Stanley Brothers Archives - Green Market Report

StaffJune 13, 2023
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The Daily Hit is a recap of the top financial news stories for June 13, 2023.

On the Site

Would-be Whistleblowers Facing Countersuit from Former Employer

A pair of former employees at a California marijuana company who tried to blow the whistle on millions of dollars worth of cannabis counterfeiting and diversion are now facing a lawsuit from their ex-boss, who denied all wrongdoing and claims instead that the two employees were thieves. Read more here.

Stanley Brothers Accuse Charlotte’s Web of Ignoring Shareholders

Jesse and Joel Stanley, the co-founders of Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF), have accused the company’s board of ignoring shareholders’ demand for change. Rather than engaging with their concerns, the brothers claim that the board has pointed them towards legal counsel. Read more here.

Connecticut Latest in String of States to Enact 280E Relief

Connecticut on Tuesday became the latest in a national trend of states with operational marijuana markets to approve state-level relief from the 280E provision of the federal tax code. The new state budget signed by Gov. Ned Lamont will let cannabis companies claim state tax breaks in the same amount they would have been entitled to from the federal government if 280E did not exist. Read more here.

Founding Director of Cannabis NYC on the Factors Thwarting the Adult-Use Rollout

Dasheeda Dawson talked to Crain’s New York Business about persuading legacy operators to join New York’s legal market, ensuring that the industry is just and equitable as well as profitable, and what we should — and shouldn’t — tell young people about cannabis. Read more here.

In Other News

ZYUS Life Sciences Corp.

Zyus Life Sciences Corp. completed the previously announced reverse takeover transaction with Zyus Life Sciences Inc., in accordance with the terms of an arrangement agreement dated Nov. 15, 2022. Under the arranged Phoenix Canada Oil Company Ltd. and the former Zyus completed a business combination, through which the former Zyus entity is now a wholly owned subsidiary of the company. The combined entity is expected to commence trading on the TSX under the ticker symbol ZYUS on June 19. Read more here.

Humble & Fume

Humble & Fume Inc. (CSE: HMBL) (OTCQX: HUMBF) closed on its non-brokered private placement of convertible debenture units of the company in aggregate principal amount of C$1,540,000. Read more here.

Hempsana Holdings Ltd.

Hempsana (CSE: HMPS)entered into an agreement to restructure the previously announced investment in the corporation by Antosh Consulting Inc. into an equity issuance, following consultation with the Canadian Securities Exchange. The investor has agreed to purchase 30 million units of Hempsana at a price of $0.03 per unit, for a total purchase price of $900,000. Read more here.


Debra BorchardtMarch 4, 2021
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Well-known hemp CBD company Charlotte’s Web Holdings, Inc.  (OTCQX: CWBHF) is expanding beyond its current model with a planned acquisition of privately-held Stanley Brothers USA Holdings. Stanley Brothers is a cannabis wellness incubator currently operating in three states (ColoradoCaliforniaFlorida) with expansion plans underway in eight additional states.

The acquisition though isn’t immediate. Instead, Charlotte’s Web is pursuing a five-year option plan valued at $8 million, which could be extended to seven years. However, the acquisition could also happen in three years and upon the federal legalization of cannabis in the U.S. The company stated that the common shares of Charlotte’s Web continue to trade on the TSX in Canada and OTCQX in the US. The payment will be made in stock, which has fallen on the news.

“Consumer attitudes, market trends, and laws surrounding cannabis and its role within the wellness category continue to trend positively. This strategic Option provides Charlotte’s Web optionality to enter the U.S. cannabis wellness market in partnership with an experienced and trusted team and brand, positioning our business for potential new growth opportunities and shareholder value creation,” explained Deanie Elsner, CEO of Charlotte’s Web. “The Stanley Brothers are innovating cannabis wellness with the same philosophy and vision that drove their success as founders of the Charlotte’s Web brand. With this shared heritage, we could not be more aligned.”

Stanley Brothers combines full-spectrum cannabis extracts with functional botanical ingredients. Marketed under the “ReCreate” brand, the wellness formulations are lower in THC for more precisely controllable benefits. Products include functional chocolates, gummies and oil tinctures, formulated with the wellness benefits of the entire cannabis plant including CBD and THC to help achieve a desired state of wellbeing.

Charlotte’s Web Revenue Woes

Charlotte’s Web had a difficult year in 2020 as the pandemic closed many retailers which hurt sales. The company has missed earnings estimates for three quarters in a row according to Yahoo Finance. The company has also faced intense competition from thousands of CBD companies that have launched over the past two years since hemp was legalized. On top of those problems, the company has faced a lawsuit challenging its ability to patent the strain which is the company’s namesake. So it’s no surprise that the company is seeking a way to expand beyond legal hemp products.

The two companies also share a lineage with the founders. Two founders of Stanley Brothers USA are also members of Charlotte’s Web board of directors. As a result of the planned acquisition Stanley Brothers co-founders Joel Stanley and Jared Stanley are resigning as members of the Charlotte’s Web board of directors and will take board positions at Stanley Brothers.

Option Details

According to the company statement, upon the occurrence of the Triggering Event, the Company may exercise the Option to acquire Stanley Brothers USA for a purchase price to be determined at the time of exercise of the Option. The purchase price determination will involve weighted application of 3.5 times revenue and 13.5 times EBITDA multiples to Stanley Brothers USA’s financial statements at the relevant time, or a base amount and earn-out, in certain circumstances. The purchase price will be subject to customary adjustments for working capital, debt and cash at closing, and certain portions of the purchase price may be held back to cover post-closing adjustments and indemnification matters.

 


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