Publicly Traded Companies Dominate the New York Medical Cannabis Market – New Cannabis Ventures

January 21, 2020

New Yorks medical cannabis program has developed substantially over the past several years and is now dominated by publicly traded companies. While it appeared that 2019 would be the year that the Big Apple would become the 12th state to legalize the recreational use of cannabis, the Marijuana Regulation and Taxation Act failed in the waning days of the legislative session. Despite this setback, many remain confident legalization of cannabis for recreational use is in the cards for New York. In this review, we take a look at the history of the medical cannabis program, the existing marketplace and the potential for future growth.

History and Program Rules

On September 11, 2014, New York Gov. Andrew Cuomo signed into law the Compassionate Care Act. It allowed doctors to prescribe marijuana in a non-smokable form to patients with serious ailments that are included on a predefined list of 14 conditions ranging from HIV/AIDS to Parkinsons disease and which must be accompanied by a complicating condition such as chronic pain, seizures or wasting syndrome. A complete list is available here.

Pursuant to the Compassionate Care Act, there is a $50 application fee. However, the Department of Health is currently waiving the $50 fee for all patients and their designated caregivers.

The Medical Marijuana Program, which operates under the states Department of Health, oversees the certification, purchase and dispensing of medical marijuana. The program also handles the certification of practitioners and dispensaries.

A patient would have to be certified by a practitioner to obtain medical marijuana and that practitioner would be a physician, trained by and registered with the Department of Health, licensed by the state, and qualified to treat the serious condition for which the patient is seeking treatment.

The excise tax on medical marijuana in New York is a seven percent tax on the gross receipts from medical marijuana sold or furnished by a registered organization. The sale of medical marijuana, as well as the sale of related products to administer medical marijuana, are exempt from sales tax.

Since its initial enactment, however, a number of improvements have been made to that law including:

  • The authorization of nurse practitioners and physician assistants to certify patients for medical marijuana, thus expanding the scope of who can prescribe.
  • Increasing the number of organizations registered to manufacture and dispense medical marijuana.
  • Expanding the list of qualifying conditions to include chronic pain, post-traumatic stress disorder and any condition for which an opioid may be prescribed.
  • Allowing registered organizations to wholesale to other registered organizations.
  • Allowing registered organizations to deliver medical marijuana products to the homes of patients or their caregivers.

As a result of this expansion, the number of certified patients skyrocketed by a whopping 1,124 percent to more than 112K, while the number of registered medical practitioners increased from 611 in 2016 to 2,638 as of January 2020.

Existing Market

The U.S. Census Bureau estimates that New York states population in 2017 was 19.85 million, of which 14.9 million (74.9 percent) are 21 or older. Using NYS-specific data on marijuana use as reported in the 2016 National Survey on Drug Use and Health, the New York State Department of Health estimated 8.5 percent, or approximately 1.27 million residents, currently use marijuana in one form or another.

The most common conditions among medical marijuana patients are: chronic pain (53.16%), neuropathies (14.59%), and cancer (12.8), according to New York Department of Health data. Patients between the age of 51 and 60 make up the greatest percentage of certifications (23.06%), followed by those between the ages of 61 and 70 (19.21%).

There currently are ten vertically integrated registered organizations in New York state, each with the ability to operate up to four dispensaries. At this time, 37 of the possible 40 dispensaries are open.

Ten Registered Organizations with Dispensaries by Address

The first five companies obtained their licenses in In July 2015. These original five were all private at the time, but three have commenced trading publicly subsequently:

In July 2017, five more providers were licensed. All of the second group of license holders trade publicly at this time, though they were private at the time they received the licenses:

  • New York Canna, DBA The Botanist, which was acquired by Acreage Holdings (CSE: ACRG) (OTC: ACRGF)
  • Fiorello Pharmaceuticals, which was acquired in August 2019 by Green Thumb Industries (CSE: GTII) (OTC: GTBIF)
  • Valley Agriceuticals, whose parent company Gloucester Street Capital LLC, merged with Cresco Labs (CSE: CL) (OTC: CRLBF) in October 2019;
  • Citiva Medical, which was purchased in February 2018 by publicly traded iAnthus Capital Holdings (CSE: IAN) (OTC: ITHUF)
  • PalliaTech NY, which in August 2018 changed its name to Curaleaf (CSE: CURA) (OTC: CURLF) before going public

These organizations can grow, manufacture, distribute and dispense medical marijuana to patients who have an approved medical condition.

Vireo Health Vaporization Cartridges

Increasing demand is expected to favor the entry of new players into the market.

Form factors include: vape cartridge/pen, capsule, tablets, oil, oral spray, oral powder. Smoking medical marijuana is not allowed, though pods for vaporization are permitted. Edibles also are prohibited. Patients need to contact each registered organization to learn which products are available. Pricing varies among registered organizations.

Curaleaf Pods for Vaporization

Legalization for Adult-Use

On July 13, 2018, the New York State Department of Health released its report on the assessment of the potential impact of regulated marijuana. It concluded that the positive effects of a regulated marijuana market in New York outweighed the potential negative impacts, thus giving rise to expectations that the market would greatly expand.

Based on population usage, and the assumption that marijuana sells on the illegal market at $270 to $340 an ounce, the New York Department of Health estimated potential total tax revenue in the first year with a price of $297 and illegal market consumption of 6.5 million ounces ranges from $248.1 million (with a 7% tax rate) to $340.6 million (with a 15% tax rate). The estimated potential total tax revenue, with a price of $374 and illegal market consumption of 10.2 million ounces, ranges from $493.7 million (with a 7% tax rate) to $677.7 million (with a 15% tax rate).

In 2019, New York decriminalized the possession of amounts up to 2 ounces, making it a violation instead of a crime. Fines range from $50 for amounts of less than one ounce, to $100 for quantities between one and two ounces.

In his 2020 State of the State address, Gov. Cuomo reiterated his commitment to legalization for adult-use. He has promised to introduce legislation once again this year and has proposed the creation of a new state agency to oversee recreational and medical marijuana, as well as hemp. His proposal also would limit recreational sales to those over 21 to possess up to one ounce of marijuana and up to five grams of concentrated cannabis.

New Yorks medical marijuana regime does not allow certified patients to cultivate or grow cannabis. Under the proposed adult-use regulations, consumers also would not be permitted to cultivate cannabis for personal use.

The legislation would also promote social equity in the cannabis industry through various programs. Cuomo said he hopes to work with Connecticut, New Jersey and Pennsylvania to coordinate policy reform efforts. He also has called for the State University of New York to create a cannabis and hemp research center.

Conclusion

While the medical cannabis program was slow to start in New York, several changes have helped it grow substantially. The market is served by a limited number of vertically integrated providers, with eight of the 10 licenses held by publicly traded companies. Looking ahead, New York state could become one of the largest state markets for adult-use should the state move forward with legalization.

TILT Open Letter to Shareholders – New Cannabis Ventures

January 21, 2020

CAMBRIDGE, Mass., Jan. 21, 2020 (GLOBE NEWSWIRE) — TILT Holdings Inc. (TILT or the Company) (CSE: TILT) (OTCQB: TLLTF), a foundational technology cannabis platform comprised of assets to support brands worldwide, released the following letter today from the Companys interim Chief Executive Officer Mark Scatterday.

Dear Shareholders:

As we progress in 2020, we are moving forward with a reinvigorated sense of purpose and energy. Our vision is clear: TILT supports cannabis businesses across the globe through our portfolio of innovative technology companies. From software solutions to inhalation technology and more, TILT helps over 2,000 brands and retailers achieve success in this ever-changing industry. While 2019 was a challenging year for public companies in our industry, l am encouraged and reassured knowing that we have such a strong and supportive group of people working together with us and toward the same goals.

The new year is off to a great start, following on the heels of a productive fourth quarter. A few recent updates include:

  • The successful migration of Baker Technologies Inc. (Baker) clients into the Blackbird Logistics Corporation (Blackbird) platform quadruples existing clients across its software platform – right in time for the recent expansion of our product offering. This is an impressive feat, and with all these clients on a single software platform we have one of the largest footprints in the industry;
  • Jupiter Research, LLC (Jupiter) releasing several new proprietary devices that we debuted in Las Vegas last month. We also have several new exciting opportunities on the horizon.

In support of our technology and innovation businesses, our plant touching assets continue to generate revenue and free cash flow which will help fund the expansion of Jupiter and Blackbird:

  • In Massachusetts, we are working closely with our operations and construction team in Taunton to finalize our Certificate of Occupancy. With this additional capacity online (50,000 square feet), we expect to double our cultivation footprint and increase our packaging space. We are expecting to see a significant increase in revenue from this effort once complete. We have also been working closely with our affiliate partners and the Cannabis Control Commission (CCC) to revise legacy supply and services agreements that are not in line with our refined business focus or our approach to social justice and advocacy. This resulted in our friend Elev8 Cannabis receiving its provisional licenses in Massachusetts, and while additional obstacles remain, brings us one step toward our own recreational licenses in the State.
  • In Ohio, our production facility is operational we have purchased cannabis biomass from local providers and successfully produced cannabis products. We are finalizing our go-to-market strategy and expect revenue to follow shortly.

We will continue to innovate and lead the industry in supporting brands and retailers through our focus on technology and services. This continued progress shows the underlying and inherent value of TILT: a portfolio of complementary businesses driving growth across the global cannabis industry.

 

Sincerely,

Mark Scatterday
Interim Chief Executive Officer

About TILT

TILT Holdings serves cannabis brands worldwide through a strong network of portfolio companies committed to technological innovations that support long-term success. TILT services more than 2,000 brands and cannabis retailers across 33 states in the U.S., as well as in Canada, Israel, Mexico, South America and the European Union. As a market leader in cannabis technology and related products and services, the Companys core assets include wholly-owned subsidiaries Jupiter, a company that focuses on the vast potential of inhalation through innovative design, development and manufacturing; Blackbird, a company that provides operations and software solutions for wholesale and retail distribution; and Baker, a CRM platform helping dispensaries grow their business. The Company also owns cannabis operations in states including Massachusetts, led by Commonwealth Alternative Care, Inc.; and in Pennsylvania, led by Standard Farms, LLC. Headquartered in Cambridge, Massachusetts, with offices throughout the U.S., and London, TILT has over 400 employees and has sales in the U.S., Canada and Europe. For more information, visitwww.tiltholdings.com.

Original press release

Indiva Closes Final Tranche of Its Unsecured Convertible Debenture Offering – New Cannabis Ventures

January 20, 2020

LONDON, Ontario, Jan. 20, 2020 (GLOBE NEWSWIRE) — Indiva Limited (the Company or Indiva) (TSXV:NDVA) (OTCQX:NDVAF) is pleased to announce that further to its news release dated December 9, 2019, and December 23, 2019, it has closed the second and final tranche of its non-brokered private placement of unsecured convertible debentures (the Debentures) in the aggregate principal amount of $1,040,000 (the Final Tranche). This brings the total funds raised for this private placement to $3,155,000 (the Offering).

As previously announced in the Company’s December 9, 2019, news release, the Debentures will mature on the date that is 36 months from the date of issuance, bear interest at the rate of 10% per annum, computed on the basis of a 360-day year composed of twelve 30-day months, and payable semi-annually on the last day of June and December of each year, commencing on June 30, 2020. The Debentures will be issued at a price of $1,000 per Debenture with each Debenture being convertible, at the option of the holder, into 5,000 common shares in the capital of the Company (each, a Share) at a conversion price of $0.20 per Share, subject to adjustments. The Offering is subject to final approval from the TSX Venture Exchange.

The Company expects that the proceeds of the Offering will be used for capital expenditures, equipment purchases and working capital purposes.

The Company has paid a cash finder’s fee in connection with the Final Tranche to a finder in the aggregate amount of $3,500, which represents 7% of the gross proceeds received from the investor introduced to the Company by the finder. Insider participation in the Offering totalled $760,000.

MI 61-101 Disclosure

Three insiders of the Company participated in the Final Tranche and, as such, the issuance of the Debentures to such insiders is a related-party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (MI 61-101). However, the issuance is exempt from: (i) the valuation requirement of MI 61-101 by virtue of the exemption contained in Section 5.5(b), as the shares into which the Debentures are convertible are not listed on a market specified in MI 61-101, and (ii) from the minority shareholder approval requirement of MI 61-101 by virtue of the exemption contained in Section 5.7(1)(a) of MI 61-101, as the fair market value of the Debentures does not exceed 25% of the Companys market capitalization. A material change report was not filed by the Company 21 days before the closing of the Final Tranche as the level of insider participation was not known at that time and the Company moved to close the Final Tranche immediately upon satisfaction of all applicable closing conditions. In the view of the Company, this was reasonable in the circumstances because the Company wished to complete the Final Tranche as soon as possible.

The Offering will be conducted by the Company utilizing the “accredited investor” exemption of National Instrument 45-106 Prospectus and Registration Exemptions, and also other applicable exemptions available to the Company.

The Debentures issued in the Final Tranche, and the shares into which the Debentures issued in the Final Tranche may be converted (collectively, the Securities), are subject to restrictions on resale under applicable Canadian securities laws for a period of four months and one day from January 20, 2020, the issue date of the Debentures issued in the Final Tranche.

None of the Securities have been or will be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities, in any jurisdiction in which such offer, solicitation or sale would require registration or otherwise be unlawful.

ABOUT INDIVA

Indivas family of cannabis brands set the standard for quality and innovation. Indiva aims to bring its exceptional portfolio of products to Canadians and cannabis enthusiasts around the world as laws permit. Indivas production facility, based in London, Ontario, includes a craft grow operation and an extraction and manufacturing space, which can process 70 tonnes of biomass annually and produce safe, high-quality, cannabis-infused edibles. In Canada, Indiva will produce and distribute the award-winning Bhang Chocolate, Ruby Cannabis Sugar, Sapphire Cannabis Salt, Gems, and other derivative products through license agreements and joint ventures. Click here to connect with Indiva on social media and here to find more information on the Company and its products.

Original press release

The Importance of Cannabis Debt Scoring During the Capital Crunch – New Cannabis Ventures

January 20, 2020

Guest Post by Frank Colombo,Partner and Chief Risk Officer of Aspen Finance LLC

The cannabis debt wave is coming!

Despite solid efforts to reduce cash burn, cannabis companies will require significant amounts of financing in 2020 to complete their build-outs and strategic acquisitions but

The equity market is virtually closed to a large swath of cannabis companies. Even those with solid business positions and clear paths to profitability will find selling equity painful at the new price levels. Expect to see a marked increase in distressed asset sales from companies who probably could have sold equity in early 2019.

The cannabis crash of 2019 occurred because the growth and margin assumptions required to support earlier valuations were too extreme. Investor expectations regarding growth rates, time to cash positive, stabilized EBITDA margins, costs of capital, and the difficulty of eliminating the illegal market, have been adjusted, and cannabis equities are now more fairly priced. The market may recover a bit from here; however, barring a major catalyst like full federal legalization (which doesnt seem likely in the near term), those heady IPO/RTO prices are gone for good.

There is lots of room for debt in the cannabis capital structures. Debt, including equity-linked debt, like convertibles, accounts for only 12.9% of market capitalization for the top 25 U.S. public cannabis companies:

  • Most banks and financial institutions are unable to lend to cannabis companies, and this is unlikely to change in 2020. Private capital is increasingly stepping in to fill the void, driven by the extremely attractive returns.
  • Historically this nascent industry presented too high a risk for fixed rate investors. Accordingly
  • Most cannabis debt has been convertible with low conversion premiums – essentially representing delayed equity issuance. Many deals have paired convertible debt with detachable warrants for combined coverages of well over 100%. The stripped yields (yields with conversion features removed) on these converts are eye-popping and the few straight coupon deals have been equally attractive.

The credit quality of the industry is now at a tipping point. 18 out of 25 U.S. cannabis companies profiled are expected to be EBITDA positive in 2020 (versus 8/25 in 2019), supporting the inclusion of debt in their capital structures. Debt capacity (calculated at 3 times consensus estimates of 2020 EBITDA) is approximately $4 billion compared to outstanding debt of about $1.8 billion ($0.5 billion of which is MedMen alone!).

The trend towards straight debt issuance has begun with the recently announced $275 million 13% term loan from Curaleaf and the $73 million 15% senior secured notes from Harvest Health and Rec. But make no mistake – only the top tier of credits will be able to issue debt without warrants. Pricing for mid-tier credits will likely improve with lower warrant coverages and higher exercise premiums. Meanwhile, in the midst of this new debt issuance wave, 2020 will be the real kickoff for cannabis distressed debt trading, complicated by the unavailability of Chapter 11.

Dont look for any help from the rating agencies in your investment decision

Neither S&P nor Moodys has issued any credit rating in the cannabis market and neither seems to be in any rush to jump in. It will probably take a minimum of the SAFE Banking Act before the agencies get involved.

The accounting can be byzantine, trusted ratios may fail, and neither the companies nor most managements have much operating history.

Many U.S. investors, who are not familiar with IFRS accounting, will struggle with the dramatic and volatile impacts that IFRS mark-to-market adjustments can have on gross margins and inventory valuation. Tried-and-true credit ratios like EBITDA/Interest and Debt/EBITDA may be relatively meaningless when the companies have negative EBITDA and very little debt. In addition, few of these companies have more than 2 years of operating history.

Discerning relative credit quality through the smoke

A simple yet robust credit ranking model will be a prized tool for portfolio managers first dipping their toes in the cannabis debt market. I have developed an effective model that is customizable and incorporates data from financial statements and market pricing as well as optional user inputs on qualitative factors like management quality, regulatory environments, business sector risk, and competition.

The model produces the following ranking of the top 25 public U.S. cannabis companies utilizing Q3:2019 financials and 1/16/20 equity prices:


About the author:

Frank Colombo is Partner and Chief Risk Officer of Aspen Finance LLC, a fund established to lend to and invest in the cannabis industry. Frank is a seasoned executive with over 20 years of success in consulting, credit research, valuation, and financial planning and analysis. He was formerly Global Head of High Yield Research at UBS and Managing Director/Head of Research at Seaport Group LLC.

He holds a BA summa cum laude from University of Colorado, an MBA from Stanford University, and a CFA.

Frank is available for strategy, financial analysis and valuation consulting and can be reached by emailingfcolombocfa@gmail.com.

A Sudden Sharp Shift in Sentiment for Cannabis Stocks – New Cannabis Ventures

January 19, 2020

You’re reading a copy of this week’s edition of the free New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.

Sign up toreceive a copy in your inbox each Sunday morning.

Friends,

After a rough start to the year, cannabis stocks exploded higher this week, with the New Cannabis VenturesGlobal Cannabis Stock Indexrallying 16.3%. We checked the last fewyears, and this was the best performance since the week ending 1/5/18, when the market jumped 16.6%, and the week before, 12/29/17, when it soared 20.7% as the implementation of California legalization was about to begin.

Driving the index higher was the largest Canadian LPs, with the New Cannabis VenturesCanadian LP Tier 1 Indexsurging 22.5% during the week. These 9 stocks, along with Sundial and Tilray, represent 27% of the broader market index. The recent low nearly matched the prior multi-year low set in November, creating the potential of a “double-bottom” that would hopefully signal the end of the downturn that began in late March:

The rally in the beaten up large LPs and other names follows two years of sharply negative returns for the sector that followed two very strong years. We have been expecting the market to bottom, but the timing has been elusive. Tuesday began with disappointing results and a diminished outlook for Aphria that only marginally hurt its price while not really impacting the stocks of its peers. After the close on Tuesday, Organigram reported number that were much stronger than expected, though many analysts quickly pointed to a large portion of the revenue coming from an unexpected and potentially difficult to repeat source, wholesale. Nevertheless, the market took off. Capping off the week, Canopy Growth delayed the roll out of beverages, and the stock rallied despite this marginal setback.

The improved sentiment extended beyond the large Canadian LPs into the broader market, with volumes accelerating and many names moving substantially higher. While the capital crunch will persist and likely weigh on the market this year, it seems as though traders and investors may be realizing that the worst is probably behind for most companies. For example, the vaping crisis appears to have played out. We continue to point to improvements in the product set as well as distribution in Canada and what we expect to be very strong and profitable growth for some of the largest MSOs as positive factors in 2020. Additionally, we expect to see more states embrace adult-use and medical cannabis through the ballot box and, increasingly, legislative action, a theme that is already playing out in just the first few weeks of the year.


Genomic research from turn-key solutions provider, NRGene, the sponsor of today’s newsletter, shows that using genomics in cannabis & hemp breeding programs can accelerate time to market by 20%-40%.The company is inviting breeders and growers to take the first steps towards a more sophisticated breeding program using their cutting-edge AI technology, tailored to any traits of interest.To learn more or to apply for their merit-based grant program,visit their website here.


New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:


To get real-time updates download our free mobile app forAndroidorAppledevices,like ourFacebookpage, or follow Alan onTwitter.Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group onLinkedIn.

Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters,subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managedNCV Cannabis Stock Indicesto monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View thePublic Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcomingcannabis investor earnings conference calls.

Discover upcoming new listingswith the curatedCannabis Stock IPOs and New Issues Tracker.

Find your place in the cannabis industryby visiting ourCareers and JobsPage and learn which companies are hiring aggressively.

Sincerely,

Alan & Joel

California Vape Company Legion of Bloom Will Rely Upon Brand Sales, Distribution and Cultivation to Drive 2020 Revenue – New Cannabis Ventures

January 17, 2020

Exclusive Interview with Legion of Bloom Co-Founder and Chief Procurement Officer Brandt Collings

California cannabis company Legion of Bloom uses a proprietary extraction process to develop its vape products. This year, the company is driving more revenue with cultivation and an expanding distribution platform. Co-Founder and Chief Procurement Officer Brandt Collings spoke with New Cannabis Ventures about the companys market presence, funding and expectations for growth. The audio of the entire conversation is available at the end of this written summary.

The Companys Founders

Collings, originally from Florida, was drawn to the cannabis market in California and moved to the state in 2009. He started his first farm in 2010 and developed an entrepreneurial sense for the industry. He and four other farmers (and friends) decided to pool their knowledge and assets to create Legion of Bloom as the recreational market began to take off in the state.

Together, the team is focused on creating a trusted brand. Russell Weisman serves as CEO; Matthew Woolley is the Vice President of Sales; Troy Meadows is the companys Chief Marketing Officer; and Marcos Morales is Extract Director. A few months after starting the company, James Doherty joined as COO, and, more recently, Adam Banke joined as Director of Sales.

The Legion of Bloom Team

California Market Presence

Legion of Bloom has a 44,000-square-foot indoor facility in Oakland, California, and the company does manufacturing and distribution out of Santa Rosa. The companys administrative offices are located at the latter site. Legion of Bloom distributes its products to approximately 200 dispensaries in the state.

Cultivation and Extraction

The Legion of Bloom team came from a background of outdoor and greenhouse growing, but the company had the opportunity to move inside in Oakland. Now, experimenting with a couple of different lighting technologies, it is focused on using grow methods to increase the plants cannabinoid and terpene content.

Legion of Bloom Uses a Proprietary Extraction Method to Develop Its Products

The companys proprietary extraction method is a version of steam distillation adapted for the cannabis plant. Traditional steam distillation results in a high level of THC-to-CBN conversion, but Legion of Blooms method eliminates that conversion, according to Collings.

Over time, the company has used this method to scale while maintaining quality and yield. Right now, the company is able to do 350 to 400 pounds a week with a single shift, but its new machine will allow for 600 to 700 pounds per day with one shift, according to Collings.

Product Portfolio

The Legion of Bloom product portfolio includes its flagship product The Monarch, its California Sauce live resins and Pax pods. The Monarch is a single-origin, solventless cartridge available in half a gram or one gram. The California Sauce live resins, just launched in Q4 of 2019, are gaining a lot of traction, according to Collings. Legion of Bloom has been a Pax brand partner since 2017, and the company offers a strain-specific product, a one-to-one THC and CBD product and a live resin Pax Pod. There are no immediate plans to launch new products.

Legion of Bloom Products

A Growing Distribution Platform

The company has always done self-distribution, but now, it is adding other brands in different product categories to its distribution platform. For example, the company took on Humboldt Trees as its first flower brand. The company is looking to add other companies, including an edible brand and a dabbable, solventless brand. The goal is to build a platform that supports a handful of brands with demos, sales and detailed reporting, according to Collings. Legion of Bloom is aiming to create a house of brands, one in each category, to round out its portfolio.

Looking Beyond California

Moving beyond California has always been of interest to Legion of Bloom. Rather than investing heavily in infrastructure, the company would expand its presence through licensing agreements. Recreational states are of the most interest. Collings notes Illinois as a market of interest, as well as Arizona and Nevada. He would also like to find a way into the Florida market but acknowledges the high barrier of entry.

Funding

The founders self-funded Legion of Bloom until November 2018, at which point the company took on $3 million in funding (a minority stake), according to Collings. Now, the company is in the process of raising $4 million to help support its operating expenses and expansion plans.

Going forward, Collings is interested in funding via an equity deal or a convertible note. He recognizes the possibility of fundraising via debt financing and remains open to any conversation around raising capital.

With the shrinking capital markets in mind, M&A will be a big topic of discussion this year, according to Collings. He foresees many companies merging, acquiring others, or being acquired. Becoming profitable, focusing more on metrics like EBITDA and profit margin, will be a key focus for the industry this year, he notes.

Ramping Up in 2020

Legion of Bloom is aiming to go from $6 million in brand sales to $12 to $15 million this year. The company will also add revenue with its cultivation operations, which is expected to generate an additional $20 to $30 million in revenue when completed. With a focus on ramping up this year, that number could be a little less, according to Collings. The distribution platform adds another revenue stream.

While tax implications and capital issues remain a challenge, the 44,000 square feet of cultivation represents a significant opportunity for Legion of Bloom in 2020, according to Collings.

To learn more, visit the Legion of Bloom website. Listen to the entire interview:

New Mexico medical cannabis firm wins $69,000 in lawsuit settlement

January 07, 2020

Expo New Mexico officials agreed to drop a pending appeal and pay $69,600 to medical marijuana company Ultra Health as part of a lawsuit settlement. The settlement comes almost a year after a judge ruled that event company Expo New Mexico had violated Ultra Healths First Amendment rights by restricting its free speech. The legal […]

New Mexico medical cannabis firm wins $69,000 in lawsuit settlement is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

Illinois recreational marijuana sales near $11 million

January 07, 2020

Adult-use cannabis retailers in Illinoishave sold almost $11 million of recreational marijuana since sales began Jan. 1. According to state Department of Financial and Professional Regulation, the 37 licensed recreational marijuana stores registered more than 271,000 transactions since the launch of Illinois’ rec industry. On the first day alone, sales nearly reached$3.2 million. Sales were […]

Illinois’ recreational marijuana sales near $11 million is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

Analyst warns of shelved expansion, restructuring as cannabis firms teeter on edge

January 07, 2020

The number of Canadian cannabis producers with fewer than six months of cash on hand has increased over the past quarter, reflecting disappointing earnings and front-loaded capital expenditures, according to an analyst. Greg McLeish of the Toronto office of Mackie Research Capital found that 25 companies are down to half-a-year of cash when capital expenditures […]

Analyst warns of shelved expansion, restructuring as cannabis firms teeter on edge is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

South Dakota to vote on adult use, medical cannabis

January 07, 2020

Voters in South Dakota will decide this year whether to legalize recreational marijuana for adults 21 and older. Voters also will decide in November the fate of a measure to allow medical marijuana for patients with serious health conditions South Dakota will become the first state to vote on both medical marijuana and adult-use legalization […]

South Dakota to vote on adult use, medical cannabis is a post from: Marijuana Business Daily: Financial, Legal & Cannabusiness news for cannabis entrepreneurs

George Scorsis has been in the highly regulated sector for nearly two decades. He worked with companies that provide energy drink, medical cannabis, and alcoholic beverages. His over 15 years of work experience made him an asset to the company. He was the CEO and director of Liberty Health Sciences, a cannabis provider in the United States. He was the President of Red Bull Canada for over four years and generated total sales of $150 million. He was the President of Mettrum Health Corporation and the chairman of the board of directors of Scythian Biosciences Corporation.

Contact