Yesterday, Best Idea LONG TCNNF filed and S1. TCNNF joins GTBIF and CURLF as some of the fist companies to to register with the SEC in preparation for listing in the USA, upon Legalization.
Clever Leaves expands in the Brazilian market (CLVR)
CLVR Is on the Hedgeye LONG Bias list.
Clever Leaves, a leading multi-national operator and a licensed producer of pharmaceutical-grade cannabinoids, announced that it has entered into a three-year “take or pay” partnership agreement with Entourage Phytolab, a rapidly growing pharmaceutical cannabis research and development company in Brazil. Clever Leaves will be paid approximately US $11.4 million over the term of the agreement to supply certain finished products for distribution through the pharmaceutical and the compassionate care markets in Brazil. In a second agreement, Clever Leaves will also provide active pharmaceutical ingredients (APIs) for Entourage's proprietary formulations. Supply of the finished products will begin in January 2021, with the APIs also target Q1 of 2021.
According to New Frontier Data, Brazil represents the largest addressable market in Latin America, with a population of 210 million and a rapidly growing patient network for medical cannabis. Their expansion in the nascent Brazilian medical marijuana market with Entourage Phytolab is indicative of their B2B potential. Beyond the LatAm market, Clever Leaves is on track towards becoming a formidable competitor to Canadian LPs in the European market. The company has one of the most extensive cultivation and extraction operations in Latin America and is among the world's largest, including Canada's licensed producers and top extractors. The company has the advantage of low-cost operations due to favorable climate conditions and cheaper labor than its Canadian peers. The average cost per gram by Clever Leaves' Colombian operation is USD 0.20 – Canadian operators run upwards of USD 1.71 (average of APHA, ACB, OGI, and TLRY).
We are bullish on Clever Leaves and believe in the company's opportunity: the company is early stage, the global cannabis opportunity is significant, and Clever Leaves appears to be positioned for material revenue growth coupled with a very desirable cost structure in 2021 and beyond.
Last month, we held a Fireside Chat with CEO Kyle Detwiler.
|
CLICK HERE for a video replay. |
Ayr Strategies to raise C$137M in overnight marketed offering (AYRWF)
AYRWF is a Hedgeye Cannabis Best Idea LONG.
Ayr Strategies has priced its previously announced overnight marketed offering and is seeking to raise C$137 million or US$107.8 million through an issuance of four million subordinate voting shares. The offering is expected to close on or about January 14, 2021. The company intends to use the net proceeds of the offering for working capital and general corporate purposes.
In the past weeks, other MSOs like Curaleaf, Jushi Holdings, Columbia Care, TerrAscend, and Planet 13 have announced similar capital raises in light of the brightening outlook for the U.S. cannabis industry with the November elections and Democrats winning control of the Senate. Speaking on the financing, CEO Jonathan Sandelman of Ayr Strategies commented, “This is an unprecedented time in the evolution of the cannabis industry… While our current plans are already fully funded, this offering will give us flexibility around our current plans and will allow us to be opportunistic in the fast-moving environment we expect going forward.”
Last week, we hosted a Fireside Chat with CEO Jonathan Sandelman, where we discussed the company’s background, its recent acquisitions, and Sandelman’s investment philosophy, amongst other things.
|
CLICK HERE for a video replay. |
The Green Wave’s momentum continues as states ramp legalization efforts.
- NY Gov. Andrew Cuomo (D) reiterated his push for legalization in a State of the State address earlier this week, saying, “We will legalize adult-use recreational cannabis, joining 15 other states who’ve already done so. This will raise revenue and will end the over-criminalization of this product that has left so many communities of color over-policed and over-incarcerated.” Cuomo’s initial legalization proposal calls for the establish of a new Office of Cannabis Management, a regulatory body to oversee the state’s cannabis and hemp industries.
- NJ Gov. Phil Murphy (D) gave positive statements on developing legislation to open a recreational market in a State of the State address yesterday, saying, “We are on the verge of passing an innovative and groundbreaking set of laws to reform our historically unjust approach to marijuana and cannabis.” Rolling out legislation has been delayed as Murphy’s administration and state lawmakers have butted heads on underage usage provisions.
- Activists in North Dakota have submitted a measure to allow adults 21 and over to possess and cultivate cannabis for personal use to the Secretary of State Al Jaeger. If accepted, the campaign would be allowed to start gathering signatures to qualify for the 2022 ballot.
