Grassroots Archives - Green Market Report

StaffStaffJuly 23, 2020
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5min12070

Curaleaf Holdings, Inc. (OTCQX: CURLF) closed on its previously announced acquisition of GR Companies, Inc. also known as Grassroots on July 23, 2020. Curaleaf stock was higher by almost 3% to $7.39 on the news as it has been almost a year since it was first announced. The stock is nearing its year high of $8.21.

The acquisition of Grassroots now propels Curaleaf to the top of the charts for cannabis companies by revenue. The company will now have affiliated operations that cover over 135 dispensary licenses, 88 operational dispensary locations, over 30 processing facilities, and 22 cultivation sites with 1.6 million square feet of current cultivation capacity. It also jumpstarts the company’s presence in the hot states of Illinois and Pennsylvania.

“The successful acquisition of Grassroots marks Curaleaf’s expansion into new vertically integrated markets in the Midwest, firmly establishing our U.S. market leadership position. This highly complementary combination brings together two companies with a shared vision for enhancing patients’ and customers’ lives with high-quality cannabis wellness and lifestyle products,” said Joseph Lusardi, CEO of Curaleaf. “The integration of Grassroots is expected to be immediately accretive to our financial performance, with our unprecedented scale providing significant opportunities to leverage Curaleaf’s powerful consumer brands as well as new form factor innovations across our expanded national presence.”

The company said in a statement that the cultivation and processing assets in Illinois have been transferred and the formal approval to transfer certain retail assets is expected imminently. Plus, Maryland operations previously affiliated with Grassroots may be transferred to Curaleaf after expiration of the statutory hold period, subject to regulatory approval and compliance with restrictions on ownership or control of multiple cultivations, processor, and dispensary licenses in the State.

Completion of the transaction accelerates Curaleaf’s expansion into Illinois and Pennsylvania, which are among the largest and fastest-growing cannabis markets in the United States. Curaleaf will now hold a leading licensed cannabis presence in-state markets including Arizona, Connecticut, Florida, Illinois, Pennsylvania, Maryland, Massachusetts, Maine, Nevada, New Jersey, New York, North Dakota, and Vermont.

“This opportunity would not have come to fruition without the strength of our highly skilled executive team, who have built an impressive portfolio at an unprecedented pace, with facilities in highly competitive markets,” said Mitchell Kahn, Co-Founder, and CEO of Grassroots. “We look forward to integrating our talent and resources to build a great consumer product company – one that is dedicated to producing and delivering high-quality, safe, and effective cannabis products to the customer.”

Curaleaf Announces New Board Member

Curaleaf also announced it appointed Kahn to the company’s Board of Directors effective immediately. The appointment of Mr. Kahn expands the Curaleaf Board of Directors from five to six members.

“On behalf of the Curaleaf Board of Directors and management team, we are pleased to welcome Mitch to the Board. As a co-founder of Grassroots, he brings an impressive track record for success in building the largest private, vertically integrated U.S. multi-state cannabis operator. Combined with his deep experience across commercial real estate as well as the legal field, Mitch adds significant expertise and insight that will be vital as we extend our market leadership position and drive long-term shareholder value,” said Boris Jordan, Executive Chairman of Curaleaf.

 


Debra BorchardtDebra BorchardtJuly 21, 2020
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3min3420

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF)closed on a C$34 million offering that was announced on July 2, 2020. The company said proceeds of the offering will be used to fund Grassroots’ high-return expansion projects, replenish its working capital as well as for general corporate purposes.

Joseph Lusardi, CEO of Curaleaf, said, “Our successful completion of this private placement further strengthens Curaleaf’s balance sheet and provides additional flexibility to support our future expansion initiatives as we look to extend our leadership position in the fast-growing U.S. cannabis market.”

Deal Terms

The company said in a statement that under the initial tranche, subscribers purchased an aggregate of 3,541,429 subordinate voting shares of the Company at a price of C$7.70 per Subordinate Voting Share for aggregate gross proceeds of approximately C$27,269,003.  Subsequent to setting the initial tranche, the Company secured a second tranche investment, which is part of the Offering closing today.  Under the second tranche, a subscriber purchased 842,269 Subordinate Voting Shares at a price of C$8.058 per Subordinate Voting Share for gross proceeds of approximately C$6,787,003.

In aggregate, the Offering generates approximately C$34,056,007 in gross proceeds for the Company in exchange for 4,383,698 Subordinate Voting Shares at an average price of approximately C$7.77 per Subordinate Voting Share.

Grassroots Acquisition

Curaleaf had announced in July 2019 that it was buying Grassroots or GR Companies Inc. in a deal valued at $875 million. The deal was to be made up of 108.8 million shares and $75 million at the closing which was expected in early 2020. “With the acquisition of Grassroots and the pending acquisition of Select, Curaleaf is the world’s largest cannabis company by both revenue and operating presence,” said Joseph Lusardi, CEO of Curaleaf. “With a combined 68 open dispensaries, this transaction significantly accelerates our expansion strategy and strengthens our reach across the medical and adult-use markets. In addition, it enhances the depth of our retail and wholesale platform across the country. By leveraging our scale, as well as our market-leading capabilities and expertise, we will continue to deliver value for our shareholders.”

The company currently operates in 18 states with 57 dispensaries, 15 cultivation sites, and 24 processing sites. Curaleaf employs over 2,200 people across the United States.

 

 

 


StaffStaffJuly 8, 2020
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6min3900

It’s time for your Daily Hit of cannabis financial news for July 8, 2020. 

On the Site 

KushCo 

KushCo Holdings, Inc. (OTCQX:KSHB) reported that its net revenue dropped 46% in its fiscal third-quarter ending May 31, 2020. The net revenue of $22 million was also lower than what the company has forecast in March when it told investors that it would be roughly $30 million. Analysts according to Yahoo Finance had estimated that revenue on the low end would be $29 million. 

The company attributed the drop to the adoption of the 2020 Plan, which meant tighter credit terms being extended to smaller customers. the company is focused on larger, more financially healthier customers. 

In addition to that, the drop in revenue was also driven by lower sales from vape and natural products, as well as order lumpiness from KushCo’s larger customers. Compounding the quarter’s decision to tighten credit, COVID-19 caused travel and regulatory restrictions in the markets that the company operates. 

Conception Nurseries 

Tissue culture technology company, Conception Nurseries has raised more than $15 million with the addition of approximately $12 million in its Series A round. The company said that the proceeds would be used to operationalize its facility in Sacramento, CA. 

The raise was announced by Viridian Capital Advisors, who through broker-dealer, Pickwick Capital Partners, led the financing round. 

Massachusetts 

Adult-use stores in Massachusetts closed for business on March 24th and reopened on the 25th of May. Sales were significantly higher than usual in the two weeks leading up to the closing of the adult-use market’s retail stores in Massachusetts. The day before closing, March 23rd, sales spiked 60% because of customers trying to stock up before the lockdown.  

A new report issued by Nucleus One, a Massachusetts-based B2B cannabis company offering a variety of services, has reviewed the COVID-19’s impact on the state’s cannabis industry. 

In Other News 

Scythian Real Estate, a full-service real estate company that specializes in working with sophisticated, well-capitalized cannabis operators, today announced the acquisition of a 3,048-square-foot facility operated by Grassroots Cannabis in Bradford, Pennsylvania. Scythian purchased the recently renovated property at 109 Main Street from Grassroots Cannabis in a sale-leaseback transaction. 

“This is our third transaction with Grassroots, and we’re thrilled to continue building a strong relationship with such a well-respected leader in the cannabis market,” said Randy Roberts, partner at Scythian. “We look forward to identifying new opportunities to further position Scythian for long-term growth in limited-license states and other strategic markets in the U.S.” 

 

 

 


Debra BorchardtDebra BorchardtJune 4, 2020
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4min9350

Grassroots Cannabis has sold two facilities it operated in North Dakota to Scythian Real Estate. Scythian purchased the properties from Grassroots Cannabis for $3.4M. Grassroots is going to lease back the properties. Grassroots Cannabis will continue to operate both North Dakota locations under the name Herbology, offering high-quality medical marijuana products including flower, concentrates, tinctures, vape pens and topicals, as well as one-on-one patient consulting.

“This sale-and-leaseback agreement with Scythian represents a non-dilutive capital solution for Grassroots Cannabis as we expand our retail operations,” said Steven Weisman, Chief Strategy Officer and Co-founder of Grassroots Cannabis.

Curaleaf (OTC:CURLF)  announced it was acquiring Grassroots in 2019, but the deal has yet to close. In May, Curaleaf said it is still working through state approvals and hopes to close by the end of the second quarter.

Joseph Lusardi, Chief Executive Officer of Curaleaf said in the company’s recent earnings release, “We expect the pending completion of our purchase of Grassroots, the largest private vertically integrated multi-state cannabis operator, to affirm our position as the world’s largest cannabis company by both revenue and operating presence.”

Scythian Deal

The acquisition includes a recently renovated 4,500-square-foot facility located at 310 US-2 in Devils Lake and a newly constructed 4,995-square-foot facility located at 318 24th St. East in Dickinson.

“Scythian is committed to working with cannabis operators like Grassroots Cannabis that have a proven track record of success,” said Randy Roberts, Partner at Scythian. “Both of these locations are well-positioned to support the long-term growth of Scythian’s portfolio as we continue to identify opportunities with highly sophisticated operators in quality markets.”

Scythian’s investment fund is currently valued at nearly $40 million with 18 assets under management, including various locations operated by The Green Solution in Colorado. The firm is raising an additional $25 million in capital to fulfill an existing acquisition pipeline across multiple states.

Acreage Holdings has announced early in April it was closing the North Dakota dispensary. The North Dakota location operated under Acreage’s “Botanist” banner — reopened as Pure Dakota Health, according to the state’s Division of Medical Marijuana.


StaffStaffMarch 5, 2020
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5min15620

This week marks the annual Philadelphia Flower Show, the oldest and largest horticultural event in the US.  While there won’t be any cannabis plants on display due to Pennsylvania state law, cannabis is still front and center at this year’s show, with a booth and educational sessions being run by the cannabis-focused marketing firm Chronic.

The Philadelphia Flower Show is the nation’s largest and longest-running horticultural event and features stunning displays by the world’s premier floral and landscape designers. Started in 1829 by the Pennsylvania Horticultural Society, the show introduces diverse and sustainable plant varieties and garden and design concepts. Thousands of people have traveled from around the world for this year’s event, as they do every year.

In addition to the major displays, the Flower Show hosts world-renowned competitions in horticulture and artistic floral arranging, gardening presentations and demonstrations, and the citywide Bloom Philly pre-Show celebration. The Philadelphia Flower Show has been honored as the best event in the world by the International Festivals & Events Association, competing with events such as the Kentucky Derby Festival, Tournament of Roses Parade, Indianapolis 500 Festival, and other international celebrations.  It’s a big deal – which is why it’s big news that this show is the first of its kind nationally to enable Cannabis education – as was covered here in the Philadelphia Inquirer the day the show opened.

Lisa Hurwitz, the CMO of Grassroots, which also owns Herbology dispensaries in the Philadelphia area, discussed this big step with us.

“We are excited to be a part of this year’s event to share our knowledge and expertise to further raise awareness and educate the public on the benefits of medical marijuana,” said Hurwitz.  “We’re thrilled to see all the engagement with attendees, which reflects our core mission to be invested in the communities we serve and welcoming to patients from all walks of life.”

“The Greenroom” is that booth – a stylish educational exhibit, which sits on a prominent spot toward the middle of the Philadelphia Convention Center floor.  A few cannabis experts staff the space, ready to answer questions and provide basic information about the thriving medical marijuana program in Pennsylvania and medical programs in the surrounding states of New Jersey, New York and Maryland.

“We’re here to let the thousands of attendees this week understand the benefits of medical marijuana and that it has become a resource they can depend on,” said Greg Ricciardi, the President and CEO of the Conshohocken, Pennsylvania-based cannabis marketing agency Chronic. “We have an abundance of information that anyone could need about the cannabis plant, it’s history, how it’s cultivated, how to get your medical card, where to purchase, what questions to ask, and what to expect from treating aches and pains, as well as other ailments with medical marijuana. We want to be a primary resource of factual information for Flower Show visitors and anyone else who’s curious about cannabis.”


Debra BorchardtDebra BorchardtJuly 17, 2019
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5min10640

Curaleaf Holdings Inc. (NURLF) stock popped almost 20% on the news it was acquiring privately-held multi-state operator Grassroots or GR Companies Inc. in a deal valued at $875 million. The deal will be made up of 108.8 million shares and $75 million at the closing which is expected in early 2020.

If the deal is completed, Curaleaf’s footprint grows from 12 states to 19 states and putting it within reach of Acreage Holding’s (ACRG.U) size. The company currently has 48 operating dispensaries, which would increase to 68 and the number of dispensary licenses would move from 70 to 131. The deal would also boost the company’s presence in the Midwest, where Grassroots is strong with 20 locations in Illinois and Pennsylvania.

“With the acquisition of Grassroots and the pending acquisition of Select, Curaleaf is the world’s largest cannabis company by both revenue and operating presence,” said Joseph Lusardi, CEO of Curaleaf. “With a combined 68 open dispensaries, this transaction significantly accelerates our expansion strategy and strengthens our reach across the medical and adult-use markets. In addition, it enhances the depth of our retail and wholesale platform across the country. By leveraging our scale, as well as our market-leading capabilities and expertise, we will continue to deliver value for our shareholders.”

Compass Point analyst Rommel Dionisio wrote, “Assuming the successful closing of this transaction as well as the recently announced agreement to acquire Select, Curaleaf would not only become the largest company in the U.S. cannabis industry, but also the largest player in the world by pro forma revenue.” His target price is $13 and the stock was lately trading at $7.74.

Select Aquisition

In May, Curaleaf said it was 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 included 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. Select ‘s THC products are sold in more than 900 retailers, it is the leading cannabis brand in key Western states, including California, Arizona, Oregon, and Nevada. The combination of the two companies will provide immediate geographic diversification with Curaleaf’s footprint on the East Coast and Select’s brand strength on the West Coast.

Midwest

Dionisio also noted that the two states where Grassroots has planted its flag, Pennsylvania and Illinois are two key growth markets. “We believe Illinois represents the most important growth opportunity in the U.S. cannabis market in 2020, as that state, the fifth most populous in the country, opens up to recreational use on Jan. 1,” he wrote. He also pointed out that Pennsylvania is one of the fastest-growing with over 100,000 medical patients signed up since Feb. 2018. He increased his estimates for 2020 revenue from $696 million to $861 million and EBITDA from $180 million to $248 million. The EPS estimate was moved to $0.21 from $0.20.

Mitch Kahn, co-founder and CEO of Grassroots, said, “Today’s announcement is a testament to the hard work of the many employees that helped make Grassroots the leading cannabis company in the Midwest. This acquisition will enable us to give our patients and retail partners greater access to products that adhere to the highest standards of quality and reliability, and our employees the opportunity to be part of a best-in-class operator.”

Evan Eneman, CEO of MGO|ELLO Alliance, a cannabis finance, taxation, investment banking advisory and firm said, “This trend in M&A is an evolution in the cannabis industry, and as investors put serious capital into these deals, everyone is looking for guidance on who will be next.”

 

 


Debra BorchardtDebra BorchardtOctober 31, 2018
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4min88561

As the landscape for multi-state operators gets more and more crowded, it’s becoming difficult to differentiate between them all. Grassroots Cannabis is the latest to toss its hat into the ring. It was founded by Mitch Kahn in Illinois and the company currently holds 27 licenses with operations in six states.

Grassroots’ operations are in Illinois, Maryland, Nevada, Ohio, Pennsylvania, and North Dakota. Michigan is in the pipeline to become the seventh state. The company says it is the only vertically integrated operator in Illinois, Pennsylvania, and Ohio.

To date, Grassroots has raised $70 million and the company said its plan is to roll all of the state entities into a holding structure. Then it will embark on another full company raise.

“We focus on the legal limited license states where we can create a real scale in those states, ” said Kahn. The company is one of only two growers licenses awarded in North Dakota, which has adult marijuana legislation on the mid-term ballot for November 6.

The company said that it has in-progress deals in Arizona, Florida, Maryland, New Jersey, Nevada, Ohio, Pennsylvania, and Vermont. It is also seeking to make acquisitions in these states and Massachusetts.

“We began as a retail company, not as a cultivation company,” said Kahn. “We come at it from a different approach.”Kahn’s background is retail which explains the significant retail focus. “The product mix and strains are designed to address what the patients want,” he added.

Grassroots is the flagship flower line, while Take five is the line of pre-rolls available in the Grassroots strains. Torch is the vape pen line and the company also makes a high-end terpene blend available as a concentrate or vape. Beverages and edibles are in the development stage at this time, along with pharmaceutical products.

Last week, Colorado-based edible gummy company Wana Brands said it finalized an exclusive licensing agreement with Grassroots Cannabis to bring its products to Illinois. “Grassroots Cannabis is hands-down the most trusted provider of medical cannabis in Illinois. Its loyal patient base and a strong focus on compliance are why Wana Brands sought it out as a partner,” said Nancy Whiteman, Founder & CEO of Wana Brands. The licensing agreement has been approved by the Illinois Department of Public Health (IDPH).

As of June 30, the IIDPH has approved approximately 40,000 qualifying patients since the Medical Cannabis Registry Program began accepting applicants in September 2014. Grassroots has eight dispensaries across the state of Illinois.

Grassroots has focused on building its identity as a center for wellness. Kahn said that he envisions dispensaries offering yoga and pilates. “We want to treat the whole patient,” he said.

 

 

 



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