Verano Archives - Green Market Report

StaffDecember 5, 2022
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The Daily Hit is a recap of cannabis business news for Dec. 5, 2022.

ON THE SITE

Biden Signs Historic Marijuana Research Bill, Lawmakers Push Additional Measures

After months of policy debates and trading barbs on Capitol Hill, a U.S. president has finally sent through the first piece of meaningful marijuana legislation since The Controlled Substance Act of 1970. Sen. John Hickenlooper (D-CO) also last week filed a bill that would create a federal commission to help outline the ways in which federal agencies approach implementation of eventual legalization. Read more here.

Crain’s Chicago Releases City’s Largest Cannabis Companies List

Chicago is home to a few of the cannabis industry’s leading players, including publicly traded Cresco Labs, Verano, and Green Thumb Industries, and privately held PharmaCann. They dominate Crain’s new list of Chicago’s Largest Cannabis CompaniesRead more here.

Planet 13 Confirms Consumption Lounge Win

Planet 13 Holdings Inc. (CSE: PLTH) (OTCQX: PLNHF) confirmed that its subsidiary MM Development Company Inc. received approval for a Nevada consumption lounge from the Nevada Cannabis Compliance Board. The Nevada CCB announced the winners of the consumption lounge license lottery. Read more here.

A Rhode Island Grower Won a Cannabis Competition, the State Fined it $10,000

As Rhode Island commenced adult-use sales last week, growers will look to compete against those vying for cultivation notoriety. However, one operator’s experience serves as a reminder for those operating in the nascent market. Read more here.

Survey: Cannabis-Based Medicine Epidiolex Works ‘Across Age Groups’

Ireland-based Jazz Pharmaceuticals (Nasdaq: JAZZ) announced that its anti-epileptic over-the-counter cannabis drug, Epidiolex, has been found to be effective “across age groups,” not just young children, according to a survey of caregivers presented recently at a gathering of the American Epilepsy Society. Read more here.

IN OTHER NEWS

Grown Rogue International Inc.

Grown Rogue International Inc. (CSE: GRIN) (OTC: GRUSF), a craft cannabis company operating in Oregon and Michigan, closed a non-brokered private placement of convertible debentures with an aggregate principal amount of $2 million. The convertible debentures bear an interest of 9% per year, paid quarterly, and mature 36 months from the date of issue. The principal use of funds will be to accelerate expansion efforts and for general corporate purposes. Read more here.

Halo Collective Inc. 

Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) (FSE: A9KN) reported year-to-date revenue of just over $11.7 million for 2022. Halo continues to strengthen its market share by penetrating the Eastern Oregon region and increasing territory sales. The company currently sells to over 450 dispensaries and wholesalers statewide, with a majority of accounts ordering on a monthly basis. Read more here.

Icanic Brands Company Inc.

Icanic Brands Company Inc. (CSE: ICAN) (OTCQB: ICNAF), a California-based extraction and manufacturing cannabis company, will change its corporate name to Leef Brands Inc., now that it received approval for the move from the Canadian Securities Exchange. In connection with the name change, the company’s common shares will trade under the new trading symbol, LEEF, as of Dec. 7. Read more here.


StaffOctober 27, 2022
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Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) has entered into a credit agreement to refinance its existing $350 million credit facility, extending the maturity date to October 30, 2026. Refinancing comes amidst the company’s new legal battles with its spurned acquisition of Goodness Growth. 

Verano said that the decision to refinance the debt would give the company more flexibility in how it manages its debt. For example, it has $120 million in third-party mortgages secured by real estate that is currently unencumbered. In addition to that, a $100 million accordion under the new credit facility is to be funded at the option of the existing lenders, and a $50 million third-party revolving credit facility upon the passage of cannabis banking legislation.

The refinanced indebtedness bears interest at a floating rate based on the prime rate, with a current rate of 12.75% per annum.

“We’re pleased to continue our partnership with Chicago Atlantic as our credit facility Agent and as a Lender, extending the maturity and securing terms we believe are favorable during this rising interest rate environment,” said George Archos, Chairman, Chief Executive Officer and Founder of the Company. “Importantly, we maintained flexibility around prepayments and the ability to incur additional debt which we believe adds significant value to the deal, especially given the legislative environment that has seen positive momentum build in support of cannabis policy and banking reform. Since Verano’s inception, we have taken a conservative approach to our balance sheet, including avoiding sale leasebacks, which has allowed us to leverage our real estate to bring down our blended cost of debt. This refinancing enables us to continue a selective approach to further strategic opportunities as we position our company for the future.”

Additionally, under the new credit facility, Verano can elect to prepay up to $100 million of outstanding indebtedness at any time by incurring a prepayment fee of $1 million.  Archos is participating in the credit facility as a lender.

The stock fell 2% on the news to lately sell at $5.38.

 


StaffOctober 26, 2022
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This story was reprinted with permission from Crain’s Chicago and written by John Pletz

Verano Holdings’ (OTC: VRNOF) breakup with Goodness Growth looks like it’s going to be messy and expensive.

Chicago-based marijuana company Verano called off its planned $413 million purchase of Goodness Growth on Oct. 13, citing unspecified breaches of “covenants and representations.”

Goodness says Verano tried to back out of their deal without justification. Goodness Growth sued Verano in Canada, where both companies’ stocks are listed because cannabis remains federally illegal in the U.S. Goodness is seeking unspecified damages.

In late January, Verano announced the all-stock deal to buy Minneapolis-based Goodness Growth, which has licenses in New York and Minnesota. The two markets were seen as attractive additions for Verano, which, like its Chicago peers Cresco Labs and Green Thumb Industries, is among the biggest publicly traded U.S. marijuana companies and operates in multiple states.

Goodness Growth is a relative small fry, with a market value of just over $100 million before the announcement that its deal with Verano was off, which chopped the stock price by 60%. Verano has a market value of $1.7 billion.

Soon after the deal was announced, Verano got caught in a downdraft among marijuana stocks that was roughly twice as bad as the 25% selloff in the broader market.

“Verano began raising issues and taking positions suggesting it had buyer’s remorse,” Goodness Growth says in its lawsuit, adding that Verano tried to renegotiate the price or abandon the deal.

Verano declined to comment on the suit.


StaffAugust 16, 2022
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10min1300

The Daily Hit is a recap of cannabis business news for August 16, 2022.

ON THE SITE

Verano Revenue Rises But Misses Estimates

Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) announced its unaudited financial results for the second quarter ended June 30, 2022, with revenue increasing 12% to $224 million versus the same time period in 2021. The company also trimmed its net losses to $10 million from last year’s net loss of $30 million. Read more here.

Greenlane Revenue Drops, Looks to Sell KushCo

Greenlane Holdings, Inc. (NASDAQ: GNLN) slumped in trading Tuesday morning with company revenue dropping, as it moves to offload its packaging division — KushCo — in order to reinvest in its brand houses and find more profits. The smoking accessory e-commerce platform reported financial results for the first quarter ending June 30, 2022. Read more here.

InterCure Beats on Earnings, Revenues Rise Amid Global Expansion

InterCure Ltd. (NASDAQ: INCR) (TSX: INCR.U) posted positive results despite barely missing revenue expectations, as the company looks to further its international reach and shore up its new-found partnerships. The Israeli-based cannabis company — also known as Canndoc — reported its financial report card for the second quarter ending June 30, 2022. Read more here.

Halo Shores Up Losses as Revenue Rises

Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) posted mostly positive results with revenues ticking up over the quarter — illustrating the west-coast operator’s pursuit to shave losses and pay down debt. The company announced its financial results for the first quarter ending June 30, 2022. Read more here.

The Parent Company Revenues Fall as Losses Persist

After the market closed on Monday, TPCO Holding Corp. (OTCQX: GRAMF) posted results that missed expectations as the company restructures and recovers from record losses. The west-coast cannabis company delivered its financial results for the second quarter ending June 30, 2022. Read more here.

Fieldtrip Health is Now Reunion Neuroscience

Field Trip Health has changed its name to Reunion Neuroscience Inc. (TSX: FTRP) (Nasdaq: FTRP) and reported its fiscal first quarter 2023 results for the period ending June 30, 2022. Reunion reported expenses of $5 million and a net loss of $13 million. The increase in net loss from the prior year primarily reflected the company’s focus on investing in RE104 which recently began its Phase 1 clinical trial, as well as increased public company costs. Read more here.

Psychedelic Companies Grapple With Next Steps

The emerging psychedelics industry is stuck with a sort of default business model that goes something like this: build a team of entrepreneurial-minded C-suite people, add a few qualified medical people, get a patented psychedelic molecule or compound to test and develop, build a research and development operation, then begin the clinical trials as quickly as possible while keeping antsy investors believing in the long-term value of the tenuous business journey that you and they have all embarked on. Read more here.

IN OTHER NEWS

Indiva Limited

Indiva Limited (TSXV: NDVA) (OTCQX: NDVAF), a Canadian producer of cannabis edibles and other cannabis products, is pleased to announce its financial and operating results for the second fiscal quarter ended June 30, 2022. Read more here.

Item 9 Labs Corp.

Item 9 Labs Corp. (OTCQX: INLB) —a vertically integrated cannabis dispensary franchisor and operator that produces award-winning products—today reported its fiscal third quarter operating and financial results for the nine months ended June 30, 2022. Read more here.

AmeriCann Inc.

AmeriCann Inc. (OTCMKTS: ACAN), a cannabis company that develops state-of-the-art cultivation, product manufacturing and distribution facilities, announced the release of financial and operational results for its fiscal quarter ending June 30, 2022. The company achieved a significant increase in year-over-year quarterly net income and revenue, with both being records for the company for the quarter ending June 2022. Revenue increased over 36% for the quarter ended June 2022 relative to the quarter ended June 2021, an increase of $213,188. Quarterly gross margins were 98.5%. Read more here.

Puration, Inc.

Puration, Inc. (OTC Pink: PURA) today announced an agreement remains in the works that is anticipated to result in a cash infusion within the next 90 days. Management expects the cash infusion to fuel a transition of the company’s overall cannabis market strategy. The marijuana cultivation license recently announced by PURA’s sister company, North American Cannabis Holding’s Inc. (OTC Pink: USMJ) has triggered an overall initiative for PURA and USMJ to evolve their respective cannabis market strategies to take advantage of the license and to adapt to the latest market conditions. Read more here.

Optimi Health Corp.

Optimi Health Corp. (CSE: OPTI) (OTCQX: OPTHF) (FRA: 8BN), a Canadian-based company licensed by Health Canada to produce natural, scalable, and accessible psychedelic and functional mushrooms for transformational human experiences, has received permission from Health Canada to manufacture and distribute additional psychedelic substances, most notably MDMA, under the amended terms outlined in its June 20, 2022 application to Health Canada. Read more here.

Psycheceutical Bioscience, Inc., Vici Health Sciences

Psycheceutical Bioscience, Inc. (OTC: BWVI), a bioscience company developing cutting-edge technologies for the next generation of mental health treatment, announced that it has entered into an exclusive option that provides Psycheceutical an opportunity to acquire a majority equity stake in Vici Health Sciences. The total exercise price under the option would be approximately $10.5 million, which would be paid part in cash and part in equity. Read more here.

N2 Packaging Systems LLC

N2 Packaging Systems LLC, a sustainable packaging company which uses engineering and proprietary packaging technologies to protect and preserve CBD and cannabis products, today announced 44.5% year-over-year growth in the first half of 2022. N2’s growth was driven by 16 new business accounts across the United States and around the world, including Israel and Jamaica. Read more here.

The National Association of Cannabis Businesses

The National Association of Cannabis Businesses (NACB), a cannabis industry self-regulatory organization (SRO), has announced that it will convert from a for-profit corporation to a not-for- profit organization later this year. Originally launched in June 2017, as a for-profit corporation, the mission of the NACB has been to support the compliance, transparency, and growth of cannabis businesses in the U.S. Read more here.

International Brotherhood of Teamsters

Teamsters Joint Council 25 and the International Brotherhood of Teamsters announced today that they have entered into a joint agreement that will give Teamsters Local 777 exclusive jurisdiction for organizing cannabis workers in the state of Illinois. The agreement is a huge step forward towards the union’s efforts to organize the rapidly expanding industry. Read more here.

Metrc

Metrc, a provider of cannabis regulatory systems in the U.S., announced a new contract with the State of Alabama to support the regulation of its medical cannabis market. This marks Metrc’s 23rd government contract to date and sixth so far in 2022. Read more here.


Debra BorchardtAugust 16, 2022
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Verano Holdings Corp. (CSE: VRNO) (OTCQX: VRNOF) announced its unaudited financial results for the second quarter ended June 30, 2022, with revenue increasing 12% to $224 million versus the same time period in 2021. This was slightly higher than the Yahoo Finance average analyst estimate for Verano revenues of C$280 million, which when roughly converted to today’s exchange is $217 million and higher than the first quarter’s revenues of $202 million. The company also trimmed its net losses to $10 million from last year’s net loss of $30 million.

“I am very proud of our performance this quarter alongside the strategic investments we made to ensure our high operational standards touch every part of our business,” said George Archos, Verano Founder, and Chief Executive Officer. “Despite ongoing macroeconomic headwinds, we achieved a number of wins throughout the quarter, including the successful launch of adult-use sales in New Jersey, exceeding a milestone of operating more than 100 dispensaries following the opening of seven new stores in Florida, West Virginia and Pennsylvania, announced a partnership with Mission Green to advance cannabis clemency and social equity initiatives, and launched mobile applications and rewards programs for our flagship Zen Leaf and MÜV dispensaries. I am proud of what we have accomplished since going public last year and remain confident that the strategy and plans we have in place will drive long term, sustainable growth for Verano.”

Verano noted that it has surpassed the 50-store mark in the state of Florida. It has also started sales in the new market of New Jersey with locations in Elizabeth and Lawrence Townships. Following the close of the quarter, Verano maximized its New Jersey footprint with the start of adult-use sales at Zen Leaf Neptune on the Jersey Shore.

Also after the quarter closed Verano said it launched its signature flower branded products in four new core markets – Arizona, Florida, Massachusetts, and Pennsylvania. The company also announced the upcoming launch of Savvy in September 2022, a new brand featuring larger-format cannabis products that cater to more value-oriented patients and consumers, across seven core markets.

As of June 30, 2022, Verano said its current assets were $288 million, including cash and cash equivalents of $93 million. The company said it  had working capital (deficit) of $(299) million and total debt, net of issuance costs, of $403 million.

In July, Verano told investors that it would have to restate its earnings due to accounting errors that were uncovered. The company’s Audit Committee determined that its tax expense for the first quarter 2022 report was overstated due to a clerical error in the effective tax rate calculation, and accordingly, the company’s tax obligation will be reduced.


Debra BorchardtJuly 28, 2022
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Get ready for some cannabis companies to report boosted earnings as revenues got juiced from New Jersey adult-use sales. Cantor Fitzgerald analyst Pablo Zuanic thinks that the addition of this market could drive growth in second-quarter sales for several companies in a report he issued on Thursday. While there hasn’t been any official data from New Jersey on the number of sales, which began April 21, Zuanic thinks it could be as high as $60 million in the second quarter. 

The first month was reported to be $24 million and since that time the store count has grown from 12 to 17. The SKUs at the stores have jumped from  283 to 1,322 as more products get added. Looking at the landscape the companies poised to benefit the most are TerrAscend (OTC: TRSSF) with three dispensaries in NJ selling recreational cannabis as does Ayr Wellness (OTC: AYRWF). Next with two stores under their belts are Verano (OTC: VRNOF), Acreage Holdings (OTC: ACRHF), Columbia Care (OTC: CCHWF), Curaleaf (CURLF), and  Green Thumb Industries (OTC: GTBIF). Ascend Wellness (OTC: AAWH) taps in at one store, but its Montclair dispensary was been approved to start rec sales, however, Montclair won’t allow recreational sales. 

Apothocarium stores are owned by TerrAscend

Brick & Mortar Wins

In order to make his sales estimates, the analyst calculated the number of days during the second quarter that these companies could open their stores for business. Then he looked at the hours the stores were open and the market share that the operators had. He reviewed the online menus to determine SKU counts for the stores and further drilled down to in-store brands.

“If we define market share based on opening hours (prorated for when stores began rec sales), in 2Q22 Green Thumb and Verano would have had 19% share, TerrAscend 18%, Acreage 15%, Curaleaf 11% (its second rec store opened 5/24), Ascend Wellness 8%, Columbia Care 6% (extended rec opening hours from early June), and AYR 5% (its stores opened for rec on 6/14),” wrote the analyst. “If we define it based on SKU count, Green Thumb would have had 24%, Verano 23%, Ascend 17%, TerrAscend 11%, Curaleaf 9%, Columbia Care 3%, and AYR 2%.”

However, the geography and cannabis market in the state splits into three zones – North, Central, and South.  He wrote in his report, “There are more stores in the northeastern part of NJ while the Curaleaf store in Bellmawr initially had minimal competition and benefited from incoming Philly traffic. We should also factor in location (next to a high-traffic road/ highway) and parking availability. Although this report is not a 2Q preview, we would estimate that Green Thumb and Verano had ~18% share in 2Q; Curaleaf, Acreage, and Ascend 15%; TerrAscend (parking is an issue) 10%; and Columbia Care and AYR the rest (9% combined).”

The analyst then got out his calculator and wrote, “On the base of 1Q22 reported sales (all else equal; again, we are not forecasting total 2Q sales here), this would mean +4.4% for Green Thumb (18% x $60Mn, on a 1Q22 sales base of $242.6Mn); Verano +5.3% ($10.8Mn/$202.2Mn); Acreage +15.8% ($9Mn/$56.9Mn); Curaleaf +2.9% ($9Mn/$313.4Mn); Ascend +10.6% ($9Mn/ $85.1Mn); TerrAscend +12.1% ($6Mn on $49.7Mn); AYR +2.4% ($2.7Mn/$111.2Mn), Columbia Care +2.2% ($2.7Mn/$123.1Mn).”

Brand Power

The analyst went a little further and found that the top five brands in the adult use market accounted for 80% of the total SKUs available. Verano was the winner here with 376 SKUs or 28% of the market share. It was followed by Curaleaf with 321 SKUs and a 24% share, then TerrAscend’s Kind Tree brand came in at 215 SKUs and 16% share. Green Thumb’s Rhythm brand had 6%, and Ascend Wellness’s Ozone brand had 5%.

Vapes had the most SKU’s with Verano leading the pack, while flower came in second  and Curaleaf led that category. Curaleaf led the day for pre-rolls, while Verano mopped up with the edible category. 

In Closing

Most cannabis companies have been complaining about how challenging the cannabis industry has become. Mature markets are flattening out in sales and costs are going up, while prices come down. Consumers are being hit with inflation pressures and there are recession worries on the horizon. The addition of a new market and one that is looking to be a strong one is great news for these companies. Welcome to the Garden State.


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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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