CSE Archives - Green Market Report

William SumnerWilliam SumnerJanuary 4, 2019
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4min1340

In the absence of sensible federal cannabis reform, a growing number of US-based companies are looking to do business in Canada, where adult-use cannabis is fully legal. Aside from the simple issue of legality, cannabis companies operating in Canada are also able to list themselves on publicly traded stock-exchanges, such as the Canadian Securities Exchange (CSE), whereas most US-based companies cannot.

For those cannabis companies hoping to do business north of the border, the question becomes: how does one take their company public in Canada and when is the right time to do it? A new report released by MGO-ELLO Alliance attempts to answer this question.

MGO-ELLO Alliance is a professional collaboration between MGO LLP, a company dedicated to CPA and financial advisory services, and ELLO LLC, which focuses on cannabis financial services. MGO-ELLO Alliance aims to help shepherd emerging companies through the increasingly complex cannabis industry.

“As the cannabis industry continues to experience massive growth, inevitable financial and operational challenges will develop and the MGO-ELLO alliance is uniquely positioned to provide the highest quality consulting and professional services needed,” said ELLO CEO, Evan Eneman, in a statement announcing the partnership.

In the report, MGO-ELLO Alliance weighs the pros and cons of going public. For example, one of the advantages of going public is that it is easier to raise capital and attract top talent. The tradeoff, however, is that publicly traded companies, especially those in the cannabis space, are under increased scrutiny and are subject to strict regulatory oversight.

The report also covers the differences between going public through an initial public offering (IPO) and a reverse takeover (RTO). Generally seen as the traditional way of going public, IPOs involve filing a preliminary prospectus form with securities regulators and allow companies to raise as much money as possible.

RTOs, which is where a company goes public by buying a publicly traded company, represents a growing trend among cannabis companies in the United States.  The reason why is that RTOs are quicker, cheaper, and subject to less oversight than traditional IPOs. The tradeoff, however, is that the purchasing company will have to issue a percentage of its shares to legacy shareholders of the purchased company. There also may be hidden liabilities that the purchasing company may have to deal with.

For US-based companies hoping to do business in Canada, the MGO-ELLO Alliance report provides a detailed walkthrough of how to go public through both an IPO and RTO, as well what the regulatory expectations are for publicly traded companies.

To view the full report, click the following link or visit the report section on Green Market Report.


William SumnerWilliam SumnerJanuary 2, 2019
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3min1410

Cannex Capital Holdings Inc. (CSE: CNNX) today announced its financial results for the second quarter of the 2019 fiscal year, which ended on October 31, 2018.

Revenue for the quarter rose to $3.05 million, up roughly 223% from $1.8 million during the same period in the previous year. The bulk of the revenue increase was attributed packaging sales and rental income.

Likewise, the company’s net income rose to $696,746; a significant increase when compared to the loss of $815,188 during the second fiscal quarter of 2018. Adjusted EBITDA decreased slightly, falling from $1.1 million to $1.03 million. At the end of the period, Cannex had approximately $10.04 million in cash and cash equivalents.

Following the end of the quarter, Cannex took several steps to strengthen its balance sheet; including signing a binding letter of agreement to merge with 4Front Holdings LLC. In an all-stock transaction. The merger is still pending due diligence regulatory approval, and there is no guarantee that merger will be completed as initially proposed.

If completed, the Cannex will own, operate or manage cultivation and production facilities in Washington, Illinois and Massachusetts and five retail operations in Illinois, Massachusetts, Maryland, and Pennsylvania.

The company also secured $32 million in funding from Gotham Green Partners, LLC, and will use the proceeds to retire existing debt and to support Cannaex’s multi-state operations.

“Cannex is pleased with another quarter of good topline results driven by continuing strong performance of our Washington State operations,” said Anthony Dutton, CEO of Cannex. “Washington is a critical component to our long-term strategy and forms the underpinnings of our operational template that we will leverage as Cannex expands into additional jurisdictions as a part of our recently announced business combination with 4Front Holdings.”

It has been a rough year for Cannex’s stock, despite the recent gains over the last quarter. Since March 2018, the company’s share price has been on a slow decline, bottoming out at around CAD$0.56 in late October. Since then, however, Cannex has been on the rise and is currently trading at or around CAD$0.96.


William SumnerWilliam SumnerDecember 6, 2018
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3min5830

As companies throughout the cannabis industry are seeking ways to create consistent and scalable cannabis products, Acreage Holdings Inc. (CSE: ACRG.U) is positioning itself to become the United States’ first national cannabis Consumer Packaged Goods (CPG) company. On December 6, 2018, the company announced that it has signed a definitive agreement to acquire Form Factory, a multi-state distributor and manufacturer of cannabis beverages and edible products, in an all-stock transaction valued at $160 million.

“Creating a wide range of products that meet the diversified tastes of consumers and owning the national manufacturing and distribution platform to ensure their consistent and predictable delivery on a national basis is a key to long-term success and value creation in the cannabis industry,” said Kevin Murphy, Founder, Chairman, and CEO of Acreage Holdings. “With this acquisition, we are now positioned to be both the first and only national cannabis CPG company and distribution platform in the U.S. cannabis industry.  The combination of the largest U.S. operational footprint, combined with the unique food and beverage manufacturing capabilities of Form Factory sets us on a direct path to becoming the Procter & Gamble of cannabis.”

Under the agreement, Acreage will issue 6.4 million Subordinate Voting Shares to Form Factory shareholders at a price of $25 per share. The company will acquire Form Factory’s grow/processor license and operations in the cities of Los Angeles, California; Oakland, California; and Portland, Oregon. Acreage will also acquire the management services contracts for Form Factory’s contract manufacturing business, as well as all of the company’s intellectual property.

With this acquisition, Acreage hopes to consistently manufacture and distribute branded cannabis products throughout the company’s 19 U.S. state footprint at a scalable level. In addition to cannabis products, Acreage plans on serving traditional, non-cannabis CPG companies. Although a specific date has not been set, the acquisition is expected to close within the first quarter of 2019.


William SumnerWilliam SumnerNovember 30, 2018
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4min3680

MPX Bioceutical Corporation

MPX Bioceutical Corporation (CSE: MPX) reported its financial results for the second quarter ended on September 30, 2018. MPX recorded revenue of CAD$14.7 million, up from CAD$4.4 million in the same quarter during the previous year. The increase in revenue was attributed to wholesale operations and the company’s management of four cannabis dispensaries in Arizona. Gross profits for the quarter rose by 30.1% to $4.4 million.

The company’s net loss for the quarter rose precipitously to CAD$19.2 million, up CAD$3.9 million in the same period during the previous year. The company attributes its losses to general operations, accretion expense of CAD$1.4 million and costs related to the change in fair value for the Hi-Med Facility and convertible loan for CAD$9.2 million.

“For the second quarter, we again experienced strong growth, with revenue increasing $10.3 million year over year, topping $14.7 million, driven by the strong performance of our Arizona operations and much-improved production from our facility in Nevada,” said W. Scott Boyes, Chairman, President, and CEO of MPX. “We continue to execute upon our aggressive expansion strategy, as demonstrated by the successful openings of the Health for Life dispensaries in Maryland managed by one of MPX’s subsidiaries.”

Plus Products Inc.

The California-based edibles manufacturer, Plus Products Inc. (CSE: PLUS) announced its financial results for the quarter ended on September 30, 2018. Revenue rose to $2.56 million, up 60% over the previous quarter. The company’s loss and comprehensive loss rose to $1.79 million, up from $1.21 million during the same period during the last year.

PLUS ended the quarter with a gross margin of $0.38 million (15%) and $11.1 million in cash on hand. Shortly after the end of the quarter, the company  went public and closed a CAD$20 million IPO

“We are pleased that as measured by retail sales in Q3, the PLUS brand is now the leading edibles brand in the largest and most competitive cannabis market in the world, and we look forward to extending the brand beyond California in 2019,” said Jake Heimark, CEO of PLUS.

Emerald Health Therapeutics Inc.

Emerald Health Therapeutics Inc. (TSXV: EMH) reported its financial results for the third quarter ending on September 30, 2018. Revenue for the company rose to $321,070, representing an increase of 51% when compared to the same period in the previous year. Likewise, Emerald Health’s net loss also increased; increasing from $1.9 million in Q3 of 2017 to $6.26 million.

Shortly before the end of the quarter, Emerald Health was chosen as an authorized cannabis supplier by the Newfoundland Labrador Liquor Corporation (NLC), and by the last week of November had completed its first adult-use cannabis shipments to Newfoundland; as well as British Columbia and Labrador.

“As we move forward at this pivotal point of commercial production, we expect our Pure Sunfarms joint venture, Quebec facility, and hemp sourcing agreements to result in significant scaling of production and sales from the fourth quarter onward,” commented Avtar Dhillon, MD, President of Emerald Health.

 


William SumnerWilliam SumnerNovember 29, 2018
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3min3890

Today, Acreage Holdings Inc. (CSE: ACRG.U) announced its unaudited financial results for the third quarter, which ended on September 30, 2018.

Acreage reported quarterly revenue of $5.5 million, representing a 160% increase when compared to the same period in the previous year. The company’s year-to-date revenue increased by 92% to $10.6 million. The company’s net loss increased from $0.7 million in the third quarter of 2017 to $4 million. The year-to-date net loss was $2.1 million.

Gross profits for the quarter, excluding fair value items, was $1.9 million; up 118% when compared to the same period in the previous year. Year-to-date gross profits were $3.8 million, representing an increase of 76% over the previous year.

During the last quarter, Acreage launched its flagship brand, “The Botanist;” opening a cannabis dispensary in Baltimore, Maryland and increasing the number of dispensaries owned by the company to 16. By January 2019, the company expects to have as many as 23 retail dispensaries opened. Acreage was also awarded the right to receive one of eight total dispensary licenses in the state of North Dakota.

“We are in the midst of a transformative moment for the U.S. cannabis industry and we have been laying the groundwork to fully leverage our unique strategic advantages – scale, operational depth, and financial strength,” commented Kevin Murphy, Founder, and CEO of Acreage. “Our November public listing and private placement equity raise of approximately $314 million gives us the ability to continue to expand our industry-leading footprint beyond the 18 states that we are in. These efforts have laid the foundation for us to roll out the nation’s first truly national brands in the industry. With our operational foundation now in place and the tailwinds of transformational pending legislation that we anticipate will open new cannabis markets in the U.S., we believe we are in a strong position for the future.”

Acreage on the Move

Over the last month, Acreage has made a number of property purchases and acquisitions to strengthen its portfolio. Most recently the company close the acquisition of Michigan-based Blue Tire Holdings LLC, entered into an agreement to acquire the intellectual property rights of one of the world’s largest and diverse libraries of cannabis genetics, and has agreed to purchase a third Connecticut cannabis dispensary. The latest purchase in Connecticut will give Acreage three of nine dispensary licenses in the state.

 


StaffStaffNovember 15, 2018
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4min1340

NEW YORK, Nov. 15, 2018 /AxisWire/ Kevin Murphy announced today that, in connection with the business combination (the “Business Combination”) completed on November 14, 2018 among certain parties, including Acreage Holdings, Inc. (the “Company”) and High Street Capital Partners, LLC (d/b/a Acreage Holdings) (“Acreage Holdings”), Mr. Murphy acquired ownership of 168,000 class C multiple voting shares (the “Multiple Voting Shares”) of the Company, representing 100% of the issued and outstanding Multiple Voting Shares.  Murphy Capital LLC and The Kevin Murphy 2018 Annuity Trust, entities under the control and direction of Mr. Murphy, acquired an aggregate of 113,102 class B proportionate voting shares (the “Proportionate Voting Shares”) of the Company, representing approximately 7.8% of the issued and outstanding Proportionate Voting Shares. Following the Business Combination, Mr. Murphy and the entities under the control and direction of Mr. Murphy continue to hold an aggregate of 15,957,908 units of Acreage Holdings (the “Convertible Units”), which are ultimately convertible into 15,957,908 class A subordinate voting shares (the “Subordinate Voting Shares”) of the Company. Upon completion of the Business Combination, Mr. Murphy also received 540,000 options (the “Options”), each of which entitles  him to purchase one Subordinate Voting Share.

Immediately prior to the completion of the Business Combination, Mr. Murphy did not own or exercise control or direction over any securities of the Company.  The Multiple Voting Shares, Proportionate Voting Shares, Convertible Units and the Options represent, on an as-converted to Subordinate Voting Share-basis (converting only the shares and securities that Mr. Murphy owns or exercises control and direction over), ownership of an aggregate of approximately 49.7% of outstanding Subordinate Voting Shares.

Mr. Murphy holds and controls his shares of the Company for investment purposes and only and Mr. Murphy may increase or decrease his beneficial ownership or control over the shares of the Company or the Convertible Units, which he may do, from time to time, depending on market or other conditions and to the extent deemed advisable in light of his general investment strategy.  The Multiple Voting Shares held by Mr. Murphy are designed to ensure that  Mr. Murphy has voting control at meetings of shareholders of the Company and the existing share structure is subject to the provisions of the coattail agreement between the Company, Mr. Murphy and the Company’s transfer agent as described in the Company’s listing statement dated November 14, 2018, which is posted and filed under the Company’s profile on www.sedar.com.

This news release is being disseminated as required by National Instrument 62-103 – The Early Warning System and Related Take-Over Bids and Insider Reporting Issues in connection with the anticipated filing of an early warning report (the “Early Warning Report“). A copy of the Early Warning Report will be available on SEDAR under the Company’s issuer profile at www.sedar.com and can be obtained by contacting the contact set out below.

For further information please contact:

Communications Contact:
Lewis Goldberg / Jon Goldberg
KCSA Strategic Communications
212-896-1282
Acreage@kcsa.com

Company Contact:
Howard Schacter
Head of Communications
917-579-0727
h.schacter@acreageholdings.com


William SumnerWilliam SumnerJuly 27, 2018
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3min15290

The company behind the brand Curaleaf is going public in Canada. On July 26, 2018, PalliaTech Inc. announced that it has entered into an agreement with Lead Ventures Inc. (LEAD) to combine their businesses, with PalliaTech shareholders gaining a controlling interest in Lead Ventures.

PalliaTech is a holding company specializing in the medical cannabis industry with operations in 10 U.S. states on both the East and West coast. Its subsidiaries are focused on cultivating, processing, and dispensing medical cannabis for the company’s brand, CuraLeaf.

Formerly known as Maccabi Ventures Inc., Lead Ventures is a junior mineral exploration company that acquires, searches for, and evaluates natural properties in Canada.

Although merging with a non-cannabis company is not the most common way of going public, other cannabis companies have successfully completed similar methods.

Earlier this year, MedMen went public in Canada through a reverse takeover of the Canadian public company OutdoorPartner Media. Most recently, Dixie Brands Inc. announced that it too would go public through a reverse takeover of Academy Explorations Limited.

The combined company will retain the name Pallia Tech Inc., and the company’s share will list on the Canadian Securities Exchange (CSE). Outstanding common shares of both companies will be consolidated on a basis that is yet to be determined. All of Lead Venture’s directors and officers will be replaced by nominees named by PalliaTech.

PalliaTech intends to complete a brokered private placement of subscription receipts to accredited investors through a single purpose vehicle. Existing shareholders of Lead Ventures before the completion of the agreement will receive post-consolidated shares of the newly combined company; totaling to CAD$2.16 million, at a price per share equal to the PalliaTech Financing price.

Completion of the agreement is still dependent on several factors, such as shareholder and regulatory approvals. Approval of the transaction by shareholders is expected to occur during an annual general and special shareholder meeting of Lead Ventures. Trading of Lead Ventures’ common shares will remain halted until all the applicable regulatory authorities have accepted all necessary filings.



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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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