Cannabis Event
We are hosting a call with Steven Kemmerling on 12/22/21 @ 2 PM
Cannabis has moved to a Tier 1 policy issue in DC, and D's, R's, and independents want reform. This powerful combination has never been seen in a prohibition era, but will that mean we will see some form of Cannabis legalization happen before the Mid-terms or a 2023 event? Will it happen under the current administration?
On the call, Steve discussed the challenges financial institutions face in managing risk and the opportunities for institutions looking to invest in the cannabis industry.
Key topics to be discussed:
- Why SAFE failed and what is the likely next move?
- How can financial institutions create cannabis policies and procedures to reflect today's market and regulatory realities more effectively without leaving undue risk or opportunity to change?
- Why are JP Morgan and other Large Financial institutions increasing enforcement around Cannabis now?
- Is this a move because the big banks know Legalizations is coming?
- Expectations for incremental legalization in 2022?
CANNABIS/CONSUMABLES PRO SUBSCRIBERS CLICK HERE FOR EVENT DETAILS (INCLUDES VIDEO AND MATERIALS LINK)
California Consolidation
Earlier this year $HBORF acquired sublime and several other assets.
Yesterday $GLASF announced it was acquiring Plus Products in CA. Glass House is building the largest cannabis brand-building platform in California and yesterday moved closer to that goal. According to BDS Analytics data, the Company's house cannabis brand, Glass House Farms, was the No. 1 ranked flower brand by sales in California in Q3 2021. Yesterday Glass House Brands (GLASF) announced the intention to acquire the business of Plus Products for $25.6M through a combination of unsecured convertible debt and equity, plus additional performance-based consideration. PLUS is a cannabis and hemp food company in California focused on using nature to balance consumers' lives. The acquisition is expected to close in Q1 2022. "As one of the fastest-growing categories in cannabis, edibles are a key component of the Glass House growth strategy," said Kyle Kazan, CEO. "Plus has built a very strong brand in the gummy segment, and in the very competitive California and Nevada markets, no less. Plus,' a diverse and well-recognized line of edibles, including dual-action sleep and strain-specific products, is the ideal complement to our portfolio," Kazan said. "Our vertically integrated platform will allow us to expand the distribution of Plus to the more than 700 stores in our network, as well as to our retail stores, as we pursue top sales ranking in both flower and edibles categories in the country's largest market."
According to BDS Analytics data, Plus is a leading edibles brand in California with the No. 4 ranked edibles brand by sales in Q3 2021, adding nicely to the Company's flower market share. Based on top-of-mind brand awareness, Plus is the No. 1 ranked brand in California in the gummy segment, the largest segment of the edibles category. According to BDS Analytics, the combined Company would be the only Company with a top 5 position in both the Flower and Edibles categories in California. "We think there is a long runway for Plus on the Glass House platform. Based on Headset's November data, Plus outsells Wana in California, the nation's largest cannabis market, by a multiple of nearly 10x," Kazan said of the combined brands' sales potential versus that of its competitors. As a side note Plus has a wide path to gain scale at the national level with brands like Wana, which was acquired by Canopy Growth in October for $300 million.
Planet 13 M&A
Planet 13 is buying Next Green Wave for 0.1081 of a common share of Planet 13 (Exchange Ratio) subject to calculations described below, and $0.0001 in cash for each NGW Share held. The Company cites the transaction rationale:
- The transaction is expected to be immediately accretive to 2021 and 2022 EBITDA.
- NGW's operations will serve as the backbone of Planet 13's continued focus on the California market. NGW will enable Planet 13 to introduce its diverse brand portfolio of exotic, pheno-hunted cultivars to the Santa Ana SuperStore and across the state.
- NGW Shareholders will participate fully in the upside of Planet 13's upcoming expansions into Illinois and Florida.
- Planet 13 to retain NGW's management team, deepening the pro forma company's knowledge base and expertise across the California market.
- Planet 13 to benefit from NGW's highly respected cultivation techniques and pheno-hunted cultivars, greatly expanding the pro forma company's cultivation capabilities, product offerings, consistency, and proficiency.
- The combined experience and expertise of the Planet 13 and NGW operational teams will drive further improvements across the pro forma company's footprint.
Management Commentary
"Today's announcement is an extension of the strategy we've laid out for investors of adding cultivation and production in California to vertically integrate and bring our highly popular brands into the state. We are methodically expanding our footprint to drive topline growth and improved profitability," said Bob Groesbeck, Co-CEO and Co-founder of Planet 13. "We've been incredibly impressed by the Next Green Wave team and their ability to generate revenue and Adjusted EBITDA based on the quality of their cultivation and manufacturing in this very competitive market."
"This is an exciting day for Next Green Wave shareholders. Planet 13 has proven its ability to run incredibly productive retail locations and create manufactured products that command a significant share of sales in their home state of Nevada," said Mike Jennings, CEO of Next Green Wave. "They are a perfect fit for Next Green Wave, and being a part of their attractive growth profile and expansion in Illinois and Florida is the correct next step for NGW."
