Curaleaf Archives - Green Market Report

StaffSeptember 19, 2022
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12min710

The Daily Hit is a recap of cannabis business news for September 19, 2022.

ON THE SITE

Zeroed In On Germany, Curaleaf Acquires Majority Stake in Four20 Pharma

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) said that it acquired a 55% stake in Four20 Pharma, a top five German producer and distributor of medical cannabis in the European Union. The deal is worth €19.7 million or approximately $19.7 million, according to SEDAR filings. Read more here.

High Tide Borrows $19 Million For Expansion

High Tide wants to go from 140 stores to 150 – High Tide Inc. (Nasdaq: HITI) (TSXV: HITI) closed on a $19 million senior secured credit facility with connectFirst Credit Union Ltd., with an initial 5-year term, at connectFirst’s floor interest rate. The company said its plan was to use the proceeds to expand its store count. Read more here.

Tri-State Area Expects Thousands Of Cannabis Jobs

As legalization marches forward in the tri-state area, so do the hopes for job creation. A new report from Cannabiz Media outlined those aspirations and how much these new employees could cost. The report dives explicitly into New York, New Jersey, and Connecticut as the tri-state region in the Northeast. Read more here.

Icanic Brands To Buy Coachella Valley Boutique Dispensary

The acquisition will be paid in stock. – Icanic Brands Company, Inc. (CSE: ICAN) (OTCQB: ICNAF) said that it plans to acquire The Leaf, a luxury boutique dispensary located in Palm Desert, California. Under the accord, Icanic will acquire The Leaf for a price tag based on the dispensary’s trailing twelve months of revenue calculated on the date of closing. Read more here.

The Future Psychedelics Workforce Is Getting Schooled Today

A jump in research studies sparks increased educational programs – There is a growing need for more therapists, more clinicians, and more researchers in the psychedelics industry. Academic institutions around the world are beginning to add courses and training programs to their list of curricula available for any student who wants to specialize in some aspect of psychedelics, in an effort to quickly build a psychedelics workforce. Read more here.

Jane Technologies Honored For The Best E-Commerce Platform At Green Market Report Tech Awards

Jane’s unique platform offers dispensaries and cannabis brands a turnkey e-commerce solution with many marketing and analytics options. The Green Market Report Tech Awards were presented following the first-ever Green Market Report Tech Summit on Sept. 8 at The Pearl event space in San Francisco. This week, we’ll be providing a closer look at the honorees. Read more here.

IN OTHER NEWS

Denver City Council Considers Changes to Marijuana Rules in Effort to Bolster Delivery

Denver City Council will consider a proposal Monday to drastically cut license fees for marijuana delivery services and extend — forever — a requirement that delivery company owners come from socially disadvantaged backgrounds. The current “social equity” mandate is set to end in 2024, but the city aims to call the bluff of dispensaries waiting until then to establish their own delivery services rather than rely upon the existing businesses. Read more here.

Medical Marijuana Company Sues Minnesota Over THC Regulations

A Minnesota-based medical cannabis company is suing the state over its THC regulations, claiming discrimination. Last week, Vireo Health filed a civil lawsuit against the Minnesota Department of Health, the state and several county attorneys, saying Minnesota’s THC laws discriminate against Vireo. Read more here.

NY’s Oneida Indian Nation to Launch Cannabis Operation

The Oneida Indian Nation will start construction next month on a full-scale, 50,000-square-foot cannabis cultivation and production facility. Retail locations, which will be announced at a later date and located exclusively on Nation lands, are projected to open in late 2023. The entire cannabis operation, from seed to sale, will be operated by the Oneida Indian Nation. The cultivation and manufacturing facility will be located on Hill Road in Verona, New York. Read more here.

Red White & Bloom Brands Inc.

Red White & Bloom Brands Inc. (CSE: RWB and OTC: RWBYF) a multi-state cannabis operator and house of premium brands, announced the appointment of Colby De Zen as President and Director of the Company effective immediately and the appointment of Gabriel Bianchi to the Board of Directors upon completion of regulatory approvals. The company further announces that it has restructured the terms of certain outstanding debentures issued by the company to arm’s length lenders in the aggregate principal amounts of USD $70,040,000 and CDN $2,120,000 and issued a new convertible debenture in the principal amount of CDN $17,000,000. Read more here.

Northern Lights Acquisition Corp.

Northern Lights Acquisition Corp. (Nasdaq: NLIT), a special purpose acquisition company, announced that it has amended that certain unit purchase agreement dated February 11, 2022, by and among the company, 5AK, LLC, the company’s sponsor, SHF, LLC d/b/a Safe Harbor Financial, a Colorado limited liability company, SHF Holding Co., LLC, a Colorado limited liability company and the sole member of Safe Harbor, and partner Colorado Credit Union, a Colorado corporation and the sole member of the seller, to extend the date by which the transactions contemplated thereby had to be consummated from August 31, 2022 until September 28, 2022, and provide for the deferral of $30 million of the $70 million due to the seller at the closing of the business combination. Read more here.

Rubicon Organics Inc.

Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF), a licensed producer focused on cultivating and selling organic certified, premium cannabis, provided a corporate and operational update for the period ending August 31, 2022. Read more here.

BYND Cannasoft Enterprises Inc.

BYND Cannasoft Enterprises Inc. (NASDAQ: BCAN) (CSE: BYND) announced yesterday that it has signed a share purchase agreement to acquire 100% ownership of Zigi Carmel Initiatives & Investments Ltd., which holds the patent pending intellectual property for a therapeutic device that uses low concentrations of CBD oils, such as hemp seed oil and other natural oils, to treat certain women’s health issues. Read more here.

TREES CORPORATION

TREES CORPORATION (OTCQB: CANN) announced that is has signed definitive documents to acquire the Green Tree Longmont and Green Tree Berthoud dispensaries in the state of Colorado, over 34,000 square feet of grow operations and a state-of-the-art manufacturing facility. This acquisition will add to the company’s current footprint in Colorado and will bring its total number of Colorado dispensaries to 4 along with 3 operational stores in Oregon, for a total of 7 retail dispensaries. Read more here. Read more here.

Exclusive Brands

Exclusive Brands, a Michigan-based vertically integrated cannabis company composed of retail locations, a processing and manufacturing facility, and licensed grow operations, as well as home to cannabis brands, announced today that the company has added an indoor facility and greenhouses to their existing farm located in Arlington, Michigan. Read more here.

BellRock Brands Inc.

BellRock Brands Inc. (CSE: BRCK.U), a cannabis consumer packaged goods and intellectual property platform, announced that its subsidiary, Ironton Properties, LLC, has finalized the sale of its Denver real property to a third-party buyer for $2.5 million USD. Approximately $2 million of proceeds from the sale were used to fully repay a promissory note entered into in May of 2022. Read more here.

Psyence Group Inc.

Psyence Group Inc. (CSE: PSYG|OTCQB: PSYGF), a life science biotechnology company pioneering the use of natural psychedelics in mental health and well-being, announced that it has received approval for its Phase IIa clinical trial from the Medicines and Healthcare Products Regulatory Agency (MHRA), the UK equivalent regulatory body to Canada’s Health Canada and the US’s FDA. The clinical trial will assess the efficacy and safety of psilocybin-assisted psychotherapy versus psychotherapy alone for the treatment of adjustment disorder due to an incurable cancer diagnosis. Read more here.

Small Pharma Inc.

Small Pharma Inc. (TSXV: DMT) (OTCQB: DMTTF), a biotechnology company focused on short-acting psychedelic-assisted therapies for mental health conditions, today announced that it has completed enrollment in the Phase IIa clinical trial of its intravenous formulation of N, N-dimethyltryptamine (DMT) candidate, SPL026, with psychotherapy for the treatment of major depressive disorder. This formulation recently received patent protection in the United States under patent no. 11,406,619 for injectable formulations of DMT based compounds. Read more here.


Adam JacksonSeptember 19, 2022
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Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) said that it acquired a 55% stake in Four20 Pharma, a top five German producer and distributor of medical cannabis in the European Union.

The deal is worth €19.7 million or approximately $19.7 million, according to SEDAR filings.

“We are pleased to complete the transaction with Four20 Pharma and I am personally thrilled to welcome Torsten and Thomas to the Curaleaf family,” said Curaleaf executive chairman Boris Jordan. “Our early focus on Europe has given Curaleaf a formidable strategic asset and strong foundation in one of the industry’s critical global markets.

Four 20 Pharma is one of the largest operators in Germany, having captured more than 10% market share. The company employs 41 team members and is based in Paderborn, Germany.

The allure of Germany’s nascent industry has captured the interests of the largest cannabis corporations, especially as U.S. legalization stalls while adult-use consumption in Germany is slated to roll out in early 2024.

“Curaleaf is the only U.S. MSO uniquely positioned to capitalize on the opportunity,” Jordan said.

Curaleaf said that the deal provides the company a strategic pathway to acquire complete control of Four 20 Pharma by 2026.

“Four 20 Pharma is an ideal asset to accelerate our growth in Germany as the country readies for its conversion from medical cannabis to adult-use,” said Miles Worne, president of Curaleaf International — which already happens to be the largest vertically integrated cannabis company in Europe.

“Curaleaf International continues to build our platform in eight markets, and this deal further underscores our aspiration to be a major player in the European market and the global industry leader,” Worne said.

Though Germany’s adult-use program is still in its infancy, Cantor Fitzgerald analyst Pablo Zuanic wrote in a report last month that sales could begin in early 2025.

Zuanic posited that the actual commencement of sales may be more dependent on whether imports are allowed — “a big if,” he added — or if only domestic production will end up ultimately supplying the German recreational market. Canada, the only G-7 recreational 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 2024 (assuming potential exporting countries enact rules that allow the export of rec cannabis),” he wrote.

The currently existing medical marijuana market — which began in 2017 — has been slow to materialize, he added, with only €300 million in sales as of the report’s August publishing.

Curleaf estimated that the German market could be worth upwards of €1 billion by the end of the first year of legalization.


Adam JacksonAugust 8, 2022
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Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) posted positive results on Monday — driven by new retail store openings in key emerging states and the green light for adult use in New Jersey. The company reported its financial results for the second quarter ending June 30, 2022.

For the key metric of total revenue, Curaleaf beat expectations as it delivered approximately $338 million during the period — beating the Yahoo Finance Average analyst estimate for revenues of $334.15 million.

Revenue from retail sales rose 13% totaling $252 million — 75% of total revenue — an 8% uptick versus $312 million in the same quarter last year. The company said that growth in retail revenue was primarily due to the opening of 28 stores over the year — seven dispensaries since the last quarter alone — in emerging states such as Arizona (including the acquisition of Bloom Dispensaries), FloridaMaine, and Pennsylvania and the commencement of adult-use in New Jersey.

However, the company also saw wholesale revenue fall 6% to $84 million versus $89 million during the same time last year. The decline in wholesale revenue during the quarter was largely due to the company’s continued assessment of the wholesale marketplace in California and Colorado, it said.

Curaleaf also reported a second-quarter net loss of $28 million compared to a net loss of $5 million in the same period last year. The company said that the net result was primarily impacted by an “unfavorable net change in fair value of biological assets coupled with the increase in operating expenses, which were partially offset by higher revenues.”

Gross profit on cannabis sales was $175 million for the quarter, versus $155 million the year before. Gross profit margin reached 51.9%, versus 49.6% last year — largely resulting from the increase in vertically integrated products sold in its dispensaries and the mix of revenue from higher margin states, the company said.

The earnings were for a loss of four cents per share, which met analysts’ estimates.

Adjusted EBITDA rose to $86 million in the second quarter, versus earnings of $84 million in the same period last year. The year-over-year gain was “primarily driven by solid revenue growth combined with operating leverage,” the company said, adding that “The year-over-year decrease in Adjusted EBITDA margin reflects greater SG&A expenditures due to increased headcount in support of new store openings, higher levels of expenses related to research and development activities, as well as higher sales and marketing spend and an increase in professional fees.”

This quarter, Curaleaf had $187 million of cash and $587 million of outstanding debt net of unamortized debt discounts, which had a weighted average interest rate of 7.3% per annum.

During the first half of 2022, Curaleaf invested $60 million net in capital expenditures during the first half of the year — mostly for cultivation, processing, and retail site development activities. The company said it expects to invest approximately $125 million in capital expenditures in total this year.

“Our record-breaking second quarter got off to a great start with the launch of adult use in New Jersey and a historic 4/20,” said Boris Johnson, Curaleaf’s executive chairman. “We bounced back from earlier headwinds to grow revenue 8%, and AEBITDA 18% sequentially while continuing to execute on our growth strategy for Europe, a key differentiator for Curaleaf and a significant advantage over our competitors. I am also very pleased to report that thanks to our vertical penetration and operating efficiencies, Adjusted EBITDA margins expanded to 26%. The fundamentals of our business are strong, and our leadership team is moving with speed and discipline, continuing to set-up 2022 as another milestone year.”

New Faces

In newly-minted CEO Matt Darin’s bid to reorganize the company at the top, Curaleaf today said that it has tapped Ed Kremer and Camilo Lyon as new CFO and CIO, respectively. Mitch Hara was named new CSO and started last week.

Ed Kremer has served as a public CFO and held leadership positions at Oakley, Beats by Dre, and Oliver PeoplesNeil Davidson, Curaleaf’s Interim CFO, will work closely with Mr. Kremer during the transition period, the company said.

Lyon most worked as a managing director at BTIG covering the consumer and cannabis sectors.

“Ed, Camilo, and Mitch all bring robust industry experience; track records of business discipline, growth, and success; and smart strategic insights that will drive Curaleaf towards fulfilling our long-term goals,” Darin said at the time. “I’m thrilled to welcome them to the leadership team, and I’d like to thank Neil Davidson for his continued commitment and contributions to Curaleaf.”

Tyneeha Rivers — who joined as the company’s first Chief People Officer in June — has made an immediate impact on organizational dynamics and leadership culture, the release said.


Debra BorchardtJuly 28, 2022
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Get ready for some cannabis companies to report boosted earnings as revenues got juiced from New Jersey adult-use sales. Cantor Fitzgerald analyst Pablo Zuanic thinks that the addition of this market could drive growth in second-quarter sales for several companies in a report he issued on Thursday. While there hasn’t been any official data from New Jersey on the number of sales, which began April 21, Zuanic thinks it could be as high as $60 million in the second quarter. 

The first month was reported to be $24 million and since that time the store count has grown from 12 to 17. The SKUs at the stores have jumped from  283 to 1,322 as more products get added. Looking at the landscape the companies poised to benefit the most are TerrAscend (OTC: TRSSF) with three dispensaries in NJ selling recreational cannabis as does Ayr Wellness (OTC: AYRWF). Next with two stores under their belts are Verano (OTC: VRNOF), Acreage Holdings (OTC: ACRHF), Columbia Care (OTC: CCHWF), Curaleaf (CURLF), and  Green Thumb Industries (OTC: GTBIF). Ascend Wellness (OTC: AAWH) taps in at one store, but its Montclair dispensary was been approved to start rec sales, however, Montclair won’t allow recreational sales. 

Apothocarium stores are owned by TerrAscend

Brick & Mortar Wins

In order to make his sales estimates, the analyst calculated the number of days during the second quarter that these companies could open their stores for business. Then he looked at the hours the stores were open and the market share that the operators had. He reviewed the online menus to determine SKU counts for the stores and further drilled down to in-store brands.

“If we define market share based on opening hours (prorated for when stores began rec sales), in 2Q22 Green Thumb and Verano would have had 19% share, TerrAscend 18%, Acreage 15%, Curaleaf 11% (its second rec store opened 5/24), Ascend Wellness 8%, Columbia Care 6% (extended rec opening hours from early June), and AYR 5% (its stores opened for rec on 6/14),” wrote the analyst. “If we define it based on SKU count, Green Thumb would have had 24%, Verano 23%, Ascend 17%, TerrAscend 11%, Curaleaf 9%, Columbia Care 3%, and AYR 2%.”

However, the geography and cannabis market in the state splits into three zones – North, Central, and South.  He wrote in his report, “There are more stores in the northeastern part of NJ while the Curaleaf store in Bellmawr initially had minimal competition and benefited from incoming Philly traffic. We should also factor in location (next to a high-traffic road/ highway) and parking availability. Although this report is not a 2Q preview, we would estimate that Green Thumb and Verano had ~18% share in 2Q; Curaleaf, Acreage, and Ascend 15%; TerrAscend (parking is an issue) 10%; and Columbia Care and AYR the rest (9% combined).”

The analyst then got out his calculator and wrote, “On the base of 1Q22 reported sales (all else equal; again, we are not forecasting total 2Q sales here), this would mean +4.4% for Green Thumb (18% x $60Mn, on a 1Q22 sales base of $242.6Mn); Verano +5.3% ($10.8Mn/$202.2Mn); Acreage +15.8% ($9Mn/$56.9Mn); Curaleaf +2.9% ($9Mn/$313.4Mn); Ascend +10.6% ($9Mn/ $85.1Mn); TerrAscend +12.1% ($6Mn on $49.7Mn); AYR +2.4% ($2.7Mn/$111.2Mn), Columbia Care +2.2% ($2.7Mn/$123.1Mn).”

Brand Power

The analyst went a little further and found that the top five brands in the adult use market accounted for 80% of the total SKUs available. Verano was the winner here with 376 SKUs or 28% of the market share. It was followed by Curaleaf with 321 SKUs and a 24% share, then TerrAscend’s Kind Tree brand came in at 215 SKUs and 16% share. Green Thumb’s Rhythm brand had 6%, and Ascend Wellness’s Ozone brand had 5%.

Vapes had the most SKU’s with Verano leading the pack, while flower came in second  and Curaleaf led that category. Curaleaf led the day for pre-rolls, while Verano mopped up with the edible category. 

In Closing

Most cannabis companies have been complaining about how challenging the cannabis industry has become. Mature markets are flattening out in sales and costs are going up, while prices come down. Consumers are being hit with inflation pressures and there are recession worries on the horizon. The addition of a new market and one that is looking to be a strong one is great news for these companies. Welcome to the Garden State.


Andrew WardJuly 12, 2022
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New York is often considered a likely major player in the US cannabis market. 

While reasonable, the state’s immense unlicensed consumption habits have some wondering if it will face problems as California has. If so, what might happen to New York’s licensed operators, including social equity license holders, a priority component of the state’s Marijuana Regulation and Taxation Act

With New York not fully rolling out its regulations, sources across the sector feel it’s too early to predict how the state will contend with the unlicensed market. Most appear optimistic that the state will become a significant player but caution that several factors could alter the outcome. 

Illicit Market Value 

As New York waits for final regulations, the unlicensed market continues to perform, likely earning one to several billion in untaxed sales yearly. Juliana Whitney, CEO, and founder of Cann Strategy estimates illicit market sales to be between $1.5 and $2 billion annually. 

“New York has a strong legacy market, and it will remain that way, even with the existence of licensed dispensaries,” she predicts.

Andrew Livingston, director of economics and research at Vicente Sederberg LLP, estimated the illegal market’s value at around $1.8 billion. Livingston believes the licensed market would benefit by focusing on tourist consumers while many residents remain illicit market buyers. He also recommends that the state avoid overregulating and focus on market accessibility and bringing legacy buyers to the licensed market. 

“It is all about enticing consumers, many of which who are accustomed to bike messengers meeting them at their apartment or outside their building,” he said.

 

Some see the illicit market earning much more per year. There are some that estimate New York’s illegal sales totaled $5.1 billion in 2022. However, this figure can’t be verified. Curaleaf (OTC: CURLF) CEO Matt Darin said, “That’s a significant amount of money that could be taxed and go towards community reinvestment and public education.”

Cost, Access, and Supply All Critical

A strong legacy market and unfinished regulations are just two of the substantial remaining hurdles that cloud market outlooks. Early-stage access was critical for numerous sources, indicating that the market must avoid shortages during the launch period. In previous years, countries like Canada and Germany have faced product shortages. Domestically, Nevada, Washington state and Illinois are all significant markets to experience such an issue. 

Vicente Sederberg’s Livingston said New York would have to compete with illicit access points, including park tables and food trucks. “The city will need to find a way to make cannabis more appealing to access via regulated storefronts or delivery services than it currently is,” he said. 

Curaleaf’s Darin said getting to market is critical. He feels a sooner-than-later market launch would help compete with the illicit market, maximize job growth, generate revenue and seed social equity programs. He feels that the state should include craft and small farmers and existing medical operators like Curaleaf to combat supply concerns.

“Existing operators in the state have the infrastructure and resources to help launch adult-use quickly and ensure that there is ample supply of product to serve both the adult-use and medical use markets,” he said.

Jeremy Unruh, senior vice president of public and regulatory affairs for PharmaCann of New York, offered a similar opinion. He also feels that allowing existing medical players like, PharmaCann, would bring the market online sooner. “The question is whether the [CCB] will capture the lion’s share of that megamarket, or allow illicit operators to continue to dominate and proliferate in New York State,” he said.

Unruh claimed his company’s analysis found that using existing infrastructure could result in $1 billion in additional tax revenue and 10,000 more full-time jobs over the first five years. 

Even if the market launches soon, results may take time to reach their full potential. “Regardless of preparation, it usually takes new markets a bit of time to stabilize the supply,” said Cann Strategy’s Whitney. She also warned that the legal market would have initial training and pricing hurdles for customers and dispensaries. 

“Not many New York job candidates will have preexisting experience working in licensed cannabis business and therefore will all require adequate and accurate training,” she said. 

Whitney feels employees will need to work on providing confident customer service while working within a strict regulatory space, unlike most other retail sectors. 

She said that sticker shock will always impact legacy market buyers when first buying licensed products. However, Whitney expects “many will move away from the legacy market just because the new purchasing experience fits more into their usual lifestyle,” which includes a demand for convenience and lab-tested products. 


Debra BorchardtJuly 5, 2022
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Cantor Fitzgerald analyst Pablo Zuanic issued a report this morning in which he sees some value in the beaten-up cannabis group, although he also cautioned that numerous roadblocks remain. He was clear that the group may not have even found a bottom yet as prices continue to slide along with the broader market. Zuanic also noted that even the second quarter might not bring relief on valuations, but he is a selective buyer at these levels. Having said that he said investors may not see any meaningful upside for another two to three years and that it would probably only occur when some sort of federal reform occurs.

Current Valuation

Zuanic wrote, “The MSOS ETF fell 25% in the last month vs. a 7% drop for the S&P500, and over the last three months it is down 49% vs. -15% for the SPX Index (yoy -75% vs. -12%). Even on risk-on days, when the larger Canadian LPs move up, MSOs either drop or stay flat. The MSO stock performance masks encouraging medium and long-term sales trends, with more states legalizing since 4/1 (NM, NJ), or soon to start rec sales (RI, CT/NY), or soon to vote to legalize (MD, MO); also, states like IL could see growth accelerate as more stores open, as we have recently seen in MI (+22% seq sales trends based on Apri/May data).”

If investors were hoping for some relief in the second quarter, then Zuanic dashed those hopes. He said that the second quarter boost will most likely only apply to those companies in New Jersey. Adult-use sales begin in the state on April 21 and sales have reportedly been very good. Plus, investors have been increasingly focused on profit margins and cash flows, which dampens buying. The companies with good cash flow are also beset with high taxes and debt levels are high.

“In this context, where it is difficult to call the bottom (as technicals and poor liquidity exacerbate stock swings and concerns about the lack of reform at the federal level and about state level fundamentals), we would tread carefully and are buyers only selectively of a few MSOs. We think the current state of affairs will lead to further consolidation (Columbia Care was at 0.9x debt to sales as 3/31/22, and we think that contributed to the decision to sell at the bottom) and benefit those in a stronger position,” wrote Zuanic.  He says he is focused on quality and his top picks (in alphabetical order) remain: Cresco (CRLBF. OW) proforma (1.7x C23 EV/Sales), Curaleaf (CURLF, OW) (2.7x), Green Thumb (GTBIF, OW) (1.6x), and Trulieve (TCNNF, OW) (1.9x).

Sales Trends

The analyst took a temperature read on sales in the second quarter based on data from Headset. He cautioned that it wasn’t official hard data, but did gather that second-quarter sales overall had improved from the first quarter. Most companies had reported that first-quarter sales dropped from the fourth quarter, so this improvement is welcome. However, early indications seem to say that sales dropped versus 2021 for the same time period. He believes these sales figures are competing with last year’s stimulus checks that consumers got during the pandemic.

Cannabis prices seem to be falling as much as the stock prices. The analyst cited Cannabis Benchmarks and pointed out that wholesale prices nationwide (in the 18 states it tracks) averaged $1,057/lb for the week ending 7/1, down 16% from 4/1/22 and down 20% YTD (-35% you). “Regarding key MSO states that we track: AZ -9% seq and -45% YTD; CA -4% and -20%; CO -9% and -17%; CT -10% and -9%; IL +1% and -12%; MA -7% and -37%; MI +4% and -43%; NV -5% and -14%. We realize lower wholesale prices sometimes may be neutral for companies just focused on retail, but most of the MSOs that we track have cultivation and tend to be vertically integrated,” he wrote.

 

 


StaffJune 30, 2022
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The Daily Hit is a recap of the top cannabis business stories for June 30, 2022.

ON THE SITE

Tyson 2.0 Raises $9M with Plans to Expand Celebrity Property

Cannabis advocate and former boxer  Mike Tyson’s cannabis brand Tyson 2.0 announced the close of its oversubscribed $9 Million Series A round led by JW Asset Management. Additional investors in the round include K2, Ambria Capital, Tress Capital, and Patrick Carroll. The company said that the new funds will be used to acquire more celebrity intellectual property, scale marketing efforts, accelerate distribution, and further invest in the development of Tyson 2.0’s house of brands strategy. Read more here.

Akerna Shares Plunge on New Offering

Despite being in financial trouble, cannabis tech firm Akerna Corp. (Nasdaq: KERN) announced the pricing of an underwritten public offering of 29,382,861 units with common stock warrants. The units are being sold at a public offering price of $0.23 per unit and the pre-funded units are being sold at a public offering price of $0.2299 per pre-funded unit. The news sent shares tumbling almost 50% in early trading to lately sell at 14 cents per share. The offering should bring in roughly $6.7 million. Read more here.

Grown Rogue Reports Rising Revenue as Prices Fall

Grown Rogue International Inc.  (CSE: GRIN) (OTC: GRUSF) reported its fiscal second-quarter 2022 results for the three months ending April 30, 2022. Grown Rogue reported revenue rose 72% to $4.7 million versus $1.37 million for the same time period last year. Sales also rose sequentially from the first quarter’s revenue of $3.73 million. Read more here.

Curaleaf Pushes Back on Tip Jar

Cannabis multi-state operator Curaleaf Holdings Inc.  (OTC: CURLF) is pushing back against an employee lawsuit that sued the company for the contents of a tip jar. Former employee Morgan Heller filed a complaint in March accusing the company of not giving the employees $126,000 that had been collected in tip jars. Heller says the managers took the money instead. Read more here.

Field Trip’s Clinics Cost More Than the Revenue They Bring In

Field Trip Health Ltd. (NASDAQ: FTRP) reported fiscal fourth-quarter and full-year 2022 results for the period ending March 31, 2022, and provided a business update today. All results are reported in Canadian dollars. For the quarter, Field Trip earned patient services revenues of $1,724,102 from its twelve clinics in operation, an increase of $1,197,667 or 228%, over the fourth quarter ended March 31, 2021. Read more here.

Psychedelic Microdosing is Trendy, but Studies are Lacking

Microdosing psychedelics is quickly becoming a trendy new mental and physical wellness event that athletes, celebrities, and everyday businesspeople are doing it as a daily ritual that is sometimes even encouraged by their bosses. In fact, the very term “microdosing” is working into common usage as just another way of saying you tried something, or attended some event, or ingested some substance — but just not a lot of it. Read more here.

IN OTHER NEWS

Canopy Growth Corporation

Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) announced today that, further to its press release dated June 29, 2022, it has entered into an additional privately negotiated exchange agreement with a holder of the company’s outstanding 4.25% unsecured senior notes due 2023, to acquire approximately C$7.25 million (approximately USD$5.6 million) aggregate principal amount of the notes from the noteholders in exchange for common shares of the company and approximately C$140,000 (approximately USD$110,000) in cash for accrued and unpaid interest. Read more here.

MariMed, Inc.

MariMed, Inc. (OTCQX: MRMD), a multi-state cannabis operator, today announced that it has obtained a receipt for its final non-offering, long form prospectus dated June 29, 2022, from the Ontario Securities Commission. Concurrent with its prospectus filing, the Company also received conditional approval from the Canadian Securities Exchange to list the company’s common shares on the CSE under the symbol “MRMD”. Listing of the common shares is subject to the satisfaction of certain customary conditions, including the receipt by the CSE of all final documentation. Read more here.

Northern Lights Acquisition Corp., SHF Holding Co., LLC

Northern Lights Acquisition Corp. (Nasdaq: NLIT), a special purpose acquisition company, announced that it has amended that certain unit purchase agreement, dated February 11, 2022, by and among the company, 5AK, LLC, the company’s sponsor, SHF, LLC d/b/a Safe Harbor Financial, a Colorado limited liability company, SHF Holding Co., LLC, a Colorado limited liability company and the sole member of the target, and Partner Colorado Credit Union, a Colorado corporation and the sole member of the Seller, to extend the date by which the transactions contemplated thereby had to be consummated from June 30, 2022, until July 29, 2022, with the ability for the deadline to be extended through August 31, 2022. The extension of the outside date will provide the company with additional time to complete the business combination as it awaits regulatory approval. Read more here.

Ascend Wellness Holdings, Inc.

Ascend Wellness Holdings, Inc. (CSE: AAWH.U) (OTCQX: AAWH), a multi-state, vertically integrated cannabis operator, announced that it has closed on $28.5M of the remaining additional funding under the accordion feature of its existing term loan credit facility. As previously announced, the company drew initial funding of US$210M in August 2021 and subsequently closed on a US$36.5M expansion in May 2022. This additional raise brings the total raised under the senior credit facility to US$275M. Read more here.

Auxly Cannabis Group Inc.

Auxly Cannabis Group Inc. (TSX: XLY) (OTCQX: CBWTF) announced today the voting results from its annual general meeting of shareholders held on June 30, 2022. A total of 159,835,106 common shares of the company, representing 17.85% of the issued and outstanding common shares of the company, were voted in connection with the meeting by shareholders and proxy holders. All of the matters put forward before the company’s shareholders for consideration and approval, as set out in the company’s information circular dated May 20, 2022, were approved by the requisite majority of the votes cast at the meeting. Read more here.

Canntab Therapeutics Limited

Canntab Therapeutics Limited (CSE: PILL) (OTCQB: CTABF) (FRA: TBF1) a developer in cannabinoid and terpene blends in hard pill form for therapeutic applications, provided a corporate update to its shareholders and stakeholders. Further to the announcement made by Canntab on April 14, 2022, with respect to our exploration of a variety of alternative business strategies including potential M&A opportunities, as well as identifying and negotiating partnerships to assist Canntab in expanding its product offerings in the United States and other international jurisdictions. Read more here.

Pervasip Corp. 

Pervasip Corp. (OTC: PVSP), a developer of companies and technologies in high value emerging markets, and Zen Asset Management, its wholly owned subsidiary today announced that its partnership with Full Spectrum Advisors is yielding results ahead of expectations. Following announcements made in March, introducing its partnership with Full Spectrum Advisors, Pervasip reports early results that are exceeding projected yield improvements with 25% increased harvest results in the cultivation centers growing Artizen flower. Read more here.

MediPharm Labs Corp.

MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ), a pharmaceutical company specialized in precision-based cannabinoids, today announced the results of matters voted on at its annual meeting of holders of common shares held on Thursday, June 30, 2022. The voting results for each of the matters presented at the meeting are outlined below. Read more here.

Humble & Fume Inc.

Humble & Fume Inc. (CSE: HMBL) (OTCQX: HUMBF), a North American distributor for cannabis and cannabis accessories, announced the detailed voting results for the 2021 Annual General Meeting of Shareholders, held on June 29, 2022, which includes the election of Mark Hubler to the Board of Directors. Read more here.

 


StaffJune 30, 2022
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Cannabis multi-state operator Curaleaf Holdings Inc.  (OTC: CURLF) is pushing back against an employee lawsuit that sued the company for the contents of a tip jar. Former employee Morgan Heller filed a complaint in March accusing the company of not giving the employees $126,000 that had been collected in tip jars. Heller says the managers took the money instead.

Curaleaf wants the Illinois federal court to dismiss those claims saying it never agreed to pay those tips to workers in the first place. Curaleaf’s position is that tips were not part of the employment agreement and had told the employees as such. Heller even states in her complaint that Curaleaf had instructed employees not to take the tips, but the employees chose to ignore the directive and continued to put out a tip jar by the cash register. Heller said that the employees believed the tips would be collected at the end of the day and distributed evenly among all the hourly employees. However, Heller says the money was instead kept by the managers. Indeed, the confusion over how the tips that were collected should be disbursed seemed to be at the discretion of the managers. Some managers used the money to buy lunch for the staff or give out lunch money.

“The alleged facts indicate there was no meeting of the minds as to whether tips were a part of the agreed upon compensation or how tips were dispersed to employees,” Curaleaf said. the company went on to say, “Heller’s allegations acknowledge that Curaleaf’s corporate policy was to not accept tips and that subsequent deviations from this stance were done on an ad hoc basis in response to policy violations and not, as the IWPCA would require, according to an agreement.” Curaleaf has over 300 reviews on Glass Door with an average rating of three stars out of five. Less than half say they would recommend the company to a friend.

Tipping At Dispensaries

Tipping is fairly commonplace at dispensaries. Sometimes the tip jar is placed for a specific budtender, and other times it is intended for the whole staff. Restaurants often engage in similar tipping structures, where some waitstaff collect their own tips and others pool them to include kitchen help as well as front-of-the-house workers. Many cannabis consumers are aware that budtenders are often only paid a small percentage over minimum wage. The Pot Guide wrote, “For a basic transaction, a dollar is a good standard. For anything more complex $2-5, depending on the extent of the service and size of the purchase, and if you’re really making them run around for a large order, consider throwing a $5-10 in the tip jar.”

However, in some states with extraordinarily high taxation, a consumer may feel they have already paid a high price for the product and that the company should adequately pay their employees.

A Curaleaf spokesperson said, “It’s unfortunate that this disagreement has become a legal matter, but facts are facts. No managers (or anyone) at Curaleaf ever stole tips and Curaleaf strongly denies the allegations in the complaint. As with any lawsuit, allegations are made and fact-finding occurs throughout the course of the litigation. We stand by our decision to request this baseless lawsuit be dismissed.”


Debra BorchardtJune 7, 2022
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With just 12 dispensaries open in the state, New Jersey still managed to ring up $24 million in sales in the first month. That’s roughly $5 million a week. According to the New Jersey Cannabis Regulatory Commission, “On the first day of adult-use sales in New Jersey, 12 participating dispensaries sold cannabis and cannabis products to 12,438 recreational cannabis customers for a total gross sale of nearly $1.9 million.” BDSA expects New Jersey to be the third-largest contributor to overall US sales growth by 2026 and is forecast to generate annual revenue of $2.3 billion in total legal cannabis sales.

“We expected sales to be substantial and the data shows that the market is effectively serving both adult-use consumers and patients,” said Jeff Brown, executive director of the New Jersey Cannabis Regulatory Commission. “We continue to monitor inventory and access for patients and are prepared to take enforcement action against any ATC that does not meet the requirements for patient access and supply.” The CRC has approved 102 conditional licenses to date.

Columbia Care

This is sparking the existing operators to keep ramping up as licenses expand. Columbia Care Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF)  said it has started operations in its new, approximately 270,000-square-foot cultivation and production facility in New Jersey. Col-Care has also begun using post-harvest automation equipment and expanded its adult-use shopping hours at both of its Cannabist locations in Deptford and Vineland to the maximum number of hours allotted by the New Jersey Cannabis Regulatory Commission (CRC). The company said it received approval from the New Jersey CRC to do so on May 25, 2022, along with the approval to begin using post-harvest automation equipment. Col-Care said the introduction of this equipment will reduce the “harvest to shelf” time for products, making it easier to meet the rapidly-growing patient and customer demand.

“After ten years of navigating the ever-evolving cannabis industry in various markets, we have so many lessons learned and have been able to bring those to bear in how we approach New Jersey, knowing how it will serve as a model for those east coast states transitioning to adult use in the near term. We are proud of how we managed to scale alongside the demand in the last month and are thrilled to be able to serve more patients, customers, and wholesale partners with our newest cultivation facility and equipment,” said Nicholas Vita, CEO, of Columbia Care. “As always, we owe a debt of gratitude to the CRC as well as local officials and our communities for their support in our efforts to make New Jersey one of the strongest cannabis markets in the world and a beacon for the industry.”
In addition to the new 270,000-square-foot cultivation, manufacturing, and processing facility, Col-Care also operates a 50,000-square-foot facility, located in Vineland. The company has a third retail location in development in New Jersey, which is expected to open later in 2022.

Green Thumb Industries

Green Thumb Industries (OTC: GTBIF) CFO Anthony Georgiadis said on the company’s recent earnings conference call, “New Jersey adult sales kicked off on 4/21 and early results look yearly similar to Illinois circa, January 2020. We just completed a wholesale facility expansion in Paterson. We have a new facility that’s about to break ground. So, long-term, we’re confident in our prospects of being a big player within the wholesale side of the New Jersey market.” The company did acknowledge the lack of products on the adult-use side of the store versus the medical side, but that is due to the state regulators’ preference to remain focused on the medical patients. CEO Ben Kovlar said on the same call, “There’s a lot of demand for this product. If there wasn’t, there would not be people lined up around the corner at these stores in New Jersey. So that’s what gives us a lot of conviction. There ends up being a lot of upside.”

Curaleaf

Curaleaf Holdings, Inc. (OTCQX: CURLF) is another New Jersey company enjoying its expansion efforts. Curaleaf began new adult-use sales at its Edgewater Park on May 25. It’s the company’s second location to sell adult-use cannabis in the Garden State and the 13th adult-use store to be added in the state. “After a successful adult-use launch in April, we are thrilled to expand our adult-use footprint allowing us to serve even more New Jersey consumers,” said Matt Darin, CEO of Curaleaf. “I’d like to thank the Town of Edgewater Park for their partnership and for so graciously welcoming us into the community. Curaleaf is committed to ensuring patients and consumers receive quality products and service as they embark on their cannabis journey.”

Ayr Wellness

Last month, medical operator Ayr Wellness (OTC: AYRWF) got its green light to begin adult-use sales. “We are thrilled to be approved for adult-use sales in New Jersey and to have all three dispensaries cleared simultaneously to open for adult-use,” said Jonathan Sandelman, Founder, Chairman and CEO of Ayr. “To date, Central Jersey has the lowest number of dispensaries per capita, leaving its population under-served compared with the rest of the state. New Jersey is expected to become a highly influential state for the U.S. cannabis industry, and we are honored to help shape the market landscape from its early stages.”  The company is working on opening its first adult-use store.

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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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