financing Archives - Green Market Report

Adam JacksonAugust 19, 2022

Economic headwinds in the industry are causing cannabis companies to make changes to their financing strategies.

The news comes as cannabis capital raises are down 63.1% so far this year despite M&A movement soaring, according to a report by Viridian Capital Advisors. The cash crunch illustrates the rising stakes for those vying to survive in a tightening landscape.

Agrify (Nasdaq: AGFY) attributed its recent procurement of a $35 million-dollar loan to a “challenging” operating environment in the industry, while XS Financial cited near-term pullback in financing.

Agrify obtains $35M financing

“It is imperative for us to align our strategy, resources, and execution plan with the new realities of the market,” said Raymond Chang, chairman and CEO of Agrify.

Chang said the alteration had been a top priority for the company, “and we are pleased to be able to move forward with additional flexibility to manage our business, conserve cash, and pursue a variety of compelling growth opportunities with fewer restrictions.”

Agrify will pay down a portion of the outstanding balance on the original note and exchange the remaining balance for a new $35-million-dollar note.

In addition to the significantly reduced principal balance, the new deal removes or modifies certain financial covenants. The new note will have no required amortization payments on the principal balance for three years and offers a company option for early repayment.

The deal includes a new warrant to purchase 14,227,643 shares of common stock. Additionally, Agrify will exchange the warrant to purchase 6,881,108 shares of common stock issued under the prior loan for a new warrant with the same number of underlying shares with a reduced exercise price.

“All of these modifications should make it easier for us to navigate through these turbulent times as we look forward to rebounding strongly from the temporary challenges facing the entire industry,” Chang added.

XS Financial closes $24M deal

XS Financial closed on a $24 million line of credit with Needham Bank committing $20 million and acting as the administrative agent. XS Financials’ existing $4 million line of credit with an FDIC-insured bank will be retired, and the same bank will contribute $4 million in the new loan.

“With many capital sources in the industry experiencing a near-term pullback in financing, we are thrilled to continue funding our target borrowers at scale for their critical expansion projects,” XSF CEO David Kivitz said.

XSF fully retired its $15 million line of credit with the Garrington Group concurrently with the closing of this loan.

The new loan has a term of two years, expiring in August 2024. Loans made under the line of credit will bear interest at an annual rate equal to the Wall Street Journal Prime rate plus 1%, with a floor of 6%, and may be prepaid with no penalty at any time.

“This credit facility is a strong indication of James’ and our lenders’ ability to offer credit solutions tailored to the unique needs of a company and underscores the strength of our nationwide banking platform in the fast-growing cannabis market,” Needham Bank CEO Joseph Campanelli said.

IM Cannabis issues financing

IM Cannabis also said that it will issue $5 million worth of nonbrokered financing – similar to a stock split. The company intends to use the proceeds from the offering for general working capital purposes.

Following the deal, the company may issue up to 10 million common shares at a price of 50 cents per common share. The deal is expected to close on or about Aug. 22.

William SumnerMay 23, 2018

The cannabis streaming company Cannabis Wheaton Income Corp. (CBW) has just landed a gigantic financing deal. On May 22, 2018, the company announced that it has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets, in which the underwriters have agreed to purchase on a bought deal basis 71,500,000 units of the Company at a price of C$1.40 per unit, for a sum total of C$100 million .

Each unit entitles its holder to acquire one common share of the company and one half of one common share purchase warrant. A full purchase warrant entitles the holder to purchase one common share at a price of C$1.85 for a two year period following the closing date.

The company has also agreed to allow the underwriters the option of purchasing an additional 15% of units at a price of C$1.40 per unit until the date that is 30 days following the closing of the Offering. If the option is exercised, Cannabis Wheaton will have raised an additional C$15 million .

The offering is expected to close on May 31, 2018. Once closed, the company will used the proceeds from the offering to fund domestic and international operations, capacity expansion, general working capital, and for any new potential investment opportunities it might come across.

Cannabis Wheaton Acquisitions and Partnerships

Over the last several months, Cannabis Wheaton has been busy building its portfolio the partnerships and acquisitions. Just last month the company acquired two cannabis companies, Robinson’s Cannabis Incorporated and Dosecann Inc. Acquired through an all-stock deal, Dosecann is a late-stage “Licensed Dealer” applicant pursuant to the Narcotic Control Regulations with a purpose-built 42,000 square foot facility located in Charlottetown, Prince Edward Island. Robinson’s is a private held cannabis company that is currently building a 27,700 square foot purpose-built facility for cannabis cultivation in Kentville, Nova Scotia. Although not currently licensed, Robinson’s has completed the review process on paper and is confirming its readiness stage.

The company has also engaged in a joint venture with Peter Quiring, one of the largest greenhouse builders and operators in Canada, to build a cannabis cultivation greenhouse facility in Leamington, Ontario; operating under the newly formed subsidiary GreenhouseCo., with Quiring serving as CEO.

Stock Performance

Trading on the Toronto Stock Venture Exchange, Cannabis Wheaton’s stock is currently trading at CC$1.40, down from its 52-week high of C$2.97.

StaffFebruary 8, 2018

Canadian medical marijuana company Tilray announced the completion of its Series A funding round totaling C$60 million. The round consisted of a group of leading global institutional investors and the terms were not disclosed. Cowen served as sole placement agent.

Tilray will use the new funding to increase its existing production capacity in North America, to continue to build its European Union campus in Portugal, and to expand the availability of its products to more patients and pharmacies around the globe.

“This funding round represents another strategic milestone for Tilray as we pioneer the future of medical cannabis globally,” said Brendan Kennedy, Chief Executive Officer, Tilray. “With support from some of the world’s leading institutional investors, we will expand our production capacity in North America and Europe, and scale distribution of our products to more patients and more pharmacies in more countries.”

Tilray is federally licensed in Canada and Europe currently sells pharmaceutical-grade, GMP-certified medical cannabis products to tens of thousands of patients in eight countries. It was the first licensed producer of medical cannabis in the world to have its facility Good Manufacturing Practices certified in accordance with European Medicine Agency (EMA) standards. Tilray supplies hospitals, pharmacies and pharmaceutical distributors on four continents, and has signed supply agreements with NOWEDA, one of Germany’s largest pharmaceutical wholesalers, and Shoppers Drug Mart, Canada’s largest pharmacy chain.

Since its founding in 2014, Tilray has been wholly-owned and solely funded by Privateer Holdings, the world’s leading private equity firm investing exclusively in legal cannabis. Tilray’s Series A funding round marks the first time that outside investors have invested directly into a Privateer Holdings portfolio company. With its Series A funding and incorporation, Tilray is positioned to operate and finance its growth independent of Privateer Holdings.

Privateer also has in its portfolio, Marley Natural cannabis, Goodship edibles and the media company Leafly.

William SumnerFebruary 1, 2018

Cannabis icon and country music legend Willie Nelson is once again making waves in the cannabis industry. On Jan. 31, 2018, GCH Inc., a Colorado-based firm founded by Willie Nelson and parent company of Nelson’s premium cannabis brand Willie’s Reserve, announced that it had raised $12 million to fund its state-by-state expansion.

As cannabis legalization spreads throughout the United States, Nelson is just one of a handful of celebrities hoping to cash in on the legal cannabis industry. In recent years, other musicians such as Snoop Dogg and Julian Marley have launched their own cannabis brand, as well as television star such as Whoopie Goldberg, who launched the female-centric cannabis brand Whoopie & Maya.

Led by Tuatara Capital, a sector-focused alternative investment manager, the latest funding brings GCH’s total funding to $29.5 million. Currently, GCH is in the middle of its Series B financing, which is expected to raise approximately $40 million by closing. GCH hopes to use the funds to finance investments for new market expansion and to grow the brand’s portfolio through increasing product selection

Currently being distributed in states of Colorado, Washington, Nevada and Oregon, Willie’s Reserve hopes to expand into the California market by Spring 2018.

“We’re on the right side of history,” Nelson said in a statement. “People have spoken with their votes and their dollars. Now that we’ve proven regulating and taxing is good for individuals and business and states, it’s pretty clear that pot is good for America.”

In addition to the new funding, the company also announced the launch of Willie’s Reserve Sungrown Line, which features crafted cannabis raised outdoors throughout Colorado and Washington, and an expansion to the Annie’s Edibles’ product line of Willie’s Reserve.

New products in the Sungrown line will include packaged flower and ready rolls, in a variety of terpene-rich strains. Annie’s Edibles product expansion will feature four new flavors for its chocolate confectionery collection; including Maui Espresso Bean, Roasted Cacao Nibs, Dark Chocolate, and Chocolate Almond. The Sungrown line and Annie’s Edibles expansion are expected to launch in February 2018.

William SumnerJanuary 29, 2018

ABcann Global Corporation (ABCCF) has announced that it has entered into an agreement with Canaccord Genuity Corp. and Eight Capital, on their own behalf and on behalf of a syndicate of underwriters.

Under the agreement, the underwriters will purchase on a bought deal basis, pursuant to the filing of a short form prospectus, a total of 11,500,000 units of the Company at a price of $3.50 per unit, totaling $40,250,000. One unit of the company consists of one common share of the company and one half of one common share purchase warrant of the company. The stock fell over 11% to $2.74 on the OTC Marketplace. It is down from its 52-week high of $3.29.

Additionally, the underwriters will purchase 30,000 unsecured convertible debentures of the Company, at a price of $1,000 per Convertible Debenture, for $30,000,000; bringing the total value of the deal to just over $70,000,000.

Each warrant will be exercisable as one common share of the company for up to two years following the closing date at a price of $4.25 per share. If common shares have a daily volume weighted average $7.00 or more for a period of 15 days, the company may accelerate the exercise period of the warrants for a period of no less than 30 days after the company gives written notice of the acceleration.

The Convertible Debentures will have a maturity date of three years, bearing an interest rate of 6% from the date of the closing, and made payable semi-annually on June 30 and December 31 of each year. At the holder’s discretion, the convertible debentures will be convertible into common shares, at a price of $4.00, at any time prior to the maturity date.

The company has also given the underwriters an over-allotment option to purchase 1,725,000 additional units of the company and 4,500 additional Convertible Debentures. The option would be exercisable on or at any time before the 30^th day following the close date of the agreement. If the underwriters exercise the option, an additional $10,537,500 would be raised; bring the total value of the agreement to $80,787,500.

The proceeds from the agreement will go towards construction and development at the company’s Vanluven facility and planned Kimmett facility, general working capital, corporate development, and product development.

Jack SmithJanuary 25, 2018

California-based Canndescent has announced it’s raising $10 million Series B financing that’s aimed to help the company keep rolling out its productions and boost the size of its production facilities to more than 100,000 sq. ft.

Canndescent is part of the self-described “cannabis 2.0 charge,” as it looks to bring cannabis into the mainstream in a variety of ways, including luxury and lifestyle marketing. It launched the nation’s first ultra-premium flower brand (The Art of Flower) in California and now ranks as the leading branded flower in the state, according to BDS Analytics.

CEO Adrian Sedin said the financing gives the company validation for its business model and will make it even more competitive in California.

“This round validates our strategy of simplification and sophistication, our effects—Calm, Cruise, Create, Connect, and Charge–and our leading position in California, the nation’s most competitive and largest cannabis market,” Sedlin said.

Sedlin has said previously he wants to make his company “the Hermès of cannabis” and expects to be selling more than $50 million worth by next year, according to a 2017 interview with CNBC. The company’s Instagram page reflects this premium lifestyle mentality, akin to that of a luxury retailer more than a weed company.

According to data from Crunchbase, the company previously raised $6.5 million in 2016, including from Sedlin himself, as well as Floret Ventures.

Stella Kleiman, a managing partner at Floret, said Canndescent has executed its vision extraordinarily quickly, going from concept to market in just 18 months. “They’re executing flawlessly and, in my experience as a long-time technology entrepreneur, are one of the few institutional quality teams touching the plant,” Kleiman said.

John Brecker of Altitude Investment Partners agreed with Kleiman, saying: “Every so often, a VC participates in a ‘fund-maker’ that materially increases the fund IRR and that helps it to raise subsequent funds. I believe Canndescent is such a fund-maker.”

Sedlin added that Canndescent, which produces over 10,000 pounds of cannabis per annum, will bring The Art of Flower to new customers around the country and in different product categories.

In addition, Canndescent said it is opening its second production facility today, which will bring it to 48,000 sq. ft. The company has a goal of getting to more than 100,000 sq. ft, which it hopes it will accomplish with the addition of its third facility, scheduled for later this year.

William SumnerJanuary 18, 2018

Canopy Growth Coporation (WEED), a diversified cannabis and hemp company based in Smith Falls, Ontario, today announced that it has entered into an agreement with a syndicate of underwriters led by GMP Securities L.P. (GMP) and BMO Capital Markets (BMLP) as joint bookrunners. The underwriters have agreed to purchase, on a bought deal basis, 5,060,000 common shares of the company, at a price of $34.60 per common share, for an estimated value of approximately $175,076,000.

The company has also agreed to grant the underwriters an over-allotment option to purchase up to an additional 759,000 common shares at the Offering Price. The option is exercisable in part or wholly at any time on the date of or prior to the 30 days following the closing of the offering. The offering is expected to close on Feb. 7, 2018.

This latest deal comes on the heels of a two year agreement between Canopy and the Canadian provincial government of Prince Edward Island, in which the company will provide the province with a minimum of one million grams of cannabis for at least the first year. Upon the third year, the deal may be renewed pending approval from both the company and the provincial government. The retail value of the deal has been estimated to be worth approximately $8 million – $12 million annually.

Cannabis Wheaton Income Corp. Closes Private Placement

Also posting big numbers today is Cannabis Wheaton Income Corp. (CBW), the self-proclaimed world’s first cannabis streaming company, which announced the closing of a previously announced $100 million private placement.

The funds were raised through the issuance of 100,000 Convertible Debenture Units at a price of $1,000 per Convertible Debenture Unit. The net proceeds from the deal will go towards funding working capital, administrative costs, financing of the company’s streaming partners, and other general corporate expenses.

MMCAP International Inc. SPC and Wheaton Income have agreed to a binding term sheet in regards to the offering where MMCAP will agree to subscribe up to $48 million aggregate principal amount of convertible debenture units.

A more detailed description of the terms in the offering can be found here.

Jack SmithJanuary 12, 2018

Simplifya, which builds regulatory compliance software for the cannabis industry, said on Thursday that it had raised $1 million as part of a larger Series B funding round.

The funding round, which the company said could reach $3 million when it’s completed, has a number of investors, including Merida Capital Partners, who provided the initial $1 million commitment.

“Simplifya’s compliance tool has helped companies across Colorado navigate a constantly evolving regulatory landscape and set an example for the rest of the nation,” said Simplifya CEO and co-founder Marion Mariathasan in a statement, announcing the capital raise.

Mariathasan added the company’s goal is to make it as easy as possible for the legal cannabis industry to comply with state and local regulations. “This round of funding will allow us to expand into additional markets and develop more features to help cannabis businesses not just survive, but thrive,” Mariathasan said.

The investment comes at a time when the regulatory field is at a crossroads, after U.S. Attorney General Jeff Sessions rescinded memos from the Obama administration, specifically the Cole memo that allows for the medical or recreational use of marijuana.

“The recent DOJ marijuana policy shake-up might have raised concerns for some cannabis industry investors, but it strengthens the case for investing in Simplifya,” said Brian Vicente, a co-founder of Simplifya and founding partner of Vicente Sederberg LLC, one of the nation’s leading cannabis law firms. “The cannabis industry is a compliance industry. Now more than ever, businesses are going to want to be in clear compliance with state and local laws, and they are going to need assistance.”

Despite Sessions’ attempt to curb the use of legalized marijuana, many experts believe his actions may, in fact, do the opposite, helping it to become legal.

In an op-ed for CNN, Michael Chernis a Los Angeles-based attorney and expert specializing in the cannabis industry wrote it would help the industry. “If Sessions intended to quell the enthusiasm of California’s cannabis business enthusiasts and government officials, he once again fell short,” Chernis wrote.

The investment comes at a crucial time for Simplifya, which has boosted its compliance offerings as California’s adult-use system comes online. The company said that the investment by Merida will help it grow its tools, which already include allowing them to delegate, review and manage compliance tasks. They also have tools for audit management, scheduling and keeping track of certain issues.

Merida Capital Partners managing partner Mitchell Baruchowitz said the investment in Simplifya highlights the company’s promise, citing other investors who have previously invested in the company.

“The fact that Simplifya is backed by cannabis industry leaders like Vicente Sederberg and Hypur Ventures, and partnered with companies like New Frontier Data, just furthers our belief that they are going to play a key, long-term role in this nascent industry,” Baruchowitz said in the release. “Product trends will come and go, but regulatory compliance will always be of paramount importance to every successful cannabis company.”

Debra BorchardtJanuary 9, 2018

MedReleaf Corp. (MEDFF) stock popped over 7% on the OTC Marketplace following the announcement of a $100 million bought deal. Shares jumped over 7% to lately trade at $23.66. This is near the high of its 52-week range of $24.99.

The company announced that it has entered into an agreement with Canaccord Genuity Corp. and GMP Securities L.P. to purchase, on a bought deal basis 3,800,000 units of the company at a price of $26.50 per share for aggregate gross proceeds of $100.7 million. The deal is expected close on or around January 31, 2018.

According to the company statement, MedReleaf plans on using the net proceeds to finance the acquisition and/or construction of additional cannabis production and manufacturing facilities in Canada as well as in other jurisdictions with federal legal markets.

Each unit will consist of one common share and one-half of one common share purchase warrant of MedReleaf. Each warrant will be exercisable to acquire one common share of the Company for a period of two years following the closing date at an exercise price of $34.50. In the event that the volume weighted average trading price exceeds $51.75 for ten consecutive days, MedReleaf will have the right to accelerate the expiry date of the warrants upon not less than fifteen trading days’ notice.

MedReleaf is the first and only ICH-GMP and ISO 9001 certified cannabis producer in North America. MedReleaf is an R&D-driven company dedicated to patient care, scientific innovation, research and advancing the understanding of the therapeutic benefits of cannabis. Sourced from around the world and carefully cultivated in one of two state of the art facilities in Ontario, MedReleaf delivers a variety of premium products to patients seeking safe, consistent and effective medical cannabis.

Cannabis stocks tumbled last week after Attorney General Jeff Sessions rescinded the Cole Memorandum which gave a level of protection to the cannabis companies in U.S. The Cole Memo also made Canadian companies feel a little more secure when dealing with the U.S. So far there has been little response with regards to immediately arresting companies engaged in the cannabis industry. Instead, states, where marijuana has been legalized, have vowed to fight back.

Jack SmithDecember 28, 2017

With the cannabis industry still in its nascent stages, consolidation is bound to happen, as companies look to capture as much of it as they can. And MJardin wants to be a part of that.

Denver, CO.-based MJardin announced it has closed on $20 million in financing (both equity and debt) from KES 7 Capital to acquire companies, something the company believes can help take it to the next level.

“We saw this as not only a logical next step but an opportunity for a transformational partnership,” said James Lowe, Co-Founder, Director and Chief Cultivation Advisor at MJardin in a statement. “We brought in strategic long-term shareholders [KES 7 Capital] who will support the Company for both near and long-term growth initiatives. MJardin has now further solidified its position as a market leader.”

In addition to looking at acquisitions, MJardin said it will use the proceeds for general working capital and corporate purposes.

KES 7 Capital CEO and President Mark Christensen said the financing puts further confidence behind MJardin as one of the companies likely to benefit from consolidation in the space.

“We looked at many cannabis deals and companies, and MJardin is a clear leader in the space,” said Christensen. “We are very excited to continue working with the MJardin team on their future growth initiatives and their Canadian strategy.”

MJardin specializes in providing different services to its partners in the legal cannabis industry, including “turnkey cannabis cultivation and processing solutions including licensure support, facility design, and systems implementation.”

It also provides “facility ramp-up and the day-to-day operational management required in a large-scale, professionally managed cannabis facility.”

The capital raise comes after MJardin announced a strategic partnership with Bridging Finance “to create the premier infrastructure fund for the consolidation of the cannabis sector.”

Earlier this month, MJardin announced a partnership with Grand River Organics to “produce and distribute medical cannabis throughout Canada under Health Canada’s ACMPR, while positioning for the ultimate legalization of recreational cannabis.”

In August, MJardin partnered with The Canadian Bioceutical Corporation (BCC) to provide a number of different services for BCC’s licensed facilities across the U.S., including ones in Massachusetts and Nevada.

In a November report, Ernst & Young believes consolidation is inevitable in the legal cannabis space, particularly in Canada.

Chuck Rifici, a leading cannabis investor in Canada, believes that now is the time to buy other companies while the market is still growing.

“It makes sense to do deals where you’re buying optionality in a future market for not much in stock,” Rifici said in an interview with CBC News. “These smaller companies are in a position to fill in gaps and get a nice premium on their stock and the larger guys are essentially printing cheap paper to do those deals.”

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financing Archives - Green Market Report

Headwinds Cause Cannabis Companies To Adapt Finances

Cannabis Wheaton Lands $100 Million Bought Deal Financing

Cannabis Wheaton Acquisitions and Partnerships

Stock Performance

Tilray Completes C$60 Million Series A Funding

Willie’s Reserve Raises $12 Million In Additional Funding

ABcann Global Announces $70 Million Bought Deal

Canndescent Raises $10M Series B Financing

Canopy Announces 175 Million Bought Deal Financing

Cannabis Wheaton Income Corp. Closes Private Placement

Simplifya Raises $1M As Part Of Larger Series B Round

MedReleaf Announces $100 Million Deal

MJardin Group Receives $20M in Financing As It Hunts For Acquisitions

Goodness Growth Earnings Benefit from Arizona Exit, Minnesota Market Changes

Kentucky Becomes 38th State to Legalize Medical Marijuana

Clever Leaves Ekes Past Expectations, Losses Rise

Cannabis Wheaton Acquisitions and Partnerships

Stock Performance

Cannabis Wheaton Income Corp. Closes Private Placement

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