Florida Archives - Green Market Report

Debra BorchardtFebruary 28, 2022
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MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) announced that it plans to sell its Florida assets to Florida-based private company Green Sentry Holdings LLC for $83 million. MedMen said in a statement that it is a cash deal that includes the sale of substantially all of MedMen’s Florida-based assets, including its license, dispensaries, inventory, and cultivation operations. Additionally, MedMen agreed to license its trademarks in the state for two years, subject to termination rights, for a quarterly revenue-based fee.

“As MedMen continues to transform its business model and position itself for future growth, our go-forward strategy is going to include an asset-light model that enables us to leverage the power and strength of the MedMen brand,” said Michael Serruya, MedMen’s Chairman and Interim CEO. “We feel confident this model will deliver strong financial results and opportunities for growth across many states and will continue to identify trademark licensing opportunities that will introduce the MedMen brand and retail experience to other markets across the United States and internationally.”

Green Sentry is associated with Brady Cobb, who is an attorney, lobbyist, strategist, and consultant based in South Florida who focuses his practice in the areas of regulated medical cannabis, Federal and State government relations, and regulatory matters. Brady is also a cannabis entrepreneur who co-founded Florida cannabis operator Bluma Wellness and sold it to Chicago-based Cresco for $213 million in April. He also has an incredible family history – his father was a pot smuggler for Pablo Escobar in Florida in the 1970s and 1980s. Perhaps Green Sentry will fare better in its dealing with MedMen than Ascend Wellness, which can’t seem to get MedMen to let go of its New York assets.

According to MedMen’s last annual report, the company had six stores in Florida that serviced the medical-only market. MedMen also operates a cultivation and production facility in Eustis, Florida, which is approximately an hour’s drive north of Orlando. The company also has five registered trademarks in Florida. The company also said that revenues in Florida had not been substantially impacted by COVID. However, the annual report stated, “During the year ended June 26, 2021, the company strategically closed five retail locations in Florida to provide better and consistent supply for its patients. While these dispensaries remain temporarily closed as of June 26, 2021, the company saw improved plant yields and quality driving improved margins.”

The transaction is subject to customary closing conditions, including applicable regulatory approvals. The deal is expected to close in late April or early May 2022, pending the receipt of all required contractual consents and governmental approvals including the requisite change of ownership approval from the Florida Office of Medical Marijuana Use.

Ascend Wellness Update

Of course, MedMen had agreed to sell its New York assets to Ascend Wellness but has since decided to try to terminate that deal. In the latest development, MedMen submitted documents asked that the court send all papers to a lawyer named Peter Fountain when they had been going to Alex Spiro, both at the law offices of Quinn Emanuel Urquhart & Sullivan, LLP.

 


StaffSeptember 1, 2021
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Planet 13 Holdings Inc. (CSE: PLTH)(OTCQX: PLNHF) is buying a subsidiary of Harvest Health & Recreation Inc. (OTC: HRVSF) in an all-cash deal valued at $55 million. The company will be named Planet 13 Florida Inc. and will purchase a license to operate as a Medical Marijuana Treatment Center issued by the Florida Department of Health to the seller. The acquisition is dependent on the successful close of the Trulieve Cannabis Corp./Harvest arrangement transaction and the Florida Department of Health’s Office of Medical Marijuana Use approval for Planet 13 Florida.

“Florida has long been one of our most coveted markets with over 20 million residents, 130 million annual visitors and incredible consumer demand already demonstrated in the medical program. It was important for us to enter the market prior to a transition to adult-use to put the pieces in place to capitalize on this market in both the short and long term,” said Larry Scheffler, Co-CEO of Planet 13. “We are excited to introduce our best-in-class retail experience and portfolio of popular products to the Florida market and to continue to build the Planet 13 brand across the United States.” Planet 13 is known for its adult-use cannabis superstores in Las Vegas and Orange County. This will be a medical-use only location.

As of August 26, 2021, there were 22 companies with MMTC licenses with 371 dispensing locations across Florida. License holders are not subject to restrictions on the number of dispensaries that may be opened or on the number or size of cultivation and processing facilities they may operate.

“After a lot of planning on how we wanted to approach this market, now is the time for action. We are well-capitalized to complete the initial buildout of our cultivation and retail plan which includes a network of neighborhood stores in priority metro areas to support future SuperStores in Miami, Orlando, and other tourist destinations, said Bob Groesbeck, Co-CEO. We have a successful track record of completing large retail and cultivation buildouts on time and on budget. This expertise combined with our differentiated, experience-driven retail and diverse product portfolio gives us confidence moving into the Florida market.”

 


Debra BorchardtOctober 31, 2019
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Liberty Health Sciences Inc. (CSE: LHS) (OTCQX: LHSIF) reported net sales of $10,627,656 for the second quarter ending August 31, 2019, versus $2,219,290 for the quarter for the same time period in 2018. Liberty Health delivered net income for the quarter of $22,884,261, turning the corner over last year’s net loss of $5,605,355 and besting many cannabis companies that only seem to deliver net losses.

The company attributed the significant year-over-year increase in revenue to the opening of new dispensaries and delivery locations, as well as experiencing an upsurge in same-store sales volume and an uptick in the registered patient base for Medical Marijuana Use in Florida.

“The second quarter of fiscal year 2020 proved to be the largest sales revenue quarter in the history of our Company,” said Victor Mancebo, Interim Chief Executive Officer of Liberty. “Liberty’s continued growth directly ties to the strategic initiatives we have set in place, which has been increasing our Florida production, retail base, and delivery footprint along with expanding our product portfolio and brand partnerships. We continue to work on numerous marketing strategies that will complement our expansion plans and simultaneously provide our patients a more educational, personalized and accessible experience.”

Liberty said it was one of the first companies in Florida to rollout whole flower products in all of its dispensaries, Liberty has reached monthly sales, including smokable medical marijuana, of more than $4.6 million in August 2019. In the heat of the vape crisis, flower has become a consumer favorite. The company said it expects its sales to continue to grow steadily as it expands its dispensary footprint and product offerings. Those product offerings include  Liberty Health Sciences, Zentient, Pretty Pistil, Papa’s Herb, Mary’s Medicinal, PAX, Werc Shop, and Lemon and Grass.

As of August 31, 2019, Liberty said it had $23,884,434 of cash and term deposits. The company currently has 19 operational dispensaries.

In The Pipeline

Liberty finished construction on its new 387-acre state-of-the-art Liberty-360 facility comprising 300,000 square feet of greenhouse processing and production space resulting in the company being the lowest cost and consistent producer in Florida. The company has lease agreements in place for another 10 locations and is further negotiating another seven.

 


Debra BorchardtFebruary 19, 2019
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Fresh off its successful IPO, SLANG Worldwide (CNSX: SLNG) has formed a strategic partnership with Florida-based Trulieve Cannabis (OTC: TCNNF) to offer cannabis patients in Florida access to leading cannabis brands in Trulieve’s dispensaries across the state. As part of the agreement, Trulieve will have an exclusive license to SLANG’s extensive portfolio through its U.S. subsidiary, National Concessions Group, Inc. better known as Organa Brands.

Florida is quickly establishing itself as a significant cannabis market in the U.S.  The state has registered over 180,000 medical cannabis patients, a number that has tripled since 2017. According to the Florida Department of Health, Trulieve is responsible for consistently producing and distributing between 60% and 80% of cannabis in the state. The company has 24 dispensaries and home delivery available throughout the state.

“Great partnerships and collaboration are foundational to SLANG’s culture, scalability, and growth strategy,” said SLANG’s CEO Peter Miller. “Not only does Trulieve operate one of the most impressive cannabis cultivation and distribution businesses in Florida, they also share SLANG’s commitment to bringing leading cannabis products to consumers. Every year, SLANG products deliver millions of high-quality cannabis experiences to consumers around the world and, in partnership with Trulieve, we look forward to providing those same exceptional cannabis products to Florida’s patients.”

As a result of the partnership, SLANG will introduce the O.penVAPE, Bakked, District Edibles, and Magic Buzz product lines to Florida medical patients. The company said that the availability of edible products will be subject to regulatory approval by the Florida Department of Health. As part of the agreement signed by the two groups, SLANG will collaborate with Trulieve with regard to the production and distribution of the SLANG portfolio of products, offering in-house training to staff in preparation for production and distribution exclusively through Trulieve.

“SLANG operates with the same goals as Trulieve, working to expand patient access and create products that are high-quality, consistent, and reliable,” said Trulieve CEO Kim Rivers. “SLANG’s expansive portfolio ranges from vaporizer cartridges to edibles to concentrates, all products that will provide Florida’s patients with the effective, natural relief they’re seeking in ways that are innovative and fresh.”

According to an Arcview report titled the State of Legal Marijuana Markets, Florida is estimated to have 550,000 legal potential consumers by 2022. It is projected to reach $1.7 billion in legal spending by the year 2022. The report also stated that medical cannabis sales are expected to reach $456 million in 2018, up from $192 million in 2017.

 

 


Debra BorchardtOctober 23, 2018
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Ontario-based Scythian Biosciences (OTC: SCCYF) is selling its Florida operation called 3 Boys Farms and using that money to become a multi-state operator.

In July, Scythian sold its Caribbean assets to Aphria (OTC: APHQF)  in a deal valued at $193 million. Scythian spent $136 million to purchase CannCure Investments Inc, which is an Ontario-based company that is itself in the process of acquiring an interest in the Florida-based 3 Boys Farms, along with The Healthcare Organization. That deal was supposed to close on October 15.

Scythian is selling its 100% interest in 3 Boys Farms, which is a strictly Florida operation to Verano in exchange for $100 million of Class B units in Verano. In exchange, Scythian will receive a substantial stake in Verano which will open the company up to key markets, including Illinois, Maryland, Michigan, Nevada, Ohio, Florida, and Puerto Rico, with additional states to be added in 2019. All part of the company’s expansion strategy. Only four states are operational at this time.

“Scythian delivers on its promise to investors by identifying and investing in the most impressive emerging cannabis company in the U.S. marketplace, Verano,” said Scythian Chief Executive Officer Brady Cobb. “Verano brings strong, efficient and expansive operations to numerous U.S. markets. Its customer-centric dispensary experience that is filled with its diverse and high-quality products (150 SKU’s), cutting-edge cultivation facilities, innovative processing techniques, and seasoned executive/management team will fast-track its standing to the top of the U.S. cannabis industry.”

Deal Details

Scythian is investing $88 million in Class B units of Verano as part of a larger brokered private placement of securities of Verano to accredited investors for an aggregate amount of $100 million. Clarus Securities Inc. acted as the sole agent in the financing. The deal is expected to close on or about October 26, 2018. According to the company statement, Scythian also entered into a membership interest contribution agreement between Scythian and Verano, under which Scythian will acquire the remaining 40% of 3 Boys Farms and, when completed, sell and convey its entire interest in 3 Boys Farms to Verano in exchange for $100 million of Verano class B membership units.

Verano

Verano Holdings is a national, vertically integrated operator of licensed cannabis cultivation, manufacturing, and retail facilities. Verano develops and produces a suite of limited edition, fashion-forward cannabis products, which offer medicinal therapies and inspirational product options. It designs, builds and operates the Zen Leaf™ branded dispensary.

Facilities include:

  • Illinois: one cultivation and production facility and three dispensaries;
  • Florida: one cultivation and production facility and up to 30 dispensary facilities under current law;
  • Maryland: one cultivation and production facility and two dispensaries;
  • Nevada: one cultivation and production facility and one dispensary;
  • Michigan: licenses under development;  
  • Ohio: licenses under development;
  • Puerto Rico: licenses under development

“This transformative investment will fast-track our long-term goal to dominate the most important growth industry in the United States,” stated George Archos, Verano’s Chairman, and CEO. “Even with our accelerated growth, we will remain focused on our core values of operational excellence with an unwavering commitment to producing safe, quality cannabis products for a consistent experience.”

 

 


Debra BorchardtSeptember 7, 2018
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MedMen Enterprises Inc. (MMNFF) entered into a letter of engagement with Eight Capital to purchase, as co-lead underwriter and joint bookrunner, along with Cormark Securities Inc. as co-lead underwriter and joint bookrunner, and a syndicate of underwriters 13,636,364 units of the company on a “bought deal” basis at a price per Unit of CAD$5.50 for gross proceeds of CAD$75,000,002. The deal is scheduled to close on or about September 28.

In addition to the C$75 million, MedMen has agreed to an over-allotment option to purchase up to an additional 15% of the units at the same price. If this option is exercised, then MedMen will get an additional C$11,250,000 bring the potential total gross proceeds to roughly C$86,250,000 million.

MedMen said it plans to use the proceeds for continued expansion of its retail footprint across attractive cannabis markets, development of its cultivation and production facilities, working capital and general corporate purposes. MedMen currently operates 19 licensed facilities in California, Nevada and New York.

The money will also go towards the newly announced Florida acquisitions. MedMen said it had secured prime retail locations with long-term leases in Ft. Lauderdale, Miami Beach, West Palm Beach, St. Petersburg and Key West. This is keeping with the MedMen strategy of entering premium retail districts with high visibility and heavy foot traffic.

“Our entry into Florida through this acquisition demonstrates our growing national footprint as well as our ability to execute,” said Adam Bierman, MedMen chief executive, and co-founder. “Our real estate team is hard at work preparing to put MedMen branded stores in the most coveted locations in Florida – locations in highly desirable and defensible market areas with high foot traffic and proximity to popular brand retailers.”

Going into Florida won’t come cheaply. MedMen will pay $53 million, half of that in cash. The rest according to a company statement will come from an issuance of 8,549,132 common units of MM Enterprises USA, LLC, a subsidiary of the company, which by their terms are ultimately redeemable for Class B Subordinate Voting Shares of the Company starting on January 1, 2019. The LLC has paid Treadwell Nursery US$6,625,000 in cash as of closing date, September 6, 2018, and will pay the same amounts in cash on each of the dates that are three, six and nine months after the closing date.

Florida is quickly becoming a popular state among cannabis companies. It is the third most populous state in the U.S. with a rapidly growing medical cannabis market and large potential adult use market. The state has high tourist activity and is home to the largest elderly community in the nation. According to ArcView, medical cannabis sales are estimated to be approximately US$1.4 billion by 2021.


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