What a day; to sum up:
- TRSSF to buy GAEGF
- HRVSF sells FL license to PLNHF
- GTBIF has max capacity in MA
- Ayr Wellness Enters Agreement to Acquire PA Natural Medicine
- INCR now trades on the Nasdaq
Fundamentals, M&A cannabis has it all, except nobody cares. What is it going to take to get the sector out of the doldrums? Like it or not the fate/future of this industry lies in Washington!
GTI Expands in MA
GTBIF is a LONG
GreenStar Herbals owns and operates two adult-use retail locations in Massachusetts. The commercial terms were not revealed. The acquisition includes two open and operating adult-use retail locations; a license for one additional retail location set to open in 2021. Green Thumb (GTBIF) Founder and CEO Ben Kovler: “With this acquisition, we have the maximum number of retail locations in the state, which directly supports the increased production capacity from our acquisition of Liberty Compassion in June. We are excited to work together with the GreenStar team to serve the massive demand for cannabis throughout the Commonwealth.” With this addition, Green Thumb increases its national presence to 64 open retail locations, with licenses for 114 retail locations.
Terrascend/Gage
TRSSF is a LONG
Yesterday TRSSF announced an exciting acquisition. Gage Growth is Michigan's largest operator with 12 dispensary locations and 2 cultivation facilities in the state. Terrascend has agreed to acquire the entire company for a total consideration of $545 Million. In addition, each Gage Growth shareholder will receive .3 shares of Terrascend, representing an 18% premium on closing prices of both companies on August 31st. Based on consensus estimates, the deal value implies a 2021 sales multiple of 3.44 and a 2022 sales multiple of 1.44. We don't officially follow Gage but the valuation looks low. There is a unique element in the PR stating that TRSSF has to separately buy out Gage's license holders that are not owned by the company, not owned by common shareholders. Gage Growth had 2020 sales of $49 Million and an EBITDA loss of $16.7 Million. Upon completing the transaction, Terrascend will have operations in 5 states and Canada with 7 cultivation facilities and 23 operating dispensaries. "The acquisition of Gage expands our footprint to the third-largest cannabis market in the U.S.," said Jason Wild, Executive Chairman of TerrAscend. "Combining our market-leading share in our existing states with Gage's proven cultivation, retail, and marketing capabilities, creates one of the largest and most dynamic companies in the industry. We look forward to leveraging Gage's profound connection with Michigan's consumers, in addition to its established partnerships with award-winning brands like COOKIES, to provide our patients and customers with best-in-class product offerings and retail experiences." Cookies is one of the most prolific and well-respected cannabis lifestyle brands in the United States and TRSSF is not the exclusive partner for cookies in Michigan and New Jersey.
Planet 13 Acquires Harvest's FL Assets
Bullish for CNTMF which is a LONG
Planet 13 Holdings announces its entry into the booming Florida market by acquiring Harvest Health's Florida license to operate as a Medical Marijuana Treatment Center. Planet 13 will pay $55 Million in cash for the license. Planet 13 will not receive any dispensary locations or cultivation; they will only receive a license to operate in the state. This planned divestiture was agreed upon when the Trulieve acquisition of Harvest was announced. When the deal closes, the 11 dispensary locations and one cultivation location will operate under Trulieve's Florida medical marijuana license. As of last week, there are 22 companies with licenses to operate in Florida. These companies have 371 total dispensary locations in the state. This deal emphasizes how valuable the ability to operate in Florida is. The deal will close when the Harvest/Trulieve deal closes. RWBYF entered into a definitive Stock Purchase Agreement on February 21, 2021, as amended on April 27, 2021, to acquire Acreage Florida and Florida Real Estate for a purchase price of US $60,000,000 in cash, stock, and other considerations. The sale includes property in Sanderson, Florida that includes over 15 acres of land, and approximately 114,000 SF facilities for cultivation, and a 4,000 SF freestanding administrative office building.
Both deals highlight the value proposition of CNTMF, which trades at a market value of $188 million, dramatically below the company's intrinsic value.
DEA Growing More Weed
The DEA is planning to grow more weed for scientists. The agency is proposing “significant increases” in research marijuana production, according to a Federal Register notice slated to publish Thursday. The changes are related to “increased interest by DEA registrants” for using the substance for research and clinical trials. The details: The DEA is seeking to boost the 2021 production quota of marijuana from 1,500,000 grams to 2,000,000 grams, and increasing marijuana extract production from 200,000 to 500,000 grams.
“DEA firmly believes in supporting regulated research of schedule I controlled substances,” the filing reads. The production increases “reflect the need to fulfill research and development requirements in the production of new drug products, and the study of marijuana effects in particular, as necessary steps toward potential Food and Drug Administration approval of new drug products.” The context: Researchers interested in studying marijuana have long struggled with bureaucratic red tape around Schedule I substances — the most restrictive category of federal drug laws. Some have criticized the federal research marijuana supply as subpar compared to marijuana available on state regulated markets. What’s next: The proposed increases will be open to public comment until Oct. 4.
