Parallel Archives - Green Market Report

Debra BorchardtMay 12, 2022
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 Talladega wants out of the Parallel cannabis lawsuit. This is the lawsuit that disgruntled Surterra Wellness (now known as Parallel) investors filed against the company’s leader beau Wrigley and Surterra Holdings, along with a family office and Talladega LP and Talladega Inc. The company filed a motion earlier this week to dismiss its involvement and outlined why it should not be a part of the lawsuit. Talladega was not initially named in the case, instead, it was Canadian hedge fund SAF Group, but they were replaced by Talladega. 

At issue is a bridge loan that Talladega extended to Surterra/Parallel. The lender, who owns the Junior Notes says it was a purely selfish move to keep the company operational in order to protect the health of those junior notes. 

Not In New York

First, Talladega says it shouldn’t be included in a New York lawsuit since it isn’t located in the state. The company is based in Canada and says that alone should be grounds for getting itself dismissed from the case. 

Bridge Over Troubled Water

Next Talladega says it only provided a bridge loan that kept Parallel operating and didn’t really classify as debt that would breach the covenants of the other debt instruments. In the motion Talladega says, “Beginning in June 2021, shortly after Talladega and the company entered into the Talladega Credit Agreement, the company began to experience financial stress and defaulted under both the Note Purchase Agreement and the Talladega Credit Agreement. On December 16, 2021, Talladega issued a notice of default to the company listing 11 defaults or events of defaults under the Talladega Credit Agreement. Following issuance of the notice of default, the company, PE Fund, and Talladega entered into discussions to provide financing to the company to allow it to “bridge” the gap until the Company could be sold to one or more third-parties, or recapitalized.”

Talladega says the unhappy investors waited until 10 days after the bridge loan to file the lawsuit. The investors claimed that Talladega completed the bridge loan in order to earn more fees and jump to the head of the capital line. Talladega says it was just trying to protect itself from Parallel going under. The company wanted to give Parallel a chance to find a buyer or get more financing. The fee amounts in the bridge loan documents are redacted. 

The investors also complained that Talladega was an insider, but again the company says that is wrong. The filing stated, “Beyond Talladega’s participation in the Talladega Credit Agreement and the Bridge Credit Agreement, Talladega has no close relationship with the Company that would give it any sort of control over the Company or the Company’s actions.”

The investors believe Talladega knew more than it is saying because it was the Administrative Agent and Collateral Agent for the Junior Note holders for Parallel. The original complaint stated, “The Junior Lien Notice informed the Company that it had failed to (i) maintain the required debt-service-coverage ratio; (ii) maintain specified adjusted consolidated EBITDA as of September 30, 2021; and (iii) “pay Catch-Up [a]mount[s]” due as of September 30, 2021. 99. The Junior Lien Notice also explained that the Company had defaulted on the Junior Note through its “incurrence of Indebtedness pursuant to that certain Negotiable Subordinated Promissory Note dated June 30, 2021”—i.e., the PE Fund Note.” However, Talladega sending out the default notice didn’t make it an insider. 

In Closing

Since Parallel is a private company, there is little information as to the health of the company. Within the state of Florida, where the company mainly operates it is number five on the list of top license holders with 46 licenses according to Cannabiz Media. Trulieve leads with 121 licenses, followed by Curaleaf with 50, then Verano at 48, and Ayr Wellness with 47 licenses. However, none of the companies break out their revenues from Florida, so it’s difficult to determine how much revenue is coming into the company.


Debra BorchardtApril 6, 2022
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The debt troubles facing Parallel are exposing the risk to other companies. Innovative Industrial Properties (NYSE: IIPR) gets 10% of its revenues from Parallel and Sundial’s (OTC: SNDL) joint venture with SAF Group called Sunstream Bancorp owns some defaulted debt. 

In March 2021, Sundial Growers Inc. formed a  50/50 joint venture with SAF Opportunities LP, a member of the SAF Group called SunStream Bancorp Inc. The Joint Venture’s first mandate was the formation of a special opportunities fund with commitments from third-party limited partners alongside an initial commitment from Sundial of $100 million. 

Sunstream is the owner of $145 million of Junior notes owned by Parallel Cannabis and those notes are in default – exposing Sundial to the loss. According to the lawsuit filed by disgruntled investors, the notes were purchased shortly after the joint venture was formed and was likely the venture’s first investment or one of the first investments. The notes were purchased on May 7, 2021. The lawsuit actually attributes the purchase to SAF Group, but Sunstream’s spokesperson did confirm that it was Sunstream that owned the debt, not SAF Group. 

Parallel used the Junior Note to refinance seller financing provided by the sellers of New England Treatment Access (“NETA”). NETA is a cannabis facility that Parallel acquired in 2019. The Junior Note carries an annual non-default interest rate of 14.25%. Sunstream may have felt some comfort in the language of the Junior Note that stated Parallel couldn’t incur any more debt, but the company is alleged to have done just that. 

According to the court filing, “On December 16, 2021, Parallel received an even more alarming default notice—this time for the Junior Note—in the form of a Notice of Default, Election of Default Rate and Reservation of Rights to the Company (the “Junior Lien Notice”) from Talladega LP, the Administrative Agent and Collateral Agent for the Junior Note holders. The Junior Lien Notice informed the Company that it had failed to (i) maintain the required debt-service-coverage ratio; (ii) maintain specified adjusted consolidated EBITDA as of September 30, 2021; and (iii) “pay Catch-Up [a]mount[s]” due as of September 30, 2021.”

Sunstream’s Silence On Parallel

Sunstream has made a big deal out of most of its investments. It has lent money to Jushi (OTC: JUSHF) and the SPAC Greenrose Acquisition Corp. Michigan-based Skymint also got financing from the joint venture. However, one would be hard-pressed to find any mention of the $145 million investment in Parallel. Despite the numerous press releases crowing about these deals and more, there is little information about the purchase of the notes from Sunstream or Sundial. 

Sunstream has also let it be known it was planning to go public. Sunstream IVXX Investment Corp. announced that it has submitted a draft registration statement on a confidential basis to the U.S. Securities and Exchange Commission for a proposed initial public offering of its common stock. Could a dud investment affect that IPO?

Sundial’s investors

In July 2021, Sundial increased its commitment to SunStream Bancorp Inc. to $538 million from its previously announced commitment of $188 million. In October 2021, Sundial reported it was buying the common shares of Alcanna Inc., and after extending the closing date, completed the transaction at the end of March. The valuation fell from an all-stock deal valued at $346 million to and combination of cash and stock valued at $320 million. So, it seems as if it’s business as usual at Sundial. However, analysts covering Sundial will no doubt want to know if the effects of this default will bleed into Sundial’s books.


Debra BorchardtApril 5, 2022
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The disgruntled investor lawsuit against Parallel cannabis initially hit the public records as a heavily redacted document. The Judge in the case apparently denied the redaction request and Green Market Report got a look at the complaint in all its glory or gory detail.

Notably, the actual debt amounts are spelled out along with other details that weren’t gleaned from the previous review. There are several issues alleged in this lawsuit and it is broken down as such:

  • The SAFE (Simple Agreement for Future Equity) Investors claim their $25 million investment wasn’t supposed to be released until $50 million was raised. Their money was inappropriately taken from escrow 
  • Former CEO Beau Wrigley increased the company debt to $300 million
  • Parallel reduced its revenue projections by 40% in a matter of months
  • Parallel was in default on its debts but did not tell potential investors.
  • The defaults were triggered by money owed to the former founder Jake Bergmann
  • Green Health debt was created inappropriately to pay Bergmann
  • Wrigley was conflicted between issuing debt and making sure repayment terms were overly generous
  • Investors allege that the Ceres SPAC Investment may have been a ruse all along to convince the SAFE investors to commit

SAFE Investors

The SAFE investors say they agreed to invest $25 million if another $25 million was raised bringing the total to $50 million. They say they wanted Wrigley to put up some money to have “skin in the game.” They say their money was in escrow and not to be released until the whole $50 million was raised, but that didn’t occur. They were also told that the investment would be a bridge funding until the SPAC deal was closed or alternative funding was accessed and that their money would likely be tied up until the second quarter of 2022. The money was released on September 27, 2021 even though the full $50 million wasn’t raised. The investors though found out that Wrigley didn’t put up his money after the fact and complained.

Wrigley is alleged to have then made up a shortfall of $10 million, but then had his own family fund called the PE Fund pay him back $3 million. The court filing says, “The Company had quietly used $3 million of the SAFE money to pay back part of Wrigley’s PE Fund Note, which means that while Wrigley was out soliciting “bridge” financing, he was actually taking $3 million out of the Company.”

Big Debt

One of the details that had been redacted in the original documents was the amount of debt at Parallel. The unredacted version states that Parallel had $300 million in debt. “By the end of June 2021, as discussed above, the Company had incurred more than $350 million in debt, a portion of which—the PE Fund Note—constituted an undisclosed default under $300 million of its Senior and Junior Note.”

  • The Senior notes account for $165 million with 10% interest. 
  • The Junior notes are $145 million and are owned by the SAF Group in Canada. The company used the Junior Note to refinance seller financing provided by the sellers of New England Treatment Access (“NETA”). NETA is a cannabis facility that Parallel acquired in 2019. The Junior Note carries an annual non-default interest rate of 14.25%
  • The company also appears to owe approximately $54 million on $44.3 million of certain convertible secured notes issued to Green Health. The Green Health Notes accrue interest at a rate of 16% per year, and carried a prepayment penalty of 25%

Rosy Revenue Projections

The investors also allege that in August 2021, Parallel projected 2022 revenue of $618 million. However, by January 2022 those revenue projections had dropped by 40% to $362 million. The company is privately owned and so actual revenue figures can’t be obtained. 

Debt Defaults

The case alleges that by September 2021, Parallel “was on the precipice of (i) covenant and payment defaults on $145 million of recently issued junior debt, (ii) cross-defaults on $165 million of senior debt, and (iii) defaulting on a $13.5 million promissory note issued by Wrigley’s “family office,” Defendant PE Fund (PE Fund also held $91.2 million of the Company’s $165 million in senior debt); b. That as of September 27, 2021, the company also was already in payment default on approximately $44 million of notes issued by Defendant Green Health – a different Wrigley family office”

The complaint says that Parallel actually began defaulting on the debt as early as June 2021 because the company began issuing new debt to pay its other obligations. The investors say that their debt agreements specifically stated that Parallel couldn’t incur any more debt, but did so anyway. Essentially raising more money to pay off the previous debts due, which is why the complaint called Parallel a Ponzi scheme. 

Bergmann Payments

Bergmann was the original founder of the company but he stepped down in 2018 when Wrigley became the CEO. The complaint says, “A dispute between Bergmann and the company arose over the value of Bergmann’s common stock. To resolve the dispute, and disregarding that Bergmann’s interests should have been junior to all of the company’s debt and Preferred Stock obligations described herein, the company entered into the Bergmann Settlement in or around January 2021.” Parallel (Surterra at the time) agreed to pay Bergmann $38.5 million and the first payment was to be $6 million. The second payment was to be $12.5 million and if Parallel couldn’t make that payment – it would rise to $13.5 million. 

The investors say Parallel didn’t have the money and created more debt called the Green Health note to pay off Bergmann. The investors also say they were never told about the money owed Bergmann when they made their investment. Bergmann was paid $16 million in June 2021, but it didn’t come from Parallel – instead, it came from the Green Health debt which got money from the PE Fund.

Green Health Notes

Green Health is another Wrigley family office. The investors say the Green Health debt was created in order to pay off Bergmann and that was not allowed because the existing note holders agreed to lend money to Parallel if the company incurred no more debt. “The Company also appears to owe approximately $54 million on $44.3 million of certain convertible secured notes issued to Green Health. The Green Health Notes accrue interest at a rate of 16% per year, and carried a prepayment penalty of 25% (inclusive of all interest) had they been repaid before the May 1, 2021 maturity date.” Wrigley was CEO of Parallel and Green Health at the same time. 

The Green Health Notes convert into preferred equity of Parallel to the tune of $135 million worth of preferred stock that would outrank one of the disgruntled investors – Techview’s Series D Preferred stock. So, the $44.5 million investment from Wrigley’s family office would turn into $135 million of stock. 

“Remarkably, the fact that the Third and Fourth Amended Green Health Notes were executed as of May 7, 2021, with a past-due maturity date of May 1, 2021, means the notes were already in default upon execution.

Ceres Acquisition SPAC

Parallel was rumored to be going public as the qualifying transaction for the Ceres Acquisition SPAC (OTC: CERAF). However, the deal fell apart and was terminated. The valuation fell from $1.8 billion to $1 billion and the lawsuit alleges that Parallel’s poor performance as a company would have resulted in a loss of value in the public share. The investors also allege that maybe the SPAC deal was never intended to go forward and was just a marketing tool. 

When the SPAC deal was terminated, Parallel spun the news as a positive story. The company alluded to more investors coming forward and that it had just received new private investor money, which was the SAFE money. 

Parallel Crashes

The problems all came to a head according to the complaint when in November 2021, Wrigley resigned as CEO when the first default notices started going out. At the beginning of December, it became really clear to the investors just how bad the situation was. “During a Zoom call that day with Perella Weinberg Partners (“PWP”)—one of the company’s financial advisors in connection with the purported effort to sell the company—PWP disclosed that the year-end interest payment due on the $165 million in Senior Notes would not be paid, because the company would instead need to conserve precious cash for the sale process.”  

The investors had been told their cash would last the company until at least the second quarter of 2022, but it may have already been used up by the fall of 2021. The investor’s group financial advisor Trip McCoy had eventually asked the current CEO James Whitcomb where the money went, “Whitcomb attempted to deflect the issue to PWP’s supposed mishandling of the situation, but also conceded that although “we still have most of that money today” “[t]he issue is we need to raise more, and the [newly appointed strategic advisory] committee is focused a lot on unwinding of some of Beau’s securities and redistribution of this equity back to the rest of the cap table.” Whitcomb further conceded in the same message exchange that “Beau and Jay have some explaining to do to you as I mentioned in our last call.”


Debra BorchardtMarch 28, 2022
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The latest documents in the privately-owned Parallel Cannabis (formerly Surterra Wellness) lawsuit lay bare the issues surrounding the company’s debt and its inability to pay those debts causing defaults.

The court documents filed on Friday outline a plan by Parallel’s then CEO Beau Wrigley and his family fund called the PE Fund to create a new level of debt that would jump ahead of the Senior debt holders (some of whom are filing the lawsuit). That money would then pay the debt owed and avoid default. However, there were many problems with the plan and those issues are outlined in the latest complaint. 

To set the stage, investors that buy debt in a company are also ranked in order of priority in case the company runs into trouble. In the case of Parallel, Senior noteholders come first, followed by Junior noteholders – there are no common shareholders since the company is still private. Had it become a public company those shareholders would be the last in the line to collect any money.

Super Senior Debt

The investors in the case, John and Ultima Morgan, TGHI II LLC, Prime Overseas Investments and Enterprises Ltd., and Techview Investments Ltd. complain that in 2021 while Wrigley was preparing the company to go public with a Special Purpose Acquisition Corp. called Ceres Acquisition Corp., it was actually having trouble paying its debts. The complaint says, “Wrigley did not wish to reveal that the Company had missed its projections so badly that it could not pay a debt Wrigley had just secretly negotiated a few months earlier. This need for secrecy was exacerbated because Wrigley was simultaneously planning to refinance [redacted] of other debt, all the while trying to close a SPAC transaction so he could access the public markets to cash out his controlling stock interest.”

The investors claim that Wrigley wanted to create a new tranche of Super Senior Notes to be senior to their first-lien Senior Notes. The same collateral backing their investment would now be used to back the new debt. The investors say they didn’t give their approval to be pushed back down the line of repayments and that their approval was required. They also say that the Collateral Documents would need to be changed and that the current debt holders have covenants that state no more debt can be incurred. Essentially saying the company couldn’t create the Super Senior debt. 

While the amount of debt that Parallel was saddled with is consistently redacted, there are a couple of footnotes that show “$18 million was owed to the former owner (R. Jake) Bergmann as part of a confidential settlement the company could not afford. There may also be up to $107 million of consideration owed for the company’s acquisition of a company known as Windy City.” The complaint also says that Parallel borrowed money from the PE Fund in June 2021 to pay off Bergmann. 

In 2019, Surterra did say it had raised $300 million in private capital, and last year Forbes reported that the company had $348 million in debt. 

Junior Note Default

The case states that Parallel failed to make its payments for the Junior debt in September 2021. The investors say they weren’t notified of the default within the required five days. They suggest they didn’t learn of the situation until a call on November 15, 2021, and that PE Fund claimed to have also just learned of the default in that call. However, the complaint alleges that the machinations by PE Fund during the summer (when it tried to create the Super Senior debt) showed that it knew it was in trouble which was why it was trying to create new sources of debt. The case alleges eight defaults occurred during Wrigley’s tenure at the company, including the default caused by PE Fund in the June 2021 Transaction. Wrigley resigned shortly after the November call. 

GH Notes

In addition to the hoped-for Super Senior Notes, Parallel issued a series of convertible promissory notes (the “GH Notes”) between January and May of 2021 to a Wrigley-controlled investment vehicle—Green Health Endeavors. The investors say the company did not conduct any arm’s length negotiation for the financing terms of the GH Notes, nor did the company explore any other financing options available. “Furthermore, upon information and belief, the GH Notes were issued in January 2021 but were not approved by the disinterested directors and shareholders.” The complaint went on to say, “Wrigley’s own employee, James “Jay” Holmes, negotiated the terms of the GH Notes on behalf of Green Health Endeavors while simultaneously sitting on the board and serving as an officer of the Company, in both roles reporting directly to Wrigley as his boss.” The investors also allege that the GH Notes should never have been issued because it violated the agreement to the original noteholders that the company wouldn’t incur any more debt.

The Scheme

In sum, if the company went under, the holders of the Super Senior Notes would have pushed the other lenders out of the way and been able to take over the company. “In that sense, the Scheme is a paradigmatic “loan-to-own” scheme developed by a corporate insider—who is not only the largest existing secured creditor, but also the controlling shareholder—to take the Company at a fire sale, while leaving all innocent third parties holding the bag without any recourse.” 

Parallel’s Licenses

Despite the inability to pay its debt or close the SPAC transaction to go public, the company continues to operate in several states. Even though some of this information is redacted in the court documents, according to Cannabiz Media, Surterra/Parallel has 44 active licenses in Florida, three licenses in Pennsylvania under the Goodblend name, and one Goodblend license in Texas. It has 11 active licenses under the NETA (New England Treatment Access)  name in Massachusetts. It has nine active licenses in Nevada under the names Parallel Brands, Cookies and D.H. Aldebaran. 

Nine license applications in Pennsylvania were denied, along with one denial in New Jersey and two denials in Georgia.

Illinois Deal Is Off

Curaleaf (OTC: CURLF) agreed to buy Grassroots in Illinois and along with that deal, the company noted three Illinois medical dispensary licenses and six adult-use dispensary licenses owned by former affiliates of Grassroots (the “Illinois Assets”) were sold to Parallel in April 2021. The transaction though is subject to regulatory approval, which it doesn’t appear to have received. In a securities filing by Curaleaf, it wrote “Under the terms of the transaction, the purchase price for the Illinois asset consists of a $100,000 base price to be paid $60,000 in cash and $40,000 in Parallel stock, plus earnouts of up to an additional $55,000 payable through 2023. The Company has received from Parallel a $10,000 deposit, which is refundable under limited circumstances and will be applied to the base purchase price for the Illinois Assets at closing.”

On February 25, 2022, Curaleaf wrote in its annual report that it had “received correspondence from Parallel’s attorneys indicating that it will not be in a position to complete the acquisition of the Illinois Assets due to lack of financing and seeking to terminate its agreement to purchase the Illinois Assets. The Company has asserted that Parallel’s actions have constituted material breaches of its agreement with Parallel and is exploring its options.”


Debra BorchardtMarch 21, 2022
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At the beginning of March, a complaint was filed in the New York County Supreme Court and the Southern District of Florida. Then almost immediately the court documents were heavily redacted. It seems some investors of privately-owned Surterra Wellness, now known as Parallel are pretty angry about what happened to their investment dollars. While some portions remain unclear, there is still a lot that can be gleaned from the complaint and allegations. Both cases suggest that Wrigley loaded up Parallel with excessive debt and misrepresented the health of the cannabis company. The complaint alleges that his goal was to get the company taken public through the Ceres Acquisition Corp SPAC and then exiting with a profit.

The Players

Parallel is a cannabis company formerly known as Surterra Wellness and has been building its market share in Florida among other states. According to Florida’s OMMU, Surterra’s market share in flower the medical-only state has ranged between 9% and 5.9% over the past year. SH Parent is the parent company of Parallel/Surterra. 

William “Beau” Wrigley, Jr. is the chewing gum company heir and had been the CEO of Wm. Wrigley Jr. Company until its 2008 sale to Mars Inc. for $23 billion. He is the Chairman and CEO of WWJR Enterprises and has controlled PE Fund during all relevant times. Wrigley had initially invested in the company in 2017 and assumed day-to-day operations as Chairman and CEO in late 2018. Wrigley resigned as CEO effective November 19, 2021, after disclosure of the defaults under the Note Purchase Agreement. James Whitcomb is the current CEO of the company and is named in the Florida case. 

The Florida Case

The Florida case lists the plaintiffs as Tradeinvest Asset Management Company (BVI) Ltd., First  Ocean Enterprises SA,  and  Techview Investments Ltd. and the defendants as Wrigley, Jr., James “Jay” Holmes, James Whitcomb, SH Parent Inc.  d/b/a Parallel, Surterra Holdings Inc., Green  Health Endeavors (another Wrigley family fund), PE Fund LP, and Robert “Jake”  Bergmann. That case alleges that Wrigley convinced the plaintiffs to invest in a Simple Agreement for Future Equity or SAFE. A SAFE is a relatively new type of security in which an investor’s cash investment generally converts to equity in the issuing company under conditions specified in the SAFE. They are often issued to provide a company with bridge financing until it can complete an additional capital raise or a sale of the company, and will often convert to equity upon the occurrence of that future, specified event.  They say they sent the money to the company on September 27, 2021. Although much is redacted, it does allege that the investors were misled and had they been told the truth would likely not have made the SAFE investment. 

While it’s difficult to truly know what is in the complaint, it seems to infer that Parallel was aware that the Ceres SPAC deal was in trouble while it was convincing the SAFE investors to send the money. The case notes that “On October 1, 2021, the company sent an e-mail, on behalf of Wrigley, to the company’s investors explaining that the Company was no longer pursuing the SPAC transaction. Among other things, he noted that the Company would “focus on alternative financing avenues to pursue a vast array of growth opportunities,” and that, the Company had ”just raised and closed a significant initial equity financing through the private markets,” referring to the SAFE.” In other words, Parallel would have likely known on September 27, that the Ceres deal was in trouble since the company announced just days later that it was over.

The complaint alleges that once the Ceres deal fell through that Wrigley and Parallel tried to tell investors that the deal fell through because the company was worth more and that “cannabis industry players were lighting up their phones.

The investors say in the complaint they finally got access to company documents in December and learned the details were inconsistent with what they were told for the SAFE investment. The case says, “The practice  of raising funds under false pretenses, is the essence of a Ponzi scheme.”

The New York Case

This case involves John and Ultima Morgan, TGHI II LLC, Prime Overseas Investments and Enterprises Ltd., and Techview Investments Ltd. and they are alleging that Surterra Holdings Inc. dba Parallel, SH Parent Inc., PE Fund LP, WWJr. Enterprises Inc., William “Beau” Wrigley, Jr., SAF Group, and GLAS Americas LLC allowed Wrigley to falsely build up the company in order for it to be taken over by a Special Purpose Acquisition Company, and then he could cash out. The plaintiffs all hold Senior Notes in the company.

PE Fund is an investment vehicle within Wrigley’s family office empire. It is directly or indirectly controlled by Wrigley and is under common ownership with other Wrigley-controlled entities. WWJR Enterprises is the general partner of PE Fund. WWJR Enterprises is named for Wrigley’s initials and is controlled by Wrigley. SAF is a global alternative investment manager based in Canada and owns a junior note. 

Excessive Debts

The complaint alleges that ever since Wrigley took over the leadership of the company, it has incurred substantial debts. The amount of Parallel’s debt is redacted in the court documents.  The case states, “The Company’s current capital structure consists of multiple tranches of debts with different priorities.” The case also alleges that Wrigley inappropriately placed himself on both sides of the debt negotiations. The investors complain that Wrigley “repeatedly botched his own projections, ultimately ruining the company’s credibility and chance of going public.”

Street Insider has posted a copy of the Parallel deck associated with the Ceres SPAC deal and it came with some pretty lofty projections. The projected 2021 net revenue was $447 million. The presentation said that the company had $348 million in debt. The company also said in the presentation that it had a net loss of $140 million in 2020. Growjo.com estimates Parallel’s annual revenue at $65 million a year, but since the company is private this number can’t be verified. 

The court document goes on to say, “ On February 22, 2021, the company had announced that it planned to go public by merging with Ceres Acquisition Corp., a special purpose acquisition corporation or SPAC. After numerous failed efforts to keep the deal alive, on September 30, 2021, the deal was called off due to investors’ concerns in “Parallel’s ability to deliver on lofty financial projections it provided in February.”

The case also suggests that Holmes, PE Fund, and Wrigley were negotiating terms of the company’s debt that would benefit them and described as terms that would “Make a loan shark jealous.”

The lawyers in the group did not respond to a request for comment. 

 


Debra BorchardtOctober 1, 2021
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Ceres Acquisition Corp. (NEO: CERE.U)(OTCQX: CERAF) has decided to call off the Business Combination Agreement dated February 21, 2021, with SH Parent, Inc. also known as Parallel. Ceres said it plans to continue looking for another company for its qualifying transaction before the deadline of March 3, 2022, unless of course that date is extended, with shareholder approval.

Premium Price

Back in February, the deal was valuing Parallel (formerly Surterra Wellness) at an implied enterprise value of $1.884 billion saying the expected net revenues would $447 million in 2021. The expected pro forma cash on hand was to be $430 million at the close, including the $225 million from the PIPE and $120 million of cash held in Ceres’ escrow account assuming no redemptions. At the time, the deal was expected to close in Summer 2021.

Parallel has ongoing operations in four medical and adult-use markets with approximately 50 locations nationwide, including 42 retail stores, and cultivation and manufacturing sites. The company has retail brands using the name Surterra Wellness in Floridagoodblend in Texas; New England Treatment Access (NETA) in Massachusetts; and The Apothecary Shoppe in Nevada. Parallel also has a license under its goodblend Pennsylvania brand for vertically integrated operations and up to six retail locations, in addition to a medical cannabis research partnership with the University of Pittsburgh School of Medicine. Subject to regulatory approval, Parallel said it will add Illinois as a sixth market when its announced acquisition of six Windy City Cannabis licenses is complete.

No Confidence

Reuters reported that “several investors had lost confidence in Parallel’s ability to deliver on lofty financial projections it provided in February when the merger was announced.” With just 42 stores and in some small markets like Texas, the ability to deliver more revenue than companies twice its size had to give investors pause. Reuters also reported that several investors who had committed to the $225 million private investment had refused to invest over the following months. Since Parallel is a private company, actual revenue figures aren’t disclosed. If one estimates Parallel’s revenues and Parallel doesn’t like it, get ready to hear from their lawyer.

 

 


Julie AitchesonMay 3, 2021
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Up until now, the cannabis market in Texas has been limited, to say the least. Its medical cannabis Compassionate Use Program has fewer enrolled patients and businesses than most other states, and their restrictions put them in the bottom 11 (out of 47 programs) for accessibility nationwide. But between a recent $25 million investment by one of the largest privately-held multi-state cannabis operators in the U.S. (Parallel) in a cannabis cultivation, production and retail facility in San Marco Texas, and breaking legislative gains including over a dozen pieces of cannabis-related legislation submitted for consideration in 2021, that is about to change.  

Parallel’s investment reflects the growing demand for medical cannabis products in Texas. This financial commitment expands Parallel’s ability to meet the growing demand for medical cannabis products in Texas. The company has planned a 63,000 square-foot facility that is expected to create hundreds of new jobs in the San Marcos region. The company also recently introduced its goodblend retail brand a retail brand of Parallel that just launched the first cannabis capsules for patients registered in the Texas Compassionate Use Program. These capsules are the fifth medical cannabis format option offered through the company’s Surterra Wellness branded product line, and the fourth first-to-market product innovation that it has launched in Texas in the last eight months. 

and the lower House chamber’s passing of H.B. 1535 on Thursday would help expand Texas’ marijuana program for those suffering from chronic conditions. Currently, the state’s cannabis program serves those suffering from grave diseases such as terminal cancer, intractable epilepsy, seizure disorders, and multiple sclerosis, but if the bill gets passed into law, those with chronic pain, non-terminal cancer, and PTSD would gain access as well.  The bill would also raise the THC cap from 0.5% to 5% and make it possible for those in the medical cannabis program to have access to higher doses. 

This followed the passage of H.B. 2539 in the legislature by just a day, which would lessen the penalty for possession of up to two ounces of marijuana concentrate to a misdemeanor. On Friday, the Texas legislature passed H.B. 441 which, if signed into law, would make possession of less than four ounces of marijuana a misdemeanor as well.

According to a recent University of Texas poll done in collaboration with The Texas Tribune, a large majority (60%) of Texans support the possession of cannabis for medical and recreational use, while only 13% of respondents believe it shouldn’t be legal for use of any kind. For the record, the latter describes the stance of Texas governor Greg Abbot when Texas legislators legalized the use of medical cannabis in 2015. Though he appears to have had a change of heart since then, the original laws were among the most restrictive in the country, resulting in a low number of business licenses awarded and a similarly low percentage of Texans to whom cannabis would be available. This is the original climate that Parallel’s watershed investment and proposed legislative measures are seeking to proactively improve, which many Texans hope will lead to greater access for those in need, criminal justice reform, and economic growth for the U.S.’s second-largest state. 


Debra BorchardtFebruary 22, 2021
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6min21250

Privately-held multi-state cannabis operator Parallel and special purpose acquisition corporation (SPAC) Ceres Acquisition Corp.  (OTCQX: CERAF) have entered into a definitive business combination agreement involving a transaction that, if completed, would result in Parallel becoming a public company. The investors have an over-subscribed private investment in public equity (PIPE) of $225 million. The deal is expected to close in Summer 2021.

The deal values Parallel at an implied enterprise value of $1.884 billion with expected net revenues of $447 million in 2021. The expected pro forma cash on hand of $430 million at the close, including the $225 million from the PIPE and $120 million of cash held in Ceres’ escrow account assuming no redemptions.

William “Beau” Wrigley Jr., Chairman and CEO of Parallel said, “This transaction will enable Parallel to accelerate existing investments to transform not only our company but also the cannabis industry, as we seek to disrupt the more traditional beverage alcohol and healthcare spaces. As a public company, we will have access to capital to grow our national footprint through new licenses and M&A, improve our cultivation and production capacity, expand our established retail footprint, develop and launch rare cannabinoids products with therapeutic benefits, and conduct important clinical research in partnership with the University of Pittsburgh Medical Center. We look forward to working with the Ceres team and benefiting from Scooter Braun’s expertise and extensive influencer network to reach our diverse consumers with creative omnichannel approaches that will fuel Parallel’s leadership in the cannabis industry.”

Formerly Surterra Wellness

In June of 2019,  Surterra Wellness closed on the initial $100 million Series D funding round and expanded its Board of Directors.  The company noted back then that the participants in the round included existing and new investors including former Patrón Spirits Company CEO, Ed Brown. At this time, Parallel is operating in five states that have the potential to see significant growth in cannabis sales, including FloridaPennsylvaniaMassachusettsTexas, and Nevada. It has a total of 42 brick-and-mortar dispensaries. Plus, an e-commerce infrastructure that supports the next phase of cannabis distribution, including online order-ahead, curbside pickup, and home delivery sales, which is expected to drive strong net revenue generation.

Ceres

The company said in a statement that the combined publicly listed company is expected to have Class A Subordinate Voting Stock and Class B Multiple Voting Stock. The Class B Multiple Voting Stock will have 15 votes per share and will be held by Beau Wrigley and his affiliate entities upon close. The Class A Subordinate Voting Stock will have one vote per share and will be the publicly traded class of stock upon the closing of the Transaction.

Scott “Scooter” Braun, Co-Founder of Ceres Group Holdings said, “I have carefully watched the cannabis industry and Parallel stands out as a leader in the space. With a culture of compliance and strong values, a commitment to social equity, and disciplined growth and innovation, I’m thrilled to work with Parallel. Together, Ceres and Parallel have the experience and reputation to drive growth and create value for all their stakeholders. Beau and his team stand out among the pack and bring to the table their deep experience and business acumen to run a public business of this size and I believe Parallel is primed for massive growth in the sector. I’m honored and excited for the opportunity.”

Joe Crouthers, Chairman and CEO of Ceres Acquisition Corp said, “Ceres’ deep cannabis and consumer experience, coupled with Scooter’s powerful network, makes Ceres an ideal partner for a well-positioned, well-led, high growth cannabis company like Parallel. The Ceres team has organized a set of truly unique resources that aims to open the top of the consumer awareness funnel and help fuel growth – from capital to cannabis to marketing to an extensive network in entertainment and access to consumers – we look forward to supporting Parallel’s transition to a publicly traded company.”


StaffJanuary 6, 2021
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Parallel (formerly known as Surterra Wellness) is one of the largest privately held, vertically integrated, multi-state cannabis companies in the world with a mission to pioneer well-being and improve the quality of life through cannabinoids.  Parallel owns and operates retail dispensaries in four medical and adult-use markets:  Surterra Wellness in Florida and Texas; New England Treatment Access (NETA) in Massachusetts, and The Apothecary Shoppe in Nevada.  The company has a diverse portfolio of high quality, proprietary and licensed consumer brands and products including Surterra Wellness, Coral Reefer, and Float.  Parallel operates approximately 50 retail stores nationwide, including cultivation and manufacturing sites across the four states.

Executive Spotlight: Stevens Sainte-Rose

1) What is your title?
Chief Human Resources Officer

2) How many years have you been with Parallel ?
I have been with Parallel since September 2019. Prior to joining Parallel, I served in senior leadership positions with global companies such as The Coca-Cola Company, Walgreens Boots Alliance and Dawn Foods.

3) Where did you study?
I received my B.A. in Industrial and Labor Relations from Cornell University, and I completed my M.S. in Organizational Dynamics from the University of Pennsylvania.

4) What is your most successful professional accomplishment before cannabis?
In addition to my current role, I am also the Founder and Principal at Chase the Experiences, an executive coaching practice with a focus on creating more successful executive-level transitions and driving better diversity and inclusion. I also have certifications in The Myers-Briggs Company, Certified Emotional Intelligence 2.0 and Certified Professional Executive Coach.

5) What is Parallel’s mission?
Parallel is one of the largest privately held, vertically integrated, multi-state cannabis companies in the world with a mission to pioneer well-being and improves the quality of life through cannabinoids. We follow rigorous operations and business practices to help ensure the quality, safety, consistency, and efficacy of our products and are building our business by following strong values and putting the well-being of our customers and employees first.

6) What has been your team’s most successful achievement to date?
At Parallel our goal is to be the employer of choice in the cannabis and retail industries where we attract, engage, develop and retain top talent at all levels of the organization. This best positions us as a retailer of choice for our customers and allows us to carry out our mission every day to improve their quality of life through cannabinoids.
To do this we focus on three things:

1) World class rewards and well-being benefits programs
2) Top notch professional and management development programs at all levels.
3) Strong culture of shared purpose and engagement.
In 2020, while we made progress against all three areas, we are very proud of our total rewards and well-being benefits programs. We have benchmarked our offerings against cannabis, retail, consumer product goods and healthcare industries. These are largely where we pull our talent. We are the market leader against cannabis and retail industries and very competitive against CPG and healthcare industries. Examples of our offers include:
● 401k with company discretionary match
● Tuition reimbursement
● Employee Relief Fund
● Suite of Life Assistance and mental health programs
● Product discount
● Pet insurance
In addition, all employees have shares of the company as we want all to be part of the company’s long term success. These examples along with very attractive healthcare, dental, and vision
coverage are incorporated within our benefits package. Our offerings are informed by us listening to our employees and surveying them to understand what’s most important to them as
well as benchmarking against other industry best practices. In 2021, we will look to accelerate our portfolio of offers in buckets 2 and 3 with a suite of professional and management development programs and cultural engagement programs to unite our team. Examples of what’s in development include:
● “Homegrown,” our internal management trainee program for hourly associates
● Diversity and cultural leadership programs (led by a Diversity Council with established
employee resource groups)
● Product expertise and certification programs
● “Parallel Cares” program which includes company support of each employee’s charity of
choice through a matching contribution
We will leverage our established monthly pulse engagement survey to verify our activities are
truly impacting and engaging our employees.

7) How did the team execute this achievement?
While our customers and patients are what we get up every morning to serve, the core of what makes this happen is our employees, especially our front-line hourly employees. Our offerings are informed by us listening to our employees and surveying them to understand what’s most important to them. Also, we consistently benchmark ourselves against other industries and best practices to help ensure we are leading the market. Lastly, this cannot happen without leadership support, engagement, and role modeling.

8) What is your team working on right now that is unique in the industry?
This year we really took a step back and took inventory of what type of benefits are most desired by our employees. Stemming from a survey we conducted, we decided to create new programs including pet insurance and tuition reimbursement given that the typical age range of our employees is 30-32 years old. We’re also extremely proud of two new initiatives available for our employees. Our Employee Relief Fund, which is designed to support associates who experience financial hardships and is funded by the generosity of both associates and their leaders. Grants to associates provide monetary assistance to cover expenses like transportation, food, utilities, and funeral expenses that stem from eligible events. This was a system in the works before COVID-19 but is increasingly dependent upon as the pandemic continues on. Secondly, our Better Together program offers a one-time award of Restricted Stock Units (RSUs) valued at 10% of annual base pay, allowing associates to benefit from the long-term growth of Parallel’s values. Both of these initiatives are quite unique not only for the cannabis industry but the American business industry at large.

9) What are your predictions for 2021 in your particular segment of the industry?
At Parallel we are taking the long-term view of our company, and as cannabis continues to become a fixture, we want to be the lead in offering the most competitive benefits. The cannabis industry continues to attract talent from many industries and will continue to do so – talent who is interested in joining the industry today, and may not have even considered it a couple of years ago. We want to be a leader in being the most competitive in how we provide benefits and rewards so we can attract, and importantly, retain the best talent, and help those entering the business or their first job develop professionally.

10) What are your team’s long term goals?
At Parallel our goal is to be the employer of choice in the cannabis and retail industries where we attract, engage, develop, and retain top talent at all levels of the organization. This best positions us as a retailer of choice for our customers and allows us to carry out our mission every day to improve their quality of life through cannabinoids.


William SumnerOctober 7, 2019
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It’s time for your Daily Hit of cannabis financial news for October 7, 2019.

On the Site

NBA Veteran Al Harrington’s Viola Closes on $16m Financing Round

NBA veteran Al Harrington’s Viola closed on a $16 million funding round led by Gotham Green Partners. This is the first institutional investment in the company. The company said that this latest round of funding will assist with the acquisition of a 34,500 sq. ft cultivation, processing and distribution facility in Adelanto, California as well as the completion of Viola’s 48,000 sq. ft facility in Detroit, Michigan. The funds will also enable Viola to continue to advance the growth of the company’s personnel with key new hires that will continue to establish Viola as a leader in the cannabis marketplace.

Surterra Wellness

Surterra Wellness today announced that it has changed its corporate name to Parallel effective today. In June, Private cannabis company Surterra Wellness closed on the initial $100 million Series D funding round and expanded its Board of Directors.  The company noted back then that the participants in the round included existing and new investors including former Patrón Spirits Company CEO, Ed Brown.

The Power That Data Has On Brand

Knowledge is power and the more data you have the better choices you can make for your brands. Akerna has been gathering data through its MJ Platform and will demonstrate how this data can be used for success with your brand. This panel was taped at the green Market Summit on September 11 in Los Angeles.

In Other News

TerrAscend

TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF) announced that Health Canada has approved the company’s plan to expand its facility in Mississauga, Ontario from from 17,800 sq. ft. to 51,800 sq. ft. The expansion will include additional cultivation capacity, a commercial kitchen, formulation rooms and increased primary and secondary packaging capacity. “Achieving this approval milestone is a crucial step in our plan to cultivate premium grade cannabis at scale for distribution to the EU and other international markets,” said Michael Nashat, CEO of TerrAscend.

Emerald Health Therapeutics

Emerald Health Therapeutics (TSXV: EMH) (OTCQX: EMHTF) announced that its subsidiary, Verdélite, has a received a license amendment from Health Canada for the complete growing and processing area in its 88,000 square foot indoor facility. This will allow the company to increase its production space from 4 to 21 highly-controlled-environment grow rooms and to a total of 16 processing rooms. “This new license amendment allows Verdélite to transition into its full commercial phase and positions Verdélite as a key growth contributor to Emerald’s financial results in 2020,” said Riaz Bandali, CEO of Emerald Health.


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


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