Origin House Archives - Green Market Report

Debra BorchardtDebra BorchardtMay 17, 2019
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3min950

Origin House, formerly known as CannaRoyalty (CSE: OH) (OTCQX: ORHOF)  announced preliminary unaudited revenue of approximately C$11 million for the first quarter ending March 31, 2019. No profit or loss numbers were revealed.

The company also noted that April was off to a good start with approximately C$6.5 million in unaudited revenue. The wholly-owned distribution division, Continuum contributed approximately $4.8 million of that amount in April.

“As we outlined on our Q4 call less than a month ago, momentum is building in the California market for all legal players and for Origin House specifically. Q1 and the month of April were record revenue periods for the Company, and also record periods for the number of top California cannabis brands that our team successfully onboarded,” said Marc Lustig, Chairman and CEO of Origin House. “If 2018 was a year of building for Origin House, 2019 is rapidly progressing toward an inflection point where the platform we have built begins to demonstrate its true financial power, with brands signed early in the year, rolling-out through our network and a robust pipeline of brand opportunities ahead of us.”

The approximate gross margin for the first quarter was 15% and the company said it expects gross margin to continue to trend upwards from the first quarter to the second.

The company announced on May 3, that it had obtained an interim order from the Ontario Superior Court of Justice in which Cresco Labs Inc. will acquire all of the issued and outstanding shares of Origin House. Receipt of the interim order authorizes Origin House to hold its special meeting of shareholders on June 11, 2019.

Lustig added, “I very much look forward to working alongside the team at Cresco Labs Inc. to leverage our complementary footprints and management skillsets to build a dominant North American cannabis consumer brands company.”

Both Cresco Labs and Origin House will release their earnings on May 29.


William SumnerWilliam SumnerApril 29, 2019
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6min1680

It’s time for your Daily Hit of cannabis financial news for April 29, 2019

On The Site

Aleafia Health

Aleafia Health Inc. (TSX: ALEF) (OTC: ALEAF) reported that its 2018 total revenue was $3.3 million versus zero in 2017. The pro-forma combined Aleafia Health and Emblem revenues in 2018 were $11.3 million an increase of 327% over a combined Aleafia Health and Emblem 2017 revenues of $2.7 million. Still, the company delivered a net loss from operations in 2018 of $9.7 million.

Canopy Growth

Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC) announced a key milestone in establishing its Hemp Industrial Park in the Southern Tier region of New York State. It has secured a 308,000 sq. ft. facility on a 48-acre property in Kirkwood, NY. The company said that design development would begin immediately with construction expected to start this summer.

Origin House

Canada-based Origin House (once known as CannaRoyalty Corp.) (CSE: OH) (OTCQX: ORHOF) reported its fourth quarter and year-end results ending in December 2018 in Canadian dollars. The fourth quarter saw revenues of $7.9 million an increase of 638% over last year’s $1.1 million for the same time period. The net loss for the quarter was $6.1 million.

In Other News

Charlotte’s Web Holdings

Charlotte’s Web Holdings Inc. (CSE: CWEB) (OTCQX: CWBHF) has a new CEO. The company announced today that Adrienne “Deanie” Elsner would sign on as its Chief Executive Officer effective May 15, 2019.  Elsner previously served as President of Kellogg’s $3 billion Snack Business Unit. Before joining Kellogg, Elsner worked at the Kraft Foods Company and held various leadership positions, including Executive Vice President and Chief Marketing Officer. Elsner was also named by Forbes as one of the 50 Most Influential Global CMOs. “Deanie’s appointment is timely and aligns perfectly with our corporate evolution from the early stage organization we were just two years ago into a professionally managed public company with top-tier executive talent,” said Hess Moallem, current President and CEO of Charlotte’s Web. Moallem will stay on with the company in an advisory position.

New Leaf Data Services

New Leaf Data Services (NLDS), and the Cannabis Mercantile Exchange (Cannamerx) have signed a data-sharing agreement, upon which Cannamerx will provide NLDS with real-time data generated by its international cannabis and hemp trading platform. NLDS will incorporate the platform into its Cannabis Benchmarks® and Hemp Benchmarks® wholesale price assessments. NLDS will help Cannamerx market its international wholesale cannabis & hemp products auction platform, which includes informing its business partners and subscribers about the benefits of using Cannamerx platform. “We are pleased to have entered into this agreement with Cannamerx, which will expand and deepen the wholesale pricing data that is the foundation for our institutional grade Cannabis Benchmarks and Hemp Benchmarks,” commented NLDS CEO Jonathan Rubin.

Cannara Biotech

Cannara Biotech (CSE: LOVE) (FRA: 8CB) has announced its financial results for the three month and six-month periods ended February 28, 2019. Cannara ‘s revenue for the three-month period was $518,438 and for the six-month period was $1,036,881. The net loss for the three month period was $4,011,926 or $0.01 loss per share. The net loss for the six-month period was $6,317,152 or $0.01 loss per share. The company also raised $37,375,268 via private placement in exchange for 207,640,375 common shares. “Financially, Cannara is very solid, with all costs associated with Phase one construction fully funded and most stabilized operating costs offset by lease revenue,” said Lennie Ryer, CFO of Cannara. “Built for the long run, the next few quarters will be eventful as we complete construction and advance towards the goal of ongoing revenues from our state-of-the-art production and processing facility.


Debra BorchardtDebra BorchardtApril 29, 2019

4min2060

Canada-based Origin House (once known as CannaRoyalty Corp.) (CSE: OH) (OTCQX: ORHOF) reported its fourth quarter and year-end results ending in December 2018 in Canadian dollars. The fourth quarter saw revenues of $7.9 million an increase of 638% over last year’s $1.1 million for the same time period. The net loss for the quarter was $6.1 million.

The adjusted EBITDA loss was $1.9 million versus the adjusted EBIDTA profit of $7.9 million for last year’s fourth quarter. Gross margin, excluding fair value items, was $0.2 million as compared $0.1 million, an increase of 87%; Operating expenses were $15.4 million as compared to $4.6 million, an increase of 233%.

Full Year Results

For 2018, the company delivered revenues of $18.7 million an increase of 507% over 2017’s $3.1 million. The net loss for the year was $9 million. The pro-forma revenues were $37.4 million and were $48.7 million with the acquisition of 180 Smoke on February 19, 2019.  The adjusted EBITDA profit of $3.4 million versus the 2017 adjusted EBIDTA profit of $4.1 million. Gross margin, excluding fair value items, was $1.5 million as compared $0.9 million, an increase of 67%.

Cresco Labs Acquisition

On April 1, 2019, Origin House agreed to be acquired by Cresco Labs for $1.1 billion, creating a North American cannabis powerhouse. Last year, Origin House acquired Kaya Manufacturing, Alta Supply, RVR Distribution, FloraCal Farms, and 180 Smoke in 2018 to create a footprint today comprised of 6 licenses, 8 facilities, and over 350 employees in California and Canada, with pro-forma revenue of $37.4 million. Pro-forma revenue reached $48.7 million with the acquisition of 180 Smoke in Q1 2019.

“During 2018, Origin House delivered demonstrable value creation for shareholders through organic execution, judicious acquisitions and the crystallization of value embedded in non-core assets,” said Marc Lustig, CEO of Origin House. “Throughout the year, we continued to aggressively build our platform of brands and distribution capability focused in California, and this culminated in reaching a definitive agreement to be acquired by Cresco Labs for $1.1 billion on April 1, 2019. This partnership is just the beginning of our journey together. The combined entity will be a U.S. distribution powerhouse, with a growing portfolio of over 50 brands on the shelves of over 725 dispensaries across 11 states.”

The company listed the following summary of key balance sheet totals as of December 31, 2018:

  • Cash was $69.2 million as compared to $4.5 million an increase of 1430%;
  • Total assets of $230.7 million as compared to $46.1 million, an increase of 400%;
  • Current assets of $86.0 million as compared to $7.9 million, an increase of 982%;
  • Current liabilities of $26.2 million as compared to $2.1 million, an increase of 1126%; and
  • Long-term debt financing of $16.0 million as compared to $2.3 million, an increase of 610%.

“We spent the past 12 months successfully implementing our strategy to build a platform of premium brands by creating the top distribution and brand support platform in California,” said Afzal Hasan, President and General Counsel of Origin House. “Our team executed and successfully integrated five acquisitions during the year while adding several key experiential brands to our Brand Accelerator and distribution platform. In March 2019, with the integration of our two distribution companies under the Continuum banner, Origin House now controls one of the top state-wide distribution networks in California. With 2018’s regulatory growing pains behind us and a recent commitment on the part of the government to redouble its efforts to quash the still-thriving illegal cannabis market in the state, Origin House is off to a running start in early 2019.”

 

 


Debra BorchardtDebra BorchardtApril 1, 2019
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7min3950

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF)  is acquiring CannaRoyalty Corp. also known as Origin House (CSE: OH) (OTCQX: ORHOF) in a deal valued at C$1.1 billion or C$12.68 per Origin House Share (based on the Exchange Ratio and the closing price of Cresco Labs Shares on March 29). The deal looks to be the largest public company acquisition in the history of the U.S. cannabis industry.

The combined company will be one of the largest vertically-integrated multi-state cannabis operators in the U. S.; a leading North American cannabis company, by footprint; and one of the largest cannabis brand distributors.

“The acquisition of Origin House is another example of our focused and disciplined approach to creating a meaningful presence in key cannabis markets through excellence in brand development and distribution,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “It establishes Cresco Labs as the leading multi-state operator with one of the largest distribution platforms in California. Having a similar priority on consumers and consumer brands with the expertise of executives from the largest wine and liquor distribution company in the United States, the team at Origin House has established the premier cannabis distribution company in the largest cannabis market in the world. It’s an incredible platform for Cresco in California and the distribution infrastructure will provide a valuable framework to leverage as we scale our platforms in other states.”

Origin House

Origin House is a growing cannabis brands and distribution company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands. The company’s foundation is in California where it delivers over 130 branded cannabis products from 50+ brands to the majority of licensed dispensaries. Origin House’s brand development platform is operated out of five licensed facilities located across California and provides distribution, manufacturing, cultivation and marketing services for its brand partners. Origin House is actively developing infrastructure to support the proliferation of its brands internationally, initially through its acquisition of Canadian retailer 180 Smoke.

“From an Origin House perspective, this transaction is directly aligned with our strategy to build a leading portfolio of cannabis brands in California and to rapidly and accretively take those brands to the rest of the U.S. market, as well as the Canadian market,” said Marc Lustig, Chairman, and CEO of Origin House. “By partnering with one of the largest and most innovative U.S. multi-state operators in existence today, Origin House will supercharge its growth and be in a position to offer its brand partners access to 10 additional states, with licenses and supporting infrastructure already in place.  This Transaction is not the first opportunity we have reviewed, but it has received the unanimous support of our board and large shareholders because we are confident that together we will be in a position to truly change the face of the global cannabis industry while continuing to create significant value for the shareholders of both companies.”

Terms Of The Deal

Cresco Labs will acquire all of the issued and outstanding Origin House Shares, with each holder of Origin House common shares receiving 0.8428 Cresco Labs Shares for each Origin House Share (and each holder of an Origin House proportionate voting share receiving 84.28 Cresco Labs Shares for each proportionate voting share held), which implies a price per Origin House Share of C$12.68 (on an as-converted basis), representing a total consideration of approximately C$1.1 billion (on a fully-diluted).

Origin House shareholders will hold approximately 20% of the issued and outstanding Cresco Labs shares on a pro forma, fully-diluted and as converted basis, enabling Origin House shareholders the opportunity to participate in the expected value created through the deal. The company said there would be an immediate premium to Origin House shareholders of approximately 26% over the 30-day volume weighted average price.

Upon completion of the acquisition, as well as the receipt of licensure in Michigan and the closing of the company’s pending acquisition in Florida, Cresco Labs will have operations in 11 states, 23 facilities, more than 1.5 million square feet of cultivation, and licenses to operate up to 51 retail dispensaries. Cresco Labs brands will be sold in over 725 dispensaries across the United States.

“We are excited to welcome the Origin House team to the Cresco family,” said Cresco Labs President and Co-founder Joe Caltabiano. “With the addition of Origin House and its vast distribution network in California, we will have access to incredibly valuable real-time market data and insight into consumer buying patterns that will inform our product development strategies and reinforce our brand strength. In addition to their brand building and distribution expertise, Origin House has a very experienced M&A, corporate development and capital markets team that will be extremely valuable as we continue to expand and add scale through additional transactions. With respect to the capital markets impact, with the equity issued through this transaction, we expect to have substantially more shares in our float, which we believe will provide ample liquidity for larger institutional investors looking to deploy capital into the cannabis space. We expect that our larger scale and improved liquidity following this acquisition will positively impact our ability to attract a larger universe of potential investors and reduce our cost of capital in the future.”

 

 


StaffStaffFebruary 5, 2019
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6min3020

It’s time for your Daily Hit of cannabis financial news for February 5, 2019.

On The Site

Verano

Illinois-based Verano Holdings, LLC has acquired Four Daughters Compassionate Care Inc. of Sharon, Massachusetts and its provisional medical cannabis licenses for an undisclosed amount. The first cultivation and dispensary facilities in Sharon are expected to open in six to nine months. The company said it would hire 50-75 employees locally and train them for these sites in 2019.

As a result of the acquisition, Verano has begun building a cultivation and production facility in Sharon Massachusetts. The company is also renovating an adjacent building for the dispensary. The acquisition marks Verano’s expansion into an additional adult-use market and its expanding geographic footprint into the Northeast from its current 10 operating facilities in Illinois, Maryland, Nevada and Florida, with 45+ licenses under active development in Florida, Michigan, Ohio, Puerto Rico, and Maryland.

GTI

Green Thumb Industries Inc. (OTCQX: GTBIF) is acquiring For Success Holding Company, the owner of Los Angeles-based Beboe branded cannabis products for an undisclosed amount that will be paid in GTI stock.

Beboe is known as a premium brand for its high-end packaging including its iconic rose gold vaporizer pens. The products are available in more than 125 California and Colorado retail locations and via home delivery across California.

In Other News

Jushi

Sound Wellness LLC, a subsidiary of Jushi Inc. has received approval of its industrial hemp-CBD processor license application as part of the New York State Industrial Hemp Agricultural Research program, administered by the New York State Department of Agriculture and Markets. With this announcement, Jushi is proud to support the Western New York community, New York farmers, and the nation’s premier industrial hemp program. Sound Wellness’ hemp-CBD processor license supports the company’s initiative to create product innovations centered around the untapped potentials of hemp.

By investing over $5 million in a high-tech hemp processing operation on the east side of Buffalo, NY, Jushi expects to create approximately 30-65 jobs in the area. The facility will house a state-of-the-art lab, allowing Sound Wellness to create advanced product formulations using CBD distillate, CBD isolate, and water-soluble CBD.

The Flowr Corp.

The Flowr Corporation (OTC: FLWPF)  has submitted an application to list its common shares on The NASDAQ Capital Market and has filed a Form 40-F Registration Statement with the U.S. Securities and Exchange Commission.

Target Group Inc.

Target Group Inc. (OTCQB: CBDY) entered into an agreement to acquire Massachusetts-based CannaKorp Inc. CannaKorp is the holder of the patent-pending WISP vaporizing system.

The WISP™ is a pod-based, herbal vaporizing system that uses precisely measured, sealed and tested WISP™ Pods containing dried, ground botanicals. The WISP™  vaporizer, used together with WISP™  Pods, gives cannabis users the predictability and assurance to know what they’re inhaling with every use, without the hassle of grinding, measuring, or packing. For the rapidly evolving market of cannabis consumers who prefer vaporization, Wisp™ presents a proven method of delivery with unique bioavailability benefits and avoids the health concerns associated with the combustion of cannabis and other herbs.

Origin House

CannaRoyalty Corp. d/b/a Origin House  (OTCQX: ORHOF) entered into an agreement to provide strategic financing of US$704,000 to Humboldt’s Finest, an alliance of heritage cannabis farms representing Humboldt County. Humboldt’s Finest produces sun-grown cannabis flower on their farms in Humboldt County, California, which is processed into products including jarred flower, pre-roll flower joints, live resin dabs/jars and/or live resin cartr


Debra BorchardtDebra BorchardtDecember 4, 2018
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5min8230

CannaRoyalty Corp. also known as Origin House (CSE: OH) (OTCQX: ORHOF) has signed a binding term sheet to acquire certain business assets of California-based cannabis cultivator, Cub City LLC  for total consideration of $7,025,000. The deal is expected to close in March 2019.

Origin House will be purchasing a state-of-the-art craft cultivation facility with an annual production capacity of up to 1,400 kg of an ultra-premium flower. At that price, it would imply a purchase price of $5 per gram of funded capacity.

“This Acquisition was a logical next step for Origin House, led by the needs of our brand partners as we execute on our brand support and acceleration strategy,” said Afzal Hasan, President and General Counsel of Origin House. “Access to bespoke third-party cultivation is critical for new flower brands that want an authentic brand promise from seed to consumption. The existing alternative for brands is to use undifferentiated and mass-produced biomass available on the market. ”

Cub City was co-founded by a team that included Drew and Karen Duval of FloraCal. The facility and team have produced flower for some of the top packaged flower brands in California, as well as a prominent pre-roll brand.

In addition to the premium product that Origin House sought, the facility is located in close proximity to FloraCal’s 62,000 sq. ft. facility. Origin House said that the additional 24,600 sq. ft. cultivation capacity will be focused on third-party cultivation.

The company also said that both current and potential brand partners have highlighted the desire for bespoke exotic cannabis cultivation. This acquisition further expands Origin House’s brand support and acceleration platform and will allow the company to close pipeline opportunities with promising brands in California

Hasan added, “We are excited to continue growing our infrastructure and team to unlock further opportunities for growth that we have been cultivating with brand partners in California.”

Terms Of The Deal

The company statement outlined the following terms of the deal:

Under current Cub City management, the facility is undergoing construction with an estimated completion date of March 31, 2019.  Upon the completion of construction, the facility will be composed of a two-story building with 11,000 sq. ft of cultivation space, and 7,400 sq. ft of distribution, processing and packaging space in addition to 6,200 sq. ft of office space, storage, and common area

Within 30 days, Origin House will provide a construction loan facility (the “Loan”) to Cub City in an amount of up to USD$1,700,000. Funds advanced under the Loan will bear simple interest at 12% per annum and mature two years from the date of the first advance.  The Loan proceeds will be used for construction and equipment for the Facility

The Loan will be secured by a first ranking security interest on all present and future assets of Cub City and guaranteed by each of the members of Cub City on certain conditions

Key Assets

  • Some of the key assets, among others, to be purchased in the Acquisition include:
    • Cub City’s 20-year lease of the 24,600 sq. ft Facility; and
    • A 5-year local permit to cultivate, process, package and distribute cannabis. On Closing, Origin House will also have access to two state licenses: (a) a cannabis Type 11 Distribution License; and (b) a Small Indoor Cultivation license that may be used for future operations.

Included In Purchase Price

    • Forgiveness of the principal and interest accrued under the Loan (the “Loan Balance”);
    • $3,525,000 less the Loan Balance, in immediately available funds on Closing Date;
    • $3,500,000 on the one-year anniversary of the Closing Date (“Holdback Disbursement Date”). Cub City will have the option to receive the second payment in cash, shares of Origin House, or a combination of both but not less than 50% in shares.



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