The Daily Hit: December 18, 2019

Its time for your Daily Hit of cannabis financial news for December 18th, 2019.

On the Site

Elixinol Continues To Navigate CBD Labeling Rules

Green Market Report sat down at the 2019 MJBiz Conference with Leif Harrison, the CEO of Elixinol. Debra and Leif discussed the frustrating issues surrounding hemp regulations in the United States. Elixinol figured there would have been more concrete movement at the end of 2019 then there has been in terms of labeling products. Elixinol’s CEO said it can all be boiled down to one question, “Is CBD a dietary supplement or isn’t it?” Debra at Green Market Report mentioned to Leif that companies have been getting warning letters because of the terms that have been used for marketing, and how it seems that it is getting harder and harder to simply describe the products. Leif says, it absolutely is and it is a constant battle to say the right thing, especially when the right thing is changing all of the time. Leif also talked with Debra about Elixinol’s recent rebranding, as well as adding organic products to their already highly-rated product portfolio. Elixinol’s CEO also touched on pulling out of Japan’s market.

Executive Spotlight: Oregrown’s Aviv Hadar

Green Market Report talked to Aviv Hadar, the CEO and co-founder of Oregrown Industries, Inc. He has been in this role for six years and transitioned to cannabis from the tech sector. Before Oregrown, he was attending school at the University of Montana for computer science. He stopped school to found a software company that recently celebrated its 10th year in existence.

Oregrown is a farm-to-table cannabis company based in Oregon. They use organic methods to produce high-quality products. Oregrown is the first, exclusive Oregon producer for PAX Era. The company also crafts several of the state’s premier dispensary products including their own lines of Oregrown flower, extracts, and concentrates. Oregrown’s flagship dispensary located in downtown Bend, Oregon has won several awards including Best Budtender (2019), Best Place to Work (2017), Bend’s Best Place to Visit for First Dispensary Experience (2016), and Bend’s Best Dispensary five years in a row (2015-2019). They consider their best achievements to be winning Best Dispensary for five years in a row in downtown Bend, being voted the best place to work for two years in a row, and voted startup of the year by Bend Chamber of Commerce. The company has raised capital and plans to do so as well in the future. The company’s most important five-year goal? Aviv Hadar says it simply, “growth and profitability. If the perfect M&A transaction emerges, to take the ride.”

GrowGeneration Buys Oregon’s GrowWorld

GrowGeneration Corp. (NASDAQ: GRWG) has purchased the assets of Portland, Oregon-based GrowWorld for an undisclosed amount. GrowWorld was founded in 2011 and is the largest retail and warehouse garden space by square footage in the state. In addition to that, it has the highest sales volume of a hydroponic store in Portland and the highest revenue in the state.

A GrowGen statement said that “The GrowWorld acquisition is our 8th in 2019, adding an accretive $5.0 Million in revenue to our Company.  GrowWorld is one of the largest hydroponic stores in Oregon and strengthens our position in the Pacific Northwest region, that currently includes our Seattle location. With over 700 commercial cultivation licenses and a strong medical caregiver program, we feel we can capture a large market share of the Oregon hydroponic supply market.”

Leafly Expands Into E-Commerce, Data

Green Market Report sat down with Dave Cotter at Leafly during the recent MJBiz Conference in Las Vegas. Dave talked with Debra about their recent launch of Leafly Market, an e-commerce platform for purchasing the largest selection of CBD products. It has been said that Leafly’s e-commerce expansion was an organic one, because of the education Leafly already provides on different strains and dispensaries. Dave says that the company was “responding to where [their] customers are pulling [them], which is now that I understand or now that I’m educated, I now want to buy something. And so we’re creating a platform that allows them to do so.” The company also recently announced its partnership with the American Marijuana Medical Physician’s Association and their plans to work on a joint curriculum for different doctors.

The Rise of Do-It-Yourself CBD

DIY CBD is thriving. Recipes for products ranging from gummies to facial scrubs and beard wax to candles and personal lubricant jostle for space online. A small 30ml bottle of CBD oil can cost up to $300 depending on the quality and strength per dose, so many are turning to crafting their own products at home. The process in most cases is not overly onerous, although the hemp flower buds must be “decarboxylated” before use, which is an intimidating term that simply refers to the process of putting the hemp buds under low heat (between 225-245 degrees Fahrenheit) for about an hour in order to activate their chemical and pharmacological effects. Afterward, the hemp buds are ready to be used for teas, cocktails, baking, infused into oil, etc. It sounds pretty straightforward, but there is still room for frustrating and costly user error to occur. If a recent study cited by Iris Dorbian in Forbes Magazine is accurate and the CBD market could indeed surpass $20 billion dollars by 2024, there is plenty of room for DIYers and entrepreneurs alike to work for CBD, and make CBD work for them.

In Other News

Akerna to Acquire Canadian Cannabis Software Provider Ample Organics

Akerna, developer of the industry’s first seed to sale enterprise resource planning software technology (MJ Platform), has entered into a definitive agreement with Ample Organics Inc. to acquire all of the issued and outstanding shares of the company. The cash and stock transaction was valued at up to $45 million USD. The possibility of Akerna paying an additional $7.6 million in the form of stock-based deferred consideration may be paid to Ample Organics shareholders, pending specific certain revenue targets are reached by Ample Organics in the 2020 calendar year. Ample Organic’s projected 2020 calendar-year revenue is $8.7 million, reaching projected-cash flow positive in the second quarter. The acquisition multiple on 2020 revenue is 5.2x, assuming the deferred consideration is achieved in full. The purchase is expected to close by the end of Q1 2020.

Green Growth Brands Terminates Its Bid for Moxie

Green Growth Brands announced the termination of its proposed business combination with Moxie, amid the market’s adjustment to the changing macro environment. CEO of Green Growth Brands, Peter Horvath, says, “We are aggressively growing our businesses across America as we drive to become a leading cannabis retailer in the country. While we continue to be open to collaborating with other industry leaders, we need to ensure we are focused on building our operational strengths, maximize our returns and, most importantly, avoiding excessive dilution to our shareholder base.” The company will continue with its powerful growth in multi-state operations and CBD businesses. The MSO business includes a 47 dispensary rollout in three key states.