Acreage Holdings Archives - Green Market Report

Adam JacksonAugust 9, 2022
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5min1670

Acreage Holdings, Inc. (CSE: ACRG.A.U, ACRG.B.U), (OTCQX: ACRHF, ACRDF) delivered positive results in the second quarter as the company moves away from established western markets in favor of emerging markets east of the Mississippi. The company reported its financial results for the first quarter ending June 30, 2022 after the market closed on Monday.

Acreage reported total revenue of $61.4 million, an increase of $17.1 million or 39% versus the second quarter of last year. The company posted a gross margin of 50% versus 52% in the previous quarter and 54% in last year’s second quarter. Acreage also posted a net loss of $9.9 million, versus $2.5 million in the same period last year.

New Jersey For the Win

Acreage said that growth over the past year was primarily driven by expansion into Ohio in addition to the green-lighting of adult-use sales in New Jersey, “which was somewhat offset by declines within the company’s operations that were held for sale.” The Botanist (Acreage’s dispensary name) is now available to adult-use consumers at the Egg Harbor Township and Williamstown dispensaries in southern New Jersey. Acreage also closed the sale of its four Oregon retail dispensaries branded as Cannabliss & Co.

“We were thrilled to execute on a significant milestone with the launch of adult-use sales in the state of New Jersey during the second quarter,” said CEO Peter Caldini. “The initial performance of our retail stores during the roll-out has been strong, and we believe there is an even bigger opportunity to further optimize our cultivation and wholesale capabilities to serve this growing market. We are working diligently to improve our New Jersey cultivation and processing operations to take advantage of the market opportunities that are available to us.”

Additionally, total revenue for the second quarter improved sequentially by $4.5 million or 8% versus the first quarter. The company said it was able to “overcome challenges associated with industry pricing pressures which negatively impacted revenues.”

Total operating expenses for the second quarter decreased by $3.3 million, or 11%, to $27.3 million, from the same quarter last year. Increases in compensation and general and administrative expenses were more than offset by reductions in equity-based compensation expenses, losses on notes receivable, and depreciation and amortization expenses, the company said.

Adjusted EBITDA was $10.4 million in the second quarter, versus $8.1 million in the same period last year and $8.6 million in the previous quarter this year. Adjusted EBITDA as a percentage of consolidated revenue was 16.9% for the quarter.

Looking Ahead

The company said it ended the quarter with $29.3 million in cash and cash equivalents. Additionally, $100.0 million was drawn under the credit facility entered in the fourth quarter last reporting year. A further $50 million is available in future periods under a committed accordion option once certain predetermined milestones are achieved, Acreage said, as it intends to use the money to “fund expansion initiatives, repay existing debt and provide additional working capital.”

“With the conclusion of our operations in Oregon following the end of the quarter, we are in a more favorable position to drive development in our core markets, where we see the best opportunity to foster long-term growth and enhance shareholder value,” Caldini added. “During the latter half of the year, we will continue our preparation for pending adult-use sales in these developing Northeastern markets, such as New York and Connecticut, in addition to strengthening our presence in New Jersey.”


StaffJuly 5, 2022
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9min1010

The Daily Hit is a recap of the top cannabis business stories for July 5, 2022.

ON THE SITE

Emerald Health Gives Update on Cannabis Exit

On Monday, Canadian-based Emerald Health Therapeutics, Inc. (CSE: EMH) (OTCQB: EMHTF)  reported its financial results for the year ended December 31, 2021, and gave an update on its plans to exit the cannabis industry. Total revenue for Emerald Health in 2021 fell to C$11.8 million from last year’s C$14.2 million. Read more here.

Analyst Sees Value in Beaten Down Cannabis MSOs

Cantor Fitzgerald analyst Pablo Zuanic issued a report this morning in which he sees some value in the beaten-up cannabis group, although he also cautioned that numerous roadblocks remain. He was clear that the group may not have even found a bottom yet as prices continue to slide along with the broader market. Zuanic also noted that even the second quarter might not bring relief on valuations, but he is a selective buyer at these levels. Having said that he said investors may not see any meaningful upside for another two to three years and that it would probably only occur when some sort of federal reform occurs. Read more here.

SPACs Losing Their Mojos as Deals get Pushed Out

SPACs (Special Purpose Acquisition Corp.) were the hottest thing going on in the cannabis industry for the past couple of years, but the buzz may be wearing off. These SPACs would raise millions and then search for a “qualifying transaction.”  In other words, the money was looking for a company to essentially buy and take public. It was an easy way for cannabis companies to get investor money and quickly become publicly-traded stocks. However, these deals frequently turned sour for the secondary buyers dampening the interest. Read more here.

Flower One’s Revenue Drops in Fourth Quarter, Restructures Debt Payments

Flower One Holdings Inc.  (CSE: FONE) (OTCQX: FLOOF) has made some movement with its ongoing restructuring, including the restructuring of its term debt and its master lease. This comes on the heels of the company reporting its annual earnings. For the year ending in December 2021, Flower One reported 2021 revenue of $58.4 million, representing a 70% increase from the prior year. Despite all that revenue, as of December 31, 2021, the company only had cash and cash equivalents of $0.9 million, compared with $1.1 million as of December 31, 2020. Read more here.

Psychedelics Could be a Real Cure for Alcoholism

According to a substance use study, alcohol use disorder accounts for a majority of substance use disorder cases in the U.S., with 14.5 million or 5.3 percent of Americans aged 12 or older meeting diagnostic criteria for an alcohol use disorder in 2017 (AUD). It is a significant medical and social problem in American society, accounting for 88,000 deaths per year and more than $250 billion in annual costs. Alcohol misuse is also implicated in cancer, liver disease, and heart disease. Read more here.

IN OTHER NEWS

Acreage Holdings, Inc., Chalice Brands Ltd.

Acreage Holdings, Inc. (CSE:ACRG.A.U, ACRG.B.U), (OTCQX: ACRHF, ACRDF), a vertically integrated, multi-state operator of cannabis cultivation and retailing facilities in the U.S., today announced that it has executed and closed an amendment to its previously announced asset purchase and services agreement with Chalice Brands Ltd. (CSE:CHAL) (OTCQB:CHALF), completing the sale of the company’s four Oregon retail dispensaries branded as Cannabliss & Co. Read more here.

HEXO Corp, Tilray Brands, Inc.

HEXO Corp (TSX: HEXO; NASDAQ: HEXO) announced that at its reconvened special meeting of shareholders held today, holders of common shares of HEXO approved the previously announced transaction with Tilray Brands, Inc. (Nasdaq | TSX: TLRY) and HT Investments MA LLC. The meeting was originally held on June 14, 2022, and was adjourned prior to shareholders voting on the note transaction in order to provide shareholders with additional time to consider the previously announced amendments to the note transaction. Read more here.

Akerna Corp.

Akerna Corp. (Nasdaq: KERN), an enterprise software company and developer in the global cannabis industry, today announced the closing of its previously announced underwritten public offering of (i) 29,382,861 units of the company consisting of 29,382,861 shares of common stock together with common stock warrants to purchase up to 29,382,861 shares of common stock and (ii) 14,095,400 pre-funded units, consisting of 14,095,400 pre-funded warrants, with each pre-funded warrant exercisable for one share of common stock, together with common warrants to purchase up to 14,095,400 shares of common stock. Read more here.

Entourage Health Corp.

Entourage Health Corp. (TSX-V:ENTG) (OTCQX:ETRGF) (FSE:4WE), a Canadian producer and distributor of cannabis products, announced it has amended its existing senior secured credit facility entered into on March 29, 2019, between the company and Bank of Montreal, and its existing second secured credit facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada, entered into on September 30, 2020. The latest amendments to the Senior Credit Facility and Second Credit Facility modify the respective terms under which Entourage secured debt financing. Read more here.

Alcohol and Gaming Commission of Ontario

Today the Royal Canadian Mounted Police (RCMP) announced it has laid multiple criminal charges against five individuals. Their investigation discovered that over $3 Million CAD from the illegal sale of cannabis was laundered, including through casinos in the GTA and Niagara regions. Members of the Ontario Provincial Police’s Investigation and Enforcement Bureau (IEB), attached to the Alcohol and Gaming Commission of Ontario (AGCO) provided assistance to the RCMP throughout their investigation. Read more here.

Stem Holdings, Inc.

Stem Holdings, Inc. (OTCQX: STMH, CSE: STEM), a vertically-integrated cannabis and hemp branded products company, announced that the company has received the approval of the Holders of the Warrants and the Holders of the Convertible Debentures to reprice the convertible securities issued in connection with the company’s special warrant financing, which matured on June 27, 2022, and will mature September 14, 2022. Read more here.

The Flowr Corporation

The Flowr Corporation (TSX.V: FLWR; OTC: FLWPF) herein announces the resignation of Maurice Levesque and Don Duet from the Board of Directors who are departing in order to pursue other opportunities. Flowr would like to thank Mr. Levesque and Mr. Duet for their service to the Company and wish them success in their future endeavors. Read more here.


StaffMay 6, 2022
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4min810

After the market closed on Thursday, Acreage Holdings, Inc. (CSE: ACRG.A.U, ACRG.B.U), (OTCQX: ACRHF, ACRDF) reported its financial results for the first quarter ended March 31, 2022. Acreage reported total revenue of $56.9 million, an increase of $18.5 million or 48% compared to the first quarter of 2021. However, revenue fell sequentially by $1.2 million or 2% versus the fourth quarter. It also missed the Yahoo Finance average analyst estimates for revenue of $58 million.

The company said that the growth was primarily driven by the acquisitions of Ohio, California, and Maine operations over the past 12 months, which was somewhat offset by revenue declines due to the divestiture of Florida operations in April 2021 and declines within the company’s operations that are being held for sale. Excluding the company’s California and Oregon operations which are not considered core, however, revenue for the three months ended March 31, 2022, increased slightly by 0.5% on a sequential basis as the company was able to overcome challenges associated with the pandemic and industry pricing pressures which negatively impacted revenues.

Acreage reported a net loss of $(12.7) million, compared to $(7.8) million in the first quarter of 2021.

“In the first quarter of 2022, we achieved our fifth consecutive quarter of positive Adjusted EBITDA and sequentially improved our gross margin, while continuing to grow revenue despite industry headwinds and pandemic related challenges in Q1,” said Peter Caldini, CEO of Acreage. “We remain focused and committed to delivering against our strategic priorities of accelerating our growth in our core markets, driving profitability, and strengthening our balance sheet.”

New Jersey

On a positive note, Acreage was able to begin adult-use sales in New Jersey as part of an inaugural group of cannabis operators permitted to launch adult-use sales in the state. Acreage’s products, including its flagship brand The Botanist, are now available for adult-use consumers at its Egg Harbor Township and Williamstown dispensaries in southern New Jersey.

Mr. Caldini concluded, “Following the end of the quarter we were thrilled to begin adult-use sales in New Jersey. We are well-prepared for this market having recently completed the expansion of our Egg Harbor facility in anticipation of adult-use sales beginning this year. We have had a very successful launch and are looking forward to leveraging our expertise from New Jersey as we prepare for pending adult-use sales in New York and Connecticut. 2022 has started on strong footing for us and we remain committed to further delivering shareholder value as we execute on the significant growth opportunities ahead.”


Debra BorchardtMay 2, 2022
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6min2490

A judge decided on Friday that a New York case against Acreage Holdings (OTC: ACRHF) can proceed. Judge Andrea Masley in the New York Supreme Court listened to a week-long case and following closing arguments decided that the case against Acreage would not be dismissed. The case is regarding a New York license whose ownership got muddled through a series of mergers and partnerships.

Leading the charge is David Feder, an attorney who is part of a group that is claiming that Acreage Holdings cut them out of a portion of ownership of the converted limited New York cannabis licenses. The lawsuit claimed that Acreage acquired a New York property and this particular investor (EPMMNY) wasn’t included in the sale. A review of the legal document shows that EPMMNY’s equity stake was never finalized and so it wasn’t included in the final application for New York Canna (NY Canna).

Lawsuit Background

When medical marijuana was legalized in the state of New York, only 10 licenses were awarded. EPMMNY was formed in 2015 and the group began partnering up with another group called New Amsterdam Distributors, LLC, which was also seeking a medical cannabis business license. Members of the New Amsterdam group include Dixie, Duval, John Vavalo – a co-owner of a co-owner of J. Michael Shoes –, Dominic Falcone – who owns a plumbing company in Yonkers, and a pharmacist named Patrick Harvey. The complaint names Daino was CEO of Terradiol MC, a shell company for New Amsterdam.

Essentially it was a pairing between a group with money and no cannabis experience with a group that had the experience and needed funding. The New Amsterdam group needed the know-how and agreed to partner with EPMMNY to apply for a license as a combined entity called New York Canna Inc. Feder is a New York attorney with experience in the legal cannabis industry, had been preparing to submit a license application and began assembling a team to operate in New York. Feder began working with Malcolm Morrison, an experienced legal cannabis businessperson, who had successfully obtained cannabis licenses in other states. With this team in place, Feder and Morrison created EPMMNY with barely more than a month remaining to prepare and submit the New York license application.
Feder claims in the lawsuit that the partners agreed EPMMNY would be allocated 25% of the business for preparing the application, New Amsterdam would provide funding and own 75% of the business. However, with the clock ticking for the application to be submitted, Feder wasn’t able to get the documents confirming this arrangement. Although there was correspondence between the parties about the agreement. Despite the lack of documentation for the partnership, the application moved forward and ranked number six for getting one of the 10 licenses. This greatly improved the value of NY Canna.
Feder claims at this point NY  Canna merged with NY Medicinal without its consent and diluted its ownership by 50% to 12.5%. NY Medicinal was owned in whole or in part by Acreage Holding LLC’s predecessor, High Street Capital Partners. On December 1, 2016, Feder responded to the merger notice by rejecting it outright and demanding NY Canna’s books and records. Feder claims that his group was asked to accept the smaller ownership percentage, but they refused.
The license was awarded in 2017 and even with the ownership dispute brewing, Acreage ultimately ended up owning all of NY Canna, also known as Terradiol NY. In 2018, a week before Acreage Holdings went public, the group decided to file a lawsuit. It has been moving through the courts ever since, but now it seems Feder has notched a win at this stage.

Millions At Stake

“It’s a pretrial evidentiary hearing on whether Mr. Feder had the capacity to go with the case, and the judge ruled that he absolutely did,” said attorney Lawrence Lonergan who is representing plaintiff David Feder. “We’re very pleased the court saw things our way.” The case noted that the plaintiffs are also hoping to block Canopy Growth from acquiring Acreage Holdings, which would include the New York portion referred to as NY Canna.
The value of the ownership, should the case tip towards Feder’s claim, is worth millions. He is asking for upwards of $200 million for his stake.

Debra BorchardtApril 13, 2022
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8min1530

With the news that New Jersey was finally approving some cannabis companies to begin selling adult-use cannabis, investors began salivating over who would triumph. Cannabis stocks have been in a decidedly long bear market causing investors to lose great sums of money (on paper at least). As the process to begin these sales went through a series of starts and stops, the companies along with the investors were getting frustrated. It’s incredibly difficult for a retailer to make staffing and inventory decisions when you have no clue as to when you when need either. Investors wanted to know who would reap the benefits of those sales and when it could be reflected in earnings releases.

Potential Market

Headset.io has predicted that the first full year of sales in New Jersey could bring in $740 million in sales. The company went on to write that New Jersey, with its adult-use transition expected in March 2022, is projected to boast a 21+ population of 7 million that will produce $1.6 billion in sales by 2025.

A Rutgers report wrote, “We estimate that New Jersey would collect between $118.2 million and $173.5 million per year after recreational marijuana is legalized and when the market is fully saturated.”

Acreage Holdings (OTC: ACRHF) said during its last earnings announcement that it increased cultivation capacity output nearly fourfold at the Egg Harbor facility in New Jersey to support the company’s own retail network and the rapidly growing wholesale market ahead of the launch of the adult-use sales. These are its approved locations and while the Atlantic City store wasn’t approved in the first round, it’s expected to happen eventually.

  • The Botanist by CCF, Egg Harbor Township
  • The Botanist by CCF, Williamstown (Monroe)

Curaleaf (CURLF) has three locations in New Jersey, but so far just two have been approved in the first round.

  • Curaleaf, Bellmawr
  • Curaleaf, Edgewater Park

TerrAscend (OTC: TRSSF has been also gearing up for the state to go legal. The company said that cash used in operations was $3.8 million for the three months ending in December 2021, mainly driven by an increase in inventory related to the anticipated start of adult-use sales in New Jersey. In the last earnings announcement, Executive Chairman Jason Wild, commented, “The strategic decisions we made in Pennsylvania have resulted in the highest quality product we have ever sold in this market. Additionally, the actions undertaken in New Jersey have our team prepared for adult use, where we have one of the largest cultivation footprints in the state, along with three ideal dispensary locations.”

  • The Apothecarium, Maplewood
  • The Apothecarium, Phillipsburg

Verano’s (VRNOF) New Jersey footprint consists of three cannabis dispensaries operated under the flagship Zen Leaf brand in Elizabeth (117 Spring St), Lawrence Township (3256 Brunswick Pike), and Neptune Township (2100 Route 66), along with a 120,000 square foot cultivation and processing facility in Branchburg. Darren Weiss, Verano Chief Operating Officer, and General Counsel said, “The approval of personal use cannabis marks a huge step forward for New Jersey, the cannabis industry, and the nation at large. On behalf of our Verano New Jersey team, we look forward to welcoming personal use visitors to our Zen Leaf dispensaries.”

  • Zen Leaf, Elizabeth
  • Zen Leaf, Lawrence

Green Thumb Industries (OTC: GTBIF) must be thrilled that one of its approved dispensaries is just a 30-minute drive from New York City. The company had two locations approved, while the Paramus store will continue serving medical-only patients.

  • RISE Dispensaries, Paterson
  • RISE Dispensaries, Bloomfield

Columbia Care’s (OTC: CCHWF) outlook for revenue in 2022 included sales that it hoped would come from New Jersey. The company forecast $625-$675 million in sales for the year and specifically called out New Jersey as contributing to that estimate. Col-Care also had two locations approved.

  • Columbia Care, Vineland
  • The Cannabist, Deptford (Columbia Care)

Ascend Wellness (OTC: AAWH) was also thrilled to get at least one location in the first group to begin sales. The company tweeted, “We are thrilled to announce that we are among the first cannabis companies permitted to sell adult-use cannabis in the State of New Jersey. We look forward to opening our doors to 21+ customers. Stay tuned.” The company currently operates two of the state’s 23 medical dispensaries and expects to sell adult-use cannabis products at its Montclair retail location at 395 Bloomfield Ave. and open a third dispensary, located in Fort Lee, later this year.

  • Ascend New Jersey, Rochelle Park

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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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