Subversive Archives - Green Market Report

StaffMarch 29, 2021

Subversive Acquisition LP (OTCQX: SBVRF) gave the market an update on its qualifying transaction (QT) to combine with Israeli-based InterCure Ltd. (dba Canndoc) (TASE: INCR). Subversive believes the deal will close on April 8, 2021.

InterCure is the first public company on the Tel Aviv Stock Exchange to hold a valid and permanent license for the medical cannabis value chain through its 100% ownership in Canndoc. Canndoc is a GMP medical cannabis producer and was licensed by the Israeli Ministry of Health in 2008. It is a leading pioneer in the research, cultivation, production, and distribution of pharma-grade cannabis-based products to patients, hospitals, pharmacies, research, and governmental organizations. Through its strategic exclusive collaboration with world leaders, distribution agreement with SLE (100% owned by Teva Pharmaceutical Industry), and long-term sales agreements, Canndoc is well-positioned as a leading and significant player in pharma-grade medical cannabis in Israel, Europe, and the United Kingdom.

Previously, Subversive had said that InterCure’s expected EBITDA in the fourth quarter of 2020 had annualized run rate of greater than US$10 million and positive free cash flow. Its revenue grew more than 13 times compared to the fourth quarter in 2019 and more than three times compared to InterCure’s annual revenue in 2019. Subversive said that the fourth-quarter growth in revenue and profitability did not include the new operations acquired in January 2021 and commercialization of InterCure’s southern facility, the largest and most advanced in Israel, which occurred in 2021.

The company’s share of the medical cannabis market grew 40% in 2020 and that it was the first company to import medical-grade cannabis to Israel; It is also positioned to capitalize on the legalization of recreational cannabis.

Subversive said it will hold a special meeting of its unitholders on April 6, 2021, to get the approval of a special resolution to consummate the Qualifying Transaction. The company also said it will try to get an extension for the date of the transaction if everything isn’t in place.

Debra BorchardtJanuary 15, 2021

TPCO Holding Corp. (OTCQX: SBVCF, SBVQF) completed its qualifying transaction to acquire CMG Partners Inc. better known as Caliva and Left Coast Ventures, Inc. with global icon, entrepreneur and MONOGRAM founder, Shawn “JAY-Z” Carter and entertainment powerhouse Roc Nation. TPCO said it expects pro forma revenues of $334 million in 2021.

Shawn “JAY-Z” Carter, The Parent Company’s Chief Visionary Officer, said, “This is an incredible time for this industry. The end of cannabis prohibition is here, and The Parent Company will lead the charge to a more expansive and inclusive cannabis industry. We are paving a path forward for a legacy rooted in dignity, justice, care, and consistency. The brands we build will redefine growth, social impact, and social equity. This is our time. I’m proud and excited to lead the vision of The Parent Company.”

Jay-Z recently launched his premium cannabis line called Monogram, whose flower is cultivated at The Parent Company’s flagship growing facility in San Jose, California, using a batch-by-batch approach. The company said that each plant receives personalized attention from the company’s expert growers, who grade and select every flower by hand. The team is led by Cultivation Ambassador DeAndre Watson, who has been working with the plant for over 25 years. The packaging is matt black and looks as if it’s inspired by a high-end cosmetics line.

Common Shares and Warrants are now trading on the NEO Exchange under the symbols “GRAM.U” and “GRAM.WT.U”, respectively, and remain trading on the OTCQX under the symbols “SBVCF” and “SBVQF,” respectively. Beginning January 19, 2021, the OTCQX symbol “SBVCF” will change to “GRAMF.”

Michael Auerbach, Chairman of SCAC and The Parent Company, added, “This is an industry-defining moment. With its experienced management team, advanced infrastructure, industry-leading operational efficiencies, proven strategy of brands, and cultural influence, The Parent Company will help shape the future of cannabis in the U.S. and beyond as well as begin to repair and rectify the wrongs of prohibition.”

The Parent Company listed the following investment highlights in a company statement:

Progressive Operational Platform –

TPCO owns its supply chain, enabling the company to leverage scale and profitably produce and distribute a broad portfolio of cannabis products for every consumer segment. The vertically integrated, omnichannel strategy maximizes gross profit and EBITDA margins, scales consumer reach, generates proprietary consumer data, and beats the illicit market on price, quality, and convenience.
Omnichannel Platform – TPCO’s scalable omnichannel business offers customers convenient express or scheduled delivery, and in-store or curbside pick-up, all through a single user-centric e-commerce platform, Caliva.com. This omnichannel e-commerce platform, offering both a robust portfolio of high-margin owned brands as well as third-party brands, allows The Parent Company to rapidly scale its direct-to-consumer reach to all Californians. Coupled with its powerful sourcing and low-cost manufacturing capabilities, this omnichannel platform offers consumers across California compelling pricing and convenience while remaining profitable.
Exclusive Brand Partnerships and Leading Cultural Influence – Brand strategy and marketing playbook led by Shawn “JAY-Z” Carter and Roc Nation, leveraging unparalleled cultural influence of leading artists and entertainers to build the most valuable and scalable brand portfolio in cannabis. JAY-Z officially launched the first his flagship cannabis line, MONOGRAM, on December 10, 2020.
Unrivaled Consumer Reach – TPCO currently reaches over 50% of consumers in California through Caliva.com, its existing direct-to-consumer platform. The Parent Company will have the greatest consumer reach of any cannabis company in California, reaching 75% of consumers in the state by the end of 2021 and almost 90% by the end of 2022 through scaling of its omnichannel platform.
Strong Balance Sheet –The Parent Company is the most well-capitalized cannabis company in the United States and will pursue an aggressive M&A strategy to accelerate growth, market share gains, and profitability.
Industry-Defining Social Impact – Led by Shawn “JAY-Z” Carter, The Parent Company will fund The Parent Company Social Equity Ventures with an initial target of $10 million and an annual contribution of at least 2% of its net income to invest in minority-owned and Black-owned cannabis businesses and contribute to the effort to rectify the wrongs of prohibition through diversifying both the business leadership and workforce of the cannabis industry. Beyond investing, the fund will also support organizations and programs focused on diversifying the cannabis workforce through job fairs and placement, industry training and education, as well as Social Equity application support.

Steve Allan, The Parent Company’s CEO, said, “With both the most comprehensive vertically integrated platform and brand portfolio in California, and the healthiest balance sheet in cannabis, we will reshape the industry in the world’s largest cannabis economy.”

StaffDecember 11, 2020

Shawn ‘JAY-Z’ Carter has launched his first products from the cannabis line, MONOGRAM. Earlier this year, Carter announced he was partnering with California-based cannabis company Caliva. That company also recently announced an agreement with The Parent Company (TPCO) and Carter has since accepted the role of Chief Visionary Officer for the newly formed corporation. The special purpose acquisition company (SPAC) Subversive Capital Acquisition Corp. (OTCQX: SBVCF) entered into definitive agreements with Carter, Roc Nation, CMG Partners Inc. (Caliva) and Left Coast Ventures, Inc. to form TPCO. The deal is expected to close in January 2021.

“Cannabis has been around for thousands of years, yet it is still an industry whose legacy of skilled craftmanship is often overlooked,” shared Mr. Carter. “I created MONOGRAM to give cannabis the respect it deserves by showcasing the tremendous hard work, time, and care that goes into crafting a superior smoke. MONOGRAM products are next level when it comes to quality and consistency and we’re just getting started.”

Monogram said its flower is cultivated at The Parent Company’s flagship growing facility in San Jose, California, using a batch-by-batch approach. The company said that each plant receives personalized attention from the company’s expert growers, who grade and select every flower by hand. The team is led by Cultivation Ambassador DeAndre Watson, who has been working with the plant for over 25 years. The packaging is matt black and looks as if it’s inspired by a high-end cosmetics line.

The newly introduced MONOGRAM strains – No. 88, No. 96, No. 70 and No. 01 – are currently available via the brand’s three product classes:

THE OG HANDROLL – The first product of its kind, THE OG HANDROLL (SRP: $50) takes inspiration from the smoke experience of a premium cigar, but implements a proprietary roll technique allowing the flower to burn slowly and evenly for multiple sessions. Highly trained artisan rollers break the flower down by hand and roll using a time-honored process that was specially architected by MONOGRAM Culture & Cultivation Ambassador DeAndre Watson. A true work of art and craftsmanship that cannot be automated, the roll itself burns clean and clear every time.
LOOSIES PREROLL PACK – The LOOSIES PREROLL PACK (SRP: $40) contains four 0.4g prerolls that have been individually wrapped to foster communal smoking with ease. Each is filled with flower that has been produced to exacting standards to ensure a premium experience. The packaging itself makes a statement and reflects the magic held within: bold, convenient, top-shelf quality – wherever, whenever.
FLOWER – Available in 2g and 4g jars, MONOGRAM FLOWER (SRP: $40 & $70) is cannabis perfected. Grown in small batches to maintain control and quality, each flower is hand-selected and hand-finished by MONOGRAM experts to provide the best possible experience, from grow to smoke. The bold packaging provides a showcase piece while keeping the cannabis fresh and protected from UV light.

StaffJanuary 8, 2020

A new Ontario-based limited partnership created to buy cannabis-based real estate businesses called Subversive Real Estate Acquisition REIT closed on its initial public offering by raising $200 million. Making this the largest post-market correction equity capital raise to date. Subversive REIT also began trading its Class A Restricted Voting Units on the NEO Exchange as NEO:SVX.UN.

While most cannabis companies have been struggling as money quickly dried up, this raise was done in less than two weeks. Particularly notable was that it was done in December when most people were focused on the holidays. The company said that the initial tranche of capital will potentially be allocated to only a portion of Subversive REIT LP’s broader pipeline of high-quality real estate assets. Particularly those in need of non-dilutive growth capital to fund high-ROI investment opportunities like expansion into new geographical markets.

The Subversive REIT brings together three cannabis industry-leading investment companies, including Subversive Capital, an investment firm with a diverse portfolio and which raised $575 million in 2019 for a cannabis special-purpose acquisition company (SPAC) called the Subversive Capital Acquisition Corp. (NEO: SVC.A.U), The Inception Companies, a private opportunistic investment firm based in Beverly Hills and London and Canaccord Genuity. Inception REIT’s management team launched a private, independent platform in 2018 providing real estate capital solutions to leading operators in the U.S. cannabis industry, is managing the SPAC.

Subversive REIT said it looks to provide capital to top cannabis operators via real estate sale-leasebacks transactions across retail and industrial assets. Richard Acosta, founder and CEO of Inception REIT, as well as founder and CEO of IA REIT Advisors (external manager of Inception REIT), will be heading Subversive REIT as director and CEO.

Selling Assets

Numerous cannabis companies have begun selling their real estate assets as a way to generate cash. The leaseback model has worked as a way to maintain their business location while monetizing a valuable asset. Most cannabis companies found that in the early days of the industry, banks were unwilling to lend money for mortgages and most were forced to buy buildings. Landlords were also unwilling to rent their buildings to cannabis companies and this added to the challenge of finding a place to do business.

Several companies like MedMen (OTC: MMNFF)and Acreage Holdings (ACRG.U)created separate real estate companies that would buy the buildings and then set up the lease arrangements. Innovative Industrial Properties (NYSE: IIPR) was the first REIT to identify this opportunity within the cannabis industry and has been handsomely rewarded for being first to market.