MPX International Completes Definitive Agreements for Cannabis Joint Venture in South Africa – New Cannabis Ventures

February 20, 2020
 

TORONTO, Feb. 20, 2020 (GLOBE NEWSWIRE) — MPX International Corporation (MPX International, MPXI or the Company) (CSE:MPXI; OTCQX:MPXOF) is pleased to announce that it has completed definitive agreements pursuant to the previously announced joint venture to establish low-cost cultivation using hi-tech greenhouses on the Sonop Farm, which is located in the traditional wine-growing region of Stellenbosch in South Africas Western Cape approximately 50 kilometres east of Cape Town. The biomass produced from the Companys operations in South Africa are expected to primarily support MPXIs operations in Malta. Upon receipt of a license to import, extract, produce finished products and distribute cannabis and cannabis derivatives, MPXI Malta Operations Ltd., a subsidiary of the Company, will produce EU-GMP quality cannabis oils and cannabis derivative products and pursue regulated medical cannabis distribution opportunities in Europe through Salus BioPharma Corporation, a wholly-owned subsidiary of the Company, as well as in Canada and Oceania.

Pursuant to the terms of the definitive agreements, MPXI has acquired an 80% interest in First Growth Holdings (Pty) Ltd. (First Growth) with the remaining 20% held by Simonsberg Cannabis Pty Ltd. (Simonsberg), whose shareholders include a prominent local winery continuing MPXIs string of successful local partnerships.

First Growth has applied under the Medicines and Related Substances Act, No. 101 of 1965 (South Africa) for a license to cultivate cannabis from the Sonop Farm (the License) from South African Health Products Regulatory Authority (SAHPRA). Construction commenced on the first cultivation phase of the project in September 2019 on an initial half hectare (approximately 54,000 square feet) with full development of the project resulting in up to six hectares (approximately 646,000 square feet) of advanced EU-Good Agricultural Practices (EU-GAP) certified greenhouse cultivation and EU-Good Manufacturing Practice (EU-GMP) certified extraction and processing laboratory.

The Company and Simonsberg loaned a principal amount of US$1.7 million on construction of the project with US$500,000 from Simonsberg at an interest rate of U.S. LIBOR plus 3% per annum. Upon receipt of the License, the US$500,000 loan from Simonsberg plus accrued and unpaid interest are convertible into common shares (the Shares) of MPXI at a deemed conversion price of C$0.35 per Share and based on the exchange rate posted by the Bank of Canada as of the date of the achievement of the License.

Upon First Growth achieving the applicable milestones outlined below, MPXI will issue warrants in MPXI (MPXI Warrants) to Simonsberg up to an exercise value of US$5,000,000. The MPXI Warrants will be issued in tranches, as outlined herein, will have a term of three years, and at an exercise price equal to the greater of (a) C$0.35 with respect to Warrant B and C and C$0.42 with respect to Warrant D, E and F and (b) the five day volume weighted average price (the VWAP) of MPXI on the Canadian Securities Exchange (the CSE) as of the day the respective milestone has been met, unless otherwise indicated below. The MPXI Warrants will be issued pursuant to all applicable securities laws, regulations, rules, rulings and orders and the rules of the CSE. The MPXI Warrants will be issued as follows:

  1. Warrant A: US$500,000 exercise value upon receipt by First Growth of the License from SAHPRA with an exercise price determined as the five-day VWAP of the MPXI Shares on the CSE as of the date of the definitive agreements;
  2. Warrant B: US$500,000 exercise value upon receipt by First Growth of the License from SAHPRA;
  3. Warrant C: US$1,000,000 exercise value upon successful cultivation and processing of 1,000 kg of Good Agricultural and Collection Practice (GACP) grade dried flower suitable for delivery to an extraction facility;
  4. Warrant D: US$1,500,000 exercise value upon successful cultivation and processing a further 5,000 kg (aggregate of 6,000 kg) of GACP grade dried flower suitable for delivery to an extraction facility;
  5. Warrant E: US$500,000 exercise value, upon the earlier of the (i) receipt by First Growth of an extraction and manufacturing license from SAHPRA and (ii) date that is twelve (12) months from the date that First Growth receives the License, if plans to build and fund an EU-GMP compliant extraction and manufacturing facility have not been approved; and
  6. Warrant F: US$1,000,000 exercise value, upon the earlier of (i) successful delivery of 100 kg of EU-GMP grade cannabis extract through First Growths processing facility and (ii) date that is twelve (12) months from the date that First Growth receives the License, if plans to build and fund an EU-GMP compliant extraction and manufacturing facility have not been approved.

In addition, First Growth will pay to Simonsberg a royalty of US$0.10 per gram of dried flower shipped.

As part of our strategy to create a cost-effective global supply chain, MPXI needed to create a source of high-quality, but low-cost cannabis biomass which could be easily exportable to Europe and other high- value cannabis markets, commented W. Scott Boyes Chairman, President and CEO of MPXI.We explored several potential cultivation jurisdictions taking into consideration relative production costs, sovereign risk, comparative ability to achieve GACP and EU-GMP certifications, readily-available infrastructure, governmental and legislative support for cannabis projects, the stability of the business environment and the availability and quality of local management/partnerships. South Africa, and the Western Cape, in particular, proved to be the best venue with high marks in each category.

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d98c2f28-c962-41a4-ab82-53cca83f25f4

Our partnership with our local South African partners has already proven itself to be highly-effective. In a few short months, the South African team selected suitable land with easy access to electricity and water, immediately adjacent to a major highway, and only 45 minutes from Cape Towns airport and container pier.

W. Scott Boyes Chairman, President and CEO of MPXI

The site has been graded, fenced and the initial half hectare of high-tech greenhouse has been erected, equipped with security equipment and has received a preliminary inspection by SAHPRA. The next phase of the development will include internal fixturing and readiness for the commencement of cultivation expected mid-to-late 2020.

Simon Back, Director of Simonsberg, adds, MPXI brings a wealth of experience in the cannabis industry, and together with our team’s local knowledge and skills, we are confident that we will deliver on the vision of creating a world-class cultivation facility here in the Winelands.

About MPX International Corporation

MPX International Corporation is focused on developing and operating assets across the global cannabis industry with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient.

Original Press Release

Charlotte’s Web Pet Products Approved for NASC Quality and U.S. Hemp Authority Seals – New Cannabis Ventures

February 20, 2020
 

Only Full-Spectrum Hemp-Derived CBD Pet Line to Comply withIndustry’s Two Highest Standards

BOULDER, CO,Feb. 20, 2020/PRNewswire/ – Charlotte’s Web Holdings, Inc. (“Charlotte’s Web” or the “Company”) (TSX:CWEB,OTCQX:CWBHF), the market leader inhemp-derived extract products, is pleased to announce that its edible pet supplementshave been approved to carry seals of approval from two of the most trusted organizations in their respective industries, the National Animal Supplement Council (NASC), a non-profit group dedicated to protecting and enhancing the health of companion animals throughout the country and the U.S. Hemp Authority, an organization created for the purpose of helping create standardization and quality across the hemp industry.

As the only full-spectrum hemp derived CBD brand to comply with both the NASC Quality Seal program and the U.S. Hemp Authority Certification Program, Charlotte’s Web is further validating to pet owners why it is known as The World’s Most Trusted Hemp Extract. The Company has been expanding its presence in the fast-growing pet CBD market, with its 12 SKU pet line experiencing 57% year-over-year revenue growth in Q3 2019.

Charlotte’s Web pet products will also now feature labels confirmingNon-GMO, Grain Free andUSAGrown Hemp as part of the Company’s commitment to corporate responsibility, health and wellness, and sustainable farming practices. As part of these efforts, Charlotte’s Web has been transitioning its hemp farming from conventional to organic agriculture practices, with more than 50% of its fields now certified organic. The Company is pursuing broad organic certification for its various product lines.

For canine owners, we understand that dogs aren’t just pets, they’re family. They deserve products you can trust. Charlotte’s Web is committed to producing the safest and highest quality pet products. We are very proud that our edible pet products have earned a seal of approval from both the NASC and the U.S. Hemp Authority.

Deanie Elsner, CEO of Charlotte’s Web

In addition to the Company’s full-spectrum hemp extract with naturally occurring CBD and other cannabinoids and terpenes, Charlotte’s Web canine chews include functional ingredients to support Hip & Joint, Senior Dogs and Calming. Each of these products will display the NASC Quality Seal on their packaging.

The NASC Quality Seal enables consumers to make safe and empowered purchasing decisions when shopping for their pets. The seal is awarded only to manufacturers and suppliers that have successfully passed an NASC facility audit and comply with rigorous quality standards, including strict labeling requirements, real-time adverse event reporting, and random product testing by an independent lab.

Charlotte’s Web products also carry U.S. Hemp Authority Certification, which requires meeting or exceeding stringent self-regulatory standards for Current Good Manufacturing Practices (cGMP) and passing an annual third-party audit. The Program is designed to increase consumer and law enforcement confidence in hemp products being sold in the market today by designating them as safe and legal.

Subscribeto Charlotte’s Web news

About Charlotte’s Web Holdings, Inc.

Charlotte’s Web Holdings, Inc. is the market leader in the production and distribution of innovative hemp-derived cannabidiol (“CBD”) wellness products. Founded by the Stanley Brothers, the Company’s premium quality products start with proprietary hemp genetics that are responsibly manufactured into hemp-derived CBD extracts naturally containing a full spectrum of phytocannabinoids, including CBD, terpenes, flavonoids and other beneficial hemp compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products), CBD capsules, CBD topicals, as well as CBD pet products. Charlotte’s Web hemp-derived CBD extracts are sold through select distributors, brick and mortar retailers, and online through the Company’s website atwww.CharlottesWeb.com. The rate the Company pays for agricultural products reflects a fair and sustainable rate driving higher quality yield, encouraging good farming practices, and supporting U.S. farming communities.

Charlotte’s Web is a socially conscious company and is committed to using business as a force for good and a catalyst for innovation. The Company weighs sound business decisions with consideration for how its efforts affect its employees, customers, the environment, and the communities where its employees live and where it does business, while maximizing profits and strengthening its brands. The Company’s management believes that socially oriented actions have a positive impact on the Company, its employees and its shareholders. Charlotte’s Web donates a portion of its pre-tax earnings to charitable organizations.

Shares of Charlotte’s Web trade on the Toronto Stock Exchange (TSX) under the symbol “CWEB” and are quoted in U.S. Dollars inthe United Stateson the OTCQX under the symbol “CWBHF”. As ofJanuary 1, 2020, Charlotte’s Web had 67,418,174 Common Shares outstanding and 95,342.49 Proportional Voting Shares convertible at 400:1 into Common Shares, for an effective equivalent of 105,555,170 Common Shares outstanding.

Original press release

Organigram Launches New Cannabis Vape Pens and Edibles in Canada – New Cannabis Ventures

February 20, 2020
 

 

Organigram Continues Cannabis 2.0 Roll Out, Releases Edison Vape Pens Powered by Feather, and Edison Bytes to Markets Across Canada

Product portfolio demonstrates Companys investment in innovative technology, world-class product development and production

MONCTON, New Brunswick-February 20, 2020-(BUSINESS WIRE)–Organigram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), the parent company of Organigram Inc. (the Company or Organigram), a leading licensed producer of cannabis, is pleased to continue the roll out of its innovative portfolio of recreational adult use cannabis products including vape pens and cannabis-infused chocolate.

Edison Vape Pens Powered by Feather

Organigram has sent its first shipments of its Edison vape pens powered by Feather technology to jurisdictions across Canada from the Companys Moncton production campus.

Organigram, for its Edison Cannabis Co. brand, has an exclusive agreement in Canada with Feather Company Ltd. (Feather), a cannabis innovator committed to the production of premium-quality products that enhance the cannabis experience for consumers. Edison vape pens rely on Feathers innovative technology and pen construction.

The well-crafted, inhalation-activated pens are designed to offer adult consumers a simple, intuitive user experience. The ready-to-use vape pens combine sophisticated design, cannabis distillate and curated terpene blends, representative of Edisons star strains iconic aroma profiles.

These include:

  • Rio Bravo With terpinolene, caryophyllene, myrcene and pinene terpenes, this formulation captures the flavour of Edisons Rio Bravo flower.
  • Lola Montes This precise blend of dominant terpenes including limonene, caryophyllene, myrcene and linalool celebrates the flavour profile of Edisons Lola Montes flower.
  • La Strada Edisons La Strada strain is brought to life through this formulation with terpenes including myrcene, alpha and beta pinene, caryophyllene, and humulene.

Were pleased to release this advanced device, which will offer consumers a new consumption option.

Greg Engel, CEO, Organigram

The sleek, subtle, compact design and intuitive function of the Edison powered by Feather device creates a distinct offering, especially when combined with our signature Edison formulations; a breadth of variety will help strengthen the appeal of the regulated market and were proud to contribute this line of products to the Canadian retail market.

The Edison vape pen is constructed with a ceramic atomizer, internal stainless-steel components and borosilicate glass. No vitamin E acetate, propelyne glycol, vegetable glycerin or medium-chain triglyceride (MCT) are used in the formulation of the products; cannabinoids are extracted using C0.

The Edison pens are ready-to-use upon inhalation, with no time required to heat internal components, and do not require any chargers, additional cartridges, or separate batteries. Pens are available in 0.3-gram units, with a target potency of 80% THC (800 mg/g), though potency may slightly exceed or be less than target.

As Canadians, seeing Feather launch in our backyard after the demonstrable success weve had in Colorado, is a proud moment for our entire team, says Patrick Lehoux, CEO, Feather Company Ltd. Our goal has always been simple, to design intuitive products that seamlessly fit into our customers lives and elevate their everyday moments.

The Companys next-generation product portfolio includes high-quality infused chocolate and a dissolvable powdered beverage product, created using nanotechnology and providing a discreet and customizable experience for the consumer. First shipments of chocolate and dissolvable powder products are expected in calendar Q1 and Q2 of 2020, respectively. The Feather launch follows the release of the Companys first 2.0 offering, the Trailblazer Torch, which launched in Canada on December 17, 2019.

Edison Bytes

Following a $15 million investment in a high-speed, high-capacity, fully automated production line, the first run of Organigrams cannabis-infused chocolate offering has also shipped to retailers across Canada.

Edison Bytes, the Companys premium cannabis-infused chocolate truffles available in both milk and dark chocolate formulations, are the first of Organigrams chocolate products to be available to Canadian adult consumers. Products will be available as single chocolates containing 10 mg of cannabis each and sets of two truffles containing 5 mg each.

The chocolate making process is the product of collaboration between Organigrams engineering and quality assurance teams. Organigrams teams have dedicated efforts to producing a homogeneous product, reliably and consistently distributing defined doses of cannabis throughout the ganache.

Our team and partners have been identified for their own global expertise and unwavering commitment to quality, says Engel. Everyone involved in the conception, development and delivery of this line values creativity, curiosity and leadership. We are all committed to applying our experience and expertise to the development of a portfolio of novel products that delight our customers.

About Feather Company Ltd.

Feather Company Ltd. is a lifestyle design brand. We believe that good design combined with quality cannabis makes for great intuitive experiences. Our mission is simple, we make great products that elevate the everyday, one person and one moment at a time. Feather is a Canadian-based, global company, headquartered in Sudbury, with offices in Toronto, Ottawa and Denver, Colorado. You can find Feather products in dispensaries throughout Canada, Colorado and soon in California and the United Kingdom.

About Organigram Holdings Inc.

Organigram Holdings Inc. is a NASDAQ Global Select and TSX listed company whose wholly owned subsidiary, Organigram Inc., is a licensed producer of cannabis and cannabis-derived products in Canada.

Organigram is focused on producing high-quality, indoor-grown cannabis for patients and adult recreational consumers in Canada, as well as developing international business partnerships to extend the Company’s global footprint. Organigram has also developed a portfolio of legal adult use recreational cannabis brands including The Edison Cannabis Company, Ankr Organics and Trailblazer. Organigram’s facility is located in Moncton, New Brunswick and the Company is regulated by the Cannabis Act and the Cannabis Regulations (Canada).

Original Press Release

Multi-State Cannabis Operator Jushi Holdings Bets on Three Core Cannabis Markets to Spur Growth – New Cannabis Ventures

February 19, 2020
 

Exclusive Interview with Jushi Holdings Founder, Chairman, and CEO Jim Cacioppo

Multi-state operator Jushi(CSE: JUSH) (OTC: JUSHF) has $65 million in cash on its balance sheet, as of Dec. 31, 2019. Founder, Chairman, and CEO Jim Cacioppo spoke with New Cannabis Ventures about his companys management team, plans to go deep in its existing states and its approach to funding. The audio of the entire conversation is available at the end of this written summary.

Focusing on Strong Management

Cacioppo started analyzing and investing in the cannabis industry about five years ago. He didnt find many companies with management teams he wanted to invest in, so he decided to create an MSO: Jushi.

As the company was built, Cacioppo took a management first approach. He brings his experience from the hedge fund world, and a number of other team members who he previously worked with him in the financial space are a part of the Jushi team.

Additionally, Jushi acquired The Clinic, an operator out of Colorado. The acquisition was not about hard assets, but rather intellectual property and a strong management team, according to Cacioppo. EVP of Operations Ryan Cook runs the Denver office, which the company views as its HQ2. This office houses Jushis cannabis expertise, with team members like Vice President of Manufacturing Kim Eastman.

The companys HQ1 is in Florida, where Cacioppo is based. Here, Co-President and Founder Jon Barack (who worked with Cacioppo at One East Partners) also brings his financial acumen to the table.

Max Cohen, the founder of The Clinic, stepped away from his role as COO, remaining as an independent director. This move was always planned, according to Cacioppo.

Other important members of the Jushi leadership team include CFO Kim Bambach, VP of Human Resources Nichole Upshaw, and EVPs and CO-Heads of Legal Affairs Matt Leeth and Tobi Lebowitz.

Jushi Team Members

The company currently has 240 team members, but its focus on adding retail locations will increase that number significantly. Each new store opening adds about 20 people to the team, and Cacioppo expects Jushi to have 350 to 450 employees by the end of the year.

Jushis Multi-State Presence

Jushi has 25 retail locations, two cultivation locations, and three extraction and processing locations across multiple states, including:

  • Pennsylvania:The company has 15 retail locations in Pennsylvania, six of which are open.
  • Illinois:In Illinois, Jushi has four retail locations, two of which are open.
  • Virginia:Jushi is one of five vertically integrated license holders in Virginia. Cacioppo expects the company could gain 25 to 30 percent market share in the state.
  • California: The company has four retail locations under contract and expects to add more in California.
  • Nevada:Jushis footprint includes cultivation, extraction, and processing in Nevada.
  • Ohio:The company has extraction and processing, expected to open this summer, in Ohio.
  • New York:Jushi has a hemp license in New York, but it does not plan to open that facility this year due to volatility in the hemp market, according to Cacioppo.

Vetting Growth Opportunities

Jushi focuses on defendable markets with the opportunity to build a significant market share. For example, the company operates 15 of the 150 dispensaries allowed under the Pennsylvania program, equating to 10 percent market share, according to Cacioppo. Markets that allow companies to operate only a small number of dispensaries, such as Massachusetts, are not of interest to the company. The company also likes limited license markets, like California. Jushi has one of 17 operational licenses in San Diego.

When it comes to acquisitions, the company has a rigorous process for vetting opportunities. Its originations team, a part of its business development group, is responsible for getting to know the markets and the people operating in them. They then bring potential deals to the company for due diligence. Jushis in-house legal team, supplemented with external counsel, negotiates contract terms. The company does the work upfront to understand any potential liabilities and to avoid any potentially bad investments.

Jushi is focused on growth in its current markets, with California, Illinois, and Pennsylvania as its top priorities. Retail is the companys main focus in California, while cultivation and processing are top-of-mind in Illinois and Pennsylvania.

Cacioppo has a background in distressed assets, and the current market presents opportunities to take advantage of that experience. With a strong balance sheet, Jushi is keeping an eye open for other potential assets to pick up.

Jushis Brands

The companys owned brands include The Lab, Beyond/Hello, and Nira. The Lab, which came out of The Clinic, is a concentrates brand that Jushi plans to roll out across the country.

Beyond/Hello is the companys acquired retail brand. It is currently focused on Pennsylvania, but the company plans to expand its presence.

Inside the Scranton, PA Beyond/Hello Store

Nira, developed by Dr. Laszlo Mechtler, is a CBD brand. Jushi plans to roll out a THC formulation of the product, Nira Plus, in Virginia.

In addition to its owned brands, Jushi is planning to carry third-party brands, such as those developed in California, on its platform.

Approach to Funding and Capital Allocation

In January, Jushi closed $47 million in debt financing. Cacioppo pointed out that Jushi is the only small-cap MSO in the industry to have completed a debt deal. It has raised $185 million to-date, $40 million of which comes from founders and employees.

Jushi is looking at other ways of raising capital, including a sale-leaseback transaction on one if its California retail locations. The company will also consider hybrid instruments and returning to the equity markets as it grows and needs more capital for acquisitions.

The company has also managed market volatility by selling assets. For example, it sold a minority interest in a New York license to Cresco Labs (CSE: CL) (OTC: CRLBF), making three to four times on its investment.

When it comes to allocating capital, the company takes a disciplined approach. Jushi does a significant amount of analysis to understand the cash flow of anything it is opening or buying. The company also focuses on controlling operating costs.

2020 Guidance

Jushi has given guidance fore exiting 2020 with a run-rate of $150 to $180 million. That growth, according toCacioppo, will be driven by store openings in Pennsylvania, the closing of a San Diego acquisition, the opening of a Santa Barbara store, the transition of medical stores to recreational in Illinois, and opening new recreational stores in Illinois. Though there is some uncertainty due to regulatory timing, Cacioppo is confident in the companys track record of opening stores. He expects to see organic growth on top of store openings as activity increases in states like Pennsylvania and Illinois.

In 2020, Cacioppo recommends investors watch Jushis quarterly revenue run rate. Moving into 2021, the company is expected to reach cash flow and its breakeven point, and investors can begin to watch the companys margins, as well as continued revenue growth.

Jushi, like the rest of the industry, is challenged by regulatory uncertainty and rapidly scaling operations, but Cacioppo is confident in the strength of his companys management team and its balance sheet.

To learn more, visit the Jushi website. Listen to the entire interview:

Gibraltar Industries Expands Cannabis Extraction Operations with $50 Million Cash Acquisition of Delta Separations – New Cannabis Ventures

February 19, 2020
 

In October,Gibraltar Industries (NASDAQ: ROCK) purchased CO2 extraction company Apeks Supercritical, paying $12.55 million for the Ohio-based company that reported trailing annual revenue through June 2019 of $17.7 million. This move extended the company’s involvement in the cannabis industry, where it has also worked on green house facilities.

On February 14th, the company revealed an even larger acquisition of California-based Delta Separations, paying $50 million cash for the privately-held manufacturer of ethanol-based extraction systems. Gibraltar disclsoed that the acquired company generated 2019 revenue of $46 million.

As Gibraltars second acquisition in the processing market, Delta Separations leadership position in ethanol-based extraction technology combined with Apeks leadership position in CO2extraction technology expands our offering as we work with customers to shape the future of this market. The combination of Apeks and Delta will support our customers regardless of their technology and systems preference.

Gibraltar Chief Executive Officer Bill Bosway

Delta has a strong management team, is a true leader in this market with an incredible passion for its business, and our future together. We will continue to build our presence and relevance with our customers accordingly.

In addition to Delta, Gibraltar acquired Teaching Tech, which is a separate company that provides training to Delta customers. According to the company’s website, Delta was founded in 2015 and has been headed by CEO Roger Cockroft and Founder/CTO Ben Stephens. Gibraltar plans to retain substantially all employees and to change the name of Teaching Tech, according to the asset purchase agreement.

Delta Separations CUP-30 Closed-Loop Alcohol Extraction System

According to the company’s website, it sells agitation, chilling, extraction, evaporation and distillation equipment as well as modular processing labs.

These Special Purpose Acquisition Companies Are Next to Enter The Cannabis Industry – New Cannabis Ventures

February 19, 2020
 

On February 11, Greenrose Acquisition Corp. (NASDAQ: GNRSU) priced a $150 million initial public offering, becoming the latest in a series of cannabis-focused blank check companies to go public. Based in Woodbury, New York, Greenrose sold 15 million units priced at $10 each. Imperial Capital LLC and I-Bankers Securities Inc. underwrote the offering.

Blank check, or special purpose acquisition corporations (SPACs), are publicly traded companies that raise money from investors to acquire an existing company, generally one that is privately held. The money is held in a trust until a merger or acquisition is identified. Because investors dont know upfront just where their money will be used, SPACs are often referred to as blank checks.

SPACs offer privately held companies an alternative to the traditional IPO through a merger or other business combination, thus saving them from having to go through the paperwork-intensive and lengthy process. If the SPAC fails to complete a merger or acquisition within the required time frame, all of the public shares are redeemed for a pro rata portion of the cash held in the trust account.

Last year, 59 blank check companies went public, raising $13.6 billion, according to SPAC Research. So far this year, eight SPACs have gone public raising $2.5 billion.

Despite some not so positive returns for several publicly traded companies, the nascent cannabis industry has been ripe for SPACs as investor excitement continues to grow. In this review, we take a look those cannabis-focused SPACs that have popped up in recent years, how much they have raised and who is behind them.

Greenrose Acquisition Corp.

Greenrose Acquisition Corp. noted in its filing with the Securities and Exchange Commission that the cannabis market is growing, but highly fragmented and undercapitalized and companies operating across multiple verticals consistently have trouble accessing capital from traditional sources.

The companys management team consists of experienced deal makers, operators, and investors who have worked in the agricultural and investment services industries, according to the SEC Filing.

They are CEO and Director William F. Harley III, who has more than 30 years of experience in the agriculture, real estate and finance industries, and Brendan Sheehan, executive vice president, corporate strategy and investor relations and director. He has more than 25 years of experience in business development, sales and operations in the finance, technology and healthcare industries.

Stable Road Acquisition Corp.

On November 13, 2019, Stable Road Acquisition Corp. (NASDAQ: SRAC) announced it closed on an IPO of $172.5 million. The New York-based company sold 17,250,000 units, including 2,250,000 units issued pursuant to the exercise by the underwriter of its over-allotment option priced at $10 per unit. Cantor Fitzgerald & Co. acted as the sole book running manager for the offering.

The company noted that its strategy is to pursue one or more business combinations with companies servicing and operating adjacent or ancillary to, the cannabis sector, but which are not directly involved in the production, distribution and sale of cannabis (i.e. businesses that touch the plant), according to its SEC filing. They include vaporization products and cannabis accessories; software, such as seed-to-sale tracking; labs; distribution; real estate; brands; and packaging.

The companys management team includes Brian Kabot, chief investment officer of Stable Road Capital, LLC, James Norris, CFO of Stable Road Capital and Juan Manuel Quiroga, chief investment officer of NALA Investments, LLC. Combined, they have more than 60 years of investment management experience. Stable Road Capital is known for being an investor in the real estate of MedMen (CSE: MMEN) (OTC: MMNFF) through its Treehouse collaboration and has made investments in the sector in companies that includeGrenco Science and Plus Products(CSE: PLUS) (OTC: PLPRF).

Brian Kabot, CIO, Stable Road Capital

Merida Merger Corp. I

On November 7, 2019, New York-based Merida Merger Corp. I (NASDAQ: MCMJ) (NEO: MMK) announced it had raised $120 million via a dual listing on the Nasdaq and Canadas NEO Exchange. It was the first SPAC to be backed by a dedicated private equity firm (Merida Capital Partners III LP) focused on investing in the cannabis industry.

Merida Capital Partners management team has worked with legal cannabis companies since 2009 and has been investing in cannabis-related companies since 2013, according to the SEC filing. Unlike some of the other cannabis SPAC leadership that have popped up in recent years, Meridas principals have helped to build and operate sophisticated cannabis cultivation facilities and have directed significant investments into a broad spectrum of cannabis-related companies ranging from data analytics companies to hydroponic suppliers.

The company is led by Peter Lee, president, CFO and director and Richard Sellers, executive vice president of mergers and acquisitions. Mitchell Baruchowitz, who is the managing member of Merida Capital Partners, is the non-executive chairman of the board of this SPAC.

Silver Spike Acquisition Corp.

Last August, New York-based Silver Spike Acquisition Corp. (NASDAQ: SSPK), announced it priced a $250 million cannabis-focused SPAC. It was incorporated as a Cayman Islands exempted company and is backed by Silver Spike Capital, an asset management fund formed in 2019 and focused on the cannabis industry.

The companys founder, Scott Gordon, also is the founder and CEO of Silver Spike Capital, which began investing in the cannabis industry in 2014. In 2016, Gordon co-founded and became chairman of Egg Rock Holdings, a holding company that invests in and operates companies in the cannabis market and is the parent company of the Papa & Barkley family of cannabis products. Other members of the team include President William Healy, CFO Gregory M. Gentile, and COO Mohammed Grimeh.

Papa & Barkley is a cannabis wellness company.

As the industry continues to transition to a new legislative and regulatory framework, we believe that many companies will need a partner that can assist in providing a level of operational and financial expertise to support their growth. Our team includes a variety of investment, operational and healthcare professionals who will provide operating, technical, regulatory and legal expertise to assist a target business access the public markets, the company stated in its SEC filing.

Ceres Acquisition Corp.

On February 5, Los Angeles, Calif.-based Ceres Acquisition Corp. filed a preliminary prospectus with Canadian regulatory authorities for a proposed public offering to raise $120 million. The company plans to trade on the NEO Exchange.

The management team includes CEO Joe Crouthers, who started a cannabis distribution and transportation company brokering sales of input materials to cannabis product manufacturers; President, CFO and Corporate Secretary Jordan Cohen, who has experience in the technology and wellness industries; and, COO Michael Vukmanovich, who got his start in the legal cannabis industry investing, advising and networking with some of the industrys top founders, according to the prospectus.

The sponsor, Ceres Group Holdings, has been investing in the industry since 2016, with stakes in Fotmer Life Sciences, a licensed cultivation company in Uruguay, vaporizer manufacturer Pax, Palms, a multi-state pre-roll brand, and Silverpeak, a Colorado operator.

We believe that our understanding of the dynamics, competitors, trends, risks, unique nature, and opportunities of the cannabis segment will enable us to efficiently pursue the industrys best opportunities and potential transactions, the company stated. It is targeting investments in the US$200-600 million range.

There are numerous other SPACs who entered the market earlier on. They include:

  • Ayr Strategies Inc. (CSE: AYR, OTC: AYRSF), formerly Cannabis Acquisition Strategies Corp., which raised C$125 million and then closed a merger with five cannabis companies across the nation.
  • Akerna Corp. (NASDAQ: KERN) , formerly MTech Acquisition Corp, which completeda merger with cannabis software maker MJ Freeway last June, initially raised US$50 million. MTech was the first US-listed SPAC focused on acquiring a business ancillary to the cannabis industry.
  • Canaccord Genuity Growth Corp. (NEO: CGGC.UN) now Columbia Care Inc., (NEO: CCHW) (OTC: CCHWF) raised C$46 million. Canaccord Genuity Growth II Corp. (NEO: CGGZ) raised C$100 million.
  • In March 2019, New York-based Tuscan Holdings (NASDAQ: THCB) raised US$240 million. Then in June of the same year, it filed for another SPAC, Tuscan Holdings II (NASDAQ: THCA), raising $172 million.
  • In May 2019, Mercer Park Brand Acquisition (NEO: BRND) announced the closing of its $402.5 million public offering. The company said it will focus on acquiring one or more cannabis companies with an estimated aggregate enterprise value of $300 million to $800 million. The sponsor, Mercer Park, had previously sponsored the SPAC that became AYR Strategies.
  • Subversive Capital (NEO: SVC) closed on a US$575 million IPO in July 2019. The following month, Bespoke Capital Acquisition Corp. (TSX: BC)closed on a US$350 million IPO.

Because so many cannabis companies are privately held, going public via a SPAC is one way to inject lots of capital into a proven company without having to start from the ground up. With these SPACs having been successfully completed, the question now becomes what will they purchase and will they be able to do it within the required deadlines.

Indiva Finalizes White-Label Licensing and Manufacturing Agreement With Dycar Pharmaceuticals Ltd. and Grants Options – New Cannabis Ventures

February 18, 2020
 

LONDON, Ontario, Feb. 18, 2020 (GLOBE NEWSWIRE) — Indiva Limited (the Company or Indiva) (TSXV:NDVA) (OTCQX:NDVAF) is pleased to announce that further to its press release dated December 11, 2019, the Company has entered into a licensing and manufacturing agreement (the “Agreement”) with Dycar Pharmaceuticals Ltd. (“Dycar”). Pursuant to the Agreement, Dycar will immediately provide Indiva with non-dilutive financing of $3.6 million, $500,000 of which has been previously advanced, and an additional $4.5 million of non-dilutive financing over two instalments. Such amounts will be used to finance the production and distribution, by Indiva, of certain Dycar-branded cannabis products (the “Dycar Products”). Sale proceeds from Dycar Products will be used to repay the financing. The Company and Dycar will also share additional sale proceeds of Dycar Products pursuant to the terms of the Agreement.

We are pleased to finalize our partnership with Dycar and begin developing premium products on their behalf.

Niel Marotta, Indivas President and Chief Executive Officer

OPTION GRANT

The Company also announces that its Board of Directors has approved the grant of 2,977,333 stock options to directors, officers, employees and consultants of the Company. The options granted are exercisable into common shares of the Company at a price of $0.40 per common share in accordance with TSX Policy 4.4, subject to the rules of the TSX Venture Exchange and the Company’s Stock Option Plan. The options have a term of five years and will expire on February 18, 2025. One-third of all options will vest on the first anniversary of the grant, one-third of all options will vest on the second anniversary of the grant and the final one-third of all options will vest on the third anniversary of the grant.

ABOUT INDIVA

Indiva sets the standard for quality and innovation. Indiva aims to bring its exceptional portfolio of products to Canadians and cannabis enthusiasts around the world as laws permit. Based in London, Ontario, Indiva creates premium pre-rolls, capsules and edible products. In Canada, Indiva produces and distributes the award-winning Bhang Chocolate, Ruby Cannabis Sugar, Sapphire Cannabis Salt, Gems, and other Powered by INDIVA products through license agreements and joint ventures. Click here to connect with Indiva on social media and here to find more information on the Company and its products. Click here to connect with Indiva on social media and here to find more information on the Company and its products.

Original press release

Profitable California Cannabis Cultivator Kings Garden Is Paying Dividends to Its Investors – New Cannabis Ventures

February 18, 2020
 
Michael King (Left) and Charlie Kieley (Right)

Exclusive Interview with Kings Garden Co-Founders Michael King and Charlie Kieley

Kings Garden started five years ago in the Coachella Valley region of California. Since then, it has grown into a profitable cultivation company backed by the funding of friends and family. Founders CEO Michael King and COO Charlie Kieley spoke with New Cannabis Ventures about their companys California presence, their approach to distribution and their thoughts on the commoditization of cultivation.

The Team

King comes from a background in finance, beginning his career on Wall Street and then moving into real estate. He moved into the cannabis space approximately seven years ago. Kieley has spent the past 15 years in cannabis, owning and operating retail dispensaries and facilities. He was working in northern California but had roots in the Palm Springs and Coachella Valley area. As soon as Palm Springs began licensing commercial cannabis facilities, he came home.

King, with his financial background, and Kieley, with his operations experience, have complementary skill sets. They lead the company along with other key players including CFO Lauri Kibby, Vice President of Operations Gary LaSalle, Head of Cultivation Tyler Geld, Vice President of Distribution Jeffrey Fellbaum, Vice President of Processing/Packaging Cameron Maggalens, Chief Marketing Officer Tommy Kieley, and Vice President of Marketing Ivan Talan.

The leadership team oversees the approximately 200 employees at Kings Garden. Over the past five years, the company has been continuously building, but construction is now complete. The company may increase its personnel by 10 percent to accommodate increased production, but the team likely wont need to grow much more, according to King.

Cultivation at the Core

At its heart, Kings Garden is a cultivation company. It produces premium, indoor flower meant for consumption in its raw form, according to Kieley. In July 2018, the company launched its first SKU: a packaged eighth jar. Now, Kings Garden has 16 SKUs, all produced in-house.

Kings Garden Team Members at Work

The company owns and operates approximately 215,000 square feet of licensed space in the Coachella Valley. The location is ideal for Kings Garden not only because of Kieleys connection to the region but also because of the lower cost of operation compared to areas like Los Angeles and San Francisco. The company has more than 3000 cultivation lights and did more than 20,000 pounds last year.

The Kings Garden leadership team never had any intention of launching its own distribution operations. Instead, the team vetted the distribution players capable of handling the volume and scale their company was targeting. The list was relatively small, and Origin House was an easy selection to make, according to Kieley. He and the team see Origin Houses longstanding history of supporting brands and getting products to market, a major factor in its leading position as a distribution platform and as a strong acquisition for Cresco Labs.

Origin House handles all accounting, placing a link of separation between Kings Garden and its retailers. King and Kieley have heard about retailers struggling to pay, but they havent experienced it themselves.

Ramping Up

Kings Garden is increasing its production by approximately 30 percent, which will result in a small increase in expenses and a significant increase in revenue, according to King. Additionally, the company is increasing its manufacturing by 400 to 500 percent.

Kings Garden Manufactures Different SKUs, Including Concentrates.

Previously, the company has done significant wholesale business, but now it is shifting its resources to focus on its own branded products.

Last year, the company did $45 million with significant EBITDA, according to King. Kings Garden is targeting $70 to $80 million with an even stronger EBITDA this year. By 2021, the company is expected to be doing approximately $100 million. Those projections are rooted in the companys now-completed infrastructure. Additional lights have increased cultivation capacity, and the significant increase in manufacturing is being driven by upgraded SOPs and equipment.

The Potential for Expansion

Kings Garden is taking a cautious approach to expansion. Over the past year and a half, the team has vetted opportunities in different states but none have been the right fit yet. If the company does pursue multi-state expansion, it likely will not take the form of building operations from the ground up. Instead, management contracts or licensing may be an option. At this point, King and Kieley want to enjoy the infrastructure theyve built in California.

The company considered going public in the past, going so far as to travel to Canada and begin discussions. Ultimately, Kings Garden halted the go-public process, deciding it was the wrong decision. The company has no plans to list on a Canadian exchange, but it will consider the possibility of listing on the NYSE or NASDAQ when the time comes. For now, the company is happy to remain private, according to King.

Funding and Capital Allocation

In the beginning, King and Kieley put their own money into the companyfive years ago, a 10,000-square-foot facility. They wanted to prove to themselves that they had a working model. Once they did, the pair began to make calls to friends and family and pick up more space. Kings Garden has raised a total of $55 million from friends and family. One of the companys largest investors has put in approximately $13 million, while one of the smallest has put in about $20,000, according to King. Today, the company is profitable with debt and has begun paying dividends to its investors, according to King.

Kings Garden carefully tracks its monthly expenses (the largest being rent, electricity, and payroll) and ensures it has enough to cover those. Over the last few years, the company has also been able to invest money it has made back into its infrastructure.

The Commoditization Question

The commoditization of cannabis is a big topic of discussion in the industry, but not one that worries the Kings Garden team. Outdoor and greenhouse products grown as biomass that will ultimately be used for manufactured goods likely will become commoditized, according to Kieley. But, that is not the kind of cannabis Kings Garden grows. It produces premium, indoor cannabis for consumption by connoisseurs, and Kieley does not anticipate commoditization affecting that kind of product.

Kings Garden Focuses on Producing High-Quality Products.

Of course, the company faces other challenges common across the industry, from strict regulation to the burden of taxes. But, there is also an upside. With profitability becoming increasingly vital and capital funds drying up, bad operators will begin to failleaving behind a legitimate industry. At the end of this, we are going to have the industry we always wanted, said Kieley.

To learn more, visit the Kings Garden website. Listen to the entire interview:

Australis Walks Away From Folium Biosciences Acquisition After Discovering Previously Undisclosed Information – New Cannabis Ventures

February 18, 2020
 

Australis Capital Announces Termination of Merger Agreement with Folium Biosciences

LAS VEGAS, Feb. 18, 2020 /PRNewswire/ – Australis Capital Inc. (CSE: AUSA) (OTC: AUSAF) (“AUSA” or the “Company”) previously announced on, December 11, 2019, a proposed merger by and among AUSA, Folium Equity Holding LLC (“Folium”) and Folium Merger Sub, LLC by which Folium would become a wholly owned subsidiary of AUSA, and AUSA would be rebranded as and carry on the business of Folium. AUSA recently discovered new relevant information with regard to Folium and, on that basis, AUSA has decided to not proceed with the merger.

AUSA continues to lean heavily on corporate governance and our vision to navigate through an incredibly unpredictable market over the past 12 months. With over $38.2 million in cash, liquid assets, and other assets that can easily be converted into cash within a short amount of time and $5.2 million annual burn excluding charges from capital projects and one-time occurrence, AUSA has a very strong financial position.

Scott Dowty, CEO of AUSA

With 18 months of operating experience behind us, we are excited about the future and eager to execute on our strategy starting with our corporate update on February 26, 2020.

A trading halt on AUSA stock was issued in accordance with the policies of the Canadian Stock Exchange (“CSE”) at the time of the announcement of the proposed merger agreement. As the transaction will not proceed, trading is expected to resume on the CSE and OTC shortly.

AUSA is hosting a corporate update call at 1:00 PM EST on Wednesday, February 26, 2020. The conference call may be accessed by dialing 1.888.396.8094 (Toll-Free North America) or 1.416.764.8649 (Canada).

About Australis Capital Inc.

AUSA operates and builds transformative, differentiated cannabis companies predominantly in the United States, a highly-regulated, fragmented, and rapidly expanding industry. AUSA adheres to stringent evaluation and operating criteria focusing on high-quality opportunities while maintaining a steadfast commitment to governance and community. AUSA’s Board and management team have material experience with, and knowledge of, the cannabis space in the U.S., extensive backgrounds in highly-regulated industries and regulatory compliance. AUSA operating and portfolio assets include Rthm Technologies Inc., Body and Mind Inc., Quality Green Inc., Mr. Natural Inc., Green Therapeutics, LLC., and Cocoon Technology LLC.

The Company’s Common shares trade on the CSE under the symbol “AUSA” and on the OTCQX under the symbol “AUSAF”.

For further information about AUSA, please visit the website at ausa-corp.com or contact the Company by e-mail at ir@ausa-corp.com.

Original press release

Iowa board rejects two medical marijuana conditions

February 17, 2020
 
In a setback for Iowas small and limited medical cannabis program, state regulators rejected recommendations to add two more qualifying conditions for those who could be treated with MMJ

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