Subversive Capital Acquisition Corp. makes history in largest cannabis SPAC deal (SBVCF)
We are adding SBVCF to the Hedgeye Cannabis LONG BIAS list.
Subversive Capital Acquisition Corp. (NEO: SVC.A.U, SVC.WT.U; OTCQX: SBVCF) ("SCAC"), a special purpose acquisition company, announced it has entered into definitive transaction agreements with CMG Partners Inc. (Caliva), a California cannabis brand and leading direct-to-consumer platform, and Left Coast Ventures, predominant cannabis and hemp company with low-cost manufacturing and a diversified portfolio of brands, to form TPCO Holding Corp. (The Parent Company). TPCO has also signed billionaire business mogul and rapper Jay-Z as its Chief Visionary Officer and made an exclusive cannabis partnership with entertainment agency Roc Nation. As Chief Visionary Officer, Jay-Z is meant to guide brand strategy in coordination with Roc Nation’s roster of celebrity artists and athletes. The transaction is expected to close in 2021, and SCAC is the largest SPAC in both cannabis and Canadian history.
In acquiring Caliva and Left Coast Ventures, TPCO has created a vertically integrated single-state operator projected to reach $185 million in revenues in 2020. Bulk wholesale is expected to make up 53.5% of 2020 revenues, while branded wholesale is expected at 23.8% and retail/delivery at 22.8%. However, by 2022, the company projects a sales mix shift that elevates delivery to 40.9% share, with retail comprising 17.7% and combines wholesale at 41.4%. TPCO estimates revenues of $334 million for next year's revenues, an 81% YoY increase. The company currently sits on $575 million in cash-in trust and plans on consolidating the highly fragmented California market through M&A and expanding its omnichannel platform. In addition to heavily leveraging its celebrity attachment with Jay-Z to increase brand awareness and recognition, the company has made social equity a key part of their brand. Jay-Z is expected to lead its initiative to raise $10 million to invest in minority-owned and Black-owned cannabis companies. TPCO has slated at least 2% of its net annual income to support social equity initiatives.
Vireo Health files preliminary prospectus to issue up to C$260 million in securities (VREOF)
Vireo Health International announced that it had filed a preliminary base shelf prospectus with the securities regulators in each province of Canada, except for the Province of Quebec, to issue up to C$260 million ($200 million) in securities when market opportunities permit.
"Our balance sheet continues to strengthen, and we believe we have ample flexibility to continue executing our strategy pushing toward producing positive cash flow from operations," said Chairman and Chief Executive Officer Kyle Kingsley, M.D. "This prospectus ensures that we can take advantage of a favorable equity market if additional capital is deemed necessary in the future."
Vireo is licensed to grow and/or process cannabis in seven markets. The company is operational in six of those markets: Arizona, Maryland, Minnesota, New Mexico, and New York, and holds 29 total retail dispensary licenses, of which 11 are currently open for business.
The company has primarily focused on medical use markets; however, it is eyeing expansion in states poised to go recreational, specifically New York. Earlier this month, Vireo announced that it had secured a purchase option that would enable the company to significantly expand its cultivation and processing operations adjacent to the Vireo Bluebird Facility in Fulton County, NY. The option allows Vireo the flexibility to add up to an additional 96 acres of land adjacent to its existing facilities for a total purchase price of approximately US $1.3 million.
Maine cannabis retailers sell $1.4 million in the first month of legal sales.
Preliminary sales data from regulators at the state’s Office of Marijuana Policy indicate Maine’s marijuana retailers grossed approximately $1.4 million and made 21,194 transactions during the first month of retail sales. The data extracted from the state’s inventory tracking system, Metrc, shows that smokable marijuana made up 76 percent of sales. In comparison, concentrates and infused products accounted for 14 percent and 10 percent, respectively.
Maine’s adult-use market launched on October 9 and saw sales from six active licensees that month. An additional three adult-use retailers opened their doors during the first week of November. The reporting period covers sales made from Maine’s retail sales launch date of October 9 through the end of the day on November 8, a total of 31 days.
The state of 1.34 million, which was the 10th state to launch recreational sales, currently has eleven adult-use dispensaries with active licenses. Maine's first-month results were hampered due to limits on in-store purchasing, high product pricing, and supply shortages. The latter problem led most licensed stores to close during the week and open just for the weekend sales. According to the Portland Press Herald, Maine’s medical marijuana program sold on average $9.4 million in medical marijuana during a typical 3-day month in 2019, suggesting annualized revenues of $112.8 million. Adult-use sales have greater potential in Maine than these initial, lackluster sales numbers suggest; however, the market needs to resolve its supply issue first.
