TILRAY / MEDMEN
Tilray announced Tuesday that it had purchased “convertible notes” part of MedMen’s debt that Gotham Green Partners purchased after declaring bankruptcy. If those notes are converted, they would equal about 21% of MedMen’s equity. Medmen is a barely functioning MSO in need of capital; something TLRY is short of. Tilry was desperate for a narrative to have a path to the US and this was the best they can do. We can only speculate that it's obvious to the CEO of TLRY that it was unlikely that they could convince a premier US MSO to take their stock at these valuations. For that 21% stake, they're paying $120M before dilution, Implying MMEN equity $560M and an EV $720M or 5.5x sales and negative EBITDA. Tilray cannot convert that debt until cannabis is federally legal in the U.S., as Tilray is publicly traded on the New York Stock Exchange.
Tilt Old Pal
On June 17th, Tilt Holdings agreed to be the exclusive manufacturer and distributor of select products by Old Pal, an LA-based lifestyle cannabis company. Old Pal is one of the most recognizable and top-selling brands in the cannabis lifestyle space, focused on providing value to consumers through quality product consistency. Tilt announced yesterday that they would be signing a second agreement with Old Pal to expand into Pennsylvania. Tilt's subsidiary, Standard Farms, will bring Old Pal into Tilt's full-service manufacturing, packaging and distribution channels in the state. In the prior agreement, Old Pal was only to be sold in Tilt's home state of Massachusetts. With the new agreement, Standard Farms will be launching Whole Flower and 510 Oil Cartridges provided by Jupiter Research, another Tilt subsidiary. Additionally, Old Pal’s first-ever edible, The Classic Pot Brownie, is anticipated to debut this fall. "We are incredibly proud to build on our existing relationship with Old Pal and have the opportunity to introduce them to the Pennsylvania market,” said TILT CEO Gary Santo. “Old Pal’s commitment to expanding our partnership to additional markets reaffirms that our dedication to delivering high quality products and sound cannabis supply chain logistics are making a real impact. We are confident that this addition to our growing portfolio of quality brand partners will support our long-term growth goals.”
Cresco MD Acquisition
CRLBF is a USA Long.
Cresco Labs announced a definitive agreement to acquire the Blair Wellness Center in Maryland. The deal is expected to close in Q4 21'. The facility is 6,500 sq. Ft. and is located minutes from downtown Baltimore. Although Cresco did not announce the actual price paid, they did mention it implied a 1.8x 2021 revenue multiple. Blair Wellness Center had revenues consistently higher than double the state's average dispensary. Cresco plans on improving these revenues using their Sunnyside dispensary operating model. Cresco's strategic entry into the Maryland market is somewhat expecting adult-use legislation to pass some time in 2022. Other than one manufacturer license, Cresco had no footprint in Maryland before the deal. Cresco will now have access to 10 different cannabis markets in the US with many of them to have future adult-use sales.
US Marijuana Usage At High
In 1971, just 4% of US adults admitted to having tried marijuana. This number in 2021 has shot up to an astounding 49% up from 45% in 2017. Thus, almost half of adults in the US have tried marijuana. Still, though, only 12% of Americans admit to consistently consuming marijuana. As one may expect, younger Americans are more likely to use than older Americans. Another astounding statistic is that nearly the same number of Americans admit to smoking as using marijuana. These statistics just show how open Americans have become to the possibility of legalization. Now, it is up to government officials to act.
