Green Growth Brands Archives - Green Market Report

Debra BorchardtDebra BorchardtMay 20, 2020
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Green Growth Brands Inc. (OTCQB: GGBXF) had earlier this week announced that it had defaulted on its debentures due this month, now it is headed to the Canadian equivalent of bankruptcy. Green Growth said that has filed for insolvency protection under the Companies’ Creditors Arrangement Act (Canada) and obtained an order from the Ontario Superior Court of Justice granting the Applicants protection under the CCAA. Ernst & Young Inc. has consented to act as the Court-appointed monitor.

Green Growth said that the Court has granted CCAA protection for an initial 10 day period, subject to extension thereafter as the Court deems appropriate, which expires on May 29, 2020. While under CCAA protection, creditors and others are stayed from enforcing any rights against Green Growth.

Green Growth said it had to file for insolvency due to maturing debt and the effects of COVID-19 on its one dispensary The+Source which is located in Las Vegas, Nevada. The lack of tourists has caused a severe drop in sales in many of the companies located there. The company also closed its CBD chain of stores called Seventh Sense, when the malls were closed Although Seventh Sense was losing money prior to the pandemic.  “After careful consideration of all other available alternatives, GGB’s board of directors determined that it is in the best interests of the Company and all its stakeholders to seek protection under the CCAA.”

All J’s Greenspace Lending

All Js Greenspace seems to have a blank checkbook when it comes to Green Growth Brands, but it may end up owning the company since it probably won’t be able to pay back all the money that All Js has forwarded. It has agreed to fund the CCAA proceedings through a debtor-in-possession loan facility of up to US$1 million. An additional $US6.2 million will be made available for borrowing under the DIP Agreement following the Initial Period upon Court approval at a subsequent hearing that would (i) extend the stay period; (ii) increase the amount of the DIP Lender’s Charge (as defined below); (iii) approve a sale and investment solicitation process and (iv) approve a stalking-horse agreement among the company and All Js and Capital Transfer Agency in its capacity as the debenture holder trustee of the Company’s (A) US$45,500,000 aggregate principal amount of 15.00% secured convertible debentures that matured May 17, 2020, and (B) US$23,717,000 aggregate principal amount of 5.00% secured convertible debentures maturing in 2024 pursuant to which the Secured Credit Bidders would act as stalking-horse bidders under the SISP.

Selling Florida

The company’s Florida-based subsidiaries entities have entered into a forbearance agreement as of April 29, 2020, among the GGB Florida Subsidiaries. Green Ops has agreed not to start a foreclosure sale of the collateral under the Florida Security Agreement or accelerate amounts due under the related loan documents until June 15, 2020. In addition, Green Ops has agreed to advance US$500,000 to the GGB Florida Subsidiaries, representing the balance payable under a US$1 million principal amount 15% secured note dated April 29, 2020.

In consideration of the Forbearance Covenant, the Company and Florida Subsidiaries have agreed to conduct a sales process in respect of the business, assets, and undertaking of the Florida Subsidiaries with the intention of entering into a binding agreement of purchase and sale prior to the expiry of the Forbearance Period.

Slow Train Wreck

Green Growth brands built its reputation on the back of its retail executives. Its former CEO Peter Horvath is now the CEO at Hightimes Holding Corp.  These executives leading Green Growth Brands were mostly made up of former executives from Victoria’s Secret owned by L Brands, which has struggled after the lingerie failed to acknowledge a cultural departure from hyper-sexual images of women. The group mostly knew how to operate in volume sales with stores plastered all over malls. The plan was to create a chain of CBD stores not unlike Bath & Body Works also owned by L Brands.

The company paid Authentic Retail Concepts roughly $2 million in stock to help it foster a relationship with Simon Malls for the Seventh Sense CBD kiosks. The group planned to open over 100 stores in a year. In a sign of ‘jumping the shark’, there were deals signed to sell Seventh Sense CBD products in DSW Shoe Stores. Many of the ex-DSW executives had also joined with Green Growth Brands.

The sales never materialized quickly enough to cover the fast-tracked expansion and the losses mounted. This is the point at which the company decided to sell Seventh Sense and clean house. Many in the industry may recall Horvath’s brash remarks that the cannabis industry just didn’t understand retail and that experienced retailers were needed in the industry. No doubt many cannabis industry insiders are having the last laugh now.


Debra BorchardtDebra BorchardtMay 6, 2020
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CEO Stormy Simon is out at Hightimes Holding Corp. after just four months. Former Green Growth Brands (OTC: GGBXF) Peter Horvath is in. This is the third CEO for the iconic publisher High Times in just 13 months as the company pivots away from events and news and instead heads towards the dispensary side of the industry.

“We are pleased to welcome Peter to the High Times family, and to be able to tap into his wealth of experience capitalizing on major consumer brands. There are few executives with his retail experience in the mainstream world and, up to this point, none in the cannabis world with such an accomplished background,” Hightimes Holding Corp. Executive Chairman Adam Levin said. “The team and I would like to thank Stormy for all of her hard work in getting us through this transition period, and we are excited to have her continue working with us on this mission to grow High Times into all the business areas it helped create.”

Horvath’s Track Record

The High Times press release notes that Horvath previously held leadership roles for companies such as L Brands (Victoria’s Secret, Bath & Body Works, etc. ), American Eagle Outfitters (American Eagle & Aerie), and DSW (Designer Shoe Warehouse) and that he was with DSW when it went public on the NYSE in 2005. It also mentioned that he formed Green Growth Brands and took it public on the CSE in November 2018. It even touts his launch of Seventh Sense CBD. What it doesn’t mention is that Horvath was forced to resign recently and left without his million-dollar severance package after the company burned millions of dollars on Seventh Sense. The chain was closed in March and attempted to not pay the laid-off employees their back pay until Green Market Report exposed the story. 

“High Times is a unique brand with an important and rich heritage that deserves amplification and broader reach,” stated incoming Chief Executive Officer Peter Horvath. “I think of brands like Glossier, who first earned high affinity followers through compelling and relevant content, and then demonstrated that you can also serve their followers through commerce.  So, it’s been done before, I wouldn’t suggest that it will be easy, but we have all the resources to succeed.”

Victoria’s Secret is also about to go under. The once-thriving leader in women’s lingerie miscalculated its customer base’s move away from the over-sexualization of women. As women were moving away from body shaming and embracing all shapes and sizes, Victoria’s Secret was slow to recognize the seismic shift, and competitors began to take market share. The company recently tried to sell itself to a private equity firm, but the sale has fallen through. With retail in a tailspin due to the COVID-19 lockdown, it’s future is unclear.

CEO Revolving Door

It’s highly unusual for companies planning to go public to have a revolving door of CEO’s. A potential publicly-traded company typically wants to project an image of stability in order to show shareholders that their investment is in good hands. The Horvath hire is meant to align with High Times’ recent acquisition of pending and operational licenses from  Harvest Health & Recreation (OTC:HARV). His retail background seems more suitable to chairman Adam Levine’s vision for High Times dispensaries versus the previous CEO Stormy Simon.

Simon was just hired in January with her previous experience at e-commerce brand Overstock.com as the reason she moved from her position as a board member to the role of CEO. At the time of her hire, High Times said it was creating a virtual distribution business alongside its physical businesses of dispensaries and consumption cafes. The company signaled that Simon wasn’t necessarily in charge as the recent announcement with Harvest Health did not include her whatsoever. It’s highly unusual for a company CEO to not be quoted in an acquisition press release or be included in the purchase documentation. Her absence sent red flags that something was underway. It’s unclear whether Simon remains on the board. She is currently running for state representative in Utah.

Levine stepped down from the CEO role when Kraig Fox stepped in to lead the company through its efforts to go public and shift towards a plant-touching business. Fox was hired in April 2019 and left nine months later.  Fox’s background as a Senior Managing Director of Guggenheim Partners where he focused on Guggenheim’s overall strategy in the media and entertainment spaces as well as the management of its media and entertainment investments was seen as an asset.

Fox continues to receive his director and officer insurance policy, and High Times agreed to reimburse Fox for certain previously incurred business expenses (within five days) of successful completion of sales of an additional $5 million of equity securities or $10 million of proceeds from the sale of debt securities. He is expected to be reimbursed $125,000 with respect to expenses and lease payments for which Fox provided the company with receipts.

Harvest Health Deal

High Times did acknowledge that its deal to acquire the licenses from Harvest Health was subject to certain closing conditions, including the receipt of certain regulatory and third-party consents. The parties are aiming to close the acquisitions no later than June 30, 2020, subject to the parties’ mutual agreement to extend the closing date.

There is a major problem with one of the Have A Heart dispensaries that High Times is buying from Harvest Health. One license belongs to the HAH San Francisco location in which CEO Alexis Bronson says Harvest Health had no right to sell. Bronson owns 40% of the HAH dispensary and he claims his business partners sold their shares to Interurban Capital Group (ICG) without his approval. The dispensary was then flipped to Harvest Health & Recreation, who just sold it to HHI Acquisition Corp, a subsidiary of Hightimes Holding Corp.

The High Times Purchase Agreement acknowledges the Bronson position in HAH. The document states, “Neither ICG nor Harvest holds any rights to acquire the 40% interest held by Bronson. Assignment of Contingent Assignment requires the consent of the Board of Managers of HAH 2 CA LLC.” High Times was to deliver $1 million to Harvest Health on April 27 as a deposit and then another $4 million at the closing date or within 45 days of the effective date. High Times did not respond to a request to comment on the Bronson situation. Harvest is also suing ICG which adds even more complications to this deal.

The issue with this one particular license may not hold up the whole deal and if High Times can close at least some of the operational licenses then revenue can begin flowing into the company.

Delayed Reporting

High Times announced that it will delay delivering its annual report as per the SEC’s order which allows for this due to the COVID-19 virus.


Debra BorchardtDebra BorchardtApril 3, 2020
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Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) has placed the company’s CBD business into receivership. This is typically a move to avoid bankruptcy. This was the determination from the company’s special committee of the Board of Directors.

Just a few weeks ago, Green Growth Brands closed down its CBD business, which was operating as the chain of Seventh Sense stores or kiosks. The company stated at that time that the stoppage in business was due to COVID19 and the closing of malls and retail areas. However, the company was struggling prior to the virus crisis.

The consent to the appointment of the receiver was filed on April 2, 2020, with the Franklin County Court of Common Pleas, in Franklin County, Ohio.  Materials related to the filing can be accessed via the Franklin County Clerk of Courts electronic docket, which can be found at https://fcdcfcjs.co.franklin.oh.us/CaseInformationOnline/.

Technically, the CBD Business is operated by six of the company’s subsidiaries: Green Growth Brands LLC, GGB Beauty LLC, GGB Licenses LLC, Green Growth Brands Realty LLC, GGB Kiosks LLC, and GGB GN LLC (collectively, the “CBD Subsidiaries”).  Each of the CBD Subsidiaries will be subject to the receivership order.

Going Concern

Green Growth said that aside from the CBD situation, “there remains a significant risk that the company will be unable to realize sufficient cost savings, find sufficient sources of financing for on-going working capital requirements and maturing debt and other liabilities or to negotiate extensions or alternate payment terms in respect of such debt.” Green Growth is trying to negotiate its obligations and has drawn down all the money available to it through All J’s Greenspace and Chiron Ventures.

All Js advanced approximately $1.5 million from its portion of the previously announced $52.3 million debenture repayment backstop commitment.  The company said it is actively pursuing alternative financing sources but there can be no guarantee that any such financing will be consummated or if consummated on what terms.

The+Source

Green Growth said it will continue to operate its cannabis business in FloridaMassachusetts, and Nevada through its subsidiaries Nevada Organic Remedies LLC, Henderson Organic Remedies LLC, Wellness Orchards of Nevada LLC, Just Healthy LLC, and Spring Oaks Greenhouses Inc.  NOR and Henderson operates the The+Source dispensaries in the Las Vegas, Nevada region, and have recently started a delivery service in response to Nevada Governor Stephen Sisolak’s March 20, 2020 order limiting dispensary operations in the state.  None of the MSO subsidiaries nor any of their respective assets will be subject to the receivership order.

In exclusive reporting by the Green Market ReportGreen Growth attempted to lay off its workers without giving them back pay. Once the story was uncovered, the company was able to secure the money. On Friday, March 20, 2020, Green Growth Brands informed its laid-off workers that they would get paid. A spokesman for the company said, “At the time of the decision, the company remained uncertain of its ability to fund the payroll for the period ending today, March 20, 2020. As of this writing, I can confirm that such funding has been secured, that payroll has been initiated, and that all associates released will be paid for their time worked.”

The spokesman also confirmed that Horvath resigned voluntarily and would receive no severance pay. According to the company’s Management Information Circular, “If Mr. Horvath had been terminated by the Company without cause or had resigned from the Company for good reason as of June 30, 2019, Mr. Horvath would have been entitled to a payment of $2,550,000.”


Debra BorchardtDebra BorchardtMarch 23, 2020
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Editors Note: This story was updated on March 23, 2020.

Since this story was published on Friday, March 20, 2020, Green Growth Brands informed its laid-off workers that they would get paid. A spokesman for the company said, “At the time of the decision, the company remained uncertain of its ability to fund the payroll for the period ending today, March 20, 2020. As of this writing, I can confirm that such funding has been secured, that payroll has been initiated, and that all associates released will be paid for their time worked.”

The spokesman also confirmed that Horvath resigned voluntarily and would receive no severance pay. According to the company’s Management Information Circular, “If Mr. Horvath had been terminated by the Company without cause or had resigned from the Company for good reason as at June 30, 2019, Mr. Horvath would have been entitled to a payment of $2,550,000.”

Original Story

Green Growth Brands (OTC: GGBXF) was paying its executive’s handsome salaries, while at the same time stiffing its hourly employees. This week the company told its Seventh Sense CBD kiosk workers that it was closing due to the Covid-19 virus. Then two days later the company told employees that the kiosks were closing for good and it couldn’t pay their back wages.

Employee Senia Cotto said, “Our last checks were delayed. They claimed it was an error on the Payroll Companies end.” Another employee who worked as a Lead Guide Austin Grishaber said, “The company paid us late two weeks ago and they said it was a mistake and that they had the payroll and we were all okay with our jobs. Yesterday we got a message from them stating that we are all basically fired and said ‘Unfortunately, we’re not in the position to fund payroll, your termination date is official as of March 19, 2020.’ they blindsided us. They had the district guides and lead guides blinded so we wouldn’t leave the company early.” Another employee Emily Rivera also confirmed that she was told there was no money for back pay.

On February 26, 2020, former CEO Peter Horvath said in this company’s earnings call about the CBD business, “While we’re currently in the process of selling the CBD business, we’re extremely proud of how we grew this business from a mere idea to products that have reached over 300,000 consumers in just 9 short months. We’re proud of our team, which includes nearly 1,000 guys in the field as well as our home office associates, all of whom developed and launched the most comprehensive topical CBD assortment in the world, an assortment with quality that is resonating with consumers, garnering an average rating of 4.5 out of 5 points, with 75% of our consumer responses at a 5 out of 5.”

Horvath resigned from his position as CEO on Thursday after the market closed and left his position on the board as well. The company has not responded to a request for comment.

No Breaks, Late Pay

While Horvath was lauding his employees, the employees were grousing on the website GlassDoor that they didn’t get breaks and were paid late. One Lead Guide from Nashville TN wrote, “Ridiculous sales goals and expectations from the home office. They have no money to send store supplies (cleaning products, bags, etc) Low inventory, using third party products for bailouts. People are literally working for “buttons” they use as incentives, hah! They’ve paid employees late more than once, which is illegal.” He went on to add, “If your shop can’t make $100 a day, you are penalized for it. WELL….you can’t force someone to buy something, just saying.”

Another part-time employee wrote, “No communication, Blatant Lies from Higher Ups, Not always paid on time, No breaks, no place to rest, standing for hours without breaks.”

A current employee from Massachusetts wrote, “Long shifts by yourself. No product to sell. $100 minimum sales a day or you get written up. You aren’t allowed to sit or take breaks your entire shift. The company has run out of money and can’t pay employees leaving most of us stranded with late bills and overdraft fees.”

The company was certainly not telling shareholders that they were paying their hourly employees late or that the kiosks had inventory issues.

Handsome Executive Salaries

The head office salaries for the most recent quarter were $5,367,010, Also included in general and administrative costs for the quarter ending December 28, 2019, were termination and severance payment of $199,293. The company paid $2.8 million for the same time period in 2018 for the head office. Stock-based compensation expenses related to stock options and restricted stock units granted were $1,649,401

For the year ending June 30, 2019, the company’s expenses for key employees included $2,397,044, for salary or consulting fees paid to key management personnel, included in consulting fees. In addition, for the year ended June 30, 2019, included in stock-based compensation expense is $1,119,345 in connection with stock awards to key management personnel and Directors. In addition, in connection with the successful award of seven additional dispensary licenses in the state of Nevada and as a condition of NOR Agreement, the company paid $1,000,000 in a bonus which was settled with the issuance of 426,992 shares of the company at the then market price per share of CAD$3.13 per share.

Maybe the unpaid employees can take some comfort in knowing that any of the stock compensation paid to the executives is essentially worthless now. The stock was lately selling at six cents down from its 52-week high of $4.49.

CFO Brags About CBD Biz Just Weeks Ago

The company’s Chief Financial Officer Brian Logan actually bragged about how well the CBD business was doing. On the February 26, 2020 earnings conference call he said, “During the quarter, we opened 56 shops, bringing the total number of shops opened to 195 across 34 states. CBD gross margin was 40%, up from 11% in the prior quarter, resulting in gross profit of $4.4 million. CBD operating expense was $16.4 million, up from $11.2 million in the prior quarter but down significantly as a percent of sales. The increase in operating expense was driven predominantly by payroll and occupancy expense related to new shops. We also incurred $3 million of advertising expense tied to the holiday marketing campaign and new shop grand openings, which will be scaled back considerably in future quarters.”

Not only were the employees bamboozled by executives, but shareholders weren’t told the extent of the company’s problems. The closest it got was writing in the company’s filing, “The Company has a working capital deficit, and therefore does not have sufficient liquidity and capital resources at December 28, 2019, to fully execute on its business plan and satisfy its commitments over the next twelve months.” Understatement of the year.


Debra BorchardtDebra BorchardtMarch 20, 2020
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Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) CEO Peter Horvath is stepping down from this position and as a member of the Board of Directors effective on Thursday, March 19. The announcement was made after the market closed.

Mr. Horvath has served as CEO of Green Growth Brands since January 2019 and as a member of the Company’s Board of Directors since July 2018.  Randy Whitaker, the Company’s current Chief Operating Officer will take over as interim Chief Executive Officer, effective immediately.  Mr. Whitaker has served as the Company’s Chief Operating Officer since February 2019.  The vacancy on the Company’s Board of Directors will be filled in due course.

Ms. Carli Posner the Chair of the Board of Directors said, “On behalf of the Board and everyone at GGB, I would like to offer my heartfelt thanks to Peter for his significant contribution and dedication to the Company and wish Peter the best for his future endeavors.”

Mr. Horvath responded, “I am humbled to have worked with such amazing professionals along this journey.  Among those individuals is Randy Whitaker, whom I am pleased has been named as interim CEO. The Company will be in good hands with such a seasoned operator at the helm, and I have full confidence in Randy to lead the Company during this difficult time.”

Covid-19 Update

Green Growth also stated that in response to the virus pandemic it has elected to temporarily close all of its mall-based cannabidiol kiosk shops in an effort order to protect its employees and customers from unnecessary exposure to the COVID-19 virus. “In connection with this action, the company will also suspend sales under its CBD e-commerce platform.” The company said it would continue to move forward with the previously announced sale of the CBD business to The BRN Group Inc. Green Growth did mention that it would continue to solicit and evaluate any potential superior offers under the go-shop rights afforded to the company as part of that announced transaction. Although with the shops closed and the e-commerce business shuttered, it is unlikely to find a better offer.

Green Growth said that its cannabis dispensaries, located in the Las Vegas, Nevada area, will remain open for business subject to additional pandemic-related directives from local authorities.

The End Of GGB?

Will GGB even survive this? The company noted that it owes $5 million to Moxie on or before February 5, 2020 (including a five-day cure period following January 31, 2020), and an additional $2 million is due in installments to ABG-Shark LLC related to the GMR Payment on or before March 31, 2020. GGB said it is working to negotiate a deferral of these obligations and has previously announced short-term financing from certain of its key stakeholders in connection therewith.

In addition to the Moxie and ABG-Shark payments, the company and its subsidiaries have material obligations that are due or that are coming due within the next 15 to 45 days.GGB has drawn all amounts available to it under the previously announced working capital backstop commitment provided by All Js Greenspace LLC and Chiron Ventures Inc. for purposes of funding the Company’s operations.  “In addition, for purposes of funding the Company’s operations, All Js advanced approximately $1.5 million from its portion of the previously announced US$52.3 million debenture repayment backstop commitment.  Notwithstanding this US$1.5 million advance from All Js, there is no guarantee that either of the Backstop Parties will permit additional funds to be drawn from the debenture repayment backstop commitment for purposes of funding the Company’s operations.”

Victoria’s Secret Revealed

The executives leading Green Growth Brands were mostly made up of former executives from Victoria’s Secret owned by L Brands, which has struggled after the lingerie failed to acknowledge a cultural departure from hyper-sexual images of women. The group mostly knew how to operate in volume sales with stores plastered all over malls. The plan was to create a chain of CBD stores not unlike Bath & Body Works also owned by L Brands.

The company paid Authentic Retail Concepts roughly $2 million in stock to help it foster a relationship with Simon Malls for the Seventh Sense CBD kiosks. The group planned to open over 100 stores in a year. In a sign of ‘jumping the shark’, there were deals signed to sell Seventh Sense CBD products in DSW Shoe Stores. Many of the ex-DSW executives had also joined with Green Growth Brands.

The sales never materialized quickly enough to cover the fast-tracked expansion and the losses mounted. This is the point at which the company decided to sell Seventh Sense and clean house. Many in the industry may recall Horvath’s brash remarks that the cannabis industry just didn’t understand retail and that experienced retailers were needed in the industry. No doubt many cannabis industry insiders are having the last laugh now.


Debra BorchardtDebra BorchardtFebruary 24, 2020
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Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) announced that The BRN Group Inc. has agreed to acquire the company’s cannabidiol business.  The company and an affiliate of BRN have executed a “stalking horse” asset purchase agreement in respect of the CBD Transaction pursuant to which the Purchaser will acquire all of the assets and assume the current liabilities and certain other obligations of the CBD Business.

The company said in a statement that at least two-thirds of the independent members of the Board have determined that Green Growth Brands is in serious financial difficulty with limited alternatives. “As such, GGB intends to rely on the exemption from the minority shareholder approval requirements of MI 61-101 based on the financial hardship exemption.”

“While we are excited by the consumer demand signals we saw in the CBD Business during the quarter ending December 28, 2019, and we remain confident in its future potential, the CBD Business remains in its nascency,” said Peter Horvath, Chief Executive Officer of GGB. “With high-potential in the future comes material overhead costs and other obligations in the near term.  These near-term overhead costs and other obligations, together with constraints on liquidity, have posed significant challenges that have hindered us from growing the CBD Business to its full potential. At the same time, our MSO Segment continues to generate positive EBITDA despite constraints on our ability to fully execute our MSO business plan due, in part, to previously disclosed legal challenges in Nevada,” added Horvath. “In light of these factors, we have determined it necessary and appropriate to sell the CBD Business and focus on executing our MSO business plan.  The board has also formed a special committee to commence a strategic review, which will include consideration of other cost-savings measures, designed to position the Company on a pathway to achieve financial stability and ultimately a platform through which we can achieve sustainable profitability and growth.  We are committed to significantly reducing our overall operating costs and extending our cash runway while better positioning the company to refinance its debt and raise additional financing in the future.”

We Know Retail

Green Growth Brands is comprised of former executives from Victoria’s Secret and DSW Shoestores. The company launched with the attitude that cannabis retailers just didn’t understand retail and that these retail experts would be able to show the industry how it is done. The company proceeded to open dozens of CBD stores in mall settings.

Apparently the significant challenges and company overspending weren’t enough to get customers in the door. In addition to selling off the CBD business, Green Growth has also had to ask its debt holders for more time and is going to raise more money. It has also implemented a reorganization plan to save $4 million.

Going Concern

At the quarter ending December 28, 2019, the company had a working capital deficit of $133,478,662 and used cash for operating activities of $12,589,708. “There remains a significant risk that the company will be unable to realize sufficient cost savings, find sufficient sources of financing for on-going working capital requirements and other material obligations that are due or maturing in the short term or to negotiate extensions or alternate payment terms in respect of such debt.”

GGB has said that it has drawn all amounts available to it under the previously announced working capital backstop commitment provided by All Js Greenspace and Chiron Ventures Inc. for purposes of funding the Company’s operations.  All Js has advanced approximately $1.5 million from its portion of the previously announced $52.3 million debenture repayment backstop commitment.  “There is no guarantee that either of the Backstop Parties will permit additional funds to be drawn from the debenture repayment backstop commitment for purposes of funding the Company’s operations.”

GGB said it still hopes to raise up to $30 million in a non-brokered private placement of common shares to provide funding for the MSO Segment of its business following completion of the CBD Transaction.  The company said that All Js Greenspace has agreed to subscribe for $10 million of the proposed $30 million Private Placement.

Restructuring

GGB said that the holders of its outstanding 8% secured convertible debenture totaling roughly $23,717,000 aggregate principal amount of 8.00% that could have matured on October 18, 2020, have agreed to push that out to 2024.

Earnings

In addition to the big restructuring news, GGB also announced its fiscal second-quarter news. Total revenue for the quarter was $21.1 million, which was a sequential increase of 66% over the prior quarter. The company broke it down with CBD revenue at $11.0 million, a sequential increase of 113% over the prior quarter and MSO (multi-state operator) at $10.1 million, a sequential increase of 33% over the prior quarter. Despite that, the net loss before taxes for the quarter was $34.8 million.

The company is delaying its conference call on earnings until Wednesday.

 

 


Debra BorchardtDebra BorchardtNovember 26, 2019
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Green Growth Brands

Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) reported its results for fiscal first-quarter 2020 ending September 28, 2019. Revenues for the period totaled $12.7 million, a 77% increase over the previous quarter. However, the company delivered a whopping net loss of $30 million versus last year’s net loss of $2.8 million for a net loss of 15 cents per share over last year’s net loss per share of three cents per share.

Expenses Are Very High

General and administrative costs were $11,433,502 for the 13 weeks ended September 28, 2019, compared to
$2,450,960 for the three months ended September 30, 2018, of the prior year. This included head office salaries of
$5,654,77, legal and professional fees of $3,290,363, travel-related costs of $405,474, occupancy costs of $435,863, insurance costs of $349,938, and other expenses of $302,032 for the 13 weeks ended September 28, 2019. Also included in general and administrative costs for the 13 weeks ended September 28, 2019, are termination and severance payment of $421,396 and write-down of technology of $573,662.

“As we approach the holiday shopping season, we are confident in our growth trajectory,” said Peter Horvath, CEO of Green Growth Brands. “We are proud of the topline growth we accomplished in Q1 and are extremely pleased with our current results, which are an indication of future growth. In fact, the four weeks of fiscal November, retail CBD sales were two-thirds of our total CBD sales reported in all of the thirteen weeks of first quarter fiscal 2020, which we are reporting today. This topline growth is reflective of our shift from investing in the foundation of our CBD business to focusing on its execution.”

CBD Biz Costs More Than It Makes

While the company is touting its CBD success, the hard numbers aren’t that great. For the quarter CBD sales came in at $5.1 million. The CBD segment, however, incurred operating expenses of $11,225,559. Sales and marketing include personnel costs of $3,319,371; advertising costs of $1,966,655; occupancy costs of $570,254; professional fees of $229,852; supplies, postage and credit card fees of $483,125; travel of $303,657; and other expenses of $606,147.

“In a very short time, we have grown a meaningful CBD footprint. We believe our products, network of shops, rapidly growing web business and wholesale relationships position us as a leader in the industry. In the coming quarters, we look forward to reporting similar trends and results for our MSO segment of the business. As we begin to reach scale our consumer and operations expertise will be clearly reflected, not only in the customer experiences we create and the loyalty we drive but also in our financials as we work towards profitability.”

Harvest One

Harvest One Cannabis Inc. (TSX-V: HVT)(OTCQX: HRVOF) announced a net revenue of $4.1 million for the three months ending September 30, 2019, representing a 34% increase over the previous quarter, and a 142% increase over the same period in 2018. The company also reported a net loss of $5.2 million, which was slightly less than last year’s net loss of $5.7 million for the same time period.

Grant Froese, CEO of Harvest One, said, “We are very encouraged by strong revenue growth in the first quarter of fiscal 2020. Cannabis sales throughout the industry have been greatly impacted by provincial and regulatory challenges, particularly the slow rollout of retail stores in both Ontario and British Columbia. Unlike some other Canadian Licensed Producers, we are in a fortunate position of having a diverse product portfolio, where cultivation equates to approximately 50% of our revenue, with our remaining revenues coming from our medical and consumer divisions.”

Cost Cutting Measures

Mr. Froese continued, “In light of recent challenges within the cannabis industry, the company has made some difficult but necessary decisions to improve cash flows and reallocate capital to ensure the long-term growth of the Company. Harvest One has implemented significant cost-saving measures across all its divisions and expects to realize these savings immediately and improve upon them in future quarters.”

The company is laying off 20% of its workforce across all divisions. Harvest One also said it is planning on divesting its 50.1% interest in the Greenbelt Greenhouse facility and its outdoor growing site located in Lillooet, British Columbia. It said the sale of these non-core assets will provide cash proceeds to support the expansion of the company’s core business lines and operational strengths.

It is repurposing its Lucky Lake facility to focus on the company’s core strengths: namely, the development, production, and distribution of its value-added infused products, including the manufacture of its Satipharm Gelpell capsules in Canada.


William SumnerWilliam SumnerAugust 23, 2019
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4min7520

It’s time for your Daily Hit of cannabis financial news for August 22, 2019.

On the Site

Gen!us

From Jimi Hendrix to Carl Sagan, many of the greatest artistic and scientific minds in history have used cannabis to help spur cultural progress, and yet surprisingly few entrepreneurs have aspired to create a cannabis strain specifically bred to inspire creative thought. A new cannabis brand called Gen!us hopes to change that…

TerrAscend

Toronto-based TerrAscend Corp. (CSE: TER)(OTCQX: TRSSF)  reported that its second-quarter revenue rose 21% sequentially to $17.6 million from $14.6 million for the first quarter. A huge jump for the quarter ending June 30, 2019 over last year’s $0.01 million in 2018. The company raised its revenue guidance from $135 million which was projected in April to $141 million for 2019. On a pro forma basis, TerrAscend said it generated $42 million of revenue in the second quarter or over $168 million on an annualized basis.

In Other News

Green Growth Brands

Green Growth Brands (CSE: GGB) (OTCQB: GGBXF) has closed its previously announced bought deal offering. Selling 22.5 million units of the company, at a price of C$2.45 per unit, the company raised C$50.22 million. The proceeds of the offering will go towards paying off the cash portion of its acquisition of Nevada Organic Remedies LLC, Henderson Organic Remedies LLC, and deferred cash compensation and certain other fees in connection with its acquisition of Spring Oaks Greenhouses, Inc.. The remained will go towards capital expenditures and general corporate purposes.

KushCo Holdings

KushCo Holdings, Inc. (OTCQX:KSHB) has closed on a $50 million credit facility with Monroe Capital LLC, which consists of $35 million revolving line of credit and an accordion of up to $15 million that will be available subject to covenant compliance and borrowing base availability. The facility will last for five years. KushCo continues to execute on its less dilutive financing strategy that will provide the capital necessary to support our continued operations and acquisitive growth,” commented KushCo CEO Nick Kovacevich,. “We are excited to partner with an entrepreneurial-focused private credit firm such as Monroe, and we have plans to grow our businesses together providing critical products and services to the cannabis and CBD industry. As the size of our customer’s business grows, it’s imperative to have an adequately sized credit facility that will increase as our business grows.”


William SumnerWilliam SumnerAugust 15, 2019
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7min10480

It’s time for your Daily Hit of cannabis financial news for August 15, 2019.

On the Site

Trulieve

Yesterday, Trulieve Cannabis Corp. (OTCMKTS: TCNNF) (CNSX: TRUL) announced the release of its second quarter financial results. Year-over-year, Trulieve’s increased 149% from $23.3 million to $57.9 million. Keeping pace with revenue, operating expenses also rose from $6 million to 14.8 million, representing a 146% increase. Gross profit was $37.6 million, and the gross profit margin was 65%. Adjusted EBITDA was $31.6 million.

Harvest Health & Recreation

Harvest Health & Recreation, Inc. (CSE: HARV) (OTCQX: HRVSF) has reported its financial results for the second quarter, ending on June 30, 2019. Revenue rose from $19.2 million in the previous quarter to $26.6 million, representing an increase of 39%. If one were to include Harvest Health’s completed and pending acquisitions, quarterly revenue would be $78 million.

Money Moves From Aurora Cannabis, Green Growth Brands

Aurora Cannabis Inc.  (NYSE | TSX: ACB) said that it has secured commitments from an expanded syndicate of lenders led by the Bank of Montreal to amend and upsize its existing C$200 million secured credit facility.

Green Growth Brands Inc. (CSE:GGB) (OTCQB:GGBXF) said that it has entered into backstop commitment letters with each of All Js Greenspace LLC, Park Lane Capital Limited, and Chiron Ventures Inc. in which they have committed to subscribe for and purchase up to C$102,796,241 in the aggregate or roughly $77 million of convertible debentures to support the Company’s operations and capital needs.

Canopy Growth

Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC) stock dropped over 10% after the company announced its financial results for the first quarter ending June 30, 2019. The worst of the news in the release was that the company’s fiscal first-quarter net losses of C$1.28 billion, or C$3.70 a share, dwarfed last year’s losses of C$91 million, or 40 cents a share. The loss was attributed to a non-cash charge of $1.2 billion in Canopy’s extinguishing warrants related to the Constellation Brands Inc. (NYSE: STZ) investment.

In Other News

Vireo Health

Vireo Health International, Inc. (CNSX: VREO) (OTCQX: VREOF) announced that its affiliate, Ohio Medical Solutions (OMS), has been granted a Certificate of Operation by the Ohio Department of Commerce. OMS, which was previously granted a provisional processing license, will begin operations immediately. The license will allow OMS to purchase plant material from cultivators and manufacture Vireo-branded medical cannabis products.  “We are delighted that Ohio Medical Solutions will begin manufacturing Vireo products for the benefit of Ohio patients,” said Vireo CEO, Kyle Kingsley, M.D. “The City of Akron has been great to us and as our business grows, we look forward to continuing to create new jobs and make a positive impact on the local economy.”

Front Range Biosciences

Front Range Biosciences (FRB) announced that it has entered a collaborative licensing agreement with Steep Hill, and that it will acquire Steep Hill’s Genomics Research & Development team. The agreement will help accelerate FRB’s marker-assisted breeding program and develop new traits and varieties of hemp and cannabis. “The Steep Hill R&D team is among the top three cannabis genomics groups in the world, and we are very excited to welcome them to FRB,” said Dr. Jonathan Vaught, CEO and Co-Founder of FRB. “This acquisition is a major value inflection point for FRB…”

Medical Marijuana Inc.

Medical Marijuana Inc. has filed its financial results for the second quarter. Revenue rose 30.8% to $20.7 million. Gross profit was $15.4 million and adjusted EBITDA was $1.5 million. General and administrative expenses decreased from 21% of sales in Q2 2018 to 16% of sales revenue. “We are excited to continue our tremendous sequential success with the second quarter of 2019 proving to be the largest sales revenue quarter in the history of our Company,” said Dr. Stuart Titus, CEO of Medical Marijuana, Inc. “As the world continues to become more receptive to learning about the benefits of hemp-derived CBD, we are enthusiastic about being at the forefront of the global cannabis industry which, according to Arcview Market Research, could be worth $57 billion by 2027.”


Debra BorchardtDebra BorchardtAugust 15, 2019
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3min15130

Aurora Cannabis

Aurora Cannabis Inc.  (NYSE | TSX: ACB) said that it has secured commitments from an expanded syndicate of lenders led by the Bank of Montreal to amend and upsize its existing C$200 million secured credit facility.

The company said that its amended secured credit facility will consist of an additional C$160 million allocated between both term loans and a revolving credit facility, both of which will mature in August 2021. The credit facility will have a first ranking general security interest in the assets of Aurora. The loans can be repaid without penalty at Aurora’s discretion.

“The upsizing of our credit facility to approximately C$360 million and the broadening of the lending syndicate to include additional Schedule 1 Canadian Banks is further recognition that our best-in-class production facilities lead the industry,” said Glen Ibbott, CFO of Aurora.  “Access to this non-dilutive capital is a core funding source the Company intends to utilize as it further executes on its strategic growth initiatives. In addition to cash being generated from operations, the Company also has access to other unsecured debt alternatives, a number of equity investments, and has access to a C$514 million (US$400 million) At-The-Market equity program (“ATM”).”

Green Growth Brands

Green Growth Brands Inc. (CSE:GGB) (OTCQB:GGBXF) said that it has entered into backstop commitment letters with each of All Js Greenspace LLC, Park Lane Capital Limited, and Chiron Ventures Inc. in which they have committed to subscribe for and purchase up to C$102,796,241 in the aggregate or roughly $77 million of convertible debentures to support the Company’s operations and capital needs.

In addition,  Green Growth said that it is having discussions and has signed a letter of intent with United Capital Partners LLC to obtain additional debt financing of up to $50 million. If secured, it is anticipated that the Proposed Debt Financing would be used by Green Growth to fund, in part, the company’s presently identified capital and operating expenditures related to the opening of new dispensaries, new mall-based CBD kiosk shops and the acquisition or build-out of a cultivation facility in Florida.



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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