Video StaffThe 2023 SXSW conference in Austin TX featured a cannabis track for sessions and for the first time – a psychedelics track. Green Market Report spoke with Rep. Earl Blumenauer about the potential for legislation this year. We also met with hemp companies at the Creative Expo. Over 152,000 people attended the various shows and exhibits.
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UNION SQUARE TRAVEL AGENCY: A CANNABIS STORE, opened on February 13. The store has a robust portfolio of products from New York farmers including premium flower, pre-rolls, edibles, vapes, accessories, and more, many from BIPOC and woman-owned brands.
President Arana Hankin-Biggers said, “I’ve spent my career committed to creating economic opportunities for communities of color, and am proud to be involved in the legal cannabis industry which is finding ways for the private sector, public sector and not for profits to collaborate to empower marginalized communities.”
“This is an example of New York State getting it right,” said John McDonald of The Doe Fund. “For three decades, The Doe Fund has lived on the cutting edge of innovation, relentlessly pioneering ways to restore racial, economic and criminal justice to communities disproportionately impacted by systemic failures and inequity. Over 90% of the men we serve are BIPOC and 67% have been incarcerated. Upon their release – without successful reentry programs – they face the same marginalization from the mainstream, the same lack of economic opportunity that led them to resort to crime in the first place. Cannabis licensing; partnerships with nonprofits serving these impacted populations; and, most importantly, the revenue generated by this industry (which will go toward ending intergenerational poverty and enhancing programs like ours) can inspire systemic change and advance racial and economic justice.”
Hankin-Biggers and CEO Paul Yau expect to create 50 new jobs at the UNION SQUARE TRAVEL AGENCY. Hankins-Biggers and Yau also announced it has hired cannabis retail veteran Michael Conway to be their VP of Retail. Conway comes to the company following a successful tenure helping multiple state operator Ascend Wellness in their New Jersey and Massachusetts launch and oversaw the transition from medical to adult use in its NJ locations. Prior to that, he was Director of Retail Operations for Curaleaf NY where he managed the opening of four retail locations that led the NY medical market in sales and service.
Since 1985, The Doe Fund has helped nearly 30,000 individuals break the devastating cycle of poverty, homelessness, and incarceration. Its Ready, Willing & Able program provides paid work, housing, and comprehensive support services to homeless and formerly incarcerated men in New York City. In addition, The Doe Fund operates a portfolio of nearly 900,000 square feet of permanent affordable and supportive housing.
Earnings season is just beginning and it kicks off with Scott’s Miracle-Gro whose hydroponic brand Hawthorne saw its sales drop by 30%. Sales are forecast to continue falling by another 20-25%. CEO Jim Hagedorn described the cannabis market as a bloodbath and said the New York market had tripped over itself. Still, he insisted there was progress in the company’s investment into RIV Capital and Etain even though shareholders are suing RIV for the acquisition. Overall the company reported total sales fell by 7% to $526 million which beat expectations.
Canadian cannabis company High Tide (NASDAQ: HITI) (TSXV: HITI) saw both its revenues and its losses balloon in its final fiscal quarter of 2022, which ended on Halloween. revenues shot up for the year as a whole by 97% to C$356.9 million, but High Tide still lost $52.5 million in the fourth quarter alone, and posted a C$70.8 million loss for the fiscal year.
LeafLink raised $100 million in Series D financing this week. The company also moved co-founders Ryan Smith and Zach Silverman to new roles. Smith is moving from CEO to Executive Chairman and Silverman from Chief Technology officer to Senior Advisor. The company has now raised more than $230 million.
In Other fundraising news, Village Farms raised $25 million and 3D cannabis shopping app company Weedar raised $1.5 million.
In legal news, a New York judge is still not allowing cannabis licenses in the five regions currently involved in a lawsuit regarding social equity applicants. It was a blow to the Office of Capital Management that has made social justice applicants a priority in the very slow opening of the adult-use program.
Two dozen people have been indicted for a national cannabis smuggling operation that shipped California cannabis to New York. The U.S. Attorney’s Office in the Northern District of New York, said the indictments cover an alleged six-year operation that “shipped thousands of kilograms of marijuana” and edibles from Fresno, California, to “locations throughout the United States, including the Capital Region of New York.”
Speaking of New York, cannabis regulators extended a deadline for marijuana farmers to choose their business model to the end of the month, instead of requiring them to make a choice by Feb 1. Brittany Carbone, a board member of the Cannabis Association of New York, said that the state OCM relented on Monday during negotiations with cannabis farmers and gave all 280 growers until Feb. 28 to make their business model selection.
And finally, one of the original cannabis tech firms is saying goodbye to the industry and hello to bitcoin. Akerna is selling its cannabis assets to PosAbit and what is left of the company will merge with Gryphon digital mining. Akerna has been struggling over the years with expensive acquisitions that it then sold for much less than what had been paid. Losses never seemed to decline by much and revenues never really took off. CEO Jessica Billingsley will be a part of the board of Gryphon as Akerna is no more.
That’s it for this week. Don’t forget to register for our Women’s Summit on March 23 in New York City.
Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) is finally exiting a trio of legacy western states in search for better profits. The exodus will begin this month with the “proactive closure of the majority of its operations” including its production and cultivation facilities in California, Colorado, and Oregon. The company cited the lack of enforcement over the illicit market and price compression as to why it was tapping out of the west coast. The company is also laying off 10% of its workforce. The company said it expects to save $60 million through the moves.
New York-based Ascend Wellness Holdings (CSE: AAWH.U) (OTCQX: AAWH) announced its expansion into Maryland with its $19 million purchase of Devi Holdings, which runs four operational medical marijuana dispensaries. The move marks the seventh state in which Ascend Wellness has a footprint, according to a press release. The company already has cannabis shops in Illinois, Massachusetts, Michigan, New Jersey, Ohio, and Pennsylvania, according to its website.
Long-awaited federal guidance on cannabis clinical drug trials for humans has finally arrived. The guidance document from the U.S. Food and Drug Administration follows the 2018 federal farm bill, which removed cannabis with less than 0.3% THC by dry weight from the list of controlled substances. The move could dramatically accelerate the value of the CBD industry, which has been waiting on the guidance, and it could also help the industry back up some of the health claims various companies have made, which got them warning letters from the agency.
In state news…
Mississippi began its medical cannabis sales this week. The state legalized medical marijuana just a year ago.
New York opened its first social equity applicant dispensary and the state approved 30 more retail licenses.
In legal news this week, Nike is suing a Texas cannabis company for using the slogan “Just Hemp it”. A Michigan developer filed a $60 million lawsuit claiming delays led to a loss of funding and tenants for its project and Helping Hands Wellness Center Inc. in Nevada had its licenses suspended after inspectors “discovered Helping Hands’ employees were diverting product to the illicit market.
As a reminder, you can now submit applications to the 2023 GMR Women’s Leadership Awards, just head over to the website and there’s a link in our Summits tab.
Next week we expect earnings from High Tide, Scotts Miracle-Gro, and MedMen.
SMACKED is New York’s first social equity applicant dispensary to open. Roland Conner is the owner of SMACKED Village located in Greenwich Village in New York City. Conner had been incarcerated for cannabis but prefers to be called an entrepreneur, not an ex-con. Reuben McDaniel, CEO of DASNY was at the opening as well as Chris Webber, the former NBA player, who is also working with funding for social equity applicants.
It was a shortened trading week with markets closed on Monday for the Martin Luther King holiday.
Innovative Industrial Properties (NYSE: IIPR) told shareholders that rent collection has dropped from 100% last year to just 92% in January. Some companies like Parallel and Green Peak Industries have stopped paying rent in some locations, while others have had to use their security deposits to make rent payments. Kings Garden wants out of two locations as it looks for a possible merger.
In an effort to cut costs and try to become profitable, Columbia Care Inc. (CSE: CCHW) (OTCQX: CCHWF) has closed four unprofitable dispensaries and cut its headcount by 25%. Col-Care said it closed one dispensary in California and three in Colorado. In addition, the company also consolidated cultivation operations in California, Colorado and Pennsylvania to improve their Adjusted EBITDA contribution.
Bespoke Financial is suing California cannabis company In Da Cut for not paying back money that it borrowed. In Da Cut owes roughly $400,000 for money that Bespoke gave it to pay bills and hasn’t paid back.
In state news, Michigan had a banner year in 2022, ending with $221.7 million in sales for the month of December alone and a full-year total of $2.3 billion, a new record for the state’s marijuana industry. That annual sales figure is a 28% increase from 2021 sales figures and establishes a new high-water mark for Michigan operators.
Missouri is launching its legal adult-use cannabis sales on February 6. Last month on December 8, 2022, consumers were allowed to legally possess up to 3 ounces of marijuana. On December 8th, 2022 the Department of Health & Senior Services began accepting requests for existing medical facility licensees to convert to a fully legal facility. Once approved, it is up to each dispensary to decide when it will begin selling adult-use cannabis.
Texas is set to expand the size of its highly restrictive medical marijuana program, from just three dispensaries to a still-undetermined number, but the state is retaining its ban on full-fledged cannabis. There are just eight qualifying medical conditions that make patients eligible for medical cannabis in the state and only 8,000 registered patients.
And finally, Green Market Report has announced that our Women’s Summit will be on March 23 in New York City. You can register on the website under the Summits tab. We have also opened the application period for nominations for the Women’s Leadership Awards for 2023.
This is your weekly stash for the week ending January 13 – Yep it’s Friday the 13th.
This was a big week as the state of Connecticut launched legal adult-use sales. Privately owned Fine Fettle was able to open three stores on the first day. The Botanist owned by Acreage Holdings opened one recreational store in Montville, while Green Thumb Industries opened a Rise Dispensary recreational store in Branford. It was a successful launch with the state reporting that over $250,000 was sold on the first day.
Earnings are just beginning to trickle out. Tilray Brands, Inc. (Nasdaq: TLRY) reported revenues fell 7% in the fiscal second quarter to $144 million from last year’s $155 million. Revenue also fell sequentially from the previous quarter’s net revenue of $153 million. Tilray also delivered a net loss of $67 million versus last year’s net income of $5.7 million.
Organigram Holdings Inc. (Nasdaq: OGI) (TSX: OGI) reported net revenue of $43.3 million for its first fiscal quarter, up 43% from $30.4 million in the same time period last year. This beat Yahoo Finance’s average analysts’ $30.37 million estimate by more than $10 million. Organigram posted a net income of $6.1 million in the first quarter, versus a net loss of $1.3 million in the same time frame last year.
The Colorado-based food and cannabis grower urban-gro, Inc. (Nasdaq: UGRO) reported a record backlog entering its 2023 fiscal year and reaffirmed its financial guidance for the fourth quarter of 2022. The company expects to enter 2023 with a record consolidated backlog of around $87 million, a sequential increase of approximately $20 million from the third quarter of 2022’s announcement of $67 million in the backlog.
In state news, Maine’s adult-use marijuana sales almost doubled from 2021 to 2022, as the number of recreational retailers also shot up. The New England state sold $159 million in cannabis last year, up from $82 million in 2021 and the number of licensed retailers increased 20% to more than 110.
Recreational marijuana sales in Illinois finished 2022 with more than $1.5 billion, up 13% from 2021. Total sales in December were the highest of any month at $143.9 million, following a seasonal pattern seen in previous years. But the rate of sales growth, 4% over December 2021, was the slowest this year, reflecting continued pressure on discretionary consumer spending from inflation.
And finally, a new report from the U.S. Sentencing Commission found that Federal cannabis possession charges have fallen dramatically since 2014 from 2172 in 2014 to just 145 last year. Unfortunately, a prior cannabis possession conviction often leads to a longer sentence for other crimes.
That’s it for this week’s Stash. Markets will be closed on Monday for the Martin Luther King holiday.
Connecticut kicked off adult-use cannabis sales on Jan. 10. Green Market Report visited the Botanist, owned by Acreage Holdings (OTC: ACRHF), in Montville, and privately owned Fine Fettle in Stamford.
Both companies were stoked to finally get to sell adult-use products, and the customers were equally thrilled. Both stores had fast moving lines and plenty of product with no glitches that we saw.
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It was a shortened trading week as markets were closed on Monday for the New Year holiday.
This week Aurora Cannabis (NASDAQ: ACB) bragged about its solid balance sheet holding $320 million, but the company neglected to mention that it had almost $600 million in cash just a year ago. The company did reduce its convertible debt, but only by $84 million. The company also noted it sold its Polaris facility which brought in $15 million, however the company neglected to say it had only been open for 2 years and it is thought to have spent $50 million developing the facility.
Glass House Brands Inc. (OTCQX: GLASF) closed on a non-brokered private placement of Series C Preferred Stock, raising $4.7 million of new capital on top of the approximately $26.5 million of incremental capital raised from the company’s Series B Preferred Stock offering that closed on Dec. 6, 2022.
Flower One Holdings began its previously announced reorganization plan and the closing of the transactions contemplated by the plan, including a Canadian restructuring transaction.
Atlas Global Brands Inc. completed its reverse take-over transaction with Atlas Biotechnologies Inc., AgMedica Bioscience Inc., and Cambrosia Ltd., and the concurrent acquisition by Cambrosia of Tlalim Pappo Ltd., Pharmacy Baron Ltd., and R.J. Regavim Ventures Ltd., privately held operating cannabis pharmacies in Israel. The companies will join to form Atlas Global Brands Inc., which expects to begin trading on the Canadian Securities Exchange on Jan. 13 under the ticker symbol ATL.
Illinois is trying to pump up its social equity efforts. The state released newer, easier rules for applications. At the same time, local minority owned The 1937 Group created a social equity incubator to help social equity applicants in the state.
It’s been a busy week for legalization efforts.
A Republican lawmaker in the Virginia House of Delegates has introduced a bill to finally stand up the state’s adult-use cannabis market, more than 18 months after the legislature legalized recreational marijuana. But many advocates are unhappy with social equity changes made by the bill’s author, adding more uncertainty to the mix.
The U.S. Virgin Islands Senate voted to legalize adult recreational cannabis use, sending the legislation known as Bill 34-0345 to Gov. Albert Bryan Jr. for signature. Medical cannabis has been legal in the Virgin Islands since 2019.
This has been the big news this week, next week Connecticut will begin adult use sales in a select amount of locations.
New York opened its first adult-use cannabis dispensary in lower manhattan on December 29, 2022. The state had insisted sales would begin by the end of the year and it managed to do that in the waning days of 2022. Non-profit Housing Works is the first dispensary and all its profits will go to its charitable works.
“For years, advocates and members of New York’s cannabis community have been working toward this momentous milestone; the first adult-use dispensary opening its doors, stocked with brands and products grown, processed, manufactured and owned right here in New York,” said Kristina Lopez Adduci, CEO and founder of House of Puff. “We are ecstatic that House of Puff will be one of those New York brands that will be available for purchase and thank Housing Works for supporting us and other local cannabis companies during this crucial moment. The opening of their dispensary is just one embodiment of the vision set out by the MRTA and is a significant step towards establishing a fully operable and equitable legal cannabis industry built by and for New Yorkers and our communities most adversely affected by cannabis prohibition.”
“While working in the Governor’s office, I had the honor of helping shape the Marihuana Regulation and Taxation Act (MRTA). It is the most ambitious cannabis legislation in the nation and great care was taken to learn from states that came before us and work to establish a truly equitable, legal cannabis industry,” said Jesse Campoamor, founder of Campoamor & Sons. “Today’s store opening is an important milestone for New York’s nascent cannabis industry and begins the process of rewriting the narrative on cannabis. Just a few years ago, New York led the nation in cannabis arrests, but soon New York will lead the country in legal sales and tax revenue collection. I congratulate everyone on this monumental day, including Governor Hochul, the Office of Cannabis Management, the Cannabis Control Board, and of course, Housing Works, and look forward to celebrating the opening of the first dispensary.”
“Since the MRTA was signed, now nearly two years ago, we have all been envisioning the moment that legal adult-use sales would finally launch here in New York,” said Allan Gandelman, President of the Cannabis Association of New York. “The state’s first recreational dispensary opening its doors with shelves stocked full of New York-owned-and-operated brands, including products grown and processed by CANY members, is a culmination of all the hard work, dedication, and advocacy of the cannabis community over the past several years. We applaud Housing Works for being mindful and supportive of this vision and congratulate them on their entrance into the industry. Though this moment feels surreal, we hope it’s just one of many upcoming milestones achieved toward building a truly restorative, opportunistic, and sustainable New York-led cannabis industry.”
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