iAnthus Archives - Green Market Report

StaffApril 1, 2021
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4min12410

iAnthus Capital Holdings, Inc . (OTCPK: ITHUF) reported its financial results for the fourth quarter and year ending December 31, 2020. The company delivered revenue of $46.0 million for the quarter with a net loss of $27.3 million, or a loss of $0.16 per share. 

For the full year, iAnthus delivered revenue of $151.7 million, up 93.5% from the prior year with a net loss of $309.8 million, or a loss of $1.81 per share. The company became a U.S. reporting company effective February 5, 2021, and all the financial statements are reported in accordance with U.S. Generally Accepted Accounting Principles (GAAP). All currency is expressed in U.S. dollars.

Recapitalization Plan Still Ongoing

The company also noted that it did not make applicable interest payments due on its 13% senior secured convertible debentures and its 8% convertible unsecured debentures due during 2020. The non-payment of interest in March 2020 triggered an event of default with respect to these components of the company’s long-term debt, which, as of December 31, 2020, consisted of principal amounts at face value of $97.5 million and $60.0 million and accrued interest of $15.1 million and $4.8 million on the Secured Notes and Unsecured Debentures, respectively. In addition, as a result of the default, the company has accrued additional fees and interest of $13.8 million in excess of the aforementioned amounts that are further detailed in the company’s financial statements.

iAnthus entered into a restructuring support agreement with its debtholders to effectuate a recapitalization transaction to be implemented by way of a court-approved plan of arrangement under the Business Corporations Act British Columbia ). On September 14, 2020, the company’s security holders voted in support of the Recapitalization Transaction, and on October 5, 2020, the Plan of Arrangement was approved by the Supreme Court of British Columbia.

If consummated, iAnthus said it intends to issue up to an aggregate of 6,072,579,699 common shares upon the restructuring of (i) $22.5 million of Secured Notes (including the Exit Fee), $40.0 million of Unsecured Debentures, including interest accrued thereon and (ii) interest accrued on the interim financing in the amount of $14.7 million provided by the Secured Lenders. “The Recapitalization Transaction remains subject to the receipt of all necessary regulatory approvals and approval by the CSE. Specifically, certain of the transactions contemplated by the Recapitalization Transaction have triggered approval by U.S. state-level regulators in the states in which the Company operates. Where required, iAnthus has commenced the review and approval process.”


StaffFebruary 4, 2021
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iAnthus (OTC: ITHUF) stock popped over 57% to lately sell at 29 cents after the company was able to close on an $11 million bridge financing funded by certain lenders affiliated with the counterparties to the previously announced restructuring support agreement dated July 10, 2020. They are the holders of all of the 13% senior secured convertible debentures issued by iAnthus Capital Management, LLC and the holders of 91% of the principal amount of 8% convertible unsecured debentures issued by iAnthus.

Randy Maslow, Interim Chief Executive Officer and President of the Company said in a statement, “We are very pleased to have closed this bridge note financing. The net proceeds from the financing will be used exclusively for our operations in New Jersey for the continued construction and completion of improvements at our New Jersey cultivation, manufacturing, and dispensary facilities. We expect to sublease these facilities to MPX NJ once construction is complete and the facilities are ready to commence licensed operations.”

MPX NJ Battle

The battle between MPX New Jersey and iAnthus NJ continues even as iAnthus secured the financing. which will be used primarily for the construction and improvements of certain New Jersey facilities leased and/or owned by iAnthus NJ. These facilities are expected to be subleased to MPX New Jersey, with which the company has entered into several contractual agreements as described below. These facilities include the cultivation and manufacturing facility currently under construction in Pleasantville and the current dispensary located in Atlantic City, as well as two prospective satellite dispensaries expected to be leased and/or purchased and improved by iAnthus NJ pursuant to satellite approval applications filed with the New Jersey Department of Health on December 31, 2020.

However, the Monmouth County Superior Court is allowing iAnthus to continue construction at the Pleasantville facility. Maslow said, “We are pleased with the Court’s ruling today in iAnthus’ favor, giving the Company the green light to continue its ongoing build-out of the Pleasantville cultivation and processing facility, which is important to New Jersey’s goal of providing additional supply as quickly as possible to the state’s medical cannabis patient population. The Court recognized iAnthus’ substantial interest in completing the construction of the cultivation facility, especially given the Company’s contractual rights to acquire full ownership of MPX NJ, subject to regulatory approval. The Court’s ruling today, together with our closing yesterday on an $11 million financing earmarked solely for our NJ operations, gives us tremendous confidence in our ability to complete the cultivation, processing and associated dispensary facilities in a timely fashion for the benefit of New Jersey’s patients.”

 

Shareholder Battle

Last week, the company announced that in a unanimous decision, the British Columbia Court of Appeal dismissed the appeal of Walmer Capital Limited, Island Investments Holdings Limited, and Alastair Crawford of the order of the Supreme Court of British Columbia made October 5, 2020, approving a plan of arrangement to implement the Company’s previously announced recapitalization transaction. Thus, effectively ending the shareholder fight.

 


Debra BorchardtJanuary 26, 2021
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16min425817

It’s a bombshell recording between former iAnthus Capital Holdings Inc. (OTC: ITHUF) Hadley Ford and an unidentified investor that has been leaked to the internet. A transcript was published online in which Ford candidly discusses the company’s dealings with its lenders Gotham Green Partners and Oasis Management. Green Market Report reached out to both companies for comment but has yet to receive a response. The most explosive exchange alleges that the lenders conspired to wipe out the unsuspecting shareholders. The stock was plunging another 30% to lately sell at 29 cents as it has also found itself mired in a lawsuit with MPX NJ, a class-action lawsuit, and a fight over the company’s recapitalization or bankruptcy plan.

Well, How Did We Get Here?

At the beginning of 2020, iAnthus was looking like it would become one of the top MSO’s (multi-state operators) in the business, and then the company unraveled in spectacular fashion. In 2019, iAnthus was delivering solid earnings, making acquisitions, and getting capital from Gotham Green Partners (GGP). It closed on its huge $835 million acquisition of MPX Bioceuticals, whose COO was Beth Stavola. The company also acquired Stavol’s CBD For Life brand and made her a board member. In January of 2020, the company completed its commitment to Stavola of $11 million. This raised eyebrows at the time as many believed the company should have restructured the payment or that Stavola as a board member and Chief Strategy Officer should have made it easier for the company to repay her. In hindsight, she was smart to get her money quickly before the company fell apart. Ford’s opinion of these actions are discussed on the call.

In April 2020, Ford abruptly resigned from the company after an investigation by the board’s special committee. The company’s President and Co-founder Randy Maslow was appointed as the interim CEO. The company formed a special committee to look into allegations made in an online media report that Hadley had misused company funds for his own benefit and that there was a conflict of interest. The committee determined that two of the allegations were substantiated and recommended further action.

According to a company statement, the Special Committee determined that Ford entered into two undisclosed loans (one loan for $100,000 with a related-party and the other for $60,000 with a non-arm’s length party) and those loans created a potential or apparent conflict and should have been disclosed to the board in a timely way. On The alleged call, Ford says he believed Stavola leaked the loan information because she wanted to become CEO of the company.

Stavola at the time said, “I look forward to working closely with Randy as interim CEO and the Special Committee as the Company explores strategic alternatives.” iAnthus initiated a Strategic Alternatives Review Process and has hired Canaccord Genuity Corp. as its financial advisor.

Recapitalization To Avoid Bankruptcy

In August 2020, iAnthus reported a staggering net loss of $237.3 million, which included a $199.4 million impairment loss. While the revenue rose 12% sequentially to $30.4 million, the net losses and defaulting on debt payments have overshadowed any good news. iAnthus said in its earnings statement that it did not make interest payments due on its Secured Notes and Unsecured Debentures due on March 31, 2020. “This non-payment of interest triggered an event of default with respect to these components of the Company’s long-term debt, consisting of principal amounts at face value of $97.5 million and $60.0 million and accrued interest amounts at March 31, 2020, of $3.2 million and $1.2 million on the Secured Notes and Unsecured Debentures, respectively.”

The company had an accumulated deficit of $622 million according to the filing. On July 10, the company entered into a Restructuring Support Agreement with some of its lenders. “If the Recapitalization Transaction is completed through CCAA Proceedings, then the Existing Shareholders (defined as the existing holders of Common Shares) will not receive a recovery.” In other words, the shareholders lose everything.

MPX NJ

In addition to the Recapitalization plan, Stavola left the company. Since that time, Stavola has filed a lawsuit against iAnthus regarding MPX NJ.  In late 2020, MPX NJ sued iAnthus Capital Management and its New Jersey subsidiary. MPX is saying that iAnthus is improperly going after the operation of the Pleasantville Alternative Treatment Center by trying to negotiate with regulators. The judge ruled against iAnthus according to a story on NJ.com. The two companies have a shared lease for the dispensary, but MPX NJ is insisting that it is the company that was awarded the permit in 2018 and that the master services agreement that iAnthus cites as its authority, has not been approved by the New Jersey State of Health. iAnthus disputes the allegations of the Complaint and disputes that it ever engaged in the conduct that was the subject of the temporary restraints in the first place.

Oasis Management Debt

In addition to the money invested by GGP, Oasis Management stepped in with $25 million. In March 2020, Oasis began to complain publicly that iAnthus was in breach of the terms. This topic is discussed in detail on the call transcript with regards to Alex Shoghi, the contact at Oasis. Ford is quoted in the published transcript, which hasn’t been verified as saying:

So then we get to June of 2019 and I get this phone call from, uh, Alex Shoghi at Oasis saying, Oh, you’re in violation of your maintenance covenants. I’m like, what are you talking about? Well, the stock price is so low. Um, you know, you violated the maintenance component, so there are no maintenance covenants of the deal. Uh, there’s only a current test. And he said, nah, that’s not the way I read it. I don’t care how you read it. You and I negotiated the deal. We both know there’s no maintenance covenant. Like it’s not in any of my notes. It’s not in any of the language and any of the usual things. So yeah, he tried to stick us up for some better economics, but he had his lawyers involved and there wasn’t a maintenance covenant. So he went away.

Ford according to the call contact Adler at GGP to tell him what Shoghi was up to and Adler allegedly said he wouldn’t negotiate with terrorists and they should play hardball with Oasis. They felt that Oasis wanted better terms for his deal and that by threatening to take it public he could tank the stock price. Ford was very concerned according to the call that Shoghi was going to publish what he deemed were lies about the company. As it turned out, Shoghi did go public and the stock price dropped as expected.

The Phone Call

Initially, according to the phone call. GGP wasn’t too happy with Oasis and was on the side of iAnthus. iAnthus was trying to get more investment money from GGP and at first it seemed Adler was on board. GGP was going to invest $20 million, but then delays began to happen and the paperwork looked to be changing in GGP’s favor. Ford started to get concerned and began to look elsewhere to raise money as the $20 million dropped down to $15 million and investors were getting nervous about the Shoghi situation. As all of this is happening, the stock price continues to fall. Then it seems, Adler and GGP began to side with Oasis. Ford says on the alleged call:

 guys, you know, we got an interest payment in a week. You guys have said that you were going to forbear that, or, you know, push that off for us. I haven’t seen any paperwork. I need to get the paperwork. And Alex says, and Jason let’s Alex talk, And Alex says, oh, we’re happy to continue to have a conversation on forbearances but there’s nothing that I ask this to give us that would make them forbear. And then Jason says, I had a thought. More of a Gotahm led action. We’re going to take the company private. I’m like, well, that’s interesting. I said, you know, stocks low enough. Um, and I’ve got some ideas on that. You could, uh, offer a warrant and all these other things, and you could actually make it a very shareholder friendly, uh, going private transaction. You could have guys showing more than 1% roll into it and keep the cash need down. And the stock guys with less than that could get a long day warranted. Um, you know, give some upside when the company comes back public again, and there’s enough juice for everyone to make a lot of money.

And Jason says, well, actually had different concepts are going private. Um, uh, we’re going to take out, we’re going to wipe out the public shareholders and the junior guys, and then we’re going to recharge the management team.

At this point, Ford starts to think about the shareholders.

I’ve got a responsibility to the public shareholders. I agree to likehose the public shareholders and junior guys and enrich myself and Jason’s well, think about it. Don’t send any texts, don’t send any emails. Um, and, um, you know, we’ll talk about it. Um, and I went and spoke with our outside counsel, spoke with my board and they’re like, well, Gotham’s not your friend. And we said, okay, let’s go to the mattresses. You know, we got a lot of people already in the data room booking to, uh, finance this, we’ll hire an outside advisor, which ended up being canaccord to do kind of a strategic review. We will start to hoard cash. We’ll start to lay people off. we’ll stop all our spending. We won’t pay any interest. Um, and we’ll fight these bastrdds and there’s enough assets value here that will emerge successful.

By this time, iAnthus had approached Canaccord Genuity to help with raising money. According to the call, Ford supposedly gave names of wealthy individuals who could invest in the company, but he felt that Canaccord never pursued those options. The other unidentified person on the supposed call complained that Canaccord did receive bids for iAnthus, but never pass those offers along to the company. Had that been pursued, iAnthus shareholder value may have been saved.

More Shareholder Disrespect

The transcript of the supposed call is quite lengthy. While Ford mostly fights for the shareholders, it seems others in the company have no concern for those investors. Ford says at one point:

They’re saying, what’s my liability going forward or saying the board is not going to get rich on a shareholder friendly outcome.

And this:

 So the optimization was never about getting the best deal for the shareholders, although they will claim that, but I know the optimization was around getting something that looked prudent and thoughtful.

In Closing

Again, Green Market Report hasn’t verified the call, although New Cannabis Ventures wrote, ” We were able to confirm with the investor, who was aware that it had been leaked, that the recording is legitimate, though he claimed to have no involvement in sharing the information and had no intention for it to become public.”

With regards to the Recapitalization Plan, there is an appeal with respect to the Supreme Court of British Columbia’s final approval for the plan of arrangement to implement the Recapitalization Transaction, iAnthus confirmed that the appeal is scheduled to be heard on January 26, 2021. The submissions will be held virtually before a three-member panel of the British Columbia Court of Appeal. iAnthus considers the appeal to be without merit and intends to vigorously defend its interest in court.

In March of 2019, the stock traded at roughly $5.67. It is now trading at approximately 31 cents.


Debra BorchardtDecember 24, 2020
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There is clearly no love lost between iAnthus (OTC: ITHUF) and Beth Stavola’s MPX NJ. Last week, MPX NJ sued the troubled iAnthus Capital Management and its New Jersey subsidiary. MPX is saying that iAnthus is improperly going after the operation of the Pleasantville Alternative Treatment Center by trying to negotiate with regulators. On Wednesday the judge ruled against iAnthus according to a story on NJ.com.

The story said that in a remote hearing, Judge Joseph Quinn issued an initial order that said iAnthus could not represent itself as MPX NJ without disclosing the pending agreement before the health department or enter into contracts that bind MPX. “iAnthus must also inform Stavola of all contracts and construction at the Pleasantville cultivation site, and avoid additional unauthorized construction in parts of the facility where marijuana is being grown,” said the report.

“It certainly is our intention to work something out here,” Paul Josephson, an attorney representing iAnthus, said during the remote hearing. “I don’t think there’s anybody on either side who wants to jeopardize this permit. I think and I hope that’s a shared goal of the parties.”
iAnthus/MPX History

The two companies have a shared lease for the dispensary, but MPX NJ is insisting that it is the company that was awarded the permit in 2018 and that the master services agreement that iAnthus cites as its authority, has not been approved by the New Jersey State of Health. Stavola sold her original cannabis assets to MPX Bioceuticals and then proceeded to build that company to become an attractive property, which iAnthus acquired. She was the founder and CEO of Stavola Medical Marijuana Holdings, Health for Life Inc, GreenMart of Nevada, and CBD For Life.

According to the New Jersey Globe, the suit stated, “These actions cannot stand, as they threaten MPX NJ’s ATC permit, expose it to liability from third parties, and tarnish its reputation, as well as that of its owners, across the cannabis industry.” The lawsuit had asked the judge, Monmouth County Superior Court Judge Joseph Quinn, to keep iAnthus from acting on behalf of MPX and declare MPX NJ as the owner of the dispensary rule that the master services agreement is no good until it is approved by the New Jersey Department of Health.

The Globe said that the filing alleges further wrongdoing by iAnthus. Stavola, a former executive at the marijuana industry giant, left the firm and its subsidiaries in August, the suit says. But in September, iAnthus told regulators in Nevada she was still CEO of GreenMart of Nevada and iAnthus subsidiary.

iAnthus Downfall

iAnthus problems began in April when Chief Executive Officer Hadley Ford has resigned from his position after an investigation by the board’s special committee. The company’s President and Co-founder Randy Maslow was appointed as the interim CEO effective immediately.

The company formed a special committee to look into allegations made in an online media report that Hadley had misused company funds for his own benefit and that there was a conflict of interest. The committee determined that two of the allegations were substantiated and recommended further action. According to a company statement, the Special Committee determined that Ford entered into two undisclosed loans with iAnthus’ senior secured lender, Gotham Green Partners (one loan for $100,000 with a related-party and the other for $60,000 with a non-arm’s length party) and those loans created a potential or apparent conflict and should have been disclosed to the board in a timely way.

In August, the company reported a staggering net loss of $237.3 million, which included a $199.4 million impairment loss. While the revenue rose 12% sequentially to $30.4 million, the net losses and defaulting on debt payments have overshadowed any good news. At this point, the credit Gotham Green Partners (GGP) demanded its debt payments or it was taking over the company and leaving the common shareholders with very little. August was also the month that Stavola resigned from the company.

 


Debra BorchardtSeptember 29, 2020
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7min37060

Editors note: This story was updated on 9/29/2020.

Just two weeks ago, iAnthus Capital Holdings, Inc. (OTCQX: ITHUF) announced that, at the meetings of Secured Noteholders, Unsecured Debentureholders and Existing Equityholders voted overwhelmingly in support of the previously announced recapitalization transaction to be implemented by way of a court-approved plan of arrangement under the British Columbia Business Corporations Act. The hearing was planned for September 25, 202. The stock was halted for trading this afternoon.

According to a post on Twitter on Monday by Andro George, the plan was dismissed. George has been working with shareholders to claim that the assets are more valuable than what is being presented in court. It seems iAnthus was offering common shareholders 2.75%, while they believe they should get something in the ballpark of 25%-32.5%.

On Tuesday iAnthus released an announcement saying “Justice Gomery held that the Plan of Arrangement was put forward in good faith and met the statutory requirements of the British Columbia Business Corporations Act (the “BCBCA”). Justice Gomery was also satisfied that the Plan of Arrangement had a valid business purpose and was approved by the security holders in accordance with the requirements of the BCBCA. The Plan of Arrangement included a release of claims and Justice Gomery did not approve the form of release of claims presented to the Court.  Accordingly, Justice Gomery will have conduct of the matter and has not made a final ruling on the fairness of the Plan of Arrangement.”

“Under the RSA, iAnthus is obligated to pursue the Recapitalization Transaction under the Companies’ Creditors Arrangement Act (“CCAA”) within five business days if the final court order for the Plan of Arrangement was not granted by September 28, 2020. The parties to the RSA have agreed to extend the Deadline to Tuesday, October 6, 2020.”

iAnthus Background

iAnthus’ problems began in April when Chief Executive Officer Hadley Ford has resigned from his position after an investigation by the board’s special committee. The company’s President and Co-founder Randy Maslow was appointed as the interim CEO effective immediately.

The company formed a special committee to look into allegations made in an online media report that Hadley had misused company funds for his own benefit and that there was a conflict of interest. The committee determined that two of the allegations were substantiated and recommended further action. According to a company statement, the Special Committee determined that Ford entered into two undisclosed loans with iAnthus’ senior secured lender, Gotham Green Partners (one loan for $100,000 with a related-party and the other for $60,000 with a non-arm’s length party) and those loans created a potential or apparent conflict and should have been disclosed to the board in a timely way.

In August, the company reported a staggering net loss of $237.3 million, which included a $199.4 million impairment loss. While the revenue rose 12% sequentially to $30.4 million, the net losses and defaulting on debt payments have overshadowed any good news.

iAnthus said in its earnings statement that it did not make interest payments due on its Secured Notes and Unsecured Debentures due on March 31, 2020. “This non-payment of interest triggered an event of default with respect to these components of the Company’s long-term debt, consisting of principal amounts at face value of $97.5 million and $60.0 million and accrued interest amounts at March 31, 2020, of $3.2 million and $1.2 million on the Secured Notes and Unsecured Debentures, respectively.”

At this point, the credit Gotham Green Partners (GGP) demanded its debt payments or it was taking over the company and leaving the common shareholders with very little. Obviously, the shareholders felt that a lender that cared about the company would give it more time to pay and restructure the debt. The shareholders were told that if they didn’t vote for the recapitalization plan giving GGP most of the company then they would get almost nothing. Many voted against the plan, but iAnthus said 68% voted in favor.

Andros George contested the shareholder voting amounts and noted that he believed that not enough shareholders had voted in favor and that the CEO could not vote those shares by proxy. He believed he had 25% of the shareholders voting against the plan. He suggested the GGP was a predatory lender and that the executives of iAnthus were not acting with the best intent for the shareholders.

Shareholders have pointed to improving earnings in the first quarter with reported revenues up 12% from the prior quarter. They have also pointed to other cannabis company acquisitions with similar assets, suggesting that if iAnthus sold some assets it could address its debt issues.

This story is developing and will be updated as more information is released.

 


Julie AitchesonAugust 26, 2020
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With unionization becoming ever more common in the cannabis industry, Labor Day 2020 provides an opportunity to take a closer look at the state of cannabis labor unions in the U.S.  Across industries, labor unions organize members and offer access to group health insurance, provide legal compliance and other assistance, help negotiate annual raises and higher wages, and often provide discounts through partner businesses. The International United Food and Commercial Workers Union (UFCW- working not just in the representation of businesses, but advocacy, coalition-building, and policy change), is regarded as the most powerful cannabis union in the country, initiating a Cannabis Workers Rising Campaign in 2010. As of March 2020, UFCW represented more than 10,000 workers in 14 states.

United Cannabis Workers, which “unionized as an independent workers union made up of small business owners, self-employed workers, and employees of small cannabis businesses”, eschews “old school union tactics” while holding a significant place in the cannabis union landscape. This landscape is differentiated from that of other industries in that it normalizes companies disclosing the fact that their employees are organizing. In cannabis, unionization is frequently seen as a way for a business to demonstrate legitimacy, however not all companies are supportive of unionizing efforts.

Michigan

In January of this year, controversy broke out over proposed labor union laws for cannabis businesses in Michigan, put forward by the state’s Marijuana Regulatory Agency. The proposal included a requirement that cannabis companies enter into “labor peace agreements” with unions before being licensed to grow, sell, or distribute cannabis. This suggested rule was met with significant opposition by industry groups and businesses, many going so far as to claim the measure thinly disguised political favor and a protection racket. This June, Michigan’s pro-union “labor peace agreement” requirement was stripped out of the proposal after a deluge of negative feedback. Many who oppose labor union laws such as these claim a violation of The National Labor Relations Act, which guarantees private-sector employees the right to form labor unions and gives unionized employees the right to strike and bargain jointly for working conditions. Opponents see labor peace agreements as “a pretense to use industry licensing to impose forced union dues on workers in violation of federal labor law.”

Supporters argue that labor peace agreement requirements result in a more stable workforce for the cannabis industry. In New York and California (where cannabis labor unions are required) cannabis industry workers are commonly acknowledged as ripe for exploitation by unethical businesses and therefore in need of union protection, while companies in states such as Michigan and Massachusetts have pushed back against unionization efforts. New England Treatment Access, one of Massachusetts’ largest cannabis companies, has been on the receiving end of numerous complaints filed by UCFW alleging anti-union efforts and retaliation against workers.   In July, about 60 New England Treatment Access, (NETA) workers in Franklin, Mass., voted to join UFCW Local 1445. With so much at stake and so much still unresolved in the cannabis regulatory sphere, cannabis labor unions and industry companies will no doubt continue this dance of compromise and conflict for many Labor Days to come.

Also in July, the Cannabis Workers Union said that 40 workers from Mayflower Medicinals joined UFCW Local 1445 because they were concerned about insufficient wages, as well as an unclear and slow response to workplace safety issues by the company in relation to the current COVID-19 health crisis, and a lack of respect by management for the work that they do at the company’s grow facility. Mayflower Medicinals is owned by iAnthus Capital Holdings, Inc. (OTC:ITUHF).

“As the cannabis industry continues to grow in Massachusetts, UFCW Local 1445 is proud to support these good jobs and the responsible employers that empower their workers in this new part of our economy,” said UFCW Local 1445 President Fernando Lemus. “These workers at Mayflower/IAnthus are an important role in the company’s success and they deserve the protections and security of a union contract.”

Vireo Health Supports Unions

In January this year, Vireo Health International, Inc. (CNSX: VREO)(OTCQX: VREOF) announced that its workers at its wholly-owned subsidiary, MaryMed, LLC  voted overwhelmingly to ratify a Collective Bargaining Agreement and officially joined the ranks of United Food and Commercial Workers Local 27 (UFCW27).

The company said that the three-year agreement would be the first medical cannabis union contract ratified in the State of Maryland. The contract would cover employees working in Vireo’s 20,000 square-foot Hurlock, Maryland-based manufacturing facility, which supplies precisely formulated medical cannabis products to third-party dispensaries throughout the state.

“As a ‘people-first’ business, Vireo is deeply committed to our employees and we are proud to be a union employer in Maryland and beyond,” said Kyle Kingsley, M.D., CEO of Vireo Health. “Our workforce is key to our company’s success and we look forward to partnering with UFCW to support legislation, such as legalizing adult-use cannabis, that will help create thousands of new middle-class jobs across Maryland.”

 


Debra BorchardtAugust 14, 2020
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iAnthus Capital Holdings, Inc. (OTCQX: ITHUF) reported a staggering net loss of $237.3 million, which included a $199.4 million impairment loss. While the revenue rose 12% sequentially to $30.4 million, the net losses and defaulting on debt payments have overshadowed any good news.

The net loss per share was $1.38 versus last year’s net loss of $0.19. The majority of the impairment losses were from the Arizona and Nevada properties, $86 million, and $64 million respectively.

iAnthus said in its earnings statement that it did not make interest payments due on its Secured Notes and Unsecured Debentures due on March 31, 2020. “This non-payment of interest triggered an event of default with respect to these components of the Company’s long-term debt, consisting of principal amounts at face value of $97.5 million and $60.0 million and accrued interest amounts at March 31, 2020, of $3.2 million and $1.2 million on the Secured Notes and Unsecured Debentures, respectively.”

The company has an accumulated deficit of $622 million according to the filing. On July 10, the company entered into a Restructuring Support Agreement with some of its lenders. “If the Recapitalization Transaction is completed through CCAA Proceedings, then the Existing Shareholders (defined as the existing holders of Common Shares) will not receive a recovery.” In other words, the shareholders lose everything.

Trading Resumption Requested

The company has requested an extension for reporting its second-quarter earnings due to logistical issues and delays caused by COVID-19. The company has until October 15, 2020 to file those earnings. The company has been affected by a cease trade order that started on June 22 for failure to file financial results and now that the fiscal first quarter has been released, iAnthus is asking for the cease trading order to be revoked.

The stock has continued to trade on the OTC Markets, where it was lately selling at $0.06 a share. Its 52-week high was $2.74 on that exchange.

Stavola Leaves

Beth Stavola sold her CBD for Life company to iAnthus in 2019 and became the Chief Strategy Officer and board member of the company. For the three months ending in March, CBD For Life reported sales revenues of $652 thousand and net losses of $3.6 million. The impairment loss was listed at $2.5 million. Stavola also engineered the MPX Bioceutical acquisition for iAnthus which caused the markets to dub her the $845 million woman. The company reported that MPX delivered revenues in the quarter of $15.7 million and a net loss of $192 million.

Stavola recently left the company and told Forbes that her role was much less hands-on than she expected. However, she managed to make sure she was paid before the company began experiencing financial troubles. The Stavola Trust Note of $10.8 million was paid in full on January 10, 2020.

 


Debra BorchardtApril 27, 2020
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iAnthus Capital Holdings, Inc. (OTCQX: ITHUF) Chief Executive Officer Hadley Ford has resigned from his position after an investigation by the board’s special committee. The company’s President and Co-founder Randy Maslow has been appointed as the interim CEO effective immediately.

Investigation

The company formed a special committee to look into allegations made in an online media report that Hadley had misused company funds for his own benefit and that there was a conflict of interest. The committee determined that two of the allegations were substantiated and recommended further action.

According to a company statement, the Special Committee determined that Ford entered into two undisclosed loans (one loan for $100,000 with a related-party and the other for $60,000 with a non-arm’s length party) and those loans created a potential or apparent conflict and should have been disclosed to the board in a timely way.

With respect to the loan with the related-party report that started everything suggested that Ford entered into an undisclosed loan transaction with the managing member of iAnthus’ senior secured lender, Gotham Green Partners.  The Special Committee considered the allegation and the relevant details, are summarized as follows:

  • On December 20, 2019, iAnthus and Gotham Green closed an additional US$36.15 million of senior secured convertible notes from Gotham Green and additional co-investors.
  • A day after the close of the Third Tranche, on December 21, 2019, Ford and the Managing Member (as lender), entered into a loan for the principal sum of $100,000 documented by an email. The loan bore no interest and was to be repayable on March 31, 2020. The loan has not been repaid.

The Special Committee said it did not find a basis to conclude that “Ford’s conduct in the face of the potential or apparent conflict impacted the terms, timing, or negotiations the Company had with the related-party or the non-arm’s length party.  Nevertheless, the Special Committee concluded, and the Board accepted, that the failure to disclose such personal loans to the Board was a breach of the Company’s conflict policies and other obligations as an officer and director of the Company.”

Elizabeth (Beth) Stavola, Chief Strategy Officer and director of iAnthus stated: “I look forward to working closely with Randy as interim CEO and the Special Committee as the Company explores strategic alternatives.” iAnthus has initiated a Strategic Alternatives Review Process and has hired Canaccord Genuity Corp. as its financial advisor.

Earnings Delayed

iAnthus has postponed the filing of its annual financial statements for the year ended December 31, 2019, to incorporate subsequent event disclosures as they relate to the company’s financial position. The earnings announcement had previously been scheduled for April 7, 2020. As a result of a change to the filing date, the Company’s earnings news release for the fourth quarter and full-year 2019, as well as the conference call for financial analysts and investors previously scheduled for April 7, 2020, is being rescheduled.

iAnthus owns and operates licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry.

 


StaffSeptember 30, 2019
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It’s time for your Daily Hit of cannabis financial news for September 30, 2019.

On The Site

iAnthus

Gotham Green Partners has invested an additional $20 million in iAnthus Capital Holdings, Inc. (CSE: IAN)(OTCQX: ITHUF) through the purchase of senior secured convertible notes. Green Gotham said it was part of a broader $100 million financing plan to support the buildout of all existing markets in which iAnthus currently operates.

iAnthus has been building its market share at a rapid pace. Over the past 16 months, Chief Operating Officer Pat Tiernan said in a statement that the company currently has 27 open dispensaries, 11 of which have opened in the last ten months and the company is aggressively working to open another 12 in the next six months. Tiernan added, “We are growing in each of our markets and are one of the only MSOs that has meaningful revenue in multiple states, including Arizona, Colorado, Florida, Maryland, Massa

PathogenDX

Arizona-based DNA testing technology company PathogenDx, Inc. announced $7.5 million in Series B funding. This latest investment round was led by Cresco Capital Partners with participation from Altitude Investment Management, Arcadian Investment Partners, Panther Opportunity Fund LLC, Salveo Capital, Flatiron Venture Partners, and other investors. PathogenDx was able to close this round of funding in just under three months.

PathogenDx wants to become the new standard in DNA-based testing through widespread adoption of its advanced microarray testing platform for the cannabis, hemp, agriculture, food, and beverage industries. PathogenDx’s technology can rapidly identify and detect up to 50 pathogens all in a single test, in 6 hours providing triplicate data per analyte for certainty in results with a simple and easy process. This additional capital raise will allow PathogenDx to continue expanding its breakthrough technology into food and agriculture testing while continuing to build on its leadership position with a current portfolio of domestic and international clients in the cannabis industry.

In Other News

High Tide

High Tide Inc. (CSE:HITI) (OTCQB:HITIF) an Alberta-based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, has filed its financial results for the third fiscal quarter of 2019 ending July 31.

Revenue in the third quarter increased by 281%, to C$8 million from C$2 million for the same period in the previous year. Gross margin increased by 160%, to $3 million from $1 million in the same period in 2018, primarily due to an increase in sales volume.

48North

48North Cannabis Corp. (TSXV: NRTH) released its financial and operating results for the fiscal year ended June 30, 2019. The company delivered net revenue of $4,820,000, marking 48North’s first full year of revenue, but a net loss of $8.1 million. In fiscal 2019, the company raised over $48 million and at the end of the year had $52.7 million in cash and cash equivalents on hand. As a result, 48North believes it is well capitalized to execute on its business plan.


Debra BorchardtSeptember 30, 2019
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5min13790

Gotham Green Partners has invested an additional $20 million in iAnthus Capital Holdings, Inc. (CSE: IAN)(OTCQX: ITHUF) through the purchase of senior secured convertible notes. Green Gotham said it was part of a broader $100 million financing plan to support the buildout of all existing markets in which iAnthus currently operates.

iAnthus has been building its market share at a rapid pace. Over the past 16 months, Chief Operating Officer Pat Tiernan said in a statement that the company currently has 27 open dispensaries, 11 of which have opened in the last ten months and the company is aggressively working to open another 12 in the next six months. Tiernan added, “We are growing in each of our markets and are one of the only MSOs that has meaningful revenue in multiple states, including ArizonaColoradoFloridaMarylandMassachusetts and Nevada, with strong same-store sales growth across our footprint.”

“We are pleased to be working with a leading financial investor in the U.S. cannabis sector. The new notes will allow us to build out operations in our key markets and continue to develop our retail and product brands,” said Hadley Ford, CEO of iAnthus.   “We believe this level of support from GGP will fully fund the development of our existing assets and provide the necessary capital for iAnthus to achieve positive and sustainable EBITDA and operational free cash flow in 2020.”

Terms

The notes have an annual coupon of 13%, payable quarterly, which will mature on May 14, 2021, subject to the iAnthus’ right to extend the maturity date by twelve months, and are exchangeable into common shares of the company at a conversion price of $1.89, which represents a 25% premium to the closing price of the common shares on Friday, September 27, 2019. The notes are being issued with $10 million of attached three-year warrants with an exercise price of $1.97.  Any additional notes will have substantially the same terms, including conversion price and warrant coverage, subject to compliance with the policies of the CSE. The note purchase agreement provides GGP the right to purchase additional notes of up to $66.5 million for a total of $86.5 million. The company may obtain an additional $13.5 million from potential financing sources, including GGP or others, to fulfill its $100.0 million plan, with any such additional financing subject to the negotiation of pricing, terms, and conditions in the context of the market.

“We have viewed iAnthus as a key partner since our initial investment in May 2018 and have closely watched the Company’s evolution as it has continued to execute on its operational strategy across multiple markets. The Company has made significant strides in broadening and operationalizing its footprint, which we do not believe is reflected in the Company’s current trading price,” said Jason Adler, Managing Member of Gotham Green Partners. “We look forward to working alongside iAnthus and continuing to support the growth of the Company.”

 


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