Chalice Brands Archives - Green Market Report

StaffAugust 24, 2022
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7min2530

The Daily Hit is a recap of cannabis business news for August 24, 2022.

ON THE SITE

TerrAscend Acquires Michigan Chain For $28.5 Million

TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) completed its acquisition of Michigan dispensary chain Pinnacle Emporium from KISA Holdings, LLC, for $28.5 million. The purchase price will be a combination of cash and two promissory notes in an aggregate amount of $10 million and stock. Read more here.

Chalice Drops Truth Bomb

In a fairly depressing letter to shareholders, Oregon-based Chalice Brands (OTC: CHALF) dropped a truth bomb about the industry’s woes. The letter starts out nice enough. It talks about the progress made in the number of states that have legalized cannabis even if the Federal government has chosen to stay on the sidelines and keep it registered as a schedule 1 drug. Read more here.

4 Cannabis Companies That Pay Dividends

Instead of just spending money on cannabis, let it make you some money. There are a handful of cannabis stocks that actually pay dividends. So while you do spend some money upfront to buy the stocks, you can then watch the checks roll in every quarter as dividends get paid. Read more here.

LSD Compound Promotes Brain Growth, Study Finds

A new study from BetterLife Pharma (CSE: BETR, OTCQB: BETRF) showed that a compound drawn from LSD promotes brain growth. The findings provide new evidence of the chemical’s therapeutic ability to treat depression and other mental-health disorders. Read more here.

Why Athletes Are Turning to Psychedelics

The body of research on how psychedelics can affect athletes is expanding – and so is usage of the substances. Professional athletes often are willing to try anything for better opioid-free wellness and sports performance, and more of them are willing to admit it publicly. Read more here.

Hamptons Cannabis Expo 2022

Every year when summer is just about to end, New Yorkers can head out to Long Island for the Hamptons Cannabis Expo. This year as New York inches closer to full legalization, many were excited about the upcoming market, but some also expressed frustration about the amount of time it is taking. Read more here.

IN OTHER NEWS

MJ Holdings Inc.

MJ Holdings Inc., a cannabis holding company, today announced it has been awarded “penny stock exempt” status on www.otcmarkets.com in accordance with rules established by the U.S. Securities and Exchange Commission. This means shares of MJ Holdings Inc common stock are no longer subject to limitations associated with “penny stocks” (stocks selling for less than $5.) Read more here.

Hydrofarm Holdings Group, Inc., The Agricultural Gas Company

Hydrofarm Holdings Group, Inc. (Nasdaq: HYFM), a manufacturer and distributor of equipment and supplies for controlled environment agriculture, today announced that it has entered an exclusive distribution agreement with The Agricultural Gas Company, supplier of advanced CO2 enrichment solution for commercial cultivators. Read more here.

Pure Harvest Corporate Group, Inc.

Pure Harvest Corporate Group, Inc. (OTC: PHCG), a vertically integrated consumer products holding company focused on plant-based nutraceuticals, recreational cannabis, hemp-derived health and wellness products, and other emerging industries, today announces a positive corporate event has resulted in a significant reduction in corporate debt. Read more here.

The Hempshire Group, Inc.

The Hempshire Group, Inc. (TSXV: HMPG) is a California-based non-tobacco and non-nicotine smokable alternatives company that formulates and sells its own proprietary brand of cannabidiol hemp smokes. Hempshire recently commenced trading on the TSX Venture Exchange and today provided an overview of the company and its strategic initiatives to support growth in 2022 and 2023. Read more here.

AdvisorShares

AdvisorShares, a sponsor of actively managed exchange-traded funds (ETFs) and cannabis fund manager, today announced that the AdvisorShares MSOS 2x Daily ETF (Ticker: MSOX) will begin trading today. Read more here.

Rainbow Realty Group

Rainbow Realty Group, LLC and its affiliates announced closing a loan cross-collateralized by 9 properties in Sacramento, CA. At the properties there are 13 tenants, of which 12 are licensed cannabis operators. License-types include: 3 operating dispensaries, 2 dispensaries in development, 2 cultivators, 2 manufacturers, 2 delivery businesses, and a microbusiness. Read more here.

Needham Bank, Bostica, LLC

Needham Bank, a financial institution in Massachusetts that provides marijuana banking, announced it has closed a cannabis business loan to Bostica, LLC, a cannabis cultivator and manufacturer of cannabis products. Bostica will use the financing to complete the construction of their 60,000-square-foot cannabis cultivation and manufacturing facility in Lynn, Massachusetts. Read more here.


StaffJuly 5, 2022
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9min1710

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.


Debra BorchardtSeptember 16, 2021
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5min1240

Acreage Holdings, Inc. (OTC: ACRHF, ACRDF) is selling its four Oregon dispensaries to Chalice Brands Ltd. (CSE:CHAL) (OTCQB:CHALF). The divestiture is part of Acreage’s strategy to target only core states versus trying to be the largest MSO in the most states.  The deal is valued at $6.5 million. Acreage’s four Oregon retail dispensaries are branded as Cannabliss & Co. and the sale will end the company’s presence in the state. The company said in a statement that the Oregon stores were negatively affecting the company’s bottom line and utilizing management resources.

“This is a fantastic opportunity for Chalice to edge closer to our goal of achieving our targeted market share in the state of Oregon while entering the Eugene market, and immediately enables the deployment of our Chalice products to more stores. Adding the Cannabliss retail stores increases our footprint from twelve to sixteen stores, represents nearly a 130% increase in retail footprint for this year alone. The Cannabliss team has done a tremendous job in Portland, Eugene, and Springfield, Oregon in building historic businesses and a strong reputation for friendly customer service – exactly aligned with what Chalice looks for in a partner,” said Chalice CEO Jeff Yapp. Chalice believes it can turn around the Cannabliss stores, which have apparently lost market share.

Chalice retail footprint increases from twelve to sixteen stores in Oregon, making this nearly a 130% increase in the current fiscal year. Cannabliss is expected to carry Chalice Brands products immediately once the services agreements are completed providing the opportunity to increase total gross margins gradually from approximately 42% to at least 52% within a year. Vertical sales of Chalice branded products are expected to be approximately 25% of products sold within a year. With the Cannabliss acquisition, Chalice said it will strengthen its customer base in the Oregon market, while also significantly increasing vertical margin contribution through the distribution of its Bald Peak flower, Chalice, Private Stash, RXO, and Elysium Fields branded products into the Cannabliss stores.

“The sale of our Oregon operations represents another strategic step in our previously announced operating strategy,” stated Peter Caldini, Acreage Holdings CEO. “As we previously communicated, Acreage remains focused on our three key strategic objectives – driving profitability, strengthening our balance sheet, and accelerating our growth in our core markets.”

Oregon dispensaries include two in Portland, one in Eugene, and one in Springfield. Two of the store locations are in buildings that are on the national registry of historic places – Sorority House in Eugene and Firestation 23 in Portland. The Firestation 23 location was the first adult-use dispensary to open in the city of Portland and was Oregon’s first medical marijuana dispensary.

“This deal structure demonstrates our disciplined approach to capital allocation, as we avoid dilution while growing both our top line and profitability. The positive cash flow generated by this acquisition will partially fund the deferred payment, providing an immediate opportunity to enhance value for Chalice shareholders. With the addition of these four retail assets,  Chalice continues to cement our leadership position in Oregon as we execute on our stated market share objectives for 2021,” noted John Varghese, Executive Chairman of the Company

Terms

Under the terms of the Asset Purchase Agreement, upon regulatory approval Acreage will divest the assets of its four Cannabliss retail stores (inclusive of a working capital surplus of US $500,000) – located in Portland, Eugene, and Springfield, Oregon – for total consideration of US $6,500,000, consisting of a US $250,000 cash payment at the time of signing and a 10-month secured promissory note for US $6,250,000 bearing interest of 6% for the first 5 months and 10% for the remaining 5 months.


Debra BorchardtMay 25, 2021
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3min1250

Chalice Brands Ltd., formerly Golden Leaf Holdings Ltd. (CSE:CHAL) (OTCQB:GLDFF) reported its financial and operating results for the first quarter of 2021 with total revenue of $5.5 million versus $4.7 million for the same period in 2020. The 18% year-over-year increase was attributed to the overall improvements in the Oregon retail and wholesale businesses. Net losses increased from last year’s $2.4 million to $4.3 million in the first quarter. The company noted that had it included revenue from its Homegrown acquisition, the first quarter 2021 revenues would have been $8.2 million.

Jeff Yapp, Chief Executive Officer of Chalice Brands said, “Continued profitable operations and accretive acquisitions should set us up for a record breaking second half of 2021. We continue to look forward to favorable federal regulation changes while we grow Fifth & Root to showcase our brand portfolio nationally. Our team is energized and focused on growth as we remain disciplined in our allocation of capital.”

Gross profit was $2.5 million, or 45% of total revenue for Q1 2021, compared with $1.7 million, or 37% of total revenue, in Q1 2020. Operating expenses were $2.7 million for Q1 2021, compared with $3.3 million in Q1 2020, an improvement of $534,000, or 18%. Operating expenses of $2.7 million in Q1 2021 were 49% of total revenue, compared with $3.3 million in Q1 2020, or 70% of total revenue. The reduction in operating expenses was driven largely by decreases in share-based compensation and general and administrative expenses. The reduction in operating expenses was due primarily to decreased salaries, wages, and share-based compensation.

The company began trading under the new symbol CHAL on the CSE today but has not received its new symbol for the OTC Marketplace. “Management believes the acquisition of Homegrown as announced on May 19, 2021, represents a transformative event for Chalice, making this the right inflection point to embark on the Name Change and Consolidation. As noted in that release, we raised sufficient capital to fund this accretive acquisition. Combined with the fact that Homegrown is cash flow positive, the Company will be able to generate positive cash flow to fund operations,” stated John Varghese, Executive Chairman of Chalice Brands Ltd.

Last month the company announced its 80% acquisition of CBD skincare brand Fifth & Root with a national presence in over 400 retail outlets across the United States.

Balance Sheet Moves

Chalice reiterated that it had strengthened its balance sheet by restructuring its convertible debentures due November 16, 2021, to extend the term one year to November 16, 2022, and to reprice the conversion features from C$0.30 to US$0.06. The company also financed its focus on footprint growth in the Oregon market by completing two private placement transactions for total gross proceeds of $10.5 million.

 


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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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