokesperson said, “The transaction is still in regulatory review and we expect an answer in the near future.” MedMen and Cresco have preferred to stay mum on the situation. Although it seems the Pharmacann acquisition has been approved in all the other states, leaving just New York to green light the deal.

MedMen had announced its deal back on October 11, 2018, and said at that time that the resulting pro-forma company was anticipated to have a portfolio of cannabis licenses across the U.S. that would permit the combined company to operate 76 retail stores and 16 cultivation and production facilities.  MedMen is expected to add licenses in Illinois, New York, Pennsylvania, Maryland, Massachusetts, Ohio, Virginia, and Michigan as a result of the deal.

Cresco had stated in a filing that on October 24, 2018, it had entered into a definitive agreement to merge a subsidiary with and into Gloucester Street Capital, LLC, the parent entity of Valley Agriceuticals. Valley Ag is one of
the ten holders of a vertically integrated license from the New York State Department of Health. To date, the only material asset of Valley Ag is the vertically integrated license from the NYSDOH. Cresco said it had expected the closing to occur in the fourth quarter of 2018 or the first quarter of 2019.

Fiorello Pharmaceuticals, also known as FP Wellness, is licensed in New York state only. It is privately owned. The company lists its partners as The Clinic, Plant Consulting Group and LIU Pharmacy on its website. A report in the Daily Gazette said Fiorello Pharmaceuticals is building a medical marijuana production facility in Glenville and plans to open other dispensaries in Monroe, Nassau and New York counties. Green Thumb Industries or GTI (CSE: GTII) (OTC: (GTBIF) ) has plans to acquire FP Wellness, according to a company spokesperson.

The Buffalo News reported that there are two issues holding up the adult use legislation. The first is that Assembly Majority Leader Crystal Peoples-Stokes, who introduced the Marijuana Regulation and Taxation Act in 2013, “has insisted that half of the tax revenue should go toward reinvesting in communities that have borne the brunt of the war on drugs.” It seems the Governor is on board with this, but the tax revenue is estimated to be $300 million and he has also said he’d like to use some of that money for infrastructure projects like fixing the transit maintenance issues.

The paper said that the other issue was regarding the licenses and how to award them. The original five licensees have not made any profits and then the program was expanded to ten licenses. This group wants first dibs on recreational licenses in order to recoup their investments. The state, however, seems to be eyeing substantial license bidding fees that could potentially cause the only female-owned medical marijuana Etain to go out of business.

The state has been facing criticism that the program is heavily tilted towards corporate cannabis with no diversity except for Etain. This could be why the acquisition approvals have been stalled.

 


Debra BorchardtDebra BorchardtApril 9, 2019
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Harvest Health & Recreation, Inc. (CSE: HARVOTCQX: HRVSF) is acquiring CannaPharmacy, Inc. in a deal with undisclosed value. CannaPharmacy owns or operates cannabis licenses in Pennsylvania, Delaware, New Jersey, and Maryland.

Harvest recently announced the private placement of $500 million in convertible debentures to continue to finance acquisitions and corporate growth. Harvest said that it expects that the transaction will be accretive to Harvest’s 2020 revenue and EBITDA.

“We’re seeing significant M&A activity across our industry, but the most important factors are the price one pays for an acquisition, strength of the assets relative to the market size and synergies between the companies,” said Steve White, CEO of Harvest. “Harvest was already fully funded to build out our entire footprint, inclusive of the significant assets that come with the Verano acquisition. Our recent $500 million financing, secured in $100 million tranches for new accretive acquisitions like CannaPharmacy, continues to solidify Harvest’s position as the leading company in the cannabis industry in reach, brands, infrastructure, assets, and footprint.”

Expanding Its Footprint

The CannaPharmacy acquisition will bring operations in four major northeastern states. The licenses and assets of CannaPharmacy will add to Harvest’s extensive national footprint across 17 states and Puerto Rico. Upon closing of this transaction and the closing of the previously announced acquisition of Verano Holdings,  Harvest will hold licenses that allow it to operate up to 213 facilities, including 130 retail dispensaries.

“All of our efforts back up our three core objectives; to expand and deepen our retail and wholesale footprint, build national brands and continue our path to profitable growth, and this CannaPharmacy deal is no different,” said Jason Vedadi, Executive Chairman of Harvest. “Harvest has led the cannabis market in the Western United States for years, and this acquisition will similarly widen and extend our U.S. foothold to the East Coast. When you add that to our existing dominant position in the Pennsylvania and Maryland markets, acquisition of CBx and its suite of brands, as well as our pending acquisitions of Falcon and Verano, with its holdings throughout the eastern seaboard and brands and infrastructure to leverage, we are looking at Harvest becoming a household name throughout the region in a matter of months.”

The company statement outlined the acquisition as follows:

New Jersey

  • One of six operational (and 12 awarded) fully vertical licenses, permitting cultivation, retail sales and manufacturing.
  • Woodbridge, NJ flagship store open and operational on a major highway since 2013, one of six in the state, 20 miles from NYC. According to the most recent NJ Dept. of Health annual report in April 2018, this dispensary has served more patients and completed more cannabis transactions since inception than any other dispensary.
  • A satellite store is approved and under construction in Union, NJ, 17 miles from NYC, on one of the most heavily trafficked highway corridors in the state at the intersection of the Garden State Parkway, NJ Turnpike, Route 22, and Route 78.
  • Approval pending for a third dispensary in densely populated Monmouth County, NJ (the “Jersey Shore”), which presently does not have a single dispensary.
  • 43.4% year-over-year revenue growth from 2017 to 2018.
  • New Jersey has 42,000 medical patients and growing 60 percent annually.

Pennsylvania

  • One 46,800 square foot cultivation and processing facility in the fifth most populous state in the country, with a statutory cap of 25 grower-processors;
  • Facility is a former Pepsi bottling plant employing local Pennsylvanians.
  • Harvest currently has seven state licenses allowing up to 21 retail stores throughout the state.
  • Pennsylvania currently has 116,000 medical patients as of February 2019 and growing at 10 percent month over month.

Maryland

  •  Rights to one dispensary in Prince George’s County.

Delaware

  • One of three fully vertical licenses, permitting cultivation, manufacturing, and three retail dispensaries.
  • Newark, DE flagship open and operational on a major highway leading into the heart of downtown, one of four stores statewide, in the county that hosts 60 percent of the state’s population.
  • Two additional dispensaries expected to open in 2019-2020.
  • Delaware currently has 7,104 medical patients, a 53 percent increase from 2017, and is experiencing rapid growth in a state with one of the most liberal lists of qualifying conditions in the country.

Harvest recently won every license it applied for in Pennsylvania, giving the company the ability to open up to 21, the largest retail network in the state. Harvest received the highest scores on all but one of its regional applications (where it placed 2nd overall) based on its responses to the criteria developed by the Pennsylvania Department of Health.


Debra BorchardtDebra BorchardtOctober 3, 2018
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6min23160

MedMen Enterprises Inc.  (MMNFF)  signed an agreement to purchase Scottsdale-based cannabis company Monarch from WhiteStar Solutions. Monarch is a licensed medical cannabis license holder with dispensary, cultivation and processing operation. In addition, MedMen will acquire WhiteStar’s exclusive co-manufacturing and licensing agreements with Kiva, Mirth Provisions and HUXTON for the state of Arizona.

MedMen will pay WhiteStar approximately 80% in stock and 20% in cash in an undisclosed amount. The stock consideration will be satisfied by way of issuance of shares of MedMen Enterprises, Inc.

“Our strategy has been to establish our brand in the primary markets of California, Nevada and New York,” said Adam Bierman, MedMen chief executive, and co-founder. “We have a leading presence in those primary markets and we are now ready to expand our reach. Arizona, with its robust medical marijuana program and connectivity to California and Nevada where our brand is already strong, makes this a great fit.”

Monarch was founded in 2013 and according to the company statement is among the top medical marijuana dispensaries in the country and is the first cannabis dispensary to break ground in Scottsdale with impressive product offerings in its portfolio and a run rate revenue of over $10 million. Monarch is licensed to operate a 20,000-square-foot cultivation and manufacturing facility in Mesa, Arizona. As a wholesaler in the Arizona market, Monarch distributes branded products to over 60 dispensaries in the state.

Seven Point Acquisition

In addition to the Arizona acquisition, MedMen is also purchasing Chicago-based dispensary Seven Point for an undisclosed amount of cash at closing, deferred cash, and shares of MedMen Enterprises, Inc.

“This acquisition brings the MedMen brand to yet another major stage,” said Bierman. “MedMen has established a presence in the primary markets of California, Nevada and New York. Our strategy has been to put our brand in high visibility commercial districts in popular locations like Beverly Hills, Manhattan, Las Vegas, and Oak Park, just outside Chicago, fits the mold perfectly.”

Originally, MedMen had been expected to remain in the key markets of California, Nevada and New York. However, it recently made a move towards Florida and this week’s acquisitions signal an additional effort to move beyond those heavy tourist locations. Seven Point is located in a high foot traffic shopping district among popular restaurants, cafes and major retailers like Whole Foods, Gap and Pier 1.

“Seven Point is proud of its strong commitment to the local medical patient community and the loyal following we have built over the years,” said Brad Zerman, chief executive of Seven Point. “MedMen will continue that tradition while bringing its industry-leading retail operations and
commitment to quality and service.”

Loan Facility Is Closed

Also this week, MedMen closed a C$93,822,023 (US$73,275,000) senior secured term loan facility with funds managed by Hankey Capital and with an affiliate of Stable Road Capital as the largest loan participant.

The principal amount under the Facility will accrue interest at a rate of 7.5% per year, paid monthly, with a maturity date of 24 months following the date of closing on October 1st, 2018. The Facility will be used for acquisitions, capital expenditures, and general corporate purposes.

“This industry is more investable than ever, and this loan is reflective of that progress. Hankey Capital and Stable Road Capital’s knowledge of this sector and their creativity allowed us to structure one of the first true senior secured loans in cannabis,” said Bierman. “Our
operations in the primary markets of California, Nevada and New York are robust, and now we are turning our attention to the most promising and strategic markets across the country and the industry.”

The loan follows a recent bought deal that raised C$86 million (US$67 million). MedMen may repay the loan at any time and from time to time, in whole or in part, with a prepayment penalty of 1.0 percent of the outstanding principal amount repaid if repaid before December 31, 2019.

MedMen said it is also planning the structured sale to a special purpose real estate entity focused on the cannabis sector of real estate assets it currently owns in key markets.

“MedMen has an unmatched track record of execution in this fast-growing industry,” said Stable Road Chief Investment Officer Brian Kabot. “We are proud to facilitate MedMen’s growth with capital that can enhance value for all stakeholders and we look forward to a long-term partnership.”

Stock Performance

MedMen stock was lately trading at $3.95 on the OTC Markets. It has dropped from its 52-week high of $5.45 but remains above its year low of $2.61. It is trading at C$5.17 on the Canadian Securities Exchange, above the year low of C$2.61 and near the year high of C$5.45.


William SumnerWilliam SumnerAugust 7, 2018
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3min12660

Aurora Cannabis Inc. (ACBFF) today announced that it has entered into a letter of intent to acquire HotHouse Consulting Inc. Founded in 2004, HotHouse provides greenhouse consulting services and specializes in hybrid greenhouse growing techniques. Initially, the company focused primarily on agricultural clients, but in the ensuing years has shifted towards the cannabis industry.

Under the agreement, the company has granted 1,940,000 options to buy shares of Aurora to officers of HotHouse, which will vest annually over the next three years and are exercisable at $7.39 per common share. Aurora has also granted HotHouse officers a total of 345,000 restricted stock units of the company, which will also vest annually over the next three years. Once the acquisition is complete, HotHouse founder Laust Dam will join Aurora Larssen Projects (ALPS) as its VP of Horticultural Development.

ALPS is a subsidiary of Aurora that provides unique turn-key services to the company and its domestic and international partners; services include facility design, engineering, construction, support, maintenance, security, regulatory support, cultivation, genetics, and consulting and assistance in meeting requirements for GACP cultivation and EU GMP certification.

Aurora will use this acquisition to enhance ALPS services by providing ongoing customer support and consulting, which will be provided by HotHouse’s crop specialists, as well as ensure that ALPS designed facilities continue to run at optimal efficiency following client handover.

“Developing efficient and technologically advanced greenhouses allows Aurora to produce and harvest the highest quality cannabis at incredible scale while maintaining unmatched, ultra-low costs per gram, per square foot, per year,” said Thomas Larssen, President of Aurora Larssen Projects. “Through the addition of Laust and the entire team at HotHouse, ALPS gains significant insight and experience that we can apply to our industry-leading cultivation design, engineering, and consulting projects. With the significant exposure and strategic support gained through the backing of Aurora, ALPS has emerged as the cannabis industry’s preeminent hybrid greenhouse engineering and consulting partner.”

 


Debra BorchardtDebra BorchardtJune 28, 2018
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The deals continue to happen in the cannabis space with lab company EVIO’s expansion in Oregon and CLS Holdings closing on its Oasis acquisition.

EVIO

EVIO Inc.  (EVIO) entered into an asset purchase agreement with Oregon-based MRX Labs. The company said that it has also formed a strategic alliance with MRX Xtractors which will develop and expand growth in existing and new markets.

According to the company statement, EVIO Inc. will acquire 100% of the assets of MRX Labs, LLC including equipment, real estate, customer lists, customer contracts, rental agreements, and equipment leases. EVIO Labs Portland will relocate its personnel and license to the Tigard facility. The transaction is expected to close on or before July 11, 2018.

“We are excited about the opportunity to further expand our reach and solidify our position as the dominant testing lab in Oregon,” said William Waldrop, CEO of EVIO. “As the Oregon market matures, there is a consolidation of the marketplace occurring, and this alliance is a win-win for both of our companies and our customers.”

MRX Labs, LLC, and MRX Xtractors, founded by Paul Tomaso, CEO and CTO, and Jonah Barber, President, have been research and development, design and engineering pioneers in both analytical testing and extraction technologies. “This relationship with EVIO affords MRX Xtractors an opportunity for us to focus on the global expansion of our extraction technologies, and to unite our testing lab with a company of scientists and professionals whom we trust will take great care of our loyal lab customers and employees,” said Barber. “We are thrilled with our newly formed alliance that gives us great confidence to refer our extraction customers, across the US and Canada, to EVIO’s network of labs and vice-versa.”

EVIO’s Lori Glauser spoke to Green Market Report not long ago about the company’s expansion plans in this video.

CLS Holdings USA, Inc

CLS Holdings (CLSH) closed its acquisition of Oasis Cannabis. With this purchase, CLS is now active in the legalized cannabis market in Las Vegas, NV, generating $850,000 in gross monthly revenue.

According to the company statement, Oasis Cannabis had its best month ever last month in generating $200,000 in gross revenues. Due to increased demand and the additional capital that was just raised, CLS plans to triple the grow production capacity over the remainder of 2018. On the retail dispensary side, Oasis has steadily witnessed increased traffic over the past few months, is now up to 400 daily visitors, and is currently generating $650,000 of gross monthly revenue.



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