Michigan legal sales slow (CURLF, FFNTF)
November’s total legal sales were $91.9 million, putting YTD sales at $883.5 million and suggesting annualized revenues of $1.1 billion. Since peaking in July at $109.6 million, legal sales have slowed in the state, with November sales declining -10.7% sequentially. While sales may not clear $1 billion in Michigan’s first full year of recreational sales, it’s almost guaranteed to do so come 2021 – last month, Michigan’s largest city, Detroit, passed an amended ordinance to allow adult-use sales within the city.
Michigan’s Marijuana Regulatory Agency (MRA) estimates that legal sales could reach $3 billion with 4 million consumers within 3 years. Andrew Brisbo, director at the state agency, recently commented, “We have estimates in our economic analysis that are more based on population and surveys from anticipated consumers and models from more mature states like Colorado. The number of potential and likely adult-use consumers in Michigan is ... close to the four million marks." Hitting that 4 million marks would suggest over 57% of Michigan’s population over 21 as part of the legal market.
GrowGen makes the fifth acquisition of Q4 2020 (GRWG)
GrowGen announced it had acquired Southern California-based Canopy Crop Management and its complete portfolio of products, including the Power SI brand of silicic acid-enriched fertilizers. Established in 2019, Canopy Crop Management is recognized as the industry's leading silicic acid company. Power SI will continue to be sold through Canopy Crop Management to all hydroponic retail stores, including Grow Generation's 39 locations. This follows its acquisition of Grassroots Hydroponics, a three-store chain of hydroponic garden centers in Southern California, in mid-December.
GrowGen CEO and Co-Founder Michael Salaman commented: “Private label expansion has become a strategic priority for GrowGen, and a key component of our long-term revenue generation plan. "We are proud to bring Canopy Crop Management and its founder Rex Gill under our umbrella. Rex brings his unique technologies and proprietary products to GrowGen and will be instrumental in leading private label product development within the nutrient and additive space.”
The company has been on an acquisition spree in Q4 – Canopy Crop Management marks its fifth purchase in the quarter and its eighth this year. In November, GrowGen announced the signing of an asset purchase agreement to acquire The GrowBiz, the nation’s third-largest chain of hydroponic garden centers, with five stores across California and Oregon. The addition of The GrowBiz is expected to generate annual revenues approaching $50 million. On October 12th, GrowGen announced its acquisition of Hydroponics Depot, Phoenix's largest indoor and outdoor garden center. At the time of the acquisition, the Arizona storefront had year-to-date sales above $5 million and year-over-year growth of 50%. A little over a week later, the company announced its acquisition of Big Green Tomato ("BGT"), a two-store chain in Battle Creek and Taylor, Michigan. BGT has two well-established locations with strong commercial operations and annual revenues approaching $16 million.
The company recently completed a $172.5 million raise to fuel continued growth in the post-election cannabis landscape. As legalization momentum continues to gain across the country, GrowGen, as an ancillary, non-plant touching company, has the opportunity to consolidate a highly fragmented industry poised to grow with the green wave.
Georgia Senate candidate Jon Ossoff emphasizes marijuana legalization for the youth vote.
In a pitch to youth voters on TikTok, Democratic Senate candidate Jon Ossoff highlighted the impact of the Georgia Senate runoff election on marijuana legalization. In the video, he spells out his name while referencing parts of his progressive agenda to confirm the spelling. When he gets to ‘O’ in his first name, he says, “‘O’ as in over 1.5 million Georgians have voted early in the runoff for U.S. Senate and if you want to relieve student loan debt, save the environment, legalize marijuana and increase the minimum wage to $15 you better vote now.” The video has since been viewed over 13.8 million times on TikTok alone.
Georgia’s Senate runoff elections on January 5th are critical for any chances of meaningful cannabis legislative reform on the federal level happening in the near-term. Two Republican senators, Kelly Loeffler and David Perdue are up against two Democratic challengers, Raphael Warnock and Jon Ossoff, respectively. The outcome of these races will dictate the controlling party within the Senate. Mitch McConnel and most Republican senators are opposed to legalization – any measures passed by the Democratic-controlled House, like the MORE Act, are likely DOA in the current Senate. While Democrats winning in Georgia would not guarantee the MORE Act’s passage, it would certainly allow for serious negotiations to take place. A Democratic win for both seats would give the party control over the Senate, with Vice President-elect Kamala Harris as the tiebreaker.
Warnock and Ossoff are both in favor of cannabis and drug policy reform.
