Golden Leaf Archives - Green Market Report

Debra BorchardtMay 25, 2021
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Chalice Brands Ltd., formerly Golden Leaf Holdings Ltd. (CSE:CHAL) (OTCQB:GLDFF) reported its financial and operating results for the first quarter of 2021 with total revenue of $5.5 million versus $4.7 million for the same period in 2020. The 18% year-over-year increase was attributed to the overall improvements in the Oregon retail and wholesale businesses. Net losses increased from last year’s $2.4 million to $4.3 million in the first quarter. The company noted that had it included revenue from its Homegrown acquisition, the first quarter 2021 revenues would have been $8.2 million.

Jeff Yapp, Chief Executive Officer of Chalice Brands said, “Continued profitable operations and accretive acquisitions should set us up for a record breaking second half of 2021. We continue to look forward to favorable federal regulation changes while we grow Fifth & Root to showcase our brand portfolio nationally. Our team is energized and focused on growth as we remain disciplined in our allocation of capital.”

Gross profit was $2.5 million, or 45% of total revenue for Q1 2021, compared with $1.7 million, or 37% of total revenue, in Q1 2020. Operating expenses were $2.7 million for Q1 2021, compared with $3.3 million in Q1 2020, an improvement of $534,000, or 18%. Operating expenses of $2.7 million in Q1 2021 were 49% of total revenue, compared with $3.3 million in Q1 2020, or 70% of total revenue. The reduction in operating expenses was driven largely by decreases in share-based compensation and general and administrative expenses. The reduction in operating expenses was due primarily to decreased salaries, wages, and share-based compensation.

The company began trading under the new symbol CHAL on the CSE today but has not received its new symbol for the OTC Marketplace. “Management believes the acquisition of Homegrown as announced on May 19, 2021, represents a transformative event for Chalice, making this the right inflection point to embark on the Name Change and Consolidation. As noted in that release, we raised sufficient capital to fund this accretive acquisition. Combined with the fact that Homegrown is cash flow positive, the Company will be able to generate positive cash flow to fund operations,” stated John Varghese, Executive Chairman of Chalice Brands Ltd.

Last month the company announced its 80% acquisition of CBD skincare brand Fifth & Root with a national presence in over 400 retail outlets across the United States.

Balance Sheet Moves

Chalice reiterated that it had strengthened its balance sheet by restructuring its convertible debentures due November 16, 2021, to extend the term one year to November 16, 2022, and to reprice the conversion features from C$0.30 to US$0.06. The company also financed its focus on footprint growth in the Oregon market by completing two private placement transactions for total gross proceeds of $10.5 million.

 


Debra BorchardtFebruary 3, 2020
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Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF) signed a definitive agreement to acquire Oregon-based Tozmoz, which is a wholly-owned subsidiary, TZ Acquisition, Inc. for roughly $2.8 million. Tozmoz is a cannabis extractor that was founded in 2015 as one of the first Oregon Liquor Control Commission licensed processors in the state.

“We have been working with Tozmoz for years now and this acquisition fits squarely into our product-focused business strategy,” said Jeff Yapp, Golden Leaf Holdings’ CEO. “The core of this business is about the highest quality products on the market, like our Elysium Fields line of live resin cartridges and tinctures and our recently launched Chalice Farms RXO lines. This acquisition will allow us to take what we’ve been doing well, and continue to build and further expand our diverse portfolio of products. In our ‘crawl, walk, run’ model of business development, we believe Tozmoz is at the “run” stage.”

Terms

Golden Leaf bought all of the assets of Tozmoz, including the facility located in Clackamas, which serves as the headquarters for approximately $2.8 million. The deal consisted of cash and advances totaling $675,000, an earnout of up to $400,000 and GLH stock (29,166,667 shares at US$.06 per share). GLH has previously made certain payments to Tozmoz so that only approximately $227,000 of cash will be due at closing. The earnout of $400,000 may be paid to Tozmoz quarterly beginning in July 2020, based upon 30% of up to $1.2 million of third-party revenue generated from the assets acquired by GLH.

Last Friday, the company announced that its President Stanley (“Stan”) Grissinger would become the Interim CFO while it ontinues its search for a permanent CFO. Grissinger replaces the prior Interim CFO, Kate Koustareva.

The Tozmoz Business

Tozmoz offers multiple extraction processes including CO2, hydrocarbon and ethanol, and both short path and wiped film distillation. Additionally, Tozmoz provides product manufacturing and formulation, as well as packaging services, providing clients OLCC-approved products ready for wholesale distribution and retail sales. Tozmoz has generated revenue by toll-processing for clients including GLH. The gross margins on the GLH business will now be earned by GLH. Tozmoz will continue to do third-party white-label processing.

“Golden Leaf Holdings and Chalice Farms have become part of the fabric of the Oregon cannabis market, and we are excited to continue to innovate with them and provide the market with amazing new products,” said Mr. Klobas.

Golden Leaf Sues BMF Washington

Last week Golden Leaf said it filed a lawsuit against BMF Washington LLC and Peter Saladino in Multnomah County (Oregon) Circuit Court, seeking to recover $‎6,916,580 in damages. Golden Leaf is claiming breach of contract, arising out of the parties’ equipment leasing and intellectual property licensing agreements and is seeking damages of $676,580 and $2,080,000, respectively. There is also a claim for unjust enrichment related to their improper use of the Plaintiffs’ equipment and intellectual property. Golden Leaf is also claiming that both Defendants misappropriated trade secrets under Oregon and Washington law and is seeking additional damages of $4,160,000.


StaffSeptember 3, 2019
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It’s time for your Daily Hit of cannabis financial news for September 3, 2019.

On The Site

CBD

A new report from BDS Analytics titled “The Global Cannabinoids Market: Will CBD Overtake THC?” is forecasting that CBD sales will reach $20 billion by 2024. This would account for nearly 44%  of the $45 billion total forecasted
cannabinoid market (which includes legal cannabis).

Cannabidiol or CBD is a natural compound found within the cannabis plant. The report notes that CBD was first extracted from the cannabis plant in 1940, but it wasn’t until 1946 that Dr. Raphael Mechoulam identified the structure of CBD and later discovered properties within the compound to treat epilepsy. Since that time, the FDA approved the GW Pharmaceutical CBD drug Epidiolex for use in treating rare forms of epilepsy. Congress also passed the 2018 Farm Bill, which legalized help and set off a tsunami of hemp-derived CBD products onto the marketplace.

Netherlands

Reforms to the Netherland’s opaque cannabis laws are finally underway after an agreement was struck on a four-year trial to provide cafes with a legal and regulated supply of the product.

Under existing law, cannabis can be sold over the counter in licensed coffee shops, but it is illegal to produce and supply the drug.

From 2021, 10 areas will acquire a legal supply of top quality cannabis from regulated producers for their cafes, in a bid to reduce black market activity.

In Other News

GrowGeneration

GrowGeneration Corp. (OTCQX: GRWG), has purchased the assets of Grand Rapids Hydroponics (GRH), with 1 location in Grand Rapids, MI. Following the acquisition, GrowGen now has 4 retail and warehouse locations in the Michigan market. 3rd Quarter Revenue is Tracking in Excess of $20 Million

“Grand Rapids Hydro marks our 7th acquisition in 2019, adding an accretive $8.0 Million in revenue to our Company. GRH, strategically located in Grand Rapids, MI., adds one of the largest and highest volume hydroponic garden centers in the country. Further, this acquisition positions the Company to service the ever-growing Michigan market.  GRH has a seasoned team and we are excited that the founder, Christopher Nicholson will be continuing in an executive sales and business development role for GrowGen.”

Golden Leaf

Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF) announced that Jeffrey Yapp will succeed John Varghese as CEO of Golden Leaf Holdings. Upon the resignation of Gary Zipfel on September 2, Mr. Yapp joined the Board of Directors. Mr. Varghese, who served as Interim CEO, will transition to the role of Executive Chairman and lead all capital markets related activities.

Rick Miller, current Chairman of the Company’s Board of Directors stated, “We are enthusiastic about the wealth of experience, innovative thinking and consumer-oriented vision that Jeff will bring to the role of CEO. The Board remains confident in the great potential and growth prospects for Golden Leaf Holdings.  We want to thank John Varghese who stepped up to lead Golden Leaf through this transitional phase, for his professionalism and leadership over the last few months. As John takes on the role of Executive Chairman, I will continue to work closely with both gentlemen as the Company’s lead director.”

TGOD

The Green Organic Dutchman Holdings Ltd.  (TSX:TGOD) (US:TGODF) has obtained approval from Health Canada, under the Cannabis Regulations, to expand operations into its new hybrid greenhouse located in Hamilton, Ontario. The 123,000 square foot state-of-the-art facility will serve to increase TGOD’s premium organic cannabis production as it expands its sales in Canada.

TGOD’s hybrid greenhouse is the fruit of years of research and development. From its cutting-edge climate control systems and water recapture systems to LED lighting, it combines the latest technologies with natural elements such as living soil and natural sunlight.  This organic growing facility has a much better environmental footprint and lower waste than traditional large-scale cannabis growing.

“We are thrilled to start using this purpose-built hybrid greenhouse as we ramp up our production of premium organic cannabis, an underserved segment of the market,” commented Brian Athaide, CEO of TGOD.  “Our team pioneered the concept of growing organic cannabis at scale; this hybrid greenhouse has been artfully designed for organic cultivation, allowing us to reliably produce clean, safe and non-irradiated cannabis.”


StaffAugust 26, 2019
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It’s time for your Daily Hit of cannabis financial news for August 26, 2019.

On The Site

Khiron Life Sciences

Latin American cannabis company Khiron Life Sciences Corp. (TSXV: KHRN)(OTCQB: KHRNF) stock slid on news of the company’s second-quarter earningsKhirondelivered a net loss for the three months ending June 30, 2019, of $10.6 million or $0.11 per share versus last year’s net loss of $6.2 million causing the company stock to drop by over 4% to lately trade at $1.15.

Khiron reported that its revenues of $2.2 million came from the sale of services at its clinics and sale of its cosmeceutical products, both of which began in the fourth quarter of 2018. The company said that revenues were in line with expectations and gross profits were consistent with the first quarter of 2019.

Golden Leaf

Golden Leaf Holdings Ltd. (CSE:GLH) (OTCQB:GLDFF) reported that its second-quarter total revenue was $4.3 million as compared to $3.7 million for the same three-month period in 2018 ending June 30.  The company said that the 17% quarter-over-quarter increase was due to strong wholesale revenue streams in Oregon and flower sales from our Canadian operations.

The company also delivered a net loss of $3.4 million or $0.01 per share, compared with a net gain of $3.2 million or US$0.01 per share for Q2 2018. The company noted that last year’s net income benefited from favorable changes in the fair value of warrants and debt liabilities of $7.3 million, versus this year’s unfavorable change of $0.1 million for the second quarter.

James E. Wagner

Ontario-based  James E. Wagner Cultivation Corporation (TSX VENTURE: JWCA)(OTCQX: JWCAF) reported third fiscal quarter revenue of $749,000, up 32% sequentially from $566,000, and compared to $3,500 in the same year-ago quarter. The net and comprehensive loss was $434,000 or $(0.01) per share in fiscal Q3 2019, improving 87% sequentially from $3.4 million or $(0.04) per share, and improving 91% from $4.6 million or $(0.06) per share in the year-ago quarter.

Party Bus Legislation Advances

A bill is moving forward that would outlaw smoking and vaping in commercial vehicles unless the driver has separate ventilation.

“Much like tours for wineries and breweries, cannabis party buses have sprouted all over California, and a bill designed to rein in the festivities could soon become law. Senate Bill 625, introduced by State Senator Jerry Hill in February, was approved by the California State Assembly’s Appropriations Committee on Wednesday.

The bill, if implemented, would bar passengers from smoking or vaping cannabis products in buses, limousines, and taxicabs, with an exception for limousines and buses whose passenger and driver compartments are completely sealed off and separately ventilated. The bill would also prohibit anyone under twenty-one from being on board in the presence of cannabis smoke.”

In Other News

TerrAscend Corp. (CSE: TER; OTCQX: TRSSF) announced it has received approval for Depository Trade Clearance (DTC) settlement services. DTC is a subsidiary of the Depository Trust & Clearing Corporation, a U.S. company that manages the electronic clearing and settlement of publicly traded companies. Securities that are eligible to be electronically cleared and settled through DTC are considered to be “DTC eligible”. This electronic method of clearing securities speeds up the receipt of stock and cash, and thus accelerates the settlement process for certain investor

Namaste Technologies Inc. (TSXV: N) (FRANKFURT: M5BQ) (OTCMKTS: NXTTF) today announced that its board of directors has named Meni Morim as chief executive officer and appointed him to the Company’s board of directors. Meni has served as the Company’s interim CEO since February 4, 2019 and the Company’s Chief Product Officer since May of 2018.

Headset is launching its competitive intelligence tool, Headset Insights, in Canada. Recreational cannabis has been legal country-wide in Canada since October 2018, and the young and growing market is still developing. This will be Canada’s first retail-derived cannabis market read based on aggregated Point of Sale data at the receipt-level.

Headset Insights will first be available in Alberta, the province with the most robust private retail footprint. With Headset Insights, businesses in and out of the cannabis industry will be able to understand the competitive landscape, identify opportunities and measure brand performance. The platform will give brands, licensed producers, retailers and investors the information they need to be a competitive player in this marketplace.

Green Thumb Industries Inc. (GTI) (CSE: GTII) (OTCQX: GTBIF) today announced it has closed on a transaction to acquire New York-based Fiorello Pharmaceuticals, one of only 10 companies approved to operate a medical marijuana company in the state. Assets include a manufacturing and cultivation facility in Schenectady County and a retail store in each of the following locations: Manhattan, Rochester, Halfmoon and Nassau County, three of which are open.

 


Debra BorchardtAugust 26, 2019
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Golden Leaf

Golden Leaf Holdings Ltd. (CSE:GLH) (OTCQB:GLDFF) reported that its second-quarter total revenue was $4.3 million as compared to $3.7 million for the same three-month period in 2018 ending June 30.  The company said that the 17% quarter-over-quarter increase was due to strong wholesale revenue streams in Oregon and flower sales from our Canadian operations.

The company also delivered a net loss of $3.4 million or $0.01 per share, compared with a net gain of $3.2 million or US$0.01 per share for Q2 2018. The company noted that last year’s net income benefited from favorable changes in the fair value of warrants and debt liabilities of $7.3 million, versus this year’s unfavorable change of $0.1 million for the second quarter.

Gross profits were $1.7 million or 40% of total revenue for Q2 2019, compared with $0.9 million or 26% of total revenue in Q2 2018.  Gross profit improvement in Q2 2019 over prior year period is consistent with the gross profit of 41% of quarterly revenues in Q1 2019.

“The strong gross margin run-rate in the first six months of 2019 is primarily due to significant cost reductions and utilization of improved inventory controls and processes,” said John Varghese, Interim CEO, Golden Leaf Holdings. “Our increased focus on operational excellence and building out our executive team is starting to show results that we believe are sustainable for growth in the coming quarters.”

Operating expenses were $4.0 million for Q2 2019 compared with $4.6 million for Q2 2018. Q2 2019 operating expenses included $0.3M in wages and benefits related to headcount reductions and severance.

Adjusted EBITDA loss dramatically decreased to $1.5 million for Q2 2019, compared with a loss of $3.5 million for Q2 2018. As of June 30, 2019, Golden Leaf had approximately $5.2 million in cash, compared with $12.3 million at December 31, 2018.

James E. Wagner

Ontario-based  James E. Wagner Cultivation Corporation (TSX VENTURE: JWCA)(OTCQX: JWCAF) reported third fiscal quarter revenue of $749,000, up 32% sequentially from $566,000, and compared to $3,500 in the same year-ago quarter. The net and comprehensive loss was $434,000 or $(0.01) per share in fiscal Q3 2019, improving 87% sequentially from $3.4 million or $(0.04) per share, and improving 91% from $4.6 million or $(0.06) per share in the year-ago quarter.

“Q3 was a milestone quarter for JWC,” said President and CEO, Nathan Woodworth. “Revenue grew 32% sequentially and we celebrated our first harvest from our new JWC2 facility, allowing us to produce record amounts of our clean, consistent cannabis using our unique aeroponic technology.

“In fact, we achieved a 28% increase in actual yield per plant versus our previously reported estimated yields, and we expect this to be sustainable. We estimate the additional yield alone could boost revenue by at least $25 million annually once JWC2 is fully operational.

“Initial sales from the JWC2 harvest began following the end of the third quarter. However, right before the end of the quarter, we secured the additional license from Health Canada to add 11,000 sf. of flowering space, bringing the total to 22,000 sf. at JWC2. We anticipate initial sales generated by this additional capacity to begin in fiscal Q1 2020. Within the next couple of months, we expect to receive a license to double this capacity again to a total of 44,000 sf.”

Cash and equivalents at June 30, 2019, totaled $3.8 million, compared to $2.3 million at March 31, 2019, and $18.0 million at June 30, 2018. The decrease in cash is attributable to cash used in operations.


William SumnerMay 1, 2019
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It’s time for your Daily Hit of cannabis financial news for May 1, 2019.

On The Site

Curaleaf

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) is going to acquire Cura Partners, Inc. the owners of the Oregon-based Select brand, in an all-stock deal valued at C$1.27 billion or $948.8 million. The company said that the acquisition includes Select’s manufacturing, processing, distribution, marketing, and retailing operations and all adult-use cannabis products marketed under the Select brand name, including all intellectual property. The deal is expected to close in 2019.

Emerald Health

Emerald Health Therapeutics, Inc.  (TSXV: EMH) (OTCQX: EMHTF) delivered fourth quarter and 2018 results along with an update of its first-quarter sales. The revenue in the fourth quarter was $1.1 million versus last year’s $279 thousand for the same time period. The net loss in the fourth quarter was $13.9 million, higher than the third quarter’s losses of $6.4 million.

WeedMD

The licensed cannabis producer and distributor WeedMD Inc. (TSX-V: WMD) (OTCQX: WDDMF) announced its financial results for the fiscal year ending on December 31, 2018. WeedMD’s revenue for the full year grew from $1.4 million to $8.2 million, representing an increase of 456%. The company’s net and comprehensive loss declined dramatically, falling from $8.8 million to just $895,128.

In Other News

Golden Leaf

Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF) has reported its financial results for the 2018 fiscal year. Full-year revenue was $16.5 million, up 43% from $11.5 million in 2017. Gross profit declined slightly from 15% of total revenue ($1.7 million) to 13.3% of revenue ($2.2 million). The company’s comprehensive loss declined significantly, falling from $55.9 million in 2017 to $4.4 million, and its net loss was $4.6 million.  “Looking forward, we remain focused on growing revenue by expanding our retail footprint, product array and cultivation presence throughout the U.S. and Canada. At the same time, we are committed to growing responsibly while improving our margin growth and EBITDA. Towards that end, we have taken several measures this year to increase efficiencies throughout our organization to lower costs, increase cash flow and improve our overall financial performance,” said Golden Leaf CEO William Kulczycki.

Dixie Brands

Today, Dixie Brands Inc. (CSE: DIXI.U) (OTC: DXBRF) (Frankfurt: 0QV) announced their financial results for the fiscal year ending on December 31, 2018. Revenue for the year was $5.7 million, up 73% from $3.3 million in the previous year. Fourth quarter revenue was $1.5 million. The gross profit margin was 52% ($3.01 million), up from 47% ($1.5 million) in 2017. Net losses rose significantly, climbing from $4.3 million in the previous year to $21.23 million. Company management attributes the steep climb to “significant increase in operating and other expenses,” such as its reverse takeover of Academy Explorations Limited and public listing activities.  “The financing and public listing we completed in the final weeks of 2018 set the stage for a breakout year in 2019,” said Chuck Smith, President and CEO, Dixie Brands. “Dixie accomplished a lot as a private company, building up an industry-leading portfolio of more than 100 commercialized products.  We are very excited by our opportunities to invest our capital into strengthening our distribution network and market presence to accelerate our growth.”

Weekend Unlimited

Weekend Unlimited Inc. (CSE: POT) (FSE: 0OS1) (OTCQB: WKULF) today announced the appointment of Chris Backus as Interim President and CEO, effective immediately. Backus was appointed to the company’s Board in March of this year and previously served as a former Senior Officer and Manager with the Royal Canadian Mounted Police (RCMP). Backus will focus on the launch of the company’s wknd! brand product line, generating revenues with CHAMP and Verve beverages in the USA, and the ramp-up of the Northern Lights Organics hemp farm in Canada. “’I am energized to accept this leadership role with Weekend Unlimited. Working with the Board and the team, my focus is entirely toward harnessing the Company’s assets to deliver results for shareholders,”’ said. Backus. “This means an immediate mandate to execute on ready-to-go initiatives that will drive revenues while building strong consumer awareness of the Company’s brands. Simultaneously, we will responsibly advance our initiatives supporting growth in the longer term.”


Debra BorchardtNovember 5, 2018
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Golden Leaf Holdings (OTCQB:GLDFF) announced it was merging with Terra Tech Corp. (TRTC) after the company reported rising losses in the third quarter. The Canadian-based cannabis company with operations in Oregon, Nevada and Canada delivered quarterly revenues of $5.1 million for Q3 2018, compared to $3.1 million for Q3 2017.

The net loss for Q3 2018 was $5.5 million or $0.01 per share loss, compared with a net loss of $3.2 million or $0.01 per share loss, for Q3 2017. The losses for the quarter increased primarily due to the changes in fair value of biological assets and warrant liability. Adjusted EBITDA for the third quarter of 2018 was a loss of US$2.9 million primarily driven by production costs and operating expenses.

Mr. William Simpson, Chief Executive Officer of Golden Leaf Holdings, commented, “Our third quarter revenue reached yet another record, achieving US$5.1 million, primarily driven by sale of flower in Canada after we received our Canadian Sales license from Health Canada, and seasonal improvements in our Oregon Retail revenue and the addition of two new Retail stores in Oregon when compared to the third quarter 2017. Adjusted EBITDA for the third quarter of 2018 was a loss of US$2.9 million primarily driven by production costs and operating expenses.

Gross profits also fell and were only $0.4 million or 9% of net revenue for Q3 2018, compared with US$0.7 million or 23% of net revenue for Q3 2017. Q3 2018 gross margins decreased primarily due to non-cash valuation of biological assets.

Terra Tech Corp. signed a non-binding letter of intent to merge with Golden Leaf Holdings Ltd.  saying that a wholly owned subsidiary of Terra Tech will amalgamate with Golden Leaf, with the resulting amalgamated corporation being a wholly owned subsidiary of Terra Tech.

Derek Peterson, CEO of Terra Tech, commented, “We are planning to merge with Golden Leaf’s operations because its seed-to-sale business model is complementary to ours, encompassing both the Oregon and Canadian market which represent new markets for us, and touching Nevada where we are focused on gaining market share. Its ‘Chalice Farms’ retail dispensaries are well known and have an excellent reputation in Oregon, and the wholesale side of the business offers diverse, high quality cannabis products for all demographics, which are complementary to our existing wholesale product lines. This transaction, if completed, will create a combined company that will control 41 permits across cultivation, manufacturing, distribution and retail spanning Oregon, California and Nevada, in addition to 21 pending permit applications in multiple jurisdictions throughout the U.S.”

The LOI stated that Golden Leaf shareholders would receive 0.1203 common shares of Terra Tech for each common share of Golden Leaf held.  Terra Tech currently has 79.2 million shares outstanding. As a condition of closing, Terra Tech will be required to list its shares on the CSE.  Listing will be subject to satisfying all of the CSE’s requirements. Upon closing, Derek Peterson will remain in his position as CEO, with William Simpson to become President of the combined company.

As of September 30, 2018, Golden Leaf had approximately $20.1 million in current assets, compared with $11.6 million in current assets at December 31, 2017. The increase is largely because of the bought deal financing which was completed on January 31, 2018,


Debra BorchardtSeptember 10, 2018
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Cannabis company Golden Leaf Holdings Ltd. (GLDFF) entered into an agreement with Canaccord Genuity Corp. as sole agent and bookrunner for a private placement of unsecured convertible subordinated debenture units. The deal is expected to close on or about October 4.

Golden Leaf is a Canadian company operating in multiple jurisdictions, including OregonNevada, and Canada, with cultivation, production and retail operations built around recognized brands like Chalice Farms. Golden Leaf distributes its products through its Chalice Farms retail dispensaries, as well as through third-party dispensaries. Golden Leaf’s cannabis retail operations and products are designed with the customer in mind, focused on superlative in-store experience and quality products.

 Terms

According to the company statement, Canaccord Genuity  has been tasked with the effort to sell up to C$15 million of debenture units of Golden Leaf with  each unit to be made up  of one C$1,000 principal amount unsecured convertible subordinated debenture accruing interest at 12% per annum until December 31, 2019, after which date interest will decrease to 10% per annum, and be payable semi-annually until maturity, and 1,665 common share purchase warrants of Golden Leaf at a price of C$1,000 per unit, for aggregate gross proceeds of up to C$15 million. Each Debenture is convertible into common shares of the company at a conversion price of C$0.30 per common share. The Debentures will mature 36 months from the closing of the Offering. Each warrant will entitle the holder to acquire one common share at a price of C$0.40 per common share for a period of two years following the closing of the offering, subject to adjustment in certain events. The net proceeds from the offering are anticipated to be used for working capital and general corporate purposes.

In The Pipeline

Golden Leaf CEO William Simpson will present live at VirtualInvestorConferences.com on September 12, 2018. The company has recently announced a definitive agreement to acquire Tahoe Hydroponics Company and 11T Corp, a leading Nevada producer and among the first cultivators in the state. The company also acquired a “Sweet 16” combined cultivation, production, and retail license in California, facilitating vertically integrated operations near San Jose, CA and received a city and state license approval for an extraction in Portland, OR. It harvested its first crops from Medical Marijuana Group, its Canadian subsidiary, with yields that were 30% greater than originally forecasted, putting the Company in line with established cultivators. Canadian Sales License is expected imminently from Health Canada.

 


William SimpsonJuly 17, 2018
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With President Trump signaling his likely support for the bipartisan Congressional effort to ease the U.S. ban on cannabis in legal markets, the country as a whole could benefit immensely.

By giving states the rights to determine the best course with cannabis, business valuations could go through the roof. For example, under the current laws, Golden Leaf Holdings, a cannabis company with cultivation, production, and retail operations that is publicly traded in Canada, is unable to be publicly traded on the Nasdaq. Conversely, Canadian cannabis companies are already allowed on the Nasdaq, giving them a significant advantage in the globally booming market.

The most significant progress for businesses would come with the easing of Internal Revenue Code 280E, which has, by and large, blocked cannabis businesses from tax deductions, credits and banking in general. The passing of this bill would be a tremendous step for states with legalized markets. American cannabis entities struggle daily to make retail an efficient platform, while barely breaking even under the current regulations. The Treasury Department demanding money from a market they deem illegal needs to end.

Most significantly, ending the federal ban could represent a step in the right direction towards addressing systemic criminal justice issues that unjustly target minorities, which is far more important than any business-related outcome.

This measure is far from a single, fix-all solution. Even if the bill became law tomorrow, businesses wouldn’t be able to reap the benefits right away. If cannabis remains a Schedule 1 narcotic, banks will continue to be hesitant to opening accounts for businesses. The same goes for standard business practices like shipping across state lines.

Furthermore, nothing federally-approved changes local and state laws. This means issues stemming from occupancy, zoning, packaging and other regulations will still loom over businesses. Too many voices in cannabis could leave the industry at the whim of political agendas and powerful competitor lobbies, including tobacco, alcohol and pharma.

While the bipartisan bill does provide the U.S. a step in the right direction for both the cannabis industry and its citizens, we must remember that it still is just one incremental step in the process. Plenty of work is left to be done on federal, state and local levels to revise regulations for businesses and citizens in states with legal markets. That said, the possible passing of the bill should be championed for the huge victory it would represent. With hope, it would be far from the last one to come.

 


Jack SmithMay 31, 2018
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Golden Leaf Holdings said first-quarter revenue soared, thanks to its 2017 acquisition of Chalice Farms and highlighted the progress it’s making in expanding its cannabis operations in California.

Golden Leaf, which trades on the Canadian Stock Exchange under the “GLH” ticker and is traded over-the-counter in the U.S., said revenue jumped 42 percent year-over-year to $3.2 million for the period ending March 31, 2018. It also generated $353,000 in gross profit, up from $238,000 in the year-ago quarter. The company said gross margins included a one-time charge of $377,000 for a write-off of obsolete packaging inventory.

Net income was a gain of 2 cents per share, compared to a loss of 2 cents per share in the first-quarter of 2017. However, the company said that it benefited from a $12.4 million benefit due to favorable changes in the fair value of its warrant and debt liabilities.

Golden Leaf’s CEO William Simpson called out the Chalice Farms acquisition, which took place in July 2017 in prepared marks, noting it’s opened more locations since the deal closed.

“Subsequent to quarter-end, we opened our seventh overall retail dispensary, and sixth Chalice Farms location, located in Happy Valley, Oregon, which has exceeded our expectations and is already our second highest selling Chalice location after just a few weeks since opening,” Simpson said.

He continued: “Our retail operations are a key component of our growth strategy and we are pleased to see our increased brand recognition among customers further entrench our position as a leading retailer in Oregon. We will continue to strategically invest in our retail strategy, adding stores in optimal locations.”

Golden Leaf also called out its new Fruit Chews edible line, which was launched in March in Oregon. The chews come in four flavors (Tangerine, Tropical Fruit, Kiwi Strawberry and Acai Berry) and are designed to “bring more variety to the Golden brand of products and aim to deliver delicious tasting edibles that are vegan-friendly, gluten-free and soy-free for the health-conscious, non-smoking cannabis consumer.”

At the end of the quarter, Golden Leaf had $22.1 million in cash, aided by a CAD $17.5 million private placement in January.

During the quarter, Golden Leaf also added Craig Eastwood as its CFO. Eastwood’s hire, along with raising the $17.5 million CAD, were “instrumental in fortifying the financial management side of the business, which underpins our growth initiatives,” Simpson added.

For the rest of 2018, Simpson said that Golden Leaf’s growth initiatives include building out its retail presence in Nevada and California, both of which have legalized cannabis for recreational use. Golden Leaf also wants to establish a franchise model for its Chalice Farms acquisition in the western part of the U.S. and Canada.

Simpson concluded by saying that the company is “making great strides” building the company that will allow it to take advantage of opportunities that presented to it in the future.

“We are pleased with the progress we have made laying the foundation for our entry into new geographies, across both our retail and cultivation operations,and look forward to continuing to drive revenue growth throughout 2018,” Simpson said.


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