Competing lawsuits outline bad behavior at the company.
Competing lawsuits outline bad behavior at the company.
Real estate collateral still one of the best bets for raising capital.
On April 28, 2022, the Green Market Report hosted its first Women’s Summit in New York City. This panel was titled “Raising Capital” and addressed the challenges women face when raising money. From perfect balance sheets as female-owned companies struggle to raise capital that male-led companies don’t. This panel/presentation will give ways to overcome these issues. Panelists included Tahira Rehmatullah – CEO Commons, Daisy Mellet – Merida Capital Partners, Jen Drake – COO Ayr Wellness (OTC: AYRWF) and moderated by Chloe Aiello – Cheddar News.
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Michigan-based SKYMINT, is buying 3Fifteen Cannabis and also closing its $70 million Senior Secured Term Loan from Tropics LP, an affiliate of SunStream Bancorp Inc., a joint venture initiative sponsored by Sundial Growers Inc. (Nasdaq: SNDL), and its $8 million equity investment from Merida Capital Holdings. The acquisition will bring Skymint’s workforce to 730 employees and a combined retail portfolio of 27 locations totaling 101,000 square feet, with an additional 18+in the 2021-2022 pipeline.
The combined company will now have a dominant market share in four key Michigan regions: Grand Rapids, (4 locations), Greater Lansing (4 locations), Detroit / Metro Detroit (5 locations), and Ann Arbor (2 locations). In addition, it will have two indoor cultivation facilities totaling 77,000 square feet with a third indoor cultivation facility – totaling 184,000 square feet – due to come online next year and a 1,000–acre sustainable, sun-grown farm (Michigan’s largest outdoor cannabis farm).
“Skymint was founded on a mission to become a leader in the cannabis industry while leveraging our leadership position as a positive catalyst for change,” said Skymint CEO and co-founder Jeff Radway. “With this acquisition of 3Fifteen Cannabis, we have a monumental opportunity and responsibility to truly shape the market for the better, bring more jobs to our state, provide Michiganders increased access to clean, handcrafted, premium products and experiences at the best value, and continue our commitment to uplift the communities we are fortunate to serve.”
The company said in a statement that with the acquisition of 3Fifteen Cannabis, it now has the capability to serve nearly 90%of adult Michigan residents in a market valued at $3.2B that has embraced the freedom to consume cannabis recreationally since 2019. Three additional Skymint stores are planned to open in 2021, and 15 more locations are set for 2022.
“Merida has already invested deeply in Michigan through 3Fifteen, due to the attractive population dynamics. Skymint’s leading vertical position augments 3Fifteen’s leading retail presence,” explained Mitch Baruchowitz, CEO of Merida Capital Holdings and will be joining Skymint’s board of directors upon closing of the transaction.
The announcement comes on the heels of Michigan’s record-breaking July 2021 sales. According to an August 2021 report from industry analyst Headset, Michigan celebrated a 56% year-over-year increase in July 2021 sales totaling $171M, with adult recreational products comprising the largest share of $128M; and in May 2021, Michigan’s cannabis sales were less than $8.5M short of surpassing Colorado’s, which presently holds the No. 2 state ranking for national cannabis sales.
“We couldn’t be more excited to have a partner like Skymint to execute our shared vision for aggressive expansion,” said Tommy Nafso, President and General Counsel of 3Fifteen. “Skymint’s operational efficiencies and meticulous focus on quality, combined with best-in-state cultivation operations and innovative approach to retail, creates the perfect operating environment for continued success.”
SLANG Worldwide Inc. (OTCQB: SLGWF) has teamed up with cannabis-focused private equity firm Merida Capital Holdings to speed up Slang’s expansion in both new and existing markets. In addition to the partnership, Slang said that Merida led a non-brokered private placement of up to C$10 million to fund further growth. The stock was rising over 6% to lately sell at 32 cents.
“Integrating our brands in emerging markets through strategic partnership is core to our growth strategy. This alliance with Merida allows for us to enter two new emerging markets in Virginia and Missouri, expand our sales in Michigan and bring in growth capital,” said Chris Driessen, CEO of SLANG.
The company said in a statement that the partnership will leverage Merida’s portfolio to expand SLANG’s branded products into Missouri and Virginia, while also accelerating the companies retail distribution in Michigan. Under the terms of the agreement, Merida said it will be granted options to acquire common shares of SLANG and may earn additional compensation for achieving certain milestones, including sales targets, and initiatives to promote the commercialization of SLANG products across the entire Merida ecosystem, which also includes various licensed businesses in West Virginia, California, Maryland, Pennsylvania, and investments in various cannabis oriented finished goods, technology, and supply chain companies. SLANG’s proprietary brands include O.pen, Bakked, District, Pressies, Lunchbox Alchemy, and Firefly.
The company has been on somewhat of a buying binge. A few weeks ago, Slang said it had entered into a definitive agreement and plan of merger with Allied Concessions Group Inc. (ACG), a manufacturing and distribution business based in Colorado. ACG is an Infused Product Manufacturer (MIP) that produces O.pen, Bakked and Pressies branded cannabis products in Colorado. ACG is comprised of two different manufacturing and distribution facilities that extract both hydrocarbon and CO2 oil for all SLANG branded products in Colorado. At the end of December 2020, the company closed on its acquisition of Colorado-licensed cannabis cultivator Pleasant Valley Ranch, LLC as it made another move to own its supply chain.
Merida’s Managing Partner Mitch Baruchowitz said, “Merida is excited to welcome SLANG to our ecosystem of 50+ cannabis companies, and tap their brand expertise to expand the product offerings of our licensed medical operators in Virginia, Missouri, as well as 3Fifteen Michigan which currently boasts a leading retail footprint in the state. Our investment and partnership should remove friction from SLANG’s state by state expansion and help drive acceleration of their national brand presence.”
“Forming this strategic partnership with one of the pre-eminent cannabis investors in the U.S. is a testament to the strength of our business and the growing demand for our cannabis products. By establishing such a valuable strategic collaboration and attracting high-quality institutional investment, at sector-leading terms, we are well-positioned to fund our expansion and bring our products to new customers,” said Peter Miller, Co-Founder and Executive Chairman of SLANG.
CB2 Insights (OTCQB: CBIIF) announced that it plans to complete a non-brokered private placement of up to 20,000,000 units of the company at a price of $0.15 per Unit for aggregate gross proceeds of up to C$3 million. The Offering is expected to close on or about September 23, 2020. The net proceeds will be used for general corporate purposes and in accordance with its three-pronged growth plan which includes growth through current services, new services, and potential acquisitions.
CB2 said that it has received a definitive lead order in the amount of C$2 million from Merida Capital Partners. Merida is a cornerstone investor in the company and continues to demonstrate strong support for the company.
CB2 Insights is a healthcare services and technology company that works primarily to roster and treat patients seeking alternative treatments due to the ineffectiveness of conventional medicine, and the inability to find support through their existing care network, or in some cases, inability to access a primary care network. The medical services offered by CB2 are defined as Integrative medicine, where it works to understand the real-world evidence for the safety, impact, and effectiveness of medical treatments including plant-based medicines that often lack sufficient research and therefore adoption by conventional healthcare providers.
Its primary operations are in the United States, with application to its insights, technology, and research services deployed in other international markets including Canada, the United Kingdom, and Colombia. The company believes it is well-positioned to be the research and technology partner of choice for multiple stakeholders including Big Pharma, Life Sciences, Regulatory Bodies and Payors within the traditional and integrative medical industry.
Each Unit will consist of one common share in the capital of the Company and one half of one Common Share purchase warrant. Each Warrant is exercisable to acquire one additional Common Share at an exercise price of $0.20 for a period of twenty-four (24) months following the closing date of the Offering.
Minority Cannabis Business Association and Merida Capital Partners announced the winning recipients of investment through the Inclusive Industry (“i2”) Accelerator, which will deploy $500K initially to fast-track the development of five minority-owned businesses. MCBA and Merida launched i2 earlier this year to accelerate the development of minority-owned businesses in the cannabis and hemp industry by creating a meaningful executive mentorship program for underserved communities that could increase diversity and inclusiveness in key networks within the cannabis ecosystem and develop an infrastructure for entrepreneurs seeking capital.
“Our i2 Accelerator with Merida is a historic step towards creating a diverse, representative cannabis and hemp industry,” said MCBA President Jason Ortiz. “People of color have suffered from disproportionate enforcement of cannabis laws and have high barriers to entry and success in the hemp and cannabis industries. i2 provides companies with rigorous executive mentorship and critical resources to place them in the best possible position to successfully scale their enterprises and remove those barriers.”
“We are so proud to support these meritorious businesses and begin a sustained effort to close the inclusion gap for aspiring cannabis entrepreneurs in disadvantaged communities. The quality and number of applicants gave us confidence that this program will create incredible value for minority operators, investors and the industry at large, motivating us to significantly increase our target investment amount, so not one, but five minority-owned businesses could participate in the i2 Accelerator in this first round,” said Merida Capital Partners Managing Partner Mitch Baruchowitz.
Vega Holdings; Meriden, CT; $150K Investment: Vega Holdings is the only Latino-owned holder of a Connecticut pilot hemp license, operating in Meriden, Connecticut, with indoor and outdoor facilities that produce high-quality CBD and biomass. Luis Vega, a seasoned farmer and grower with an MBA and experience in the hospitality industry, returned to his family’s roots in farming to found Vega Holdings and will use his investment to significantly scale his existing hemp farming operation and product manufacturing.
High Road; Washington, D.C.; $100K Investment: High Road is an app-driven delivery platform that provides patients and consumers with access to licensed cannabis products through safe, convenient and compliant delivery services. The integrated, on-demand software company was founded by Jennifer Snowden, a former real estate and interior design executive turned entrepreneur. In addition to advocating for expungement and smart policy reforms, High Road hires and trains those convicted of nonviolent cannabis offenses. i2’s investment, business mentorship, networks and tools will help High Road expand its platform capabilities and propel its first mover advantage in East Coast markets.
Higher Learning Institutions; Pontiac, MI; $100K Investment: Higher Learning Institutions is a state-licensed vocational school with a cultivation and extraction lab and partnership with a major university that offers affordable, hands-on job training, educational certificates, career development, internships, free monthly seminars and job opportunities and placements in the cannabis industry. After researching the medicinal benefits of cannabis for his grandmother and taking a course at Oaksterdam University and consulting for cultivation facilities, Founder Sammie Rogers realized there were no institutions focused on assisting underserved communities with affordable career development, job training and placements in the cannabis industry. With Merida’s presence in the fast-growing Michigan market, the capital investment will help launch the school, broaden its inclusiveness efforts and close important educational and resource gaps in the cannabis sector.
James Henry; Oakland, CA; $100K Investment: In 2017, James Victor and John Alston cofounded James Henry, a minority- and veteran-owned lifestyle, health and wellness cannabis brand with licenses in manufacturing, distribution and retail delivery and a 1,700 sq. ft., green-zone facility in Oakland. With proprietary formulations developed by medical doctors, scientists and extraction experts to manage pain and other conditions, the company is committed to helping the U.S. address its opioids crisis through the promotion of responsible cannabis products for medicinal purposes, therapeutic assistance and lifestyle situations. James and John have incorporated original art and social equity as part of their brand ethos, infusing a balance of wellness and culture for consumers.
Canna Bistro; Atlanta, GA; $50K Investment: Canna Bistro offers CBD-infused foods out of a members café in Atlanta’s Historic West End. The company was founded in 2018 by Chef Swan Simpson, a self-trained vegan/vegetarian chef, who spent more than three decades perfecting plant-based, infused recipes and proprietary formulations. Initially, Chef Swan started selling $5 smoothies at pop-up retail locations across Atlanta, parlaying her loyal customer base into the first-all-CBD-infusion eatery in the southeastern U.S. In addition to incredible food Chef Simpson serves up, Canna Bistro promotes the hiring of individuals with non-violent, criminal records, along with business opportunities for previously incarcerated women and social good efforts in under-served areas.
California-based cannabis company Henry’s Original (Henry’s) closed on a Series B investment led by New York-based private equity firm Merida Capital Partners. Henry’s said it plans on using the money to expand its cultivation, processing, sales and marketing operations.
“As a company that represents the legacy of Mendocino County family-farmers and original rebels in the cannabis revolution, we are excited to partner with some of the most strategic, thoughtful visionaries in the space,” said Henry’s Chief Executive Officer Jamie Warm. “Merida’s diverse team of experts understand and are extremely supportive of our vision to scale our hand-crafted consumer packaged goods with a regional identity in California as well as new markets around the country.”
Henry’s has created a reputation for Clean Green-certified flower and pre-roll products that are cultivated entirely in Mendocino County, California. The company stated that it holds thirteen state licenses including a nursery, cultivation, processing, distribution and a retail dispensary license. The company said it has more than 100,000 square feet of cultivation in California.
The products are available in more than 250 dispensaries across California, including at The Apothecarium, Harborside, Harvest SF, MedMen, Blum and many others.
“As one of the leading pre-roll and pre-packaged flower companies in California in overall sales, this investment positions us to scale our operations, continue to shore up the supply chain and drive growth,” said Henry’s President and COO Joshua Keats.
“Henry’s is well-positioned to gain significant market share in California, the biggest market in the country and the world, and Merida sees the potential to elevate the company as it crosses the fragmentation gap geographically in and outside of the Golden State,” said Mina Mishrikey, partner at Merida. “With a powerful legacy, brand identity and farm-direct, sun-grown, Clean Green Certified products, Henry’s is a perfect fit for our portfolio. We look forward to adding value to the company as it expands its operations and working closely with Jamie, Josh, and their team.”
This investment round also included investments from Big Rock Partners, Delta Emerald Ventures and funds managed by JW Asset Management. The majority of Series A investors also invested in this round as well.
If there is someone who exemplifies a smart investor in the cannabis industry, it’s Marion Mariathasan, currently the co-founder and CEO of Simplifya, the industry’s leading regulatory compliance tool for licensees and those who audit them.
Mariathasan is a serial investor and entrepreneur if there ever was one. More attracted to ancillary cannabis services and solutions, he has personally founded or invested in about 14 different cannabis companies, including Ceylon Solutions, providing high-quality development solutions for the cannabis industry. He is also the largest shareholder of Leafwire, a platform for companies and investors to create funding relationships, and continues to be on the Boards of several organizations.
Green Market Report caught up with Mariathasan to hear about his path to where he is now in the cannabis space.
Name: Marion Mariathasan
Years at current company: “I wish I could take credit for this concept,” says Mariathasan, explaining that the renowned cannabis law firm Vicente Sederberg LLP is to be attributed to the idea surrounding compliance software. Mariathasan came on board in October 2016 as the company’s first investor, making his commitment in February 2106 in advance of the launch.
Education profile: Mariathasan is certainly well-equipped to take on a role in the tech side of cannabis. A graduate from the University of Kansas and Emporia State University, studying Architecture, Computer Science, and Computer Information Systems, his career emerged at the forefront of technology. He began his work as a computer programmer for a leading medical software company and has since held positions in some of the world’s leading tech companies.
Most successful professional accomplishment before cannabis: It’s difficult for Mariathasan to isolate just one successful professional accomplishment before making his foray into cannabis. Mariathasan is responsible for staring a handful of tech companies, so he sees his success as more cumulative. “What I’m most proud of is taking a concept that aims to solve a problem, and being able to build upon it, grow it, raise money, and sell it.”
Company Mission: Simplifya gives businesses the power to delegate, review, and proactively manage compliance tasks across all facilities and license types. With easy-to-use tools for scheduling, audit management, and tracking issues, Simplifya gives license holders a 360-degree view of their compliance. According to Mariathasan, their mission extends “to enable the cannabis industry and the movement to continue forward by helping license holders preserve their license. License is the most valuable asset that they have. If they’re not compliant from a regulatory and operational perspective, can get hundreds of dollar fines or lose their license.”
Company’s most successful achievement: Through working with its partners and cannabis license holders, Simplifya has learned and understood the pain points of the license holder and create technology around it. To make this possible, Simplifya has created relationships all around the industry that puts compliance at the forefront and have the industry value it. “It takes a village”, says Mariathasan, “The investors coupled with the team has been our best achievement thus far, but as we bring on multi-license operators, mom and pop shops, government stores, is what makes this feel like we know we’re at the right place.”
Has the company raised any capital? In December of last year, it was announced that Simplifya had raised $3 million in Series C funding from the private equity fund Merida Capital Partners. It was announced then that they would pursue additional funding, and this sure occurred to the tune of $7.3 million raised through a Founder’s round, and the series of funding rounds, including the last Series C round completed by Merida Capital. “The investors are second to none in this industry,” Mariathasan remarks.
Any plans on raising capital in the future?: Simplifya plans to hold another raise of capital towards the end of this year to help with the company’s expansion. “We’re in 17 states right now,” explains Mariathasan, “Now we have opportunities to go into more states and international. Our initial focus was marijuana dispensaries, and now we’re bringing what Simplifya has to offer to governments, banks, and insurance companies.”
Most important company 5-year goal: “We exist to make cannabis easier to operate in,” says Mariathasan, “We serve medical marijuana dispensaries, and we’re helping governments, banks, and insurance companies with mitigating the risks that come with legal cannabis while streamlining projects.”
Thus, Simplifya will continue to make relationships with companies within and external to the cannabis industry. “Government didn’t have the expertise to enforce the regulations they created,” says Mariathasan, “Now it’s easier to stay on top of the cumbersome regulations, as we can now help manage cannabis compliance from a government perspective.”
What does Mariathasan attribute to the success of Simplifya? “A lot comes down to the team and their experience with cannabis. If they can put a strategic plan together, and execute it, while building a personal connection then we are successful together.”
A forum called “Insights From The Front Lines Of The Cannabis Industry” was held on June 13 on a beautiful summer evening in New York City atop the Empire Hotel. New York was named the Empire state because it was considered to be the center of all business in America and it has become the center of cannabis investing even though the plant isn’t fully legal in the state. That could change soon.
The event was hosted by MGO, Ello, Wilson Elser, and Aon. The panelists included Kevin Murphy Chairman and CEO, Acreage Holdings (CSE: ACRG.U), Tiffany Liff Managing Director, Cresco Capital Partners, Evan Eneman CEO, MGO / ELLO Cannabis Alliance, Matt Markiewicz Managing Director, Innovation Shares, Eduardo Provencio General Counsel, Mary’s Brands, and Mitch Baruchowitz Managing Partner, Merida Capital.
New York’s legalization was discussed as Murphy said it is quickly changing. “Last week, I’d have said there was a 20% chance. Today I give it a 60/40 chance. I think on Wednesday it may happen,” he said. That sure sent a buzz through the crowd. He conceded that having former Speaker of the House John Boehner on the company’s board kept his company informed of political maneuverings. Murphy has also been actively working on the SAFE Banking Act. As a company with its roots in New York, he is keen to see changes at the state level.
Access To Capital
A key theme seemed to emerge among some of the panelists was the access to capital. “The industry has gone from basement growers who just wanted to have a bigger basement to getting a license. Now it is about the aggregation of licenses,” said Murphy. “Our biggest competition isn’t from each other but from the black market.”
Liff also noted that in the early days’ companies were forced to go public even if they weren’t really ready because there was no other way to access capital. “There are more options now,” she said. She also reiterated that she really focuses on backing the management team.
“Running a public company is not that awesome,” said Murphy. “There is an extra layer or two of accountability. Having said that, it gives us the opportunity to access capital.”
Baruchowitz pointed out that new companies often give themselves rich valuations based on angel investors and believe this should bring them more capital. “When your angel round is friends and family, that doesn’t justify certain valuations. They get shocked when they get asked the hard questions as they ask for more capital. A lot of the newcomers don’t know the grind.”
Illegal vs. Legal
Baruchowitz noted that since New York didn’t have the same ballot pressures that other states have, legalization could come easier. Having said that, the panelists noted that the quasi-illegal status has had some benefits. Baruchowitz said he believes the medicalization of cannabis is about to go on hyperdrive through legalization.
The illegality of cannabis has also caused some volatility in the cannabis company stocks. Markiewicz runs an ETF and noted that the volatility scares many advisors. He keeps an eye out for negative sentiment when reviewing his companies. The illegal nature attracts some less than savory players at times. Still, Murphy said that ETF’s provide liquidity for the stocks. “The more liquidity, the better for all of us,” he said.
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