The valuations of smaller companies is nearly the same as for larger companies
The valuations of smaller companies is nearly the same as for larger companies
Canopy exits cultivation in Smith Falls.
The deal has been a couple years in the making now.
As part of its announced organizational overhaul, Canopy Growth said it will cease its farming operations in Springfield, New York, due to an abundance of hemp produced in the 2019 growing season. The company said it will continue using this supply to produce hemp-derived CBD products for the US market.
Just one year ago Canopy announced a key milestone in establishing its Hemp Industrial Park in the Southern Tier region of New York State. It has secured a 308,000 sq. ft. facility on a 48-acre property in Kirkwood, NY. That was back when Bruce Linton was the CEO.
The company said that design development would begin immediately with construction expected to start this summer. Canopy said in a statement that its vision for the property is to build the infrastructure necessary to support hemp-derived cannabinoid extraction and related manufacturing together with providing an opportunity for participation by other businesses in the hemp industry.
In a boost to the New York cannabis industry Canopy said it would begin hiring senior leadership in late 2019 and recruit the full workforce in mid-2020. Canopy Growth also noted that it had also begun securing farm capacity to supply enough hemp for its own future extraction and formulation activities within the park. The company intended to prioritize farms within New York State for the supply of hemp at this site.
New York State granted a hemp license to Canopy Growth in January of 2019, allowing Canopy to establish operations in the state and build a facility for hemp-derived cannabinoid extraction and processing for various applications. The new hemp facility will be capable of producing tons of hemp extract on an annual basis.
In November, Canopy was told it would receive a standard 15-year payment-in-lieu-of-taxes deal, qualifying for a 39% reduction in property taxes for the first five years of the agreement. When all is said and done, their tax break will equate to $1.7 million.
According to the Binghamton Press, starting in 2020 and until 2024, Canopy was expected to pay $192,000 in property tax payments versus a full tax bill of $312,000. From 2025 through 2029, the payments will be $252,000. Beginning in 2030 through 2034, the company will pay $282,000.
Go Farm Hemp filed a $1.9 million lawsuit last month against Canopy Growth with regards to the New York farm. Canopy paid the deposit for the agreement and two installments but failed to pay the third installment that was due August 15, 2019. Canopy was accused interfering with Go Farm’s performance by “threatening seizure of Go Farm’s crops and property without any right or authority” according to the lawsuit.
It’s time for your Daily Hit of cannabis financial news for October 2, 2019.
Vape products, once considered the rising stars of the legal cannabis marketplace have struggled under the weight of the vaping crisis. Massachusetts banned all vape products for four months in order to err on the side of caution while the issue is investigated. Around the middle of August, vape product sales began dropping according to data from Headset, however, it seems the group may be slowly recovering.
Sales in Nevada and Washington both began to pick back up, while California seems to have stabilized. Most consumers are learning that the issues with vapes stemmed from products purchased outside the regulated channels.
Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) has completed an all-cash transaction to purchase a majority stake in sports nutrition company BioSteel Sports Nutrition Inc. The amount of the acquisition was not disclosed. The deal gives Canopy a significant entry into the sports nutrition and hydration category and lays the groundwork for cannabidiol (CBD) products to be sold in the U.S.
Venture capital firm Canopy Rivers Inc. (TSX: RIV)(OTC: CNPOF) completed a $10 million investment ( in TerrAscend Canada Inc., a subsidiary of its portfolio company TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF). The investment includes the purchase of 13,243 units, with each unit consisting of: (i) one unsecured convertible debenture of TerrAscend Canada with a principal amount of CA $1,000, and (ii) 25.2 common share purchase warrants of TerrAscend exercisable until October 2, 2024.
TILT Holdings Inc. (CSE: TILT) (OTCQB: TLLTF) has negotiated an agreement with six of its remaining founders regarding the immediate forfeiture of all 60,217,088 stock options granted at the time of the merger, as well as the final separation of most of these founders from the Company. During the second quarter of fiscal 2019, the company reported stock-based compensation expense of greater than $47 million associated with these now forfeited stock options. Adjusting for the subsequent forfeiture, TILT’s Q2 2019 net loss of $48.9 million would have been almost entirely reduced, bringing the Company close to break-even. The successful forfeiture of these stock options follows the recent announcement of an adjusted EBITDA positive month of July
HeavenlyRx Ltd. Acquired CBD company PureKana. Under the agreement, HeavenlyRx will acquire a majority ownership stake from the Company’s founding members with the acquisition expected to close by the end of 2019. Standing alongside HeavenlyRx’s high ethos and quality standards, PureKana – located in Scottsdale, Arizona – is a rapidly growing CBD brand and company with a large consumer base that leans toward a young and active demographic.
Westleaf Inc. (TSX-V:WL) (OTCQB:WSLFF) signed amendment agreements to two of its existing credit facility commitment letters with ATB Financial resulting in an additional $5.7 million of capital available for use by the Company. Westleaf has increased its term loan on The Plant, its fully completed extraction, manufacturing and product formulation facility, by $2.7 million and has secured a $1.0 million revolving credit facility to assist with working capital provided that any draw downs in relation thereto can only be made after final receipt of a standard processing license for The Plant from Health Canada. In addition, the credit facility related to the construction of Westleaf’s cultivation facility in Battleford, Saskatchewan has been amended to reduce its restricted cash requirement by $2.0 million.
It’s time for your Daily Hit of cannabis financial news for January 23, 2019.
Eaze just released its 2018 State of Cannabis report giving insight into the buying habits of cannabis consumers. Eaze is a Calfornia-based cannabis delivery software company with buying history from 450,000 cannabis shoppers who have used Eaze for its delivery software service along with 4,000 survey respondents.
Some of the key findings included the breakout year for CBD (cannabidiol) products and the increase in the number of women who have become cannabis consumers. The report called CBD the “darling” of 2018 after learning that CBD consumers nearly doubled in 2018 from 2.6% to 4.8%.
Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) entered into a credit agreement with Canadian Imperial Bank of Commerce and the Bank of Montreal for a $65 million secured non-revolving term loan credit facility. The Canadian-based cannabis company said it plans to use the funds to repay the Company’s existing loan facility with Romspen Investment Corporation and for general corporate purposes pending the closing of the previously announced equity investment by Altria Group, Inc.
Their future dream is a hothouse scheme, and after months of teasing its Canopy in the UK, finally. The Canadian medicinal marijuana luminary on Monday announced the creation of Spectrum Biomedical UK, a dedicated British firm targeting the underserved and uneducated but highly lucrative UK market, alongside a new Polish entity as part of a massive European campaign.
Doyen Elements International, Inc., announced its rebranding and renaming itself to Covalent Collective, Inc. . In addition, the Company announced Bill Gregorak as Chief Executive Officer, effective immediately. Prior to being named CEO, Mr. Gregorak served as Chief Financial Officer of Covalent Collective since February 2018. Mr. Gregorak takes over as CEO from Geoffrey Thompson, a co-founder of Covalent Collective, who will continue as leader of merger and acquisitions.
In his role, Mr. Gregorak will direct all business units and strategy for Covalent Collective. Mr. Gregorak will also oversee the execution of the Company’s rebranding and acquisition strategy of plant-touching enterprises that grow, process and sell cannabis products.
Bella CBD-infused bath, body and skincare has released the first-ever silicone personal lubricant enhanced with the soothing and healing properties of CBD. Developed by cannabis industry thought leader Krista Whitley, Bella’s Olio d’Amore makes it easy to experience indulgent intimacy with premium CBD, encouraging optimal sexual wellness and intimate pleasure.
It’s time for your Daily Hit of cannabis financial news for July 11, 2018.
Aurora Cannabis Inc.
Aurora Cannabis Inc. (ACBFF) announced today a pair of agreements aimed at strengthening the company’s brand recognition and product offerings.
First, Aurora announced that it has signed a binding term sheet with CannaRoyalty Corp. (CNNRF) to purchase CannaRoyalty’s exclusive license to use and commercialize pre-roll technology developed by Wagner Dimas in Canada for a price of $7 million CAD.
Aurora also announced that it has entered into a partnership agreement with Evio Beauty Group, whereby Aurora will make a strategic investment in Evio. Aurora and Evio will work together to develop a line of co-branded cosmetic products containing hemp seed oil as well as CBD infused beauty products. Evio Beauty is a company with a wide portfolio of conscious lifestyle brands and its sister cosmetic brand, Evelyn Iona, has a diverse consumer base and a strong e-commerce platform. Both Aurora and Evio hope that this partnership will help increase both companies brand recognition and cross-selling opportunities.
Canopy Growth Corp.
Canopy Growth Corporation (CGC) is acquiring Hiku Brands Company Ltd. (HIKU.CN) and paying a premium for the shares. Canopy is paying C$1.91 per share, which is a 33% premium based on the average price over a 20-day period. Hiku shareholders will receive 0.046 each of a Canopy Growth share.
Consequently, WeedMD has terminated its plans to merge with Hiku and will receive a $10 million termination fee. The companies had announced an “Arrangement Agreement” back in April. That deal was more a merger than an acquisition.
Kush Bottles Inc.
Kush Bottles, Inc. (KSHB) acquired Zack Darling Creative Associates, LLC along with its wholly-owned subsidiary, The Hybrid Creative, LLC, a specialist design agency based in Santa Rosa, California. Kush Bottles acquired ZDCA for a total purchase price of $1.45 million in cash and 360,000 shares of Kush common stock.
Following the acquisition, ZDCA will operate as a wholly-owned subsidiary of Kush Bottles, with The Hybrid Creative continuing to operate as a wholly-owned subsidiary of ZDCA. The agency’s full portfolio of cannabis and non-cannabis projects will be operated through The Hybrid Creative subsidiary. Kush Bottles will also issue earn-out payments of up to $1.75 million, through a combination of cash and stock payments, based on Hybrid achieving certain milestones.
Canopy Growth Corporation (WEED) is staking a claim in the African medical cannabis market. On May 30, 2018, the company announced that it has acquired Daddy Cann Lesotho PTY Ltd., which trades under the name Highlands.
“We’re excited to join the Canopy Growth family and bring together our strong entrepreneurial experience and local knowledge in the region with Canopy Growth’s track record and quality standards in the global medical cannabis industry,” said Highlands founder Jody Aufrichtig. “Lesotho and Southern Africa have enormous potential and we look forward to building a responsible medical cannabis business across the region.”
Highlands is located in the Kingdom of Lesotho, which recently legalized medical cannabis in 2017. Geographically surrounded by South Africa, Lesotho is part of what is known as the “Dagga Belt,” which is a region known for its prolific cannabis production. Dagga is a term used in South Africa for cannabis. Under the agreement, Canopy will issue a total of 999,643 shares of the company to Highlands’ sole shareholder, at a price of approximately $28.76 per share. The sum value of the deal is estimated to be approximately $28.8 million.
Licensed for the production, manufacturing, import, and export of medical cannabis; Canopy hopes to use Highlands to gain a strategic foothold on the African continent. This strategy is in line with a recent analysis by BMO Capital Markets, which found that Canopy was strategically positioned itself in the global market by setting up operations in international”hub regions”, like Denmark or Lesotho, with the anticipation that larger markets would soon open up.
According to a United Nations report, approximately 25% of the world’s cannabis is produced in Africa, with roughly 42% of all of the cannabis grown in Africa coming from the South African region. Approximately 38.2 million Africans, or 7.7% of the adult population, use cannabis on a daily basis.
Although Zimbabwe is the only other African nation to legalize medical cannabis, the legalization has made some progress over the last several years. Most recently, South African’s Western Cape High Court ruled that banning personal cannabis use and cultivation is unconstitutional, effectively decriminalizing cannabis in the region and paving the way for wider legalization.
Canopy is not the only cannabis company with interest in Africa. Only a handful of days before Canopy made its announcement, Aphria (APH) broke the news that it would form a joint venture with the Lesotho-based company Verve Group of Companies, dubbed CannInvest Africa Ltd.
Today Canopy Growth Corporation (TWMJF) released its financial results for the third quarter ending December 31, 2017. Quarterly revenue increased 123% to $21.7 million over last year’s $9.8 million and net earnings were $11.0 million, or $0.01 per basic and diluted share, compared to last year’s $10.7 million.
Gross margins fell to 58% of sales ($12.5 million) compared to 64% of sales in third quarter of last year. The margins would have been higher, but the cash operating costs associated with subsidiaries not yet cultivating or selling cannabis (totaling $2.9 million) drove that number down. Excluding those costs, the gross margin would have been 71% of sales ($15.5) million.
“The Company’s record revenues in the quarter were driven by a significant increase in domestic sales across all product formats as well as sales in the German medical market, which is beginning to show impressive growth,” said Bruce Linton, Canopy Chairman & CEO, in a statement. “Success in future global medical markets and the recreational cannabis market in Canada will depend not only on capacity but on strong execution and securing supply agreements with the provinces today. I believe our success on both these fronts is evident as you look at our accomplishments this past quarter.”
The company has approximately $400 million in cash on hand to fund domestic and global expansion.
In terms of cost, the weighted average cost per gram to point of harvest fell by 18% to $0.59 per gram, making it the sixth consecutive quarter under $1 per gram. Likewise, the weighted average cost per gram before shipping and fulfillment also fell by 18% to just $1.03 per gram.
The company sold a record 2,330 kilograms and kilogram equivalents, representing an 87% increase over the previous year’s 1,245 kilograms and kilogram equivalents. The average selling price per gram also rose by 13% to $8.30 per gram, compared to the previous year’s price of $7.36 per gram. The increased selling price was due in part to the improvement of oil products and a higher selling price of medical cannabis in Germany by the company’s wholly-owned subsidiary Spektrum Cannabis GmbH. Cannabis oil sales, which includes oil-based soft gel capsules, made up 23% of Canopy’s product revenue, accounting for 262-kilogram equivalents of the total kilograms sold.
“With the sector’s largest inventory of diversified, high quality cannabis products, demonstrated distribution capabilities, robust IT infrastructure, a vast production footprint, investments in seven provinces across the country and a proven record of leadership and execution, we are now excelling into the anticipated recreational sector with unparalleled opportunity,” added Linton.
Sean Stiefel of Navy Capital, the largest US Global Cannabis, L/S equity fund said, “It was a very clean quarter. The profitability was a huge win. Quebec announced their supply agreements which is a very big catalyst for the sector. Canopy is also showing improvement in their costs and was also successful in their JV and International ops.” he went on to say, “All in a very solid quarter and we except the entire sector to be up today on these earnings.”
Canopy Growth Coporation (WEED), a diversified cannabis and hemp company based in Smith Falls, Ontario, today announced that it has entered into an agreement with a syndicate of underwriters led by GMP Securities L.P. (GMP) and BMO Capital Markets (BMLP) as joint bookrunners. The underwriters have agreed to purchase, on a bought deal basis, 5,060,000 common shares of the company, at a price of $34.60 per common share, for an estimated value of approximately $175,076,000.
The company has also agreed to grant the underwriters an over-allotment option to purchase up to an additional 759,000 common shares at the Offering Price. The option is exercisable in part or wholly at any time on the date of or prior to the 30 days following the closing of the offering. The offering is expected to close on Feb. 7, 2018.
This latest deal comes on the heels of a two year agreement between Canopy and the Canadian provincial government of Prince Edward Island, in which the company will provide the province with a minimum of one million grams of cannabis for at least the first year. Upon the third year, the deal may be renewed pending approval from both the company and the provincial government. The retail value of the deal has been estimated to be worth approximately $8 million – $12 million annually.
Also posting big numbers today is Cannabis Wheaton Income Corp. (CBW), the self-proclaimed world’s first cannabis streaming company, which announced the closing of a previously announced $100 million private placement.
The funds were raised through the issuance of 100,000 Convertible Debenture Units at a price of $1,000 per Convertible Debenture Unit. The net proceeds from the deal will go towards funding working capital, administrative costs, financing of the company’s streaming partners, and other general corporate expenses.
MMCAP International Inc. SPC and Wheaton Income have agreed to a binding term sheet in regards to the offering where MMCAP will agree to subscribe up to $48 million aggregate principal amount of convertible debenture units.
A more detailed description of the terms in the offering can be found here.
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