Clever Leaves Archives - Green Market Report

Debra BorchardtAugust 22, 2022
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10min2710

As markets mature in the U.S., some companies are turning their focus to Germany. Canadian companies have faced tremendous competition causing many business models to break down. Too many licenses and plunging prices have forced several companies to merge or restructure. In the U.S., the California market is in disarray over outrageous taxes and a resurgent illicit market, while Colorado learns that having a first market advantage doesn’t mean it’s lasting. 

New Jersey has undoubtedly given a boost to the lucky licensees that have been the first to sell adult-use cannabis. New York’s adult-use launch has been disappointing to say the least. That’s why some companies have zeroed in on Germany.

Market Start Date

Cantor Fitzgerald issued a report today looking at the German adult-use cannabis market and sizing it up. While the program isn’t even established yet, Analyst Pablo Zuanic believes sales could begin in early 2025. He wrote, “The actual start of sales may be more dependent on whether imports are allowed (a big if) or if only domestic production can supply the German rec market (Canada, the only G-7 rec market, does not allow imports). If imports are allowed (more likely from within the EU only, at first, at least), we think sales could begin as soon as early 2024E (assuming potential exporting countries enact rules that allow the export of rec cannabis).” 

Market Size

As the actual timing for the opening of the market remains a product of guesswork, the size of the market is equally hard to pin down. It’s hard to say how much cannabis the population will want to consume. Zuanic looked at the various U.S. states to try to gauge a number. If California clocks in at $130 per capita spending and Colorado comes in at $350, a conservative assumption would be $150 per capita for Germany. The analyst says that would imply a $3 billion market and if he bumps that up to $200 per capita, it could be a $17 billion market. A big caveat to these numbers is the currently existing medical marijuana in the country. That market, which started in 2017, has been slow to materialize, with only €300 million in sales. Besides Cantor, in 2018, Prohibition Partners had projected a €1Bn MMJ market by 2020 for Germany, and BDS Analytics predicted €800Mn by 2022. Both have been far off those targets leading Cantor to be more conservative.

German doctors have often only prescribed medical cannabis as a last resort. A separate option for cannabis consumers in the country has been the newly created wellness centers. These are typically associated with private prescribers, online pharmacies and out-of-pocket costs. It’s described as a ‘quasi-rec’ market giving medical marijuana access to more people willing to pay. However, it demonstrates the stigma that cannabis continues to face in the country as doctors are reluctant to jump on board without more studies to back up the prescriptions.

Market Players

The companies that have targeted the German market are a mix of well known public players and some private companies. The publicly traded companies are:

  • Aurora Cannabis (NASDAQ: ACB)
  • Canopy Growth (NASDAQ: CGC)
  • Tilray (NASDAQ: TLRY)
  • Clever Leaves (NASDAQ: CLVR)

The privately owned companies include:

  • CannaMedical Pharma 
  • Four20 Pharma
  • Demecan
  • Bedrocan
  • Little Green Pharma

Tilray – Tilray claims it is the market leader both in flower and full-spectrum extracts, and claims the best distribution reach. However, Cantor notes that several other sources question the notion that Tilray is the market leader in flower MMJ. Market data points to Tilray having a 15% market share, while the company suggests the actual number is closer to 20%. The report stated, “Tilray flower is sold to pharmacies at €8.59 per gram, above the market average estimated at €7. Tilray began domestic production last year (one of three licensees, together with Aurora and Demecan), and it also imports from its facilities in Portugal (where we were told by management it can produce up to 20 tons). Based on its current German presence, global scale, and proven expertise, we expect the company to be a relevant player in the future German rec market.”

Aurora Cannabis –  Zuanic wrote that Aurora management says its number two in medical flower with 17% volume share and that Bedrocan is number one (but the Bedrocan product is distributed across various wholesalers, and not always captured by the Insight Health under the Bedrocan brand).  The report said, “Aurora also holds one of the three licenses to produce med cannabis in Germany (combined, the three licenses amount to a 2.6-ton quota), and we were told by management that operations began in July 2022.” Cantor thinks Aurora could snag one of the adult-use licenses and become a key player.

Canopy Growth – Cantor says that Canopy Growth remains a top-five player in the German flower market, with consistent supply from its Canadian facilities, selling under its own brands(although it seems it will need to transfer its Spectrum brand to the new owners of C3). Zuanic wrote, “In our view, if Germany decides to allow only domestic production and imports from only within the EU, Canopy Growth will need to find local partners or build new capacity.”

Clever Leaves – The Cantor report said, “In our view, the company is more in an early-stage phase in Germany compared with its larger peers, but its five-pronged route to market in Germany gives it options depending on the framework that Germany ends up implementing for rec cannabis.” According to Cantor, Clever Leaves supplies two CBD-only extracts to Ethypharm (a small local pharma company); it supplies bulk cannabis extracts to FoliuMed and it ships high THC cannabis flower to wholesale/distributor Cansativa (in which it owns a 9% equity stake). Cantor also said Clever Leaves distributes its own medical flower brand Iqanna; and recently announced an agreement with importer/wholesaler Cantourage to sell a second high potency flower SKU under the Iqanna brand. 

In Closing

While it’s too soon to know who will be the winners or losers in the German market, Aurora and Tilray currently seem to be the best-positioned. Cantor also pointed out that Curaleaf recently acquired Four20 Pharma, one of the top five players. So, the Curaleaf competition can’t be measured just yet. Zuanic thinks as the U.S.legalization situation remains undetermined, some investors may want to shift their focus to Germany and put these names back on the radar.

 


Adam JacksonAugust 11, 2022

7min2010

Clever Leaves Holdings Inc. (NASDAQ: CLVR) slid in trading on Thursday as the missed revenue expectations — showing how softening sales and dried financing punches holes in the cannabis sector and pushes them toward opportunities abroad.

The multi-state cannabis operator reported its financial results for the first quarter ending June 30, 2022.

Clever Leaves delivered approximately $4.7 million in total revenue during the period, a gain of 27% versus the same period last year — missing the Yahoo Finance Average analyst estimate for revenues of $5.55 million.

The earnings were for a loss of three cents per share, below analysts’ loss estimates of $0.23 cents a share.

“Across our core markets, we welcomed several key developments that strengthened our overall footprint and positioning,” said CEO Andres Fajardo. “In April, the Colombian government issued Joint Resolution 539, the final regulatory piece needed to complete the country’s framework for dry flower exports. Our preparations for this expanded market opportunity are well underway, and we remain on track to begin dry flower exports in the fourth quarter of this year. We also enhanced our market pathways in Germany, where we became a fully licensed medical cannabis distributor and now have access to an expansive network of wholesalers and pharmacies across the country.

Clever Leaves reported revenues of $4.7 million for the second quarter of 2022 and is maintaining its guidance for 2022 revenue. Clever Leaves’ forecasted range for revenue is $20 million$25 million, in line with the previous quarter. Adjusted EBITDA guidance is maintained to be a loss of $20 million$23 million.

The increase was driven by “continued sales strength across the company’s non-cannabinoid and cannabinoid segments,” it said. Cannabinoid revenue increased 124% versus the same time last year, “primarily driven by Australia, Brazil, Germany, and Israel” — while non-cannabinoid revenue increased 9% compared to the same period last year.

The company also reported a second-quarter net loss of $1 million versus a net loss of $9 million in the same period last year, “driven primarily by a $6.9 million gain on investments following the company’s sale of a portion of its minority equity stake in Cansativa, as well as a $2.2 million decrease in stock-based compensation expense.”

Diluted loss per share in the fourth quarter was $0.03 versus diluted earnings per share of $0.90 cents in the same period last year.

Adjusted EBITDA was a loss of $6.3 million in the second quarter of 2022, versus a loss of $5.8 million in the same period last year, “primarily due to increased cost of sales, including increased inventory provision and additional sales and marketing expenses,” the company said.

“To further support our growth, we took significant steps to improve our balance sheet and align our expenses with our current revenue profile,” Fajardo added. “During the second quarter, we fully repaid our two largest debt obligations, which represents a near elimination of our total debt and gives us greater balance sheet flexibility for the coming quarters. In addition, we completed a global workforce reduction that is expected to yield approximately $2 million in cost savings this year and $4 million in annual cost savings thereafter. We believe these actions have meaningfully enhanced our capital efficiency and pathway to profitability.”

Clever Leaves said it had $19.5 million worth of cash and cash equivalents in the second quarter, versus $44.8 million in the previous quarter. The company expects approximately $2 million to $3 million of annual capital expenditures.

Recently, Cantor Fitzgerald analyst Pablo Zuanic — who asked about held up plans in Columbia due to a bad harvest during the earnings call — said in a new report that Clever Leaves could become one of the world’s top five cannabinoid exporters by the end of this year. The findings came a week ahead of the company’s second-quarter earnings release and half a year since CEO Andres Fajardo was tapped to lead the company out of a desperate cash burn and into new, more profitable markets overseas.

“Still, while we are positive on the company’s top-line growth outlook, profitability and cash burn are key investment risks,” the report said. “In fact, although the cost base has been rationalized, capex lowered, and debt mostly paid down, cash burn remains an issue.”

Cantor Fitzgerald assigned Clever Leaves an “Overweight” rating and a 12-month price target of $4.50. The stock was lately selling at barely over a dollar, but its 52-week high was $12.40. Zuanic wrote, “From a purely trading perspective, positive news flow about regulatory changes, especially in Colombia and Germany, could favorably impact sentiment,” as a reason the price could jump.

“As we look to the remainder of the year, we expect to drive our business forward on all fronts by further enhancing our operations and cost structure, as well as optimizing our positioning for new commercial opportunities within our target markets,” Fajardo added. “We remain committed to further executing on our refined growth strategy, with the goal of becoming a leader in the international cannabis industry and enhancing the value we create for our shareholders.”


Adam JacksonAugust 2, 2022
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4min1361

Clever Leaves (NASDAQ: CLVR) could become one of the world’s top five cannabinoid exporters by the end of this year, according to a new report by Cantor Fitzgerald analyst Pablo Zuanic. The findings come a week ahead of the company’s second-quarter earnings release and half a year since CEO Andres Fajardo was tapped to lead the company out of a desperate cash burn and into new, more profitable markets overseas.

Clever Leaves’ plan so far seems to be good on schedule. It has inked lucrative deals with players in overseas markets such as Portugal, Germany, Australia, Brazil, Colombia and Israel.

While the outlook is still a “show me” story, it said, the new distribution partnerships add value with the assumption that continued medical market growth in those overseas markets will work to Clever Leaves’ advantage long-term. The estimates do not account for recreational cannabis legalization in Germany or elsewhere.

“Still, while we are positive on the company’s top-line growth outlook, profitability and cash burn are key investment risks,” the report said. “In fact, although the cost base has been rationalized, capex lowered, and debt mostly paid down, cash burn remains an issue.”

Cantor Fitzgerald assigned Clever Leaves an “Overweight” rating and a 12-month price target of $4.50. The stock was lately selling at 94 cents, but its 52-week high was $12.40. Zuanic wrote, “From a purely trading perspective, positive news flow about regulatory changes, especially in Colombia and Germany, could favorably impact sentiment,” as a reason the price could jump.

“In relative terms, the stock offers better “pure-play” exposure to growth in overseas medical cannabis markets,” the report said, “and eventually to (recreational) legalization in those markets.”

Global Business

With Clever Leaves focused on markets outside North America, the key for the company is to capture downstream margins. In general, these markets enjoy better economics due to higher barriers to entry such as EU certification and high start-up costs, as well as fewer licensed growers. Cantor estimates that retail prices in Europe’s medical markets, especially Germany, are three times those seen in Canada. U.S. prices in Israel and Australia are also well above the North American average. As part of its rescoped strategy, the company is now focused on exports to Australia, Germany, Brazil, and Israel.

“Yes, the company is also targeting the U.S., but we see that as more long-term optionality for CLVR’s cannabinoids exports,” the report said.

This year, the company used the bulk of the $23 million equity raise executed in the first quarter — in which the share count increased 45% — to pay down all the convertible debt, as well as borrowings related to the Herbal Brands deal. Additional shareholder dilution remains a risk, “in our view, given ongoing cash burn,” it said, though capex needs are now much lower and inventory levels are expected to come down.

“The main issue is for the company to scale up the top-line (profitably) and minimize cash burn,” the report said. “The company has less than $27 million left in an equity facility, and this could be tapped depending on the timing of overseas market growth.”


Debra BorchardtFebruary 9, 2022
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6min1900

Clever Leaves Holdings Inc. (NASDAQ: CLVR) announced a big cash burn, rising net losses, and a new CEO. The global cannabis company released its preliminary unaudited financial results for the fourth quarter and full-year ended December 31, 2021, along with its 2022 outlook. In the fourth quarter, Clever Leaves said its revenue is expected to increase 25% to approximately $4.2 million compared to $3.3 million. However, the net loss is expected to range between approximately $17.1 million and $17.5 million compared to $0.9 million. The company also said it has burned through its cash levels of $79.5 million bringing it down to $37 million at the end of 2021

For the full year, revenue is expected to increase 27% to approximately $15.4 million compared to $12.1 million. The net loss is expected to range between approximately $38.8 million and $39.2 million compared to $25.9 million. Clever Leaves said expects to report its fourth-quarter and full-year results, and provide additional operational updates, in March 2022.

“Our preliminary results demonstrate continued progress on our strategic objectives, providing a solid foundation for Clever Leaves in 2022,” said Kyle Detwiler, CEO of Clever Leaves. “We generated strong revenue growth year-over-year and maintained our prudent approach to cost management, which allowed us to drive continued margin benefits for the full year. We have executed on the milestone targets provided in our revised 2021 outlook, and I am proud of our team’s relentless dedication to sustaining production efficiencies and advancing our distribution efforts across key international markets.”

2022 Outlook

Clever Leaves said it expects full-year 2022 revenue to range between $20 million and $25 million, with a gross margin of between 50% and 55%. The company said this revenue range reflects an estimated increase in cannabinoid revenue of between two times and five times 2021 cannabinoid revenue. Clever Leaves also said it expects adjusted EBITDA to range between $(23) million and $(20) million. The Company expects approximately $2 million to $3 million of annual capital expenditures, representing an estimated 70% reduction compared to 2021.

Detwiler continued: “As we progress through 2022, we are working toward several commercial and regulatory milestones, which, if achieved, we expect will result in increased cannabinoid sales. Several regulatory or customer approval processes that were hampered by the pandemic now appear to be progressing. Having completed both construction and licensing on our Portugal cultivation expansion ahead of schedule in 2021, we are nearing completion on our capex cycle, which we believe positions us to maintain our disciplined approach to capital deployments. On the commercial front, our 2022 revenue expectations include the benefit from the cannabinoid product approvals we have obtained in Brazil. In 2022, we plan to continue our focus on ramping our existing supply partnerships and deepening our foothold within several international cannabis markets we believe have high potential.

New CEO

In addition to that, Clever Leaves said in a separate statement that Andres Fajardo, currently a director and president of the Company, has been selected to succeed Kyle Detwiler as CEO, effective March 24, 2022. Detwiler will remain CEO until March 24, 2022, to ensure a smooth transition, and he will continue to serve as the company’s Chairman until such date.

“Today’s leadership changes are the culmination of a succession planning process that our board and Kyle have worked on together,” said Elisabeth DeMarse, who has served as an independent director of the board since December 2020. “We are pleased to have someone with Andres’ experience and knowledge of Clever Leaves succeed Kyle as CEO, and we expect he will benefit from Kyle’s continued support. On behalf of our board, we are grateful for Kyle’s many contributions to this company over the years, and we wish him well in his next chapter.”

Global Reach

Detweiler added, “To support our continued work on activating our commercial pipeline, we have identified six key strategic goals on which to focus our efforts in 2022. As of last month, we have already achieved progress on our first goal, having announced our entrance into the U.S. consumer CBD market with the launch of JoySol. In Germany, we continue to make progress towards commencing our full distribution of IQANNA following a successful soft launch of the product in the third quarter of 2021, and we are nearing several commercial and business development milestones with other B2B partnerships. We remain attentive to how regulatory standards evolve in the German market and across all of our core markets, particularly as we monitor product approvals in Brazil and the status of Colombia’s resolutions dictating the timing and regulations surrounding dried flower exports. In Brazil, after lengthy product registration work to comply with strict pharmaceutical product registration protocols, we have seen a few of our partners receive special marketing authorization for cannabis products, which is one of the last milestones to accomplish before a partner can move to commercial-scale orders.


StaffJanuary 26, 2022
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3min1010

Clever Leaves Holdings Inc. (NASDAQ: CLVR, CLVRW) is launching its consumer-oriented CBD line JoySol. The products are produced by Arizona-based Herbal Brands, Inc., an established consumer goods manufacturer, wholesaler and direct-to-consumer e-tailer and a wholly-owned subsidiary of Clever Leaves. Clever Leaves acquired Herbal Brands in 2019. Since the acquisition, Herbal Brands has expanded its access to more than 20,000 retail distribution points in the U.S. through sales of its well-established nutraceutical products.

“CBD is a rapidly growing segment in the self-care and wellness category, yet we believe there is a dearth of high-quality product offerings and brands for both early-adopters of CBD and consumers which have not yet adopted products containing CBD,” said Kyle Detwiler, CEO of Clever Leaves. “The launch of JoySol makes CBD easily accessible to the everyday individual via a direct-to-consumer approach that marks our entry into the U.S. cannabinoid consumer market.”

Clever Leaves’ consumer brands division is introducing JoySol with high-quality CBD, minor cannabinoids and proprietary terpene blends at a mass-market-accessible price point. JoySol launches with oil drop blends, gummies, and topicals that comprise a unique CBD Daily Care System, with easy-to-use products specific to each segment of the day – morning, mid-day and evening.

“We want everyday consumers, from school teachers to construction workers to stockbrokers, to get more out of life, so we have leveraged CBD and other cannabinoids along with exclusive terpene blends to help support the body and mind,” said Bonnie Brown, Herbal Brands VP of Marketing.

In November, Clever Leaves reported revenue in the third quarter of 2021 had increased 3% to $4.0 million compared to $3.9 million for the same period in 2020, driven by continued strong performance within the non-cannabinoid segment, which generated strong year-over-year growth as a result of Herbal Brands’ continued recovery from pandemic-related impacts. The increase was partially offset by a decrease in cannabinoid segment revenue compared to the year-ago period. The company has been focused on its Portugal and Columbia businesses. This venture will set the company up for the U.S. markets.

 


StaffJuly 20, 2021
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5min1880

Clever Leaves Holdings Inc. (Nasdaq: CLVR) closed on $25 million in financing from Catalina LP, an affiliate of SunStream Bancorp Inc., a joint venture initiative sponsored by Sundial Growers Inc. (Nasdaq: SNDL). Clever Leaves also repaid the outstanding principal amount of the secured convertible notes due March 30, 2022. Clever Leaves also recently joined the Russell Microcap Index at the end of June.

SunStream’s $25 Million Infusion of Capital

Clever Leaves reported that it issued a secured convertible note to SunStream with an interest rate of 5.0% per year and a three-year maturity. Interest on the Convertible Note is payable on a quarterly basis, either in cash or by increasing the principal amount on the Convertible Note, at the Company’s election. SunStream may convert the principal and accrued interest on the Convertible Note into Clever Leaves’ common shares, without par value, at a price of $13.50 per share. Under this conversion feature, up to $12.5 million in aggregate principal on the Convertible Note may be converted within one year of issuance, subject to certain additional limitations.

“We are always looking at ways to optimize our financing arrangements, and we are grateful to receive this support from SunStream, which is a testament to the strength of our industry relationships and value proposition. Further, this financing meaningfully strengthens our balance sheet and reflects our commitment to opportunistically pursue value creation opportunities for our shareholders,” said Kyle Detwiler, CEO of Clever Leaves. “This financing immediately adds value to our shareholders by reducing existing indebtedness, reducing pro forma cash interest expense, and improving our liquidity with which to finance our growth. The combination of the SunStream Convertible Note and the repayment of the 2022 Convertible Notes created approximately $2.8 million of value through the discounted repayment, as well as cash interest savings of approximately $0.6 million through the previous maturity of the 2022 Convertible Notes or approximately $1.0 million per year when comparing the pro forma annual run-rate cash interest costs. With this financing, we expect to have greater flexibility to pursue new strategic growth opportunities, including new partnerships and acquisitions. We remain dedicated to being disciplined stewards of capital, and we look forward to further developing our partnership with SunStream over time.”

Repayment of 2022 Convertible Notes

As part of the announcement, Clever Leaves said it fully repaid its 2022 Convertible Notes, and the 2022 Convertible Notes were discharged. The aggregate amount paid represented the sum of 90.0% of the aggregate $27.8 million outstanding principal amount owing under the 2022 Convertible Notes, accrued interest through July 19, 2021, and legal fees.

Mexico Momentum

Last month Clever leaves said it had entered into an active pharmaceutical ingredient supply agreement with CBD Life Holding SAPI de CV, an emerging leader in the Mexican cannabis industry which offers a line of CBD Wellness and consumer products and medical cannabis products that are under development. The partnership is Clever Leaves’ first commercial agreement in the Mexican market, and it comes shortly after regulations were fully approved in the country, providing a strategic growth opportunity in one of the world’s largest pharmaceutical markets. According to a recent report from Prohibition Partners for Latin America and the Caribbean (2020), the medical cannabis market in Mexico could be worth $60 million by 2024. So, it isn’t a huge market by comparison to the U.S. or Canada but still holds many opportunities.

“As a multinational cannabis operator with substantial operations in Latin America, it has always been one of our top goals to identify leaders in the region and build long-lasting commercial relationships,” said Detwiler. “CBD Life’s brand positioning and local exposure are attractive, but it’s their commitment to high-quality, pharmaceutical-grade medical cannabis products that make this an ideal partnership.”


StaffJune 17, 2021
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4min710

Clever Leaves Holdings Inc. (NASDAQ: CLVR) said it has entered into an active pharmaceutical ingredient supply agreement with CBD Life Holding SAPI de CV, an emerging leader in the Mexican cannabis industry which offers a line of CBD Wellness and consumer products and medical cannabis products which are under development. The partnership is Clever Leaves’ first commercial agreement in the Mexican market, and it comes shortly after regulations were fully approved in the country, providing a strategic growth opportunity in one of the world’s largest pharmaceutical markets. Clever Leaves also said recently that it is set to join the Russell Microcap Index, effective at market open on June 28, 2021, upon the conclusion of the Russell indexes annual reconstitution.

According to a recent report from Prohibition Partners for Latin America and the Caribbean (2020), the medical cannabis market in Mexico could be worth $60 million by 2024. So, it isn’t a huge market by comparison to the U.S. or Canada but still holds many opportunities.

“As a multinational cannabis operator with substantial operations in Latin America, it has always been one of our top goals to identify leaders in the region and build long-lasting commercial relationships,” said Kyle Detwiler, CEO of Clever Leaves. “CBD Life’s brand positioning and local exposure are attractive, but it’s their commitment to high-quality, pharmaceutical-grade medical cannabis products that makes this an ideal partnership.”

Under the agreement, Clever Leaves said it will act as the API supplier for the development and manufacture of CBD Life’s medical cannabis products. Beginning with CBD isolate, Clever Leaves aims to be the ongoing supplier of the required APIs for CBD Life’s product manufacturing purposes. CBD Life has significant distribution in Mexico, with its products available at more than 18,000 points of sale. The company has established itself as an early-mover when it comes to providing cannabis-based products to the Mexican market. It also has formed strategic alliances with some of Mexico’s largest media groups and is the first cannabis company to launch a nationwide advertising campaign for non-psychoactive cannabinoid-based consumer products.

“We feel very fortunate to have the opportunity to work with Clever Leaves on our mission to develop safe and accessible pharmaceutical-grade cannabis medications of the highest quality. Our partnership will further propel our domestic and international expansion efforts thanks to their unmatched expertise and certifications that meet the highest standards and regulatory compliance equivalencies in most countries,” said Janko Ruiz de Chavez, COO and co-founder of CBD Life.

CBD Life’s current product line is comprised of topicals (including the traditional Hispanic household brand “Mariguanol”), beverages, and food supplements infused with hemp-derived CBD.


StaffDecember 18, 2020
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4min1340

 Clever Leaves begins trading today on NASDAQ after completing its business combination with blank check company, Schultze Special Purpose Acquisition Corp (NASDAQ: SAMA) under the ticker CLVR. At $205 million, this is looking like the biggest cannabis SPAC deal to close this year.

The company has operations and facilities in Colombia, Portugal, the United States, Canada, and Germany. Clever Leaves currently cultivates over 1.9 million square feet of greenhouses. It exports medical cannabis products to over 14 countries on 5 continents. Clever Leaves’ Colombian operation is the only medical cannabis facility in the world to receive both INVIMA and EU GMP certifications for extracts – Clever Leaves is also the first company to legally export cannabis from Colombia. Clever Leaves said it has established significant infrastructure and positioned itself to achieve global reach between its Colombia operations, its Portuguese cultivation facilities, and its global distribution infrastructure in the EU, which is currently headquartered in Germany.

George J. Schultze, Chairman and CEO of SAMA before the transaction occurred said, “We are very pleased to have completed our merger with Clever Leaves, which delivers attractive value to our stockholders. We believe that Clever Leaves is now among the best-capitalized companies in the cannabis industry and is well-positioned for substantial growth and profitability based upon its disruptive, low-cost and vertically integrated operating model. We look forward to working with its outstanding and highly accomplished management team to create significant value over time.”

Clever Leaves will have more than $80 million in cash on its balance sheet at closing. The company said it has raised approximately $225 million of capital to date, including substantial investments from institutional investors with a demonstrated track record in the cannabis sector.

Kyle Detwiler, CEO of Clever Leaves, added, “Partnering with the SAMA team represents a great opportunity to take our industry-leading platform to the next level as we are now poised to benefit from a significantly enhanced balance sheet, Nasdaq listing, and SAMA’s experience assisting companies such as ours in prudently compounding profitable growth. We expect that our combined expertise and resources will further enable us to accelerate the commercialization of Clever Leaves’ high-quality products as well as expand the company’s operations and distribution in attractive markets around the world.”

Clever Leaves’ branded nutraceutical manufacturer, Herbal Brands, will provide additional distribution capabilities for non-cannabis related products and the company said it is well-positioned in the event of legalization in the United States. Clever Leaves employs a staff of approximately 500 globally.


StaffDecember 17, 2020
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16min1130

Most can agree that 2020 was a year we’d like to leave behind. Even for the ‘essential’ business of cannabis, it was a challenging year with store closures and social distancing in grow facilities. Here now are several leaders in the industry weighing in with their thoughts on 2021.

4Front Ventures  (CSE: FFNT) (OTCQX: FFNTF) is a national multi-state cannabis operator and retailer, with a market advantage in mass-produced, low-cost quality branded cannabis products. 4Front manufactures and distributes a portfolio of over 25 cannabis brands including Marmas, Crystal Clear, Funky Monkey, Pebbles, and the Pure Ratios wellness collection, distributed through retail outlets and their chain of strategically positioned Mission branded dispensaries.

Expert: Kris Krane, President

Thoughts: 

  • Cannabis is poised to be an even better market in 2021 for a variety of reasons.  New states like New Jersey and Arizona that legalized this November are poised to come online for adult use for the first time.  Newer markets like Illinois, Michigan, and Massachusetts are poised to expand and mature.  A Biden administration is likely to be friendlier towards this industry than the current administration. But most importantly, the larger companies in the space are now focused on operations and execution, resulting in better overall performance, revenue, and EBITDA.  I would expect that we will see more consolidation in 2021, as companies use some of their new profits to acquire businesses and market share.
  • 2021 will likely see a continued focus on operations and execution, separating out the major players from those that were always built on hype and smoke and mirrors.  We may see some name brands go under in 2021, but the cream will rise to the top and the likely eventual big winners in the market will start to emerge.

Clever Leaves 

A multi-national company with operations and investments in Canada, Colombia, Germany, Portugal, and the United States. The company is about to close a SPAC deal with Schulze Special Purpose Acquisition Corp. (NASDAQ: SAMA) to becoming publicly traded on NASDAQ this month.

Spokesperson: Kyle Detwiler, CEO

Thoughts: 

  • Expectations for the cannabis market in 2021: The market will increasingly perform well 
    •  As the pandemic lingers, we still see the medical cannabis market performing well. The resilience, professionalism, and creativity in times of setback, have been critical to the success of our team to navigate complex regulatory frameworks and to maintain our customer’s and investor’s support. While a great deal of cannabis companies are still strapped for cash, we were able to raise the necessary capital to withstand the market headwinds in these extremely challenging times and we believe this will help us achieve our ultimate goal of transforming the cannabis supply chain on an international scale.
    • With approximately $125 million raised to date, which includes institutional investors with a demonstrated track record in the cannabis sector, Clever Leaves has established significant competitive advantages and positioned itself to achieve global scale as we enter 2021 between its Colombian cultivation and extraction operations, its Portuguese cultivation facilities and its global distribution infrastructure in the EU, which is currently headquartered in Germany.
    • With a low-cost operating model, significant asset base and solid leadership, investors believe our company is well-positioned for substantial revenue and is expected to achieve positive free cash flow by the fourth quarter of 2021.
  • Defining theme for the cannabis market in 2021: M&A will play a huge role
    • M&A will be an ongoing theme as we enter the new year. As we are about to close our definitive agreement with Schultze Special Purpose Acquisition Corp. (SAMA) we will become a NASDAQ-listed public company and that will be a significant opportunity for strategic acquisitions. Clever Leaves’ global sales and distribution capabilities can be meaningfully expanded through strategic decision-making and thoughtful capital deployment, including through disciplined M&A.
    • Clever Leaves is expected to be one of a few cannabis companies listed on the NASDAQ thereby making this investment opportunity available to a substantially broader base of investors. Our business combination with SAMA will significantly strengthen our balance sheet and take us to the next level, enabling us to accelerate the commercialization of our high-quality products as well as expand our operations and distribution in attractive markets around the world.

NewLake Capital

A cannabis real-estate investment vehicle that has tenants across the supply chain in the U.S. including cultivation, manufacturing, and retail. The company owns 20 properties across 8 states that are operated by experienced, well-capitalized medical and adult-use operators like Columbia Care, Trulieve, Curaleaf, and PharmaCann.

Spokesperson: Anthony Coniglio, CEO

Thoughts: 

  • Expectations for the cannabis market in 2021:The Cannabis industry will continue maturing on all three fronts of financial performance, investor acceptance, and legalization.
    • We believe the Cannabis industry will continue maturing on all three fronts of financial performance, investor acceptance, and legalization.  Good 2020 financial performance will improve in 2021, more investors will support the industry and legislative action is only a matter of time.
    • The election sealed the fate for the cannabis industry declaring it a clear winner in the years to come. This success at the ballot box is a strong catalyst for the cannabis industry. Each state with ballot initiatives has moved forward to legalize cannabis for medicinal or adult-use, further solidifying the inevitability of federal legalization and positioning the industry for sustainable long-term growth in 2021.
  • Defining theme for the cannabis market in 2021: Approval of Adult-use sales in New Jersey will create a domino effect in the Northeast
    • We think approval of Adult-use sales in New Jersey will create a domino effect in the Northeast and result in over $1Billion of sales in NJ alone, during 2022.  We think approval by NJ voters will be a catalyst for coordination with New York, Connecticut and Pennsylvania creating an adult-use region with a population of nearly 45 million people.
    • Significant investments in real estate and related infrastructure – Similar to adult-use in Illinois, we will see increased demand for retail, cultivation and manufacturing properties in New Jersey and the surrounding states We could see over 5million square feet of real estate reallocated to the cannabis industry in the coming years.  NewLake is positioning to be a provider of choice for the real estate capital needs of the industry.
    • Success at the ballot box will be another strong catalyst for the cannabis industry –  Each state that legalizes cannabis for medicinal or adult-use, further solidifies the inevitability of federal legalization and positions the industry for sustainable long-term growth.  Over the next three years, we expect meaningful expansion of existing medical programs, new adult-use markets, and new states to legalize medical-use and adult-use cannabis sales.  By 2025, we expect legal sales in the US to exceed $35Billion.

The Valens Company 

A global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. Valens (OTC: VLNCF) is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada.

Spokesperson: Everett Knight, Executive Vice President, Corporate Development & Capital Markets

Thoughts: 

  • Cannabis 2.0 Products Will Dominate the Market in Canada with 3.0 Products Gaining Market Share: Similar to the US we will see 2.0 products take more market share and next generation products such as cannabis/CBD infused bath bombs, lip balms or CBD-infused honey will start to gain market share in 2021. We’ll also see an explosion of stores in Ontario and the beverage market in Quebec will gain massive steam compared to the rest of Canada because of the restrictions on other products.
  • The US Will See More Regulation: With many more legal markets in the States, the FDA will pass more regulations in 2021. The liability risks because of lack of regulations reminds regulators of the tobacco industry when it was unregulated in the past. Expect to see increased safety requirements and product recall processes instituted in the US market. US MSOs will have to transition to GMP and food safe regulations imposed on Canadian LPs.
  • International Market Expansion: A strong trend has emerged in the last couple of years across the world – medical legalization paves the way for adult-use – this will come through bigger and faster in 2021. Mexico and Israel are close to legalization. These markets will open up a landslide of opportunities for established companies in the US and Canada looking to capture global market share. Everyone has to remember the cannabis space is just getting started.

Fotmer Life Sciences is a global cannabis cultivator and extractor and one of the world’s largest Good Agricultural and Collection Practice (GACP) and Uruguayan GMP certified cannabis exporters. Fotmer is the first fully licensed company in Uruguay producing top medical-grade cannabis flower (also known as Flos), Pharmaceutical Ingredients (API), cannabis extracts and manufactured products for the international market.

Expert: Dr. Jordan Lewis

Thoughts: (Latin America)

  • 2021 will be the year companies pivot their focus to generating positive cash flow and exhibit a viable business model to investors. The market no longer rewards aggressive expansion but is now looking for material profitability. Companies who can articulate a near-term path to profitability will be able to witness an industry kick and have a higher probability of becoming highly profitable.
  • Watching the international markets develop at a rapid pace and to see cannabis normalized at an even greater pace than years prior.

o   Brazil appears have also become an attractive market as more companies are able to introduce their products and as local pharmaceutical companies develop and register more products.

o   Uruguay is gaining a new momentum as the government provides support to help develop and efficient industry, particularly in accelerating the export process. Uruguay’s latest milestones achieved by the industry have positioned the country as one of the largest exporters of dry flower in the world and a logistics hub.

o   Recently ranked as the most attractive country to invest, Uruguay is synonymous with trust, transparency and economic resilience and is positioned hand in hand with the most developed nations


Debra BorchardtJuly 28, 2020
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5min870

As announced in early June, Clever Leaves International is expected to be one of a few cannabis companies listed on the NASDAQ making this investment available to a substantially broader base of investors. The company has one of the largest cultivation and extraction operations in Latin America and is among the largest in the world, including Canada’s licensed producers and top extractors.

It is making its way onto the NASDAQ through the Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA). The deal is expected to close in the fourth quarter and will be known as Clever Leaves Holding Corp. Kyle Detwiler, Chief Executive Officer and Andrés Fajardo, President, will continue to lead the combined company.

Terms

The deal is valued at approximately $255 million, which includes an estimated $74 million of net cash ($111 million in cash, assuming no redemptions, and $37 million in debt) on the balance sheet at closing. Clever Leaves’ shareholders will be rolling over 96% of their equity ownership into Holdco, reflecting continuing majority ownership of the combined company in excess of 55% (assuming no redemptions). Clever Leaves will have an earn-out of up to 1.8 million shares reflecting an alignment of interests and limited dilution. The transaction is subject to a minimum cash condition of $60 million, after any redemptions, compared with approximately $132 million of cash held in SAMA’s trust.

George J. Schultze, Chairman and CEO of SAMA, said, “We are incredibly excited to partner with Clever Leaves and look forward to consummating this transaction. The Company is led by an outstanding and highly accomplished management team, and we believe that with its disruptive, low-cost and vertically integrated operating model, Clever Leaves is well-positioned for substantial growth and profitability. We view the transaction valuation as highly attractive to investors, and upon closing, we expect Clever Leaves to be among the best-capitalized companies in the cannabis industry. We believe that our strategic alignment, coupled with our own background in successfully building businesses, including through targeted M&A, has the potential to create significant value for shareholders over time.”

Clever Leaves

Clever Leaves has ownership in two medical cannabis distribution companies in Germany as well as a branded nutraceutical producer and distributor in the US and is currently distributing non-cannabis products.  The company’s investments are anticipated to drive sales growth in rapidly expanding cannabis markets within Europe, Australia, the Middle East, and South America. Clever Leaves also recently secured a regional supply agreement with Canopy LATAM Corporation, a wholly-owned and controlled subsidiary of Canopy Growth Corporation.

The company has successfully developed low-cost, pharmaceutical-grade cannabis cultivation and extraction platform, operating under Colombian Good Manufacturing Practices (GMP) for cannabis production. Clever Leaves is also in the process of becoming one of the few cannabis companies in the world, and the only cannabis company in Latin America, to be granted a European Union Good Manufacturing Practice certification for extracts, subject to the successful completion of the certification process. The

Clever Leaves currently cultivates in over 1.9 million square feet of greenhouses. Clever Leaves employs a staff of approximately 500 globally and has raised approximately $120 million of capital to date, including substantial debt and equity investments from leading institutional investors with a demonstrated track record in the cannabis sector.

Kyle Detwiler, CEO of Clever Leaves, added, “We are proud of what we have accomplished to date in achieving an industry-leading position through our high-quality EU GMP certified operations and scalable cultivation and extraction capacity. These attributes have made us a global leader in low-cost cultivation with pharmaceutical-grade production primed for export. Our business combination with SAMA will significantly strengthen our balance sheet and take us to the next level, enabling us to accelerate the commercialization of our high-quality products as well as expand our operations and distribution in attractive markets around the world.”


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