IIPR closes $30 million deal with 4Front Ventures (IIPR, FFNTF)

IIPR has entered into two sale-leaseback transaction agreements with 4Front Ventures totaling $30 million. The transaction agreements cover cultivation and production facilities in Tumwater, WA, and Georgetown, MA. The all-cash sale price of $30 million will be used by 4Front to pay down the outstanding senior secured debt obligation to affiliates of Gotham Green Partners and for other general corporate purposes. The transaction is subject to various closing conditions, including standard property/title inspections and appraisals, and is scheduled to close in early December.

"Entering this sale-leaseback transaction marks a significant milestone in our stated strategy to further strengthen our balance sheet, providing us greater flexibility to fund our growth initiatives.  The successful closing of this transaction positions us well as we enter 2021, with our laser focus on profitable growth within our core markets of Massachusetts, Illinois, California, Washington, and Michigan," said Leo Gontmakher, CEO of 4Front.

Under the terms of the transaction, 4Front will occupy the Tumwater, WA, and Georgetown, MA facilities according to 20-year lease agreements, with two 5-year extensions exercisable at 4Front's discretion.

IIPR is a Hedgeye Cannabis Best Idea Long. Last month, we presented our long thesis on IIPR. It stands in a unique position at the intersection of the cannabis industry and the REIT space in a rapidly changing legislative landscape, earning outsized returns in the current environment with few competitors. We cover the stock's misunderstood risks and share our current views on the U.S. cannabis industry's investment themes.

CLICK HERE for the replay (includes video and materials link).

Aurora exhausts ATM program, files to raise more money, with 6 months to live (ACB)

Aurora Cannabis filed a base shelf prospectus yesterday, enabling it to raise US$500 million in securities over the next 25 months.  Given the company is desperate for cash, it left the door open to any all takers.  The company has exhausted its current ATM program, drawing down approximately US$183 million in the last 30 days. Aurora currently has available cash resources of approximately $272 million, in addition to an undrawn revolver capacity of approximately $11 million. 

The beleaguered company has recently reported a string of bad news, with key strategic advisor Nelson Peltz departing the company, reporting a C $ 1.8 billion loss last fiscal quarter, and fighting off a class action lawsuit. 

Without a cash, infusion ACB could be the first major Canadian LP to go under.  Our Hedgeye cash tracker gives ACB about 6 months of cash left.   

Marijuana legalization outspends opposition 36:1 in 2020 (HRVSF, SMG)

According to Marijuana Business Daily, financial support for legalization measures in AZ, MS, MT, NJ, and SD has raised $19.6 million so far versus just $546,000 raised by organizations in opposition. Financial support so far in 2020 is outstripping opposition by 36:1, compared to 2016, when that ratio was just at 4:1.  In AZ, legalization supporters have outraised opponents 11:1; Harvest Health (HRVSF) is the largest backer there, with $1.42 million in funding given. NJ has received $800,000 in backing from Scotts Miracle-Gro (SMG).