The Daily Hit is a recap of the top financial news stories for June 5, 2023.
On the Site
Cannabis Celebrates Gay Pride Month
The cannabis industry owes a debt of gratitude for the early push for legalization. Green Market Report had a chance to speak with the inclusive group Proud Mary, and others, at the recent CWCB Expo in New York City. Watch the video here.
Atlas Global Shutters Alberta Site, Lays Off 50 Workers
Atlas Global Brands Inc. (CSE: ATL), a budding Canadian-Israeli cannabis company, is shutting down its Alberta operations in a bid to slash costs and streamline its operations in the country. In a statement, the company said that it would also liquidate any assets tied to its smaller companies in the region, which includes layoffs impacting “approximately 50 employees.” Read more here.
Geronimo Capital founder and TPCO (OTC: GRAMF) shareholder George Allen sent a letter to the company’s CEO Troy Datcher outlining why he thinks the deal with Gold Flora is terrible. Allen questioned the numbers supporting the transaction and suggested that the board could be doing the deal because it benefits them more than shareholders. Read more here.
Monthly Illinois Cannabis Sales Inch Upward in May, State Reports
Cannabis retailers in the Land of Lincoln sold $132.7 million in marijuana last month, according to the Illinois Department of Financial and Professional Regulation, less than a $1 million increase from the $131.9 million in April sales. Read more here.
LeafLink Partners with Logistics Shop to Optimize California Cannabis Supply Chain
New-York based LeafLink, a major cannabis wholesale platform, is partnering with Leafgistics, a cannabis logistics company, to coordinate and streamline the storage and movement of cannabis products across the California market. Read more here.
In Other News
Greenlane Holdings
Greenlane Holdings Inc. (Nasdaq: GNLN) will effect a one-for-10 reverse stock split of its Class A common stock, par value $0.01 per share, that will become effective on June 5 at 5:01 p.m. Eastern Time. The reverse split is primarily intended to bring Greenlane into compliance with the minimum bid price requirement for maintaining its listing on the Nasdaq. Read more here.
Grow Labs Organics
Investors have high expectations for a medicinal cannabis startup based on the Isle of Man, which has secured a £1m seed funding round. Grow Lab Organics – founded by Alex Fray, Charlie Price, and Charlie Lyons – is researching and growing different strains of medicinal cannabis.
Colorado
The governor of Colorado has signed a bill into law that would allow online marijuana sales. It strikes language from existing statute that explicitly prohibits cannabis from being sold on the internet, while adding regulations to provide for online commerce. Read more here.
LeafLink is diving deeper into the world of payments. It’s an area that has bedeviled the industry as the large banks and credit card companies won’t work with the cannabis industry. LeafLink is mostly known for its wholesale cannabis platform, but now its expanded its payments suite to include Direct Payments for customers in six states. LeafLink’s Direct Payments solution is now in Colorado, California, Arizona, Massachusetts, Ohio, and Nevada.
LeafLink also noted that in addition to its Direct Payments offering, it is also launching a new digital onboarding journey for all users, which verifies and approves the company for LeafLink Payments in real-time.
“Between Direct and Flexible Payments solutions, LeafLink offers a range of holistic digital payments and purchase financing services that simplifies cannabis business operations,” said Ryan G. Smith, CEO and Co-Founder of LeafLink. “Our Direct Payments service gives cannabis operators a seamless, simple and intuitive way to manage digital transactions. The LeafLink team is excited to offer such a necessary solution to our customers across six states and hopes to help more cannabis businesses realize their growth goals in the future.”
LeafLink’ said its Direct Payments solution addresses operational pain points experienced by buyers and sellers who rely on cash transactions, allowing them to seamlessly send and receive compliant ACH payments. For buyers, Direct Payments enable businesses to effectively manage cash flow by eliminating the uncertainty of mailing and clearing checks. Sellers, on the other hand, can leverage Direct Payments to digitize manual cash collections, lower transaction costs, and expedite time-to-cash timelines. Complimentary for all LeafLink customers until next year, the service allows brands and retailers to save time, secure their payments, and centralize their transaction process within the LeafLink platform.
“LeafLink is in a unique position because we are solving for an industry that is very under-served. Whatever side of the equation you’re on in the B2B cannabis space, our goal is to fast-track your growth and efficiently give you the funds that you need. Part of being able to do that is offering a seamless onboarding experience for our customers,” said Harish Mukhami, Senior Vice President of Product for LeafLink. “I expect this will drastically shift the way cannabis operators view digital payments, which haven’t been widely adopted by the industry due to the cumbersome and manual nature of getting started. We’ve addressed that gap and are reducing that friction entirely so that customers can start transacting almost immediately.”
According to Crunchbase, LeafLink has raised a total of $379M in funding over 7 rounds. Their latest funding was raised on Jul 21, 2021 from a Series C round. LeafLink has a post-money valuation in the range of $1B to $10B as of Jul 21, 2021, according to PrivCo. LeafLink has stated that it is backed by leading venture capital firms and strategic investors, including Founders Fund, Thrive Capital, Nosara Capital, and Lerer Hippeau, LeafLink says it has raised more than $131 million of equity to date as well as a $250 million credit facility to provide liquidity to the cannabis supply chain.
Bespoke Financial
Bespoke Financial also recently announced an integrated partnership with BLAZE Solutions, a leading cannabis technology company. The partnership establishes an embedded lending product providing cannabis retailers access to Bespoke’s financing at the click of a button within BLAZE’s Dispensary POS software. The move would allow dispensaries easy access to funds for vendor payments, the financing program will boost retailers’ ability to make timely payments that trickle up the supply chain, operate at a larger scale to increase profitability, and carry an assortment of brands to keep a competitive edge.
BLAZE said its clients can opt-in through the POS to see qualifying options for Bespoke’s dispensary financing, which allows access to 60-day repayment terms on all vendor payments. Qualifying retailers can finance purchase orders to vendors seamlessly in the platform similar to a B2B buy now, pay later option. The ability to pay vendors directly from within the BLAZE platform via Bespoke’s financing will also minimize dispensaries’ reliance on cash transactions. Dispensary financing is currently in beta testing with a select group of operators and a broader launch coming later this year.
“Bespoke’s team of fintech and cannabis experts are providing working capital that helps businesses increase purchasing power and accelerate profitability in a fast-growing industry,” said BLAZE CEO, Chris Violas. “ At this momentous time for cannabis technology, BLAZE is proud to offer the dispensary financing program and build advanced digital solutions that strengthen the cannabis supply chain.”
BLAZE’s clients can now opt-in through the POS to see qualifying options for Bespoke’s dispensary financing, which allows access to 60-day repayment terms on all vendor payments. Qualifying retailers can finance purchase orders to vendors seamlessly in the platform similar to a B2B buy now, pay later option. The ability to pay vendors directly from within the BLAZE platform via Bespoke’s financing will also minimize dispensaries’ reliance on cash transactions. Dispensary financing is currently in beta testing with a select group of operators and a broader launch coming later this year.
“BLAZE is the most prominently utilized POS in California, serving approximately a quarter of licensed cannabis retailers. Through this partnership, the new dispensary financing program expands our footprint into California and Massachusetts, two of the most established cannabis retail markets on each coast, respectively,” said George Mancheril, Founder and CEO of Bespoke Financial. “This new forward-thinking lending product combines accessible, scalable financing with an industry-leading POS platform.”
Cannatech company LeafLink’s June Flash report indicated that the month of May was a mixed bag for cannabis category sales, state-by-state performance, and pricing analysis. The report analyzed data from Leaflink’s wholesale brand distribution and retailer platforms, with markets in Arizona, California, Colorado, Michigan, Nevada, Oregon, and Massachusetts.
The cartridge category saw the largest overall drop in market share, losing 1.5 percentage points from April to May 2022, though the overall wholesale cannabis industry grew 5% year-over-year (YoY) when measured by “gross merchandise value” (GMV). Edibles showed a 1% drop, month-over-month (MoM), with some markets saturated with products and experiencing decreased sales. Average concentrate prices saw a slight increase in May, at just under 1% for the month.
Flower retained 34.6% of GMV for May, with continued top category status. LeafLink noted that in May, flower saw a 1% increase in sales and 2.2% increase in market share, the largest increase since June 2021. The average price of flower held steady throughout the month of May, at $1059 a pound, up 1.3% from the end of April. LeafLink noted that flower prices saw the greatest jump in Massachusetts, at a 14% increase up from April.
May Drops 19%
Overall transaction volume for May was down 19% YoY, LeafLink reported.
Brand growth saw 44% of brands with an increase in sales, and median growth of 25%. Brands that declined had a median reduction of 20%. LeafLink named the fastest growing brands per state, including Sublime Brands (AZ), Jeeter (CA), Leiffa (CO), Primitiv (MI), City Trees (NV), Grown Rogue (OR), and In Good Health (MA).
Retailers purchased a scant 1% less in May, YoY, according to the data. May percentages were split with 48% of buyers “increasing spend at this time,” the report said. Transaction volume per buyer decreased slightly, both MoM and YoY, at 4% and 1% respectively. Buyers that decreased their spending did so at an average rate of 24%.
Massachusetts Stays Strong
Measured by GMV, “Arizona, Michigan, Nevada, and Massachusetts saw positive year-over-year growth in May, with the latter seeing a 43% increase,” the report said. Massachusetts was followed by Arizona with a 32% increase in growth, and Michigan at 20%. Older, more established markets California and Oregon experienced a decrease for the month, at -13% and -7% respectively.
The data indicated that Massachusetts’ market was experiencing the most robust growth of the states in the monthly report. In comparison, Massachusetts retailers spent only 23% more than Nevada retailers, but with up to five times as many orders than retailers in Nevada.
LeafLink added that wholesale vendors hoping to position themselves in the Massachusetts market might take advantage of the accessories category, with only 13% of brands selling cannabis accessories, while the category makes up 31% of sales statewide. Edibles and ingestibles were the most saturated category in Massachusetts, sold by 72% of brands but occupying only 22% of sales in May. In Nevada, the same trend emerged with 62% of brands offering edible products but representing only 14% of sales in the state.
Several cannabis data providers have confirmed that this year’s April 20 holiday was the highest ever – in sales. Despite falling in the middle of the week, sales were determined to be significantly higher than an average Wednesday and the highest day of sales in the past four years. Perhaps because some of these states have more mature markets. shoppers were spending slightly less on average, but there were more people shopping.
Cannabis consumer product preferences are also shifting year over year as more customers are reaching for something different from traditional flower for 420. Edibles and concentrates are winning over consumers. The data providers say that this can be partially attributed to the growing maturity of both cannabis markets and the consumers within them. The East Coast is quickly becoming the hot spot of the cannabis industry as Massachusetts won the day. While online ordering continues to have fans even after the pandemic, cannabis consumers continue to love going to their brick & mortar store.
Black Market Certified 420 party in NYC Photo by Dave Allocca
420 Sales
Headset reported that in the US, the average cannabis store experienced 148% higher sales on 4/20 than over the previous four Wednesdays. Average discounting increased by 72%.
In Canada, the average cannabis store saw sales grow by 65% and average discounts rise by a whopping 92%.
In both countries, Headset said that sales growth was driven primarily by increases in total transaction volume. In the US, the median cannabis store saw a 107% increase in transaction volume on 4/20 in comparison to the previous four weeks. In Canada transaction volume at the median store increased by 57%. However, in the US customers purchased more per transaction on 4/20, with the median store seeing a 19% increase in average basket size. In Canada, average basket size at the median store only increased by 3%.
As usual on holidays, Headset said that beverages were the top-performing products in both countries. On 4/20 sales of Beverages grew by 110% in Canada and by 176% in the US. Pre-Rolls also performed well in both markets with 74% growth in Canada and 150% growth in the US. In Canada, Edibles were the second-best performing product category on 4/20 with 83% sales growth. Concentrates took the silver medal in the US with 155% growth.
Flowhub’s data agreed with what Headset experienced. The company said that Edibles saw a major jump in popularity in just a year, climbing 5%. Flower was also less popular this 420, while concentrates had a slight jump year over year. “It’s clear that consumers are beginning to move away from traditional products like flower and are consuming more edibles and concentrates instead. There is also a slight decrease in accessories, clones, and seeds – potentially caused by a maturity in markets, people don’t need as many accessories if they’re regularly consuming.”
Flowhub also noted that online orders made up 3% of all transactions on 420 this year, the rest were in-store. Also, more than twice as many online orders were placed on 420 in 2022 vs. 420 in 2021.
Jane Technologies reported that stores using Jane in both 2021 & 2022 saw an 11% increase in online sales. Overall Jane had ~35% growth in GMV between 2021 & 2022. Stores using Jane in both ‘21 & ‘22 saw a 34% increase in edible sales. Stores using Jane in both ‘21 & ‘22 saw a 43% increase in vape sales. Stores using Jane in both ‘21 & ‘22 saw a 22% increase in flower sales. Stores using Jane in both ‘21 & ‘22 saw a 10% increase in extract sales.
Jane said that the average cart size on 4/20 increased 15% compared to the previous four Wednesdays and overall sales on 4/20 increased 160% compared to the previous four Wednesdays.
East Coast Wins
Flowhub reported that the East Coast was recording very high average revenues per location. Flowhub wrote that “This is likely due to how new the markets are and the lack of competition. There are also likely high numbers of people driving in from out of state to purchase products in these states whereas states like California and Colorado are more mature and accustomed to cannabis. Oklahoma’s very low average sales per location can be attributed to the massive number of licenses in the state. The competition is too high for locations to haul in the same revenues as lower licensed states.”
Top-selling states according to Flowhub were as follows:
● Massachusetts had the highest average revenue per location on 420 of all Flowhub markets. The state also had the highest average basket value ($130).
● Maryland had the second-highest average revenue per location on 420 of all Flowhub markets.
● Oklahoma had the lowest average revenue per location of all Flowhub markets.
● Some states with very high sales compared to an average Wednesday:
○ Michigan’s average sales were 175% higher than an average Wednesday.
○ Maryland’s average sales were 156% higher than an average Wednesday.
○ California’s sales were 134% higher than an average Wednesday.
Jane also reported that it experienced year-over-year growth for these states: Arizona, Michigan, California, Colorado, Illinois, and Florida.
i. Arizona
1. Stores using Jane in both ‘21 & ‘22 saw a 100% increase in sales YoY.
ii. Illinois
1. Stores using Jane in both ‘21 & ‘22 saw a 54% increase in sales YoY.
iii. Pennsylvania
1. Stores using Jane in both ‘21 & ‘22 saw an 18% increase in sales YoY.
iv. Florida
1. Stores using Jane in both ‘21 & ‘22 saw a 10% increase in sales YoY.
v. Michigan
1. Stores using Jane in both ‘21 & ‘22 remained flat in sales YoY.
vi. California
1. Stores using Jane in both ‘21 & ‘22 saw a 15% decrease in sales YoY.
vii. Colorado
1. Stores using Jane in both ‘21 & ‘22 saw a 20% decrease in sales YoY.
Ordering Trends
All of these dispensaries have to place orders for inventory and Leaflink has excellent data that shows how the companies were preparing for the big day. The company said that overall, sales trended upwards in the weeks prior to 4/20 in 2022. “Sales increased week-over-week, starting on 3/27 with 6.1% growth. The next week sales grew 6.9%, and an additional 2.7% in the final full week of sales prior to 4/20. Each week set a new high watermark for total sales in LeafLink, and the week of 4/10 is now the biggest week for sales in LeafLink history.”
When it came to specific state data, Leaflink noted that the vast majority of states saw sales grow in the 30 days before 4/20 with Colorado being the only exception. States included below (CO excluded) grew by varying percentages from 14.9% in Washington to 44.3% in Massachusetts over this time period. Colorado saw sales decrease by 2.3% in the 30 days prior to 4/20 compared to the previous period.
Black Market Certified 420 party in NYC photo by Dave Allocca
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
StaffJune 5, 2023
Adam Jackson
John Schroyer
Debra Borchardt
Joanne Cachapero
