Clever Leaves Archives - Green Market Report

StaffJuly 20, 2021
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5min7820

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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4min9780

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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4min15570

 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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16min13020

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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5min17640

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.”


Debra BorchardtJune 1, 2020
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4min50042

International cannabis company Clever Leaves will be listed on the NASDAQ (NASDAQ:NDAQ) as a result of its agreement with the Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA). According to a company statement, SAMA and Clever Leaves will combine and become a publicly-traded company on NASDAQ.

Kyle Detwiler, CEO of Clever Leaves said, “The SAMA team possesses significant experience assisting companies similar to Clever Leaves and will be highly additive as we work to advance our commercialization efforts, further develop and broaden our brand portfolio, and expand our operations and distribution channels. As a result of our low-cost, pharmaceutical-grade cannabis cultivation platform and effective distribution network, Clever Leaves is favorably positioned to experience aggressive growth in the rapidly expanding global medicinal cannabis industry. Strengthening our balance sheet and listing on NASDAQ would be important achievements for our company as we are eager to accelerate the commercialization of our high-quality products and to expand our distribution into markets around the world.”

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.

George J. Schultze, Chairman, and CEO of SAMA, said, “Clever Leaves has earned its industry-leading market position through its high-quality genetics capability and highly scalable cultivation, and extraction capacity. Moreover, the leveragability of its pre-existing distribution infrastructure, unique GMP certification, and disruptive low-cost model bring us great enthusiasm about its future prospects.”

Clever Leaves’ shareholders will own a majority of the equity in the combined public company. SAMA’s cash balances, currently in excess of $130 million, would be used primarily to fund the combined company’s near-term operating expenses, capital expenditures, working capital, and potential M&A opportunities.

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.


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