Surterra Wellness Archives - Green Market Report

Debra BorchardtAugust 10, 2022

Parallel Cannabis, also known as Surterra Wellness, had hoped to get its investor lawsuit dismissed, but the investors say not so fast. The latest chapter in the ongoing case has the defendants TradeInvest Asset Management Company (BVI) Ltd., First Ocean Enterprises SA, and Techview Investments Ltd. understandably opposing the request to dismiss the case.

Surterra Holdings which is also known as Parallel Cannabis filed a motion to dismiss and the hearing for this is scheduled on September 9, 2022. It wasn’t until August 5, that the TradeInvest group pushed back on the request to dismiss. In their response, they wrote, “Defendants claim they have a “get out of jail free” card. The excerpts from the documents they cite, according to Defendants, actually allowed them to make multiple, material misrepresentations to the SAFE Plaintiffs—which were critical to their decision to invest—with no liability for lying.” The investors also claim in their court filing that Surterra can’t fall back on the disclaimer of forward-looking statements language. The investors wrote, “They argue that certain representations are protected, forward-looking statements—but concede that protection does not apply where the speaker knows the statement is false (and/or is using it to aid in fraud).”

Original Complaint

Green Market Report has covered this case extensively. In March, GMR wrote that the investors alleged that chewing gum heir Beau Wrigley (the former Surterra CEO) 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.

They say they weren’t aware that the company was in financial trouble, having defaulted on some debt already. They also claim that their investment money wouldn’t be tapped until Wrigley matched the investment with his own money. Instead, they allege their investment money was used to pay off other debts causing them to claim it was a Ponzi scheme.

Lawyers Leaving

Also happening in the background of this case, the lawyers for the investors are apparently trying to get off of the case. They wrote to the judge on August 2, “Mr. and Mrs. Morgan are partners in a large law firm. Given the substantial costs and time associated with prosecuting this action, and the fact that only a subset of holders of Senior Notes had joined and agreed to bear such expenses, on July 7, 2022, Mr. Morgan notified Quinn Emanuel that they no longer wish to be represented by us and that they were accordingly releasing the firm.” The legal firm went on to say in a letter to the judge, “We had understood that the Morgans would either be representing themselves or continue appearing through their law firm, which Mr. Morgan advised me has over 800 lawyers.”

John and Ultima Morgan are part of the TradeInvest group. However, the firm Quinn Emanuel also stated they hadn’t been given any instructions for new counsel and they remain on the case for now. Indeed, the latest court filing arguing against dismissing the case was filed by Quinn Emanuel’s lawyers.

Parallel Moves Forward

Despite the financial troubles with its debt, Parallel continues to operate and move forward. In June, the company announced opening its third dispensary in Miami Florida. “As Surterra continues to expand its dispensary locations across Florida, we’re excited to increase our presence in the sunny home to hundreds of thousands of Miami residents who seek high-quality medical marijuana products, which we’re proud to provide,” said Parallel CEO James Whitcomb. Whitcomb replaced Wrigley as the lawsuit laid bare issues with repayment of the company’s debt. The company said it has 45 Medical Marijuana Treatment Centers in the state of Florida, with more planned to open in 2022.

Debra BorchardtMay 12, 2022

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 5, 2022

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

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

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.

StaffJanuary 6, 2021

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

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.

Debra BorchardtOctober 7, 2019

Brown was once the President and CEO of The Patrón Spirits Company, until retiring last year after nearly 20 years at the company. Under his leadership, Patrón grew from 118,000 cases sold in 2001 to more than 4.1 million in 2016, and is currently the top-selling ultra-premium tequila in the world. Brown’s plan to apply his expertise in the premier spirits business to Surterra’s strategic global brand building seems to be paying off.

“The introduction of our new parent company brand, under the name Parallel, reflects our transformational growth over the past year and our long-term vision. We need a corporate name that unites the diverse parts of our organization and all of our associates,” said William “Beau” Wrigley Jr, CEO and Chairman of Parallel. “We chose the name Parallel because we are improving the well-being of our consumers today through our proprietary, innovative brands while at the same time stepping into the future through robust innovation. We like the name because we see well-being along a spectrum of what quality of life means to different people at different points of their lives, and our brands cover the full range of what they need.”

Parallel also announced today the introduction of Goodblend, the company’s new global retail brand. This store brand will become a recognized source across multiple markets where consumers can find a consistent and trusted selection of the company’s cannabinoid brands. Goodblend will roll-out initially in Florida over the course of the next several months. Parallel has a house, or portfolio, of consumer brands. Each of these brands has its own instantly recognizable name, imagery, appeal, and unique and differentiated positioning. Our proprietary consumer brands include Surterra Wellness, Coral Reefer, Endless Summer and Float.

“The philosophy behind our collection of brands is that the consumer is at the heart of everything that we do. Because consumers have different needs states across the well-being continuum, each brand is distinct. Yet, all our brands focus on improving the lives of our consumers and reflect our uncompromising commitment to consistency, quality, safety and efficacy,” said Wrigley. “Goodblend will simply reinvent what retail can be. Goodblend stores will be welcoming and inclusive of all our consumers and will allow each of our distinct brands a chance to shine – having their own stage under one roof.”

Parallel’s integrated footprint includes 37 retail dispensaries across the United States, including 34 in Florida; almost one million total square feet of cultivation and manufacturing operations across the platform; R&D facilities in Massachusetts, Florida, Budapest, Hungary and Medellin, Colombia; and an exclusive partnership with global biotechnology company Intrexon to drive its science and technology-led innovation.

William SumnerJuly 9, 2019

It’s time for your Daily Hit of cannabis financial news for July 9, 2019.

On the Site

Caliva

Shawn “JAY-Z” Carter announced online today that he will enter into a multi-year partnership with Caliva as Chief Brand Strategist. The statement said that he will play a crucial role in driving creative direction, outreach efforts, and strategy for the brand. Caliva is one of the largest vertically integrated cannabis companies in California and has quickly become a market leader in cannabis consumer products in the state.

Radient Technologies

Cannabis and hemp extractor Radient Technologies Inc. (TSXV: RTI)(OTCQX: RDDTF) reported that the company lost C$18 million in its financial results for the fiscal year ending March 31, 2019.The company only reported revenues of C$214,060 for the year and expenses of C$18,319,167. The cost for that revenue was C$131,249. On a positive note, the company’s cash balance at the end of its fiscal year totaled C$31,752,852, representing an increase of $9,897,548 from March 31, 2018.

Executive Spotlight: Erin Gore, Founder & CEO of Garden Society

Erin Gore is founder and CEO of Garden Society, a California-based, cannabis-focused benefit corporation serving women in search of new, more holistic ways to rejuvenate from the rigors of their daily lives. Garden Society creates artisanal confections and sun-grown pre-rolls that connects biodynamic farming, sustainable ingredients and strain-specific cannabis in a variety of products.

Green Growth Brands

Cannabis retailer Green Growth Brands Inc. (CSE: GGB)(OTCQB: GGBXF) is acquiring MXY Holdings LLC also known as Moxie in an all-stock deal valued at $310 million. The deal is expected to close within six months. Moxie is located in three states at this time, California, Nevada, and Pennsylvania. Michigan is set to be the fourth state. The products are in 250 dispensaries, which is a retail relationship that GGB would like to leverage. Moxie provides customers with high-quality recreational and medical cannabis products.

In Other News

Surterra Wellness

The medical cannabis provider Surterra Wellness announced today that it has appointed Fareed Khan as Chief Financial Officer (CFO), who will be responsible for corporate finance, investor relations, tax and shared services activities. Formerly serving as the CFO for the Kellogg Company, Khan helped drive the company’s corporate strategy to include revitalizing key brands through targeted investment and transforming the company’s portfolio through mergers and acquisitions. “Fareed’s track record of translating strategy into initiatives that drive growth for both private and public companies, across a number of industries, will propel our continued success,” said Surterra CEO and Chairman William “Beau” Wrigley, Jr.

KushCo Holdings

KushCo Holdings, Inc. (OTCQX: KSHB) announced today its financial results for the third quarter ending on May 31, 2019. Net revenue was $41.5 million, representing a quarter-over-quarter increase of 17.9%.On a GAAP basis, gross profit was 17.8%. On a GAAP basis, the net loss was $10.6 million, up from $9.2 million in the same period of the previous year. Cash on hand is approximately $12.2 million. “We expect demand to increase for the Company’s core product offerings as the cannabis and hemp markets continue to expand and mature. Our customer base is gaining strength with the largest multi-state operators and Canadian LP’s starting to scale in existing markets, while also preparing for growth in new emerging geographies – including recently approved Illinois,” said KushCo Chairman and CEO Nick Kovacevich.

William SumnerJune 27, 2019

It’s time for your Daily Hit of cannabis financial news for June 27, 2019.

On the Site

Green Growth Brands

After a trial period of selling the Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) CBD line called Seventh Sense Botanical Therapy products, Abercrombie & Fitch (A&F) has decided to carry the products in 160 stores. The expansion includes Seventh Sense’s CBD-infused body lotions, muscle balms, lip balms, and sugar scrubs, and is Green Growth Brands’ second major wholesale agreement since the passage of the Agriculture Act of 2018 in December 2018.

Executive Spotlight: Dr. Jared Helfant, Co-Founder and President of Sparx Cannabis

At Sparx, Dr. Helfant applies his expertise to oversee operations, branding, and marketing. With a proven track record of providing top-tier, customer-facing services and long-term strategic planning, his knowledge helps facilitate budget analysis, marketing strategies, and partner relationships.

In Other News

Surterra Wellness

The medical cannabis company Surterra Wellness announced that it had closed a $100 million Series D funding round. So far, the company has raised over $300 million in private capital. Proceeds from the funding will go towards expansion initiatives such as strategic acquisitions and infrastructure capital expenditures. Surterra also announced that it had expanded its board of directors to include Ed Brown, Surterra’s Executive Director, and its Executive of Operations, Kevin Fisher.

Curaleaf

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) announced today that it had acquired both Glendale Greenhouse and Phytotherapeutics Management Services, LLC. Glendale Greenhouse is a vertically integrated cannabis business operating a cultivation and processing facility with a 20,000 square foot production facility capable of producing 3,600 pounds of flower annually. Glendale also owns a 1,500 square-foot dispensary and the master lease on the 15,000 square-foot multi-tenant building where the dispensary is located. Phytotherapeutics Management Services, LLC operates under the license of Phytotherapeutics of Tucson, LLC. Once the transaction is closed, the Phytotherapeutics’ license would be transferred to Curaleaf and apply to a newly developed, flagship dispensary.

Aleafia Health

Aleafia Health Inc. (TSX: ALEF) (OTC: ALEAF) (FRA:ARAH) has closed a $40.25 million over-subscribed public offering. Leading the offering was Mackie Research Capital Corporation and BMO Capital Markets, and included Canaccord Genuity Corp. “We are excited to close this financing and strengthen our balance sheet as we solidify and accelerate the expansion of our cannabis health and wellness ecosystem, in Canada, and globally,” said Aleafia Health CEO, Geoffrey Benic. “This is a key step enabling management to execute on its business plan and to drive operational results creating value for shareholders.”

Older Posts

Original Complaint

Lawyers Leaving

Parallel Moves Forward

Not In New York

Bridge Over Troubled Water

In Closing

SAFE Investors

Big Debt

Rosy Revenue Projections

Debt Defaults

Bergmann Payments

Green Health Notes

Ceres Acquisition SPAC

Parallel Crashes

Executive Spotlight: Stevens Sainte-Rose

On the Site

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

Surterra Wellness

The Power That Data Has On Brand

In Other News

TerrAscend

Emerald Health Therapeutics

Radient Technologies

Executive Spotlight: Erin Gore, Founder & CEO of Garden Society

Green Growth Brands

In Other News

Surterra Wellness

KushCo Holdings

On the Site

Green Growth Brands

Executive Spotlight: Dr. Jared Helfant, Co-Founder and President of Sparx Cannabis

In Other News

Surterra Wellness

Curaleaf

Aleafia Health

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