Goodness Growth Archives - Green Market Report

StaffOctober 26, 2022
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This story was reprinted with permission from Crain’s Chicago and written by John Pletz

Verano Holdings’ (OTC: VRNOF) breakup with Goodness Growth looks like it’s going to be messy and expensive.

Chicago-based marijuana company Verano called off its planned $413 million purchase of Goodness Growth on Oct. 13, citing unspecified breaches of “covenants and representations.”

Goodness says Verano tried to back out of their deal without justification. Goodness Growth sued Verano in Canada, where both companies’ stocks are listed because cannabis remains federally illegal in the U.S. Goodness is seeking unspecified damages.

In late January, Verano announced the all-stock deal to buy Minneapolis-based Goodness Growth, which has licenses in New York and Minnesota. The two markets were seen as attractive additions for Verano, which, like its Chicago peers Cresco Labs and Green Thumb Industries, is among the biggest publicly traded U.S. marijuana companies and operates in multiple states.

Goodness Growth is a relative small fry, with a market value of just over $100 million before the announcement that its deal with Verano was off, which chopped the stock price by 60%. Verano has a market value of $1.7 billion.

Soon after the deal was announced, Verano got caught in a downdraft among marijuana stocks that was roughly twice as bad as the 25% selloff in the broader market.

“Verano began raising issues and taking positions suggesting it had buyer’s remorse,” Goodness Growth says in its lawsuit, adding that Verano tried to renegotiate the price or abandon the deal.

Verano declined to comment on the suit.


StaffSeptember 21, 2022
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The Daily Hit is a recap of cannabis business news for Sept. 21, 2022.

ON THE SITE

Vireo Health Sues Minnesota Over Hemp Edibles

Medical marijuana company Vireo Health, a subsidiary of Goodness Growth Holdings (OTC: GDNSF) is fighting back against a recent loophole for edibles in the state of Minnesota. The conflict stems from a recent amendment to Minnesota laws that was enacted on July 1. The statute now allows anyone to sell edible products with up to 5 milligrams of THC derived from hemp and a THC concentration of up to 0.3% to anyone over the age of 21. The complaint against the state says that the hemp-derived edibles are chemically identical to medical cannabis-derived edibles sold by Vireo that have the same type, quantity and concentration of THC. Read more here.

Florida Issues New Medical Marijuana License To Black Farmer

On Wednesday, Florida regulators issued a long-awaited medical cannabis business license to the state’s first Black marijuana company owner, an inevitable result of a 2017 law that required the state expand the MMJ industry. The winner beat out 11 other applicants for the license, and perhaps the only certainty now is that there will be a wave of lawsuits from those who lost out, the Orlando Sentinel reported. Read more here.

Video: GMR Cannabis Tech Summit

On September 8, 2022, the Green Market Report hosted its first Cannabis Tech Summit. The Summit was sponsored by KCSA Strategic Communications, Headset, Agrify, Springbig, Zelira Pharmaceuticals, Metrc, Mattio Communications and The Bureau cannabis packaging. The event also featured the first GMR Cannabis Tech Awards. The feedback for the event was positive and especially noted the diversity of the panels and attendance as well as the panel topics. Watch now.

BLAZE Honored For Best Delivery Tech At Green Market Report Tech Awards

When delivery started to become a key part of the cannabis industry, most cannabis software solutions didn’t address it as its own consideration. Instead, they tried to be everything to everyone, and as a result, they risked not being able to deliver for operators or consumers. Enter BLAZE Solutions. The Green Market Report Tech Awards were presented following the first-ever Green Market Report Tech Summit on Sept. 8 at The Pearl event space in San Francisco. This week, we’ll be providing a closer look at the honorees. Read more here.

IN OTHER NEWS

Oklahomans Won’t Vote On Recreational Marijuana This November

After several legal battles State Question 820, the petition to legalize recreational marijuana in Oklahoma will not be on the November ballot. The Oklahoma Supreme Court denied the group’s request to allow it to go to a statewide vote, saying the organizers of SQ820 “have no clear legal right and respondents (State Election Board) have no plain legal duty” to put the petition on the Nov. 8, 2022, ballot. Read more here.

1st Circ. Declines To Review Pot Interstate Commerce Ruling

The full First Circuit on Wednesday declined to review a split panel decision that found the dormant commerce clause of the U.S. Constitution applies to the federally illegal medical marijuana industry. The decision upheld the ruling that struck down Maine’s residency requirement for cannabis licensure. Read more here.

Trulieve Wins Georgia Production License

The Georgia Access to Medical Cannabis Commission awarded Trulieve GA a Class 1 production license. Trulieve patients in Georgia will be able to choose from a variety of low-THC oil products in both oral and topical forms in the near future. Read more here.

Clever Leaves Partners With House of Kush for International Expansion

Clever Leaves Holdings (Nasdaq: CLVR), a multinational operator and licensed producer of pharmaceutical-grade cannabinoids, announced a partnership with U.S. cannabis-branded genetics company House of Kush to be the exclusive grower and distributor of proprietary genetics globally. Read more here.


Adam JacksonAugust 11, 2022
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Goodness Growth Holdings, Inc. (CSE: GDNS) (OTCQX: GDNSF) posted positive results on Thursday — driven by new retail store sales and new regulatory changes in nascent state markets.

The multi-state cannabis company reported financial results for its second quarter ended June 30, 2022.

Goodness Growth delivered approximately $21.1 million in total revenue during the period, a gain of 48.2% versus the same period last year — beating the Yahoo Finance Average analyst estimate for revenues of $19.62 million.

The net loss in the quarter was $6.2 million versus a net loss of $7 million in the same period last year. The company said that the change versus the prior year was driven by the improvement in operating income, offset by increased interest expenses. Operating income in the second quarter was $300,000, a gain of $3.5 million versus an operating loss of $3.2 million in the same period last year. The improvement in operating performance was driven by increased revenue and gross profit dollars, as well as a slight reduction in total operating expenses, the company said.

“Our second quarter results reflect improved margin performance driven by continued growth in our MinnesotaNew Mexico, and Maryland markets, as well as benefits from the recent wind down of operations in Arizona which we discussed last quarter,” said chairman and CEO Kyle Kingsley.

Gross profit was $10.4 million, or 49.2% of revenue, versus a gross profit of $6.9 million or 48.6% of revenue in the same quarter last year. The company said that the improvement in gross profit dollars was driven by higher production volume and increased sales, with relatively stable margin performance.

The company said it saw $10.1 million worth of total operating expenses in the second quarter, a reduction of $100,000 versus $10.2 million in the same period last year.

Goodness Growth said that total other expenses were $5.4 million during the second quarter, versus $2.9 million in the same period last year. It said that the variance in other expenses is primarily attributable to increased interest expenses related to the company’s credit facility.

EBITDA was $1.1 million during the second quarter, versus a loss of $2.4 million in the same period last year.

For adjusted EBITDA, the company posted $2.3 million in the quarter, versus a loss of $1.0 million in the prior year. Diluted loss per share in the second quarter was five cents versus diluted earnings per share of six cents in the same period last year.

“GAAP gross margin performance includes activities related to our Arizona operations, which were wound down prior to the end of the second quarter,” Kingsley added. “Excluding Arizona operations, we estimate that second-quarter pro forma gross margins would have been approximately 55.0 percent.”

The company said it had 128,111,328 equity shares issued and outstanding on an as-converted basis, and 159,619,637 shares outstanding on an as-converted, fully diluted basis.

Total current assets for Goodness Growth were $46.4 million. The company said it had $17 million worth of cash on hand, which included net proceeds received from an increase on its delayed draw loan of $13.5 million during the second quarter. The company’s current liabilities were $18.5 million.

“Strong sales growth catalysts resulting from the recent regulatory changes in Minnesota and New Mexico are expected to persist into next year, and we’re also looking forward to contributions from the launch of edibles products which occurred in Minnesota earlier this month, Kingsley said. “Finally, our expansion project in New York is progressing ahead of the launch of adult-use sales in that important market, and we continue to expect our pending transaction to be acquired by Verano Holdings Corp. will close sometime during the fourth quarter of this year.”


StaffMay 11, 2022
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Goodness Growth Holdings, Inc. (CSE: GDNS) (OTCQX: GDNSF) reported financial results for its first quarter ended March 31, 2022. Goodness Growth had total revenue in the first quarter of $15.6 million, an increase of 18.2% as compared to the same time period in 2021. The net loss in the quarter was $14.6 million versus a net loss of $6.9 million in the first quarter of 2021. The variance compared to the prior year was driven by the write-down of Arizona inventory to realizable value, the impairment of long-lived assets, and increased interest expenses.

“Our first-quarter results reflected continued growth across all of our markets besides Arizona, where we have been working through the loss of biomass related to weather impacts we’ve discussed previously,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “The recent launch of flower sales in Minnesota’s medical market is going exceptionally well for our Green Goods retail stores in the state, and we also expect the recent transition to adult-use sales in New Mexico to contribute to stronger sales growth throughout the remainder of this year. Our business will continue to benefit from these recent regulatory transitions in our markets, and we also believe it’s possible that adult-use sales could begin in New York sometime during the second half of 2022.”

Excluding contributions from Ohio and Arizona retail, total revenue increased 34.5% and reflected growth in each of the company’s other markets. Retail revenue excluding Arizona increased 40.3% to $12.4 million in Q1 2022. Wholesale revenue, excluding Ohio increased by 17.3% to $3.2 million, reflecting strong growth in MarylandNew York, and Minnesota, partially offset by a decline in the Arizona market.

Verano Updates

In February, the company announced that it agreed to be acquired by Verano Holdings Corp. in a deal valued at approximately $413 million on a fully-diluted basis.

Kingsley continued, “First quarter results were also impacted by an inventory adjustment in Arizona and impairments of long-lived assets in Arizona and Maryland. Given our pending transaction with Verano Holdings Corp. and the license overlaps in these markets, we’ve revised our operating plans. We recently wound down operations at the outdoor farm in Amado, Arizona, and will no longer pursue the phase two expansion in Massey, Maryland. We are continuing to focus on our expansion in New York, and expect the pending transaction with Verano to close sometime during the fourth quarter.”


Debra BorchardtMarch 11, 2022
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Goodness Growth Holdings, Inc. (CSE: GDNS)(OTCQX: GDNSF) reported financial results for its fourth quarter and full-year ending December 31, 2021. Total revenue in the fourth quarter was $13.7 million, an increase of 10.5% versus the same time period in 2020. Excluding contributions from PennsylvaniaOhio, and Arizona retail, total revenue increased 23.8%. Retail revenue excluding Arizona and Pennsylvania increased 33.8 percent to $10.8 million in Q4 2021 and reflected growth in each of the Company’s other retail markets. Wholesale revenue, excluding Pennsylvania and Ohio, declined by 5.6% to $2.2 million, with the decline primarily driven by the continued impact of crop loss in Arizona which occurred during the third quarter, partially offset by growth in New York and Maryland.

Goodness Growth also reported a net loss in the quarter of $12.7 million, versus a loss of $2.3 million in 2020 for the same time period. The company attributed the increase to higher production costs, operating, and other expenses, offset partially by the gain on the disposition of the company’s former dispensary in Arizona during the quarter.

“Our fourth-quarter results reflected continued growth across most of our markets, but we continued to experience the negative impact of crop loss in Arizona we’ve previously discussed which occurred during the third quarter,” said Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “Wholesale sales in Arizona increased sequentially as compared to Q3, but the loss of biomass continued to impact gross margin performance. Revenue increased across the rest of our operating markets in Q4, and we’re looking forward to contributions from flower sales beginning in Minnesota in Q1 and adult-use sales in New Mexico in Q2.”

2021 Full Year Results

Goodness Growth reported total revenues increased by 10.6% over last year to $54.4 million, including the company’s former subsidiaries in Pennsylvania and Ohio, and its former dispensary in Arizona. Excluding contributions from PennsylvaniaOhio, and Arizona retail, full-year revenue increased 30.8%. Retail revenue excluding Arizona and Pennsylvania increased 33.3% to $39.6 million in 2021 and reflected growth in each of the company’s retail markets. Wholesale revenue, excluding Pennsylvania and Ohio, increased by 21.3% to $9.7 million. The net loss in 2021 was $33.7 million, compared to a loss of $22.9 million in the fiscal year 2020. The variance compared to the prior year was driven by increased operating and other expenses and higher interest expenses, as well as the non-recurrence of the gain on disposition of assets in the prior year.

Total operating expenses were $40.3 million, or roughly flat compared to $40.2 million in the fiscal year 2020. Increases in salaries and wages, professional fees, general and administrative expenses, and amortization and depreciation expenses were offset by a reduction in share-based compensation as compared to the prior year. The increase in salaries and wages, and general and administrative expenses were driven by significant operational buildout across the Company’s various operating markets, and the reduction in share-based compensation was driven by the non-recurrence of warrant vesting which occurred in the fiscal year 2020.

“Smokeable flower sales began in Minnesota’s medical market on March 1, and early indications suggest Minnesota flower sales will be our strongest driver of revenue growth until adult-use sales commence in the State of New York. We continue to focus on the development of our new dispensaries in New York, as well as the construction of our new indoor cultivation facility, and expect these activities to continue through the closing of the previously-announced, pending transaction to be acquired by Verano Holdings Corp. Finally, given this pending transaction, we no longer intend to provide frequent updates of our future performance expectations, and as a result, are withdrawing our previous outlook at this time.”

On February 1, 2022, goodness Growth announced that it has entered into a deal to be acquired by Verano Holdings Corp. in an all-share transaction valued at the time of announcement of approximately $413 million on a fully-diluted basis.


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