Etain Archives - Green Market Report

Debra BorchardtMarch 30, 2022

Etain, the New York cannabis market’s only women-owned and -operated business and one of the state’s original five medical cannabis license holders has been sold to RIV Capital, Inc. (CSE: RIV) (OTC: CNPOF) for $247 million. RIV Capital will acquire ownership and control of the Etain companies once it gets regulatory approvals, including from the New York Cannabis Control Board and the New York State Office of Cannabis Management.

At one point in New York, there was a restriction that a minority-owned cannabis company could only sell to another minority-owned company so it remains to be seen if this will be enforced. RIV Capital is funded by Scotts Miracle-Gro (NYSE: SMG), so essentially Scotts is buying a cannabis company. RIV is paying $212 million in cash and $35 million in stock.

Etain COO, Hillary Peckham said, “This agreement marks the most significant transaction for a women-owned business in cannabis history. While the Peckham family will be stepping back from control of the company, we will be actively partnered with RIV Capital on preserving the ethos of the Etain brand and utilizing our combined efforts to continually find and make new spaces for women in cannabis. RIV Capital clearly recognized the potential for women-led brands to flourish in the cannabis industry, and we are proud that our work at Etain has led us to this point in time.”

Etain is one of only 10 approved vertically integrated operators in the state of New York. It was also the only New York operator with a female CEO and that has ended too. Mark Sims was named President and CEO of RIV Capital, to lead the company’s formal entry into the U.S. market and expansion into licensed adult-use operations in New York. Mr. Sims is a current director of RIV Capital, a role he will retain, and most recently was Senior Vice President of Strategy and M&A for The Scotts Miracle-Gro Company (NYSE: SMG), where he also previously served as its CIO and head of the business transformation. He replaces Narbé Alexandrian, who departs RIV Capital to pursue other opportunities.

“The pending acquisition of the Etain business is the first step in the execution of the RIV Capital strategy, shifting from an investor in the cannabis value chain to a full-fledged operator of licensed cannabis cultivation and dispensary facilities in the U.S.,” Mr. Sims said. “By capitalizing on growth opportunities in New York’s emerging market and building upon Etain’s foundation in the medical space, we intend to accelerate our strategy and continue to deliver value for shareholders.”

Etain was founded by members of the Peckham family in Chestertown, N.Y., where the business is undergoing a significant expansion in growing and manufacturing space. Etain has four operating dispensaries, including its Manhattan flagship store and locations in Kingston, Syracuse, and Westchester. The company also had a robust wholesale business in the state.

“I am excited for the future of RIV Capital and our mission of providing the highest-quality products for consumers. Our plan is to grow the Etain brand while creating a platform to bring successful, authentic West Coast brands to New York,” Mr. Sims continued. “We are thrilled to make New York the foundational cornerstone of our platform, and believe that its outsized cultural influence, limited license program, and pending implementation of adult-use sales make it a uniquely attractive state.”

RIV Capital said it plans to invest additional capital and resources into four new dispensaries, and to support the construction of a new state-of-the-art flagship indoor cultivation facility, tailored to specifically address the premium New York market.

“We’re fully supportive of RIV Capital’s strategy and plans to grow Etain,” said Hawthorne Collective President Chris Hagedorn. “This is a significant step forward for both. Just as importantly, it will establish an important foundation upon which The Hawthorne Collective and, therefore, ScottsMiracle-Gro, can participate in the larger marketplace as the legal and regulatory environment evolves.”

Debra BorchardtJanuary 26, 2022

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The New York medical marijuana program is currently offline due to a software upgrade that failed. Apparently, there was a planned upgrade to the system on Monday evening. When dispensaries opened on Tuesday, they found that something invalidated the patient cards. Patients also said that when went into the portal they couldn’t see their cards. Without that information, many dispensaries felt uncomfortable making transactions. As of 6 pm on Tuesday, there was no fix, and Green Market Report is also hearing that the system remains offline today.

Freeman Klopott, Director of Communications at the New York State Office of Cannabis Management said, “To be clear: dispensaries are remaining open, patients access to their medication has been preserved, and any disruptions with the system are being resolved.”

Tracy McCourt, Chief Revenue Officer at MedMen (OTC: MMNFF) said, “We were not able to process any transactions yesterday as the entire system was updated. We stayed open to explain the situation to our patients.”

Some dispensaries are making manual transactions, while others are closed. OCM informed them last night that they might revert back to the previous software. However, one source says that they don’t see how that is possible since they’ve already updated the new software.

The Curaleaf (OTC: CURLF) website has this message posted on its website:

UNFORTUNATELY, ALL OF OUR LOCATIONS ARE TEMPORARILY CLOSED FOR BUSINESS AS THE STATE SYSTEM IS COMPLETELY DOWN – WE WILL CONTINUE TO KEEP YOU UPDATED AS WE WORK TOWARD A SOLUTION

PLEASE LET US KNOW IF YOU WOULD LIKE TO USE ANY CURACREDITS OR SPECIAL DISCOUNTS IN THE “SPECIAL INSTRUCTIONS” FIELD WHEN YOU CHECK OUT

A call placed to a Columbia-Care dispensary said it was operating but wouldn’t confirm what system it was using. A call placed to the Etain dispensaries went unanswered.

The OCM had a meeting Tuesday but nothing was apparently said regarding the outage and whether it would be fixed anytime soon.

Video StaffDecember 21, 2021

One of the original New York cannabis licensees, Etain has a new look and a new store in New York City. The flagship store on 58th street feels more like a wellness spa than a cannabis dispensary. A green wall and fountains replace a canned soundtrack. The store features many female-owned brands along with gifts and books. Medical marijuana patients have a beautiful place to shop as do customers who only want CBD products.

Debra BorchardtDecember 9, 2021

The New Jersey Cannabis Regulatory Commission has finally approved 14 of the 2019 medicinal cannabis business applications that had been previously held up due to a court-ordered stay of the review process. The commission said that ten applications for cultivation permits and four applications for vertically integrated permits were approved and can begin preparations to serve New Jersey’s medicinal cannabis patients. The group also said that because of increasing patient need, five more cultivation permits were awarded than had been planned in 2019. On December 15, the state will begin to accept applications for adult-use cannabis business licenses.

“The current alternative treatment centers have not kept pace with patient needs,” said CRC Chairwoman Dianna Houenou. “We constantly hear from patients that prices are too high and that there are too few dispensaries with too few product options. The situation has not changed with the legalization of recreational cannabis. Our priority is to our patients and increasing the planned number of medicinal cannabis operators in the market will greatly benefit them.” Twelve alternative treatment centers and satellite locations across New Jersey currently serve 118,882 medicinal cannabis patients.

Of the ten cultivator permits approved three are in North Jersey, five are in Central Jersey, and two are in South Jersey. They could potentially add 235,000 sq. ft. of canopy to the market. The four vertically integrated awards (for businesses doing cultivation, manufacturing, and retail) could add another 120,000 sq. ft. of cannabis canopy and an additional four retail locations.

Applicants approved for cultivation:

Bloom Medicinals of PA
CYOUR NJ
Garden State Releaf
GCSS
Green Medicine
Hillview Med
The NAR Group
NJ Nectar Ventures
Noble Valley
ZY Labs

Applicants approved for vertically integrated operations:

Altus
Etain
Greenhouse Wellness
Holistic

“We know how anticipated these final actions were and we are happy they are now completed,” said CRC executive director Jeff Brown. “The awardees can now continue with the process to establish their operations. This can only be a good thing for cannabis patients and New Jersey’s fledging cannabis industry.”

“Over 117,000 patients are currently enrolled in New Jersey’s medical marijuana program, but the state only has 23 dispensaries open to provide this necessary medical aid to that population,” said Amy Peckam, CEO of Etain. “Approving additional cannabis growing, processing and dispensary licenses in the state will immensely help the program, providing patients with more variety and reducing their travel time to obtain their medicine. We cannot wait to bring our high-quality products and formulations to the patients and customers of New Jersey.”

Etain was one of the original five licensees in New York in 2015 and now has dispensaries in Yonkers, Kingston, Syracuse and a flagship in Midtown East in New York City. This approval will allow the company to open its first location outside of New York and expand the company’s presence in the tri-state area.

Debra BorchardtMarch 25, 2019

The only female member of NYMCIA President Hillary Peckam Resigns as President of the Cannabis Organization.

Full legalization in New York State seems to have hit a road bump. What looked like a done deal when Governor Cuomo said he wanted to see some legislation this year, now looks as if it could be stalled. Supposedly a disagreement over diversity amongst the licensees has caused some politicians in Albany to push back. New York State Assembly member Crystal Peoples-Stokes has stated that her position is that adult-use marijuana will not be implemented in New York State if it is not inclusive of equity.

The New York Medical Cannabis Industry Association (NYMCIA) seems to agree in principle, but the actions taken by the state and by the NYMCIA spell a different story altogether. Hillary Peckham, the only women-led licensed cannabis operator in the state recently resigned as President of the organization. Her company Etain Health is on the endangered list of cannabis companies in the state and it seems the state has made no serious moves to make sure that the only woman-owned company survives. It makes public statements that it wants to make sure there is diversity, but the actions the state actually makes are just the opposite. Peoples-Stokes and New York State Senator Andrea Stewart-Cousins, both supporters of diversity in cannabis did not respond for a request to comment.

The First Five

Etain is one of the original five licensees in New York and remains a family-owned business. It is the only female-led company in the state. Most of the original five have been bought out by larger multi-state operators known as MSO’s. Many were forced into that situation because the laws in New York’s medical marijuana program were so restrictive that patients didn’t sign up. It’s not cheap to run a cannabis company, much less one that has few patients to service. The hope for the original five was that they would be well positioned to become recreational operators one day.

Then the state decided that five licensees weren’t enough, even though those five were barely surviving and expanded the group to ten. Now the state is considering legalizing adult use cannabis and it looks as if it is considering a competitive bidding process -including an auction in order to get recreational licenses. The existing medical license holders will have to compete with others resulting in the pioneers receiving little advantage for blazing a trail as settlers come swooping in.

While the number hasn’t been confirmed, Peckham said the auction fee is expected to be quite high. That is based on a comment from one of the New York politicians who said that the $10 million that California asked for was “too low.” Peckham said that amount would be almost impossible for Etain to raise and if she doesn’t get a recreational license, it is pretty much game over.

The auction fees are intended to be used to pay for the department that will oversee the marijuana program and possibly provide incubator money and loans for minority and women-owned businesses. Peckham noted the hypocrisy of borrowing money from the department you’ve just funded through auction fees.

Just Raise The Money!

Every day there are headlines about cannabis companies raising millions of dollars, so the general response to Etain’s complaint about the potentially high cost of entering the auction is met with the response to ‘just to raise some money.’ Peckham explains the problems with that simplistic response.

Investment = Loss Of Company Control

“If I take money from an investor they will want ownership of the company and then it will cease to be a woman-owned company. Something that is very important to me and at the core of our mission at Etain,” she said. Plus, it’s well known that women-owned companies have a harder time raising money than male-led companies. That is why women-owned funds have sprung up to help their peers, but Peckham noted that these funds wouldn’t be able to deliver the amount of money she needs.

NYS Loan Rejected

The next suggestion for Peckham was to borrow the money. Peckham did apply with the Community Economic Development Department for a loan but was rejected because she worked in cannabis. Rafael Salaberrios, Vice President of Economic Revitalization told Peckham in an email, “It was a very difficult decision for us to make, but after conversations with the New York State Department of Financial Services(DFS) it was concluded that JDA Is not equipped to handle the necessary monitoring required by the Feds on Marijuana projects. JDA does not have the expertise or the manpower DFS thinks is needed to move forward.”

NYMCIA Incubator Loan

The NYMCIA suggested that the group pony up for a fund to help women-owned and minority cannabis businesses in incubator money. On the surface, this sounds like a great idea. Unfortunately, the irony of the only woman-led company (there are no minority-owned cannabis companies in New York) putting money in a fund that she would then be asking to receive money from seemed to be lost on the remainder of the group. She was derided as “cheap” by one of the male members of the group. The proposed pledge was $2.5 million.

Her only option was to resign from the group in order to try to take advantage of the fund. “They didn’t seem to understand the inherent conflict of interest or that I would be donating to a fund and then turning around and asking for money from that fund. Not only that, the contribution to the fund was probably going to escalate,” said Peckham. She had joined the association by pledging $50,000 but was now being asked to bump that up to $2.5 million for the fund. In her resignation email, Peckham wrote, “Etain cannot commit to ongoing or escalating financial commitments for a program that creates conflicts for requirements…We must conserve our capital for targeted purposes to remain sustainable in this industry.”

NYMCIA Says Nothing

Adam Goers, Vice President of Corporate Affairs at Columbia Care, a multi-state operator that is expected to become a publicly traded company this year, is chairman of the NYMCIA. The group did not respond to a request for comment on Peckhams resignation. NYMCIA recently stated that it asked fellow MSO MedMen Enterprises Inc. (MMNFF) to resign from the Association following a lawsuit filed by the company’s former CFO James Parker, in which Parker alleged CEO Adam Bierman had made derogatory comments.

“The Association has a zero-tolerance discrimination policy for any of our members who engage in this type of despicable behavior,” NYMCIA representatives said in a letter addressed to Gov. Cuomo, state Senate majority leader Andrea Stewart-Cousins and Assembly speaker Carl Heastie. MedMen confirmed that it had not resigned from the group and was still a member. Of course, seeing Etain go under just means one less competitor for the group.

The Wholesale Market

Saving a female-led company is not only good for diversity, but it turns out it will be important to the entire New York cannabis company. Etain provides several companies with a quality product. Without her, they lose a provider. This is very important because several people have told Green Market Report that some New York cannabis companies have been bringing in product from out of state illegally. A claim that hasn’t been verified, but a review of a company’s cultivation square footage versus sales will answer that question, especially if the company isn’t buying the product from another New Yorker.

Just Say Sell

The nuclear option to just sell the company which also isn’t possible for Peckham. Once again the state in its vision for diversity stated that women-owned and minority businesses can only sell to another like-minded company. Since there are no other women-owned or minority-owned cannabis companies in New York, there is no one to sell to.

Options

The State could insist on a residency requirement for the recreational licenses, which would help Etain. Or it could carve out recreational licenses for existing medical license holders that are not publicly traded companies. There seem to be options available for the state to protect the diversity it claims to want, so far it hasn’t pursued anything other than talk.