California cannabis growers sued over odors

February 28, 2020
Multiple marijuana growers in Southern California have been sued by residents of a city in south Santa Barbara County that charge smells from greenhouses led to health issue

Florida state Senator seeks partial THC cap in medical cannabis

February 28, 2020
Florida would cap the amount of THC in medical marijuana at 10% for patients under 21 years old under a state Senate bill amendment filed Friday, a move that would be disruptive to the state's fast-growing MMJ industry

Medicine Man Technologies Announces Departure of President and Vice Chairman – New Cannabis Ventures

February 28, 2020

DENVER-Feb 28, 2020-(BUSINESS WIRE)–Medicine Man Technologies Inc. (OTCQX: MDCL) announced today that Andy Williams, president and vice chairman of the Board, has decided to leave the Company to focus on cannabis medical and genetic research, along with pursuing new opportunities in the cannabis industry.

Williams, a cannabis entrepreneur, founded the Company in 2014 and led its growth over the last five years. Most recently, he was a proponent of Colorado House Bill 19-1090, which opened the Colorado cannabis industry to outside funding beginning on November 1, 2019. This new era in Colorado has provided the Company with the opportunity to create one of the leading vertically integrated cannabis operators within the state through strategic acquisitions.

Medicine Man Technologies is uniquely positioned to become a recognized leader in the U.S. cannabis market. Possessing an abundance of world-class cannabis industry experience, coupled with business management expertise, makes this the most exciting cannabis business in the world. I am confident the Company will continue to deliver on its aggressive growth strategy and will become a global leader in the near future, Andy Williams said in a farewell discussion.

We credit where Medicine Man Technologies is today with Andys vision from years ago. As a pioneer in the Colorado cannabis space, he set the foundation and positioned Medicine Man Technologies to grow to new heights. We are grateful for Andys leadership and contributions, and wish him well as he moves on to his next chapter. Additionally, I would like to reiterate the path that the Company has carved out will enable us to become one of the leading vertically integrated cannabis operators.

Justin Dye, Executive Chairman and Chief Executive Officer of Medicine Man Technologies

With our goal to close the pending acquisitions in the first half of 2020, we are on schedule with our acquisitions and are making great progress. I am pleased we are executing our plan and I am very proud of our team. I remain excited for what the year has in store for the Company, our employees, our shareholders, our communities and above all, cannabis consumers.

For more information about Medicine Man Technologies, please visit https://www.MedicineManTechnologies.com/.

About Medicine Man Technologies

Denver, Colorado-based Medicine Man Technologies (OTCQX: MDCL) is a rapidly growing provider of cannabis consulting services, nutrients, and supplies. The Company’s client portfolio includes active and past clients throughout the cannabis industry in 20 states and seven countries. The Company has entered into agreements to become one of the largest vertically integrated seed-to-sale operators in the global cannabis industry. Current agreements will enable Medicine Man Technologies to offer cultivation, extraction, distribution and retail pharma-grade products. Management includes decades of cannabis experience, a unique combination of first movers in industrial cannabis and proven Fortune 500 corporate executives.

Original Press Release

iAnthus Announces Filing of Statement of Claim to Prevent Interference with its Business – New Cannabis Ventures

February 27, 2020

NEW YORK and TORONTO, Feb. 27, 2020 /PRNewswire/ – iAnthus Capital Holdings, Inc. (“iAnthus” or the “Company”) (CSE: IAN,OTCQX: ITHUF), which owns, operates, and partners with best-in-class regulated cannabis operations across the United States, announced today that it has filed a Statement of Claim (the “Claim”) in the Ontario Superior Court of Justice against Oasis Investments II Master Fund Ltd. (“Oasis”). iAnthus filed the Claim in the interests of defending the Company against interference with the Company’s financing and business by an unsecured lender who is seeking to better its position at the expense of the Company’s shareholders and other stakeholders.

Oasis was issued an unsecured convertible debenture (the “Unsecured Debenture”) in the principal amount of US$25 million in connection with the Company’s offering of unsecured convertible note units announced March 18, 2019 and May 2, 2019 (the “Offering”). Since closing of the Offering, Oasis has consistently agitated iAnthus with unfounded allegations and self-interested proposals, all with the goal of renegotiating the terms of the Unsecured Debenture. Recently, Oasis has alleged that iAnthus breached certain debt covenants and that an event of default has occurred. iAnthus vehemently disagrees that there is currently, or has ever been, an event of default and is confident that iAnthus has complied with all covenants under the Unsecured Debenture. While iAnthus believes that Oasis’ allegations are entirely unfounded, Oasis’ behavior has interfered with iAnthus’ ongoing financing activities and the Company’s business.

Remedies sought by iAnthus include a declaration that iAnthus is not in breach of its obligations under the Unsecured Debenture (and related purchase agreement), damages, and a court ordered injunction restraining Oasis from making further false or misleading statements about iAnthus and otherwise interfering with iAnthus’ contractual relationships.

iAnthus emphasizes that the decision to commence legal action against Oasis was not taken lightly and follows significant deliberation regarding Oasis’ underlying intentions and continued actions and its negative impact on the Company and other stakeholders. While unfortunate, this course of action is required to protect the rights of the Company, its shareholders and other stakeholders. Oasis’ repeated and continued actions, even after iAnthus provided Oasis with details about the Company’s compliance with the debt covenants, have left the Company with no option but to defend itself, the interest of its shareholders and other stakeholders by pursuing all legal remedies available, including through the initiation of legal proceedings.

After good faith efforts led by iAnthus’ management, it is highly regrettable that we have been forced to take this action against Oasis. Unfortunately, Oasis, which has a long history of taking activist measures to better its position through the courts and other means, has decided it would try the same tactics with iAnthus.

Julius Kalcevich, CFO of iAnthus

We are disappointed with Oasis’ attempt to extract value at the expense of our shareholders and other stakeholders, and we will pursue any and all remedies available to us as a result of Oasis’ self-interested behavior. We are in active discussions with a variety of financing sources, including significant existing lenders and investors who continue to believe strongly in the prospects of both iAnthus and the broader industry.

Hadley Ford, CEO of iAnthus, further commented: “Despite the volatility of the equity markets and Oasis’ unfounded allegations, we continue to execute on our business plan, and look forward to expected near term catalysts, including but not limited to: the opening of our first adult use Massachusetts dispensary, additional dispensary openings in Florida, New Jersey and New York, and positive regulatory developments in New York, New Jersey and Arizona which are expected to expand iAnthus’ addressable market. ”

Our asset base has never been better positioned and our operational momentum remains strong despite these distractions.

Hadley Ford, CEO of iAnthus

About iAnthus

iAnthus owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States, providing investors diversified exposure to the U.S. regulated cannabis industry. Founded by entrepreneurs with decades of experience in operations, investment banking, corporate finance, law and health care services, iAnthus provides a unique combination of capital and hands-on operating and management expertise. iAnthus currently has a presence in 11 states, and operates 30 dispensaries (AZ-4, MA-1, MD-3, FL-12, NY-2, CO-1, VT-1 and NM-6 where iAnthus has minority ownership). For more information, visit www.iAnthus.com.

Original press release

 

Cresco Labs Rebrands New York Medical Cannabis Dispensaries and Launches Delivery in the New Hartford Area – New Cannabis Ventures

February 27, 2020

Cresco Labs Announces the Opening of its First Four Sunnyside* Dispensaries in New York and the Launch of its Medical Cannabis Delivery Program in the New Hartford Area

Stores in Brooklyn, Huntington Station, New Hartford and Bardonia are the first dispensaries to operate under the Companys national retail brand on the East Coast

CHICAGO, February 27, 2020–(BUSINESS WIRE)–Cresco Labs(CSE:CL)(OTCQX:CRLBF) (Cresco or the Company), one of the largest vertically integrated multistate cannabis operators in the United States, announced today the conversion of four dispensaries to Crescos nationwide retail brand, Sunnyside*, in the Williamsburg neighborhood in Brooklyn, Huntington Station, New Hartford and Bardonia, New York. Cresco also launched today a home delivery service for medical cannabis patients in the New Hartford area of New York. Patients can place orders for home delivery for a variety of products including vape pens and cartridges, topical creams, oral tinctures and capsules atSunnyside.shop. Cresco plans to roll out its medical cannabis home delivery program to the three other communities with Sunnyside* locations in the coming months.

These dispensaries in the state of New York are the first stores to be rebranded under Crescos national retail brand on the East Coast. Cresco holds one of the 10 vertically integrated cannabis business licenses granted in the state by the New York State Department of Health. Each license gives the operator the right to operate one cultivation facility and four dispensaries in New York.

As we continue to build our national retail brand and consolidate the five dispensary brands we operate around the country under the Sunnyside* name, we remain focused on ensuring that we deliver against the promise of what Sunnyside* stands forwellness, education and convenience, said Charlie Bachtell, Cresco Labs CEO and Co-founder.

New York has a growing medical cannabis patient program of more than 114,000 people who look to dispensaries and their cannabis product forms to treat a variety of qualifying conditions and critical illnesses. With Sunnyside*, we aim to provide a best-in-class shopping experience through ongoing education, product availability and technology.

Charlie Bachtell, Cresco Labs CEO and Co-founder

The ease of home delivery provides the convenience that many living in New York will appreciate with the benefit of the quality and consistency that regulated, third-party tested, cannabis products can provide. Home delivery plays a critical role in our ecommerce strategy, and we are excited to offer this service to reach medical cannabis patients in our communities with the right products they need.

Registered medical cannabis patients can place a home delivery order seven days a week at Sunnyside.shop with a minimum order of $80 required for delivery service. Free delivery is available for orders of $150 or more. Distributed from Crescos Sunnyside* dispensary in New Hartford, delivery services are available for patients in the following communities: New Hartford, Utica, Marcy, Whitesboro, Oriskany, Clinton, Sauquoit, Frankfurt and Rome.

About Cresco Labs

Cresco Labs is one of the largest vertically-integrated multi-state cannabis operators in the United States. Cresco is built to become the most important company in the cannabis industry by combining the most strategic geographic footprint with one of the leading distribution platforms in North America. Employing a consumer-packaged goods (CPG) approach to cannabis, Crescos house of brands is designed to meet the needs of all consumer segments and includes some of the most recognized and trusted national brands including Cresco, Remedi and Mindys, a line of edibles created by James Beard Award-winning chef Mindy Segal. Sunnyside*, Crescos national dispensary brand, is a wellness-focused retailer designed to build trust, education and convenience for both existing and new cannabis consumers. Recognizing that the cannabis industry is poised to become one of the leading job creators in the country, Cresco has launched the industrys first national comprehensive Social Equity and Educational Development (SEED) initiative designed to ensure that all members of society have the skills, knowledge and opportunity to work in and own businesses in the cannabis industry. Learn more about Cresco Labs atwww.crescolabs.com.

Original press release

Innovative Industrial Properties Generates $17.7 Million Revenue in Q4 – New Cannabis Ventures

February 27, 2020

 

Innovative Industrial Properties Reports Fourth Quarter and Full-Year 2019 Results

Acquisitions Drive 269% Q4 Revenue, 311% Q4 Net Income and 293% Q4 AFFO Growth Year-over-Year

Fourth Quarter 2019 and Year-to-Date Highlights

Financial Results and Financing Activity

  • IIP generated total revenues of approximately $17.7 million in the quarter, representing a 269% increase from the prior years quarter.
  • IIP recorded net income available to common stockholders of approximately $9.6 million for the quarter, or $0.78 per diluted share, and adjusted funds from operations (AFFO) of approximately $14.3 million, or $1.18 per diluted share. AFFO and AFFO per diluted share represented increases of 293% and 211% from the prior years quarter, respectively.
  • IIP paid a quarterly dividend of $1.00 per common share on January 15, 2020 to stockholders of record as of December 31, 2019, representing a 186% increase from the prior years quarter and a 28% increase from IIPs third quarter 2019 dividend of $0.78 per common share.
  • In September, IIP established an at-the-market equity offering program, issuing shares of common stock from September through today for net proceeds totaling approximately $184.8 million.
  • Subsequent to the end of the quarter, in January, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters option to purchase an additional 445,170 shares, resulting in gross proceeds of approximately $250.0 million.

Investment Activity

  • From October 1, 2019 through today, IIP acquired 20 properties, totaling approximately 1.0 million rentable square feet (including expected rentable square feet upon completion of properties under development), located in Colorado, Florida, Illinois, Michigan, North Dakota, Ohio, Pennsylvania and Virginia, and executed five lease amendments to provide additional tenant improvements at properties located in Arizona, California, Massachusetts and Pennsylvania.
  • These 20 properties and five lease amendments represented an aggregate investment by IIP of approximately $308.4 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs).
  • In these transactions, IIP established new tenant relationships with Cresco Labs Inc., GR Companies Inc. (Grassroots), Green Thumb Industries Inc. (GTI) and LivWell Holdings, Inc., while expanding existing tenant relationships with Green Leaf Medical, LLC, Green Peak Industries LLC, Maitri Genetics, LLC, PharmaCann LLC, The Pharm, LLC, Trulieve Cannabis Corp. and Vireo Health, Inc.
  • From January 1, 2019 through today, IIP has grown its property portfolio from eleven properties comprising approximately 1.0 million rentable square feet in nine states, to 51 properties comprising approximately 3.2 million rentable square feet in 15 states. Also since January 1, 2019, IIPs total investment in its property portfolio has increased by 307% from $167.4 million to $680.7 million (consisting of purchase prices and development / tenant reimbursement commitments, but excluding transaction costs and approximately $51.5 million in the aggregate, which represents funds that tenants at certain properties may not elect to have IIP disburse to them and pay IIP the corresponding base rent on).

Board of Directors

IIP expanded its board of directors to six members, and appointed Mary Allis Curran, a former senior banking executive, as the sixth member; with Ms. Curran also appointed to serve on the boards audit committee and nominating and corporate governance committee.

Portfolio Update and Acquisition Activity

Portfolio Update

IIP acquired the following properties and made the following additional funds available to tenants for improvements at IIPs properties during the period from October 1, 2019 through February 26, 2020 (dollars in thousands):

(1)Includes expected rentable square feet at completion of construction.

(2)Excludes transaction costs.

(3)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $23.0 million. As of February 26, 2020, IIP funded approximately $11.2 million of the reimbursement.

(4)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $250,000. As of February 26, 2020, IIP funded approximately $244,000 of the reimbursement.

(5)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $13.5 million. As of February 26, 2020, IIP funded approximately $9.4 million of the reimbursement.

(6)The portfolio consists of six retail properties, with one property closing on October 25, 2019, three properties closing on November 4, 2019, one property closing on November 8, 2019 and one property closing on November 25, 2019. The tenant is expected to complete tenant improvements at certain of the properties, for which IIP agreed to provide reimbursement of up to approximately $1.2 million. As of February 26, 2020, IIP had funded approximately $312,000 of the tenant improvement allowance.

(7)The tenant is expected to perform construction at the property, for which IIP agreed to provide reimbursement of up to $7.0 million. As of February 26, 2020, IIP funded approximately $2.0 million of the reimbursement.

(8)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $17.7 million, of which $10.7 million and $7.0 million are subject to reduction at the tenants option before April 30, 2020 and July 30, 2020, respectively. As of February 26, 2020, IIP had funded approximately $1.9 million of the tenant improvement allowance.

(9)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $19.3 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(10)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $10.9 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(11)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $2.3 million. As of February 26, 2020, IIP had funded approximately $1.2 million of the tenant improvement allowance.

(12)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs Pennsylvania properties by $4.5 million to a total of approximately $8.3 million. As of February 26, 2020, IIP had funded $3.4 million of the tenant improvement allowance.

(13)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $8.0 million. As of February 26, 2020, IIP had funded approximately $2.7 million of the tenant improvement allowance.

(14)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs Arizona properties by $2.0 million to a total of $5.0 million. As of February 26, 2020, IIP had funded approximately $4.5 million of the tenant improvement allowance.

(15)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to approximately $1.9 million. As of February 26, 2020, IIP had not funded any of the tenant improvement allowance.

(16)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs California properties by approximately $1.3 million. As of February 26, 2020, IIP had funded approximately $1.0 million of the tenant improvement allowance.

(17)The tenant is expected to complete tenant improvements at the property, for which IIP agreed to provide reimbursement of up to $4.3 million. As of February 26, 2020, IIP had not funded any of the tenant improvement allowance.

(18)The portfolio consists of two retail properties, with one property closing on February 19, 2020 and one property closing on February 21, 2020. The tenant is expected to complete tenant improvements at one of the properties, for which IIP agreed to provide reimbursement of up to $850,000. As of February 26, 2020, IIP had not funded any of the tenant improvement allowance.

(19)The amount relates to a lease amendment which increased the tenant improvement allowance under a lease at one of IIPs Pennsylvania properties by $6.0 million to a total of $16.0 million, which additional allowance may be drawn by the tenant starting on March 1, 2020. As of February 26, 2020, IIP had funded $8.8 million of the tenant improvement allowance.

(20)The amount relates to a lease amendment and development agreement amendment which increased the construction funding at one of IIPs Massachusetts properties by $4.0 million for a total of $27.5 million. IIP also canceled a remaining commitment to provide construction funding of $4.0 million for the tenant at one of IIPs Pennsylvania properties. As of February 26, 2020, IIP had funded approximately $23.0 million of the construction funding at the Massachusetts property.

From January 1, 2019 through February 26, 2020, IIP acquired 40 properties, totaling approximately 2.2 million rentable square feet (including expected rentable square feet upon completion of properties under development), located in Arizona, California, Colorado, Florida, Illinois, Massachusetts, Michigan, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, and executed ten lease amendments to provide additional tenant improvements at properties located in Arizona, California, Illinois, Massachusetts, Michigan, Minnesota and Pennsylvania.

As of February 26, 2020, IIP owned 51 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 3.2 million rentable square feet (including approximately 871,000 rentable square feet under development/redevelopment), which were 98.9% leased (based on square footage) with a weighted-average remaining lease term of approximately 15.6 years. As of February 26, 2020, IIP had invested approximately $563.2 million in the aggregate (excluding transaction costs) and had committed an additional approximately $117.5 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIPs properties. IIPs average current yield on invested capital is approximately 13.3% for these 51 properties, calculated as (a) the sum of the current base rents, supplemental rent (with respect to the lease with a tenant at one of IIPs New York properties) and property management fees (after the expiration of applicable base rent abatement or deferral periods), divided by (b) IIPs aggregate investment in these properties (excluding transaction costs and including aggregate potential development/redevelopment funding and tenant reimbursements of approximately $117.5 million). These statistics do not include up to approximately $15.9 million that may be funded in the future pursuant to IIPs lease with a tenant at one of IIPs Illinois properties, or the approximately $35.7 million that may be funded in the future pursuant to IIPs lease with a tenant at one of IIPs Massachusetts properties, as the tenants at those properties may not elect to have IIP disburse those funds to them and pay IIP the corresponding base rent on those funds. These statistics also treat IIPs Los Angeles, California property as not leased, due to the tenants default in its obligation to pay rent at that location in January and February 2020.

Financing Activity

In September 2019, IIP entered into equity distribution agreements with three sales agents, pursuant to which IIP may offer and sell from time to time through an at-the-market offering program up to $250 million in shares of its common stock. From September through today, IIP sold shares of its common stock for net proceeds of approximately $184.8 million under this program.

Subsequent to the end of the quarter, in January 2020, IIP completed an underwritten public offering of 3,412,969 shares of common stock, including the exercise in full of the underwriters option to purchase an additional 445,170 shares, resulting in gross proceeds of approximately $250.0 million.

IIP expects to use the net proceeds from these offerings to invest in specialized industrial real estate assets that support the regulated medical-use cannabis cultivation and processing industry and for general corporate purposes.

Financial Results

IIP generated total revenues of approximately $17.7 million for the three months ended December 31, 2019, compared to approximately $4.8 million for the same period in 2018, an increase of 269%. IIP generated total revenues of approximately $44.7 million for the year ended December 31, 2019, compared to approximately $14.8 million for 2018, an increase of 202%. The increase in both periods was driven primarily by the acquisition and leasing of new properties, in addition to contractual rental escalations at certain properties.

For the three months ended December 31, 2019, IIP recorded net income available to common stockholders and net income available to common stockholders per diluted share of approximately $9.6 million and $0.78, respectively; funds from operations (FFO) and FFO per diluted share of approximately $13.1 million and $1.09, respectively; and AFFO and AFFO per diluted share of approximately $14.3 million and $1.18, respectively. Fourth quarter 2019 AFFO and AFFO per diluted share for the quarter increased by 293% and 211% from the prior year period, respectively.

For the year ended December 31, 2019, IIP recorded net income available to common stockholders and net income available to common stockholders per diluted share of $22.1 million and $2.03, respectively; FFO and FFO per diluted share of $30.7 million and $2.88, respectively; and AFFO and AFFO per diluted share of approximately $34.9 million and $3.27, respectively. 2019 AFFO and AFFO per diluted share increased by 259% and 144% from the prior year, respectively.

FFO and AFFO are supplemental non-GAAP financial measures used in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income available to common stockholders to FFO and AFFO and definitions of terms are included at the end of this release.

Teleconference and Webcast

Innovative Industrial Properties, Inc. will conduct a conference call and webcast at 10:00 a.m. Pacific Time (1:00 p.m. Eastern Time) on Thursday, February 27, 2020 to discuss IIPs financial results and operations for the fourth quarter and year ended December 31, 2019. The call will be open to all interested investors through a live audio webcast at the Investor Relations section of IIPs website at www.innovativeindustrialproperties.com, or live by calling 1-877-328-5514 (domestic) or 1-412-902-6764 (international) and asking to be joined to the Innovative Industrial Properties, Inc. conference call. The complete webcast will be archived for 90 days on IIPs website. A telephone playback of the conference call will also be available from 12:00 p.m. Pacific Time on Thursday, February 27, 2020 until 12:00 p.m. Pacific Time on Thursday, March 5, 2020, by calling 1-877-344-7529 (domestic), 855-669-9658 (Canada) or 1-412-317-0088 (international) and using access code 10139231.

About Innovative Industrial Properties

Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.


FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REITs operating performance equal to net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, plus depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures.

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be supplemental measures of a REITs performance because they provide an understanding of the operating performance of IIPs properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. IIP reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REITs operating performance. IIP calculates AFFO by adding to FFO certain non-cash and infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense.

IIPs computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for managements discretionary use. FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIPs financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIPs liquidity, nor is it indicative of funds available to fund IIPs cash needs, including IIPs ability to pay dividends or make distributions. FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIPs operations.


]

FFO and FFO per share are operating performance measures adopted by the National Association of Real Estate Investment Trusts, Inc. (NAREIT). NAREIT defines FFO as the most commonly accepted and reported measure of a REITs operating performance equal to net income, computed in accordance with accounting principles generally accepted in the United States (GAAP), excluding gains (or losses) from sales of property, plus depreciation, amortization and impairment related to real estate properties, and after adjustments for unconsolidated partnerships and joint ventures.

Management believes that net income, as defined by GAAP, is the most appropriate earnings measurement. However, management believes FFO and FFO per share to be supplemental measures of a REITs performance because they provide an understanding of the operating performance of IIPs properties without giving effect to certain significant non-cash items, primarily depreciation expense. Historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time. However, real estate values instead have historically risen or fallen with market conditions. IIP believes that by excluding the effect of depreciation, FFO and FFO per share can facilitate comparisons of operating performance between periods. IIP reports FFO and FFO per share because these measures are observed by management to also be the predominant measures used by the REIT industry and by industry analysts to evaluate REITs and because FFO per share is consistently reported, discussed, and compared by research analysts in their notes and publications about REITs. For these reasons, management has deemed it appropriate to disclose and discuss FFO and FFO per share.

Management believes that AFFO and AFFO per share are also appropriate supplemental measures of a REITs operating performance. IIP calculates AFFO by adding to FFO certain non-cash and infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense.

IIPs computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs. Further, FFO and AFFO do not represent cash flow available for managements discretionary use. FFO and AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of IIPs financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of IIPs liquidity, nor is it indicative of funds available to fund IIPs cash needs, including IIPs ability to pay dividends or make distributions. FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of IIPs operations.

Original press release

AYR Strategies Q4 Revenue Increases 1% Sequentially to $32.3 Million – New Cannabis Ventures

February 26, 2020

Ayr Strategies Reports Record Fourth Quarter and Full Year 2019 Financial Results
  • Ayr Reports Annualized 2019 Results In-Line with Ambitious Growth Expectations; Reiterates Strong 2020 Outlook
  • Record Quarterly Revenue of $32.3 Million and Adjusted EBITDA of $9.2 Million
  • Generated $3.9 Million Cash Flow from Operations in Q4
  • Nevada Retail Stores Average MSO-Leading $17 Million in Annual Sales, Accounting for Over 10% of all Nevada Cannabis Dispensary Revenue in Q4 2019
  • Massachusetts & Nevada Cultivation Expansion Projects Complete and Fully Funded, with Sales from Initial Harvest Expected in Q2

TORONTO, Feb. 26, 2020 (GLOBE NEWSWIRE) — Ayr Strategies Inc. (CSE: AYR.A, OTCQX: AYRSF) (Ayr or the Company), a vertically-integrated cannabis multi-state operator (MSO) with a presence in the western and eastern U.S., is reporting financial results for the three months and full year ended December 31, 2019.

Unless otherwise noted, all results are presented in U.S. dollars.

Annualized Full Year 2019 Financial Summary (vs. 2018)

  • Total revenue increased 75% to $124.2 million compared to $70.9 million.
  • Adjusted Gross Profit (a non-IFRS measure defined below) increased 78% to $63.0 million compared to $35.5 million.
  • Adjusted EBITDA (a non-IFRS measure defined below) increased 47% to $34.5 million compared to $23.5 million; when excluding corporate and public company costs, Adjusted EBITDA increased 80%.
  • Loss from operations decreased 8% to $61.9 million compared to $66.8 million.

Management Commentary

In just seven months of combined operations, our business has thrived and we have delivered on the ambitious expectations that we laid out for our shareholders.

Ayr CEO Jon Sandelman

Our Nevada dispensaries have become the market and industry leader in terms of productivity, and our Massachusetts businesses continued to outperform despite multiple regulatory challenges.

BDS Analytics ranks our dispensaries as the highest revenue generating stores among MSOs. In Nevada, our retail performance is stronger than ever with average annual revenue per dispensary of $17 million, with our top store generating nearly $26 million annually. We also consistently improved profitability across our Nevada portfolio in 2019 as we vertically integrated the four businesses we acquired, and our in-house brands are now accounting for approximately 27% of dispensary sales compared to 22% in Q3 and less than 3% at the start of 2019.

In Massachusetts, we currently sell to more than two-thirds of all recreational dispensaries. In light of the Massachusetts vape ban in the fourth quarter, we pivoted our resources to make up the lost revenue and margin from vapes, and we were the first cannabis company back to market when the vape ban was lifted earlier than expected in December. Further, we rolled out several Nevada brands in Massachusetts during the quarter, and both customer feedback and initial sell-through have been very strong. All of this underscores the strength of our teams on the ground, which provide us operational leverage and flexibility that is essential in the cannabis industry.

For 2020, our ambitious organic growth plans are fully funded. We have completed construction on our cultivation expansions in both Nevada and Massachusetts, and these expansions have more than doubled our capacity, taking our canopy from 27,000 square feet to 63,000 square feet. We are underway with our first grow cycles in these new facilities and expect sales from our initial harvests to begin in Q2 2020.

Looking beyond these key growth drivers for 2020, we continue to target business combinations that can expand our initial portfolio and footprint; these combinations would add to our current 2020 financial outlook. The cannabis market environment continues to favor our strengths of financial discipline, cash flow generation and a fully funded growth strategy, and we have every expectation of capitalizing on attractive M&A opportunities in 2020.

2020 Outlook

Ayr expects 2020 revenue to range between $207 million and $227 million, reflecting approximately 67% to 83% organic growth from 2019. The Company also expects adjusted EBITDA to range between $93 million and $103 million, reflecting approximately 170% to 199% organic growth from 2019.

For more information about the Companys 2020 outlook, including detailed financial bridges outlining various growth initiatives, please view Ayrs corporate presentation posted in the Investors section of the Companys website at www.ayrstrategies.com.

1 Non-IFRS measure defined in Definition and Reconciliation of Non-IFRS Measures below.
2 Includes data for October and November 2019; Nevada sales for December 2019 are unavailable.
3 Due to the qualifying transaction completed on May 24, 2019, the 2019 annual results have been normalized by taking the 221-day period and annualizing it to produce a full year of results, whereas the 2018 results represent pro forma consolidated results as reported in the Companys Business Acquisition Report filed on August 7, 2019.

Conference Call

Ayr CEO Jonathan Sandelman, CFO Brad Asher and COO Jennifer Drake will host a conference call tomorrow, February 27, 2020 at 8:30 a.m. Eastern time, followed by a question and answer period.

Conference Call Date: Thursday, February 27, 2020
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (877) 282-0546
International dial-in number: (270) 215-9898
Conference ID: 2431737

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here.

A telephonic replay of the conference call will also be available after 11:30 a.m. Eastern time on the same day through March 5, 2020.

Toll-free replay number: (855) 859-2056
International replay number: (404) 537-3406
Replay ID: 2431737

Financial Statements

Certain financial information reported in this news release is extracted from Ayrs financial statements as at and for the three and twelve month periods ended December 31, 2019. These results presented herein are preliminary and subject to change. Ayr will file its annual financial statements on SEDAR shortly. All such financial information contained in this news release is qualified in its entirety by reference to such financial statements.

Definition and Reconciliation of Non-IFRS Measures

The Company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments, as well as to manage their capital structures. As non-IFRS measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measure.

The Company references non-IFRS measures and cannabis industry metrics in this document and elsewhere. Non-IFRS measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the Company from managements perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the Companys financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the Companys businesses include Adjusted EBITDA and Adjusted Gross Profit.

The Company believes that these non-IFRS financial measures provide meaningful supplemental information regarding the Companys performances and may be useful to investors because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. These financial measures are intended to provide investors with supplemental measures of the Companys operating performances and thus highlight trends in the Companys core businesses that may not otherwise be apparent when solely relying on the IFRS measures.

Adjusted EBITDA
Adjusted EBITDA represents income (loss) from operations, as reported, before interest and tax, adjusted to exclude extraordinary items, non-recurring items, other non-cash items, including stock-based compensation expense, depreciation and amortization, the adjustments for the accounting of the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination, and further adjusted to remove acquisition related costs.

Adjusted Gross Profit
Adjusted Gross Profit represents the gross profit, as reported, adjusted to exclude the accounting for the fair value of biological assets and the incremental costs to acquire cannabis inventory in a business combination.

A reconciliation of how Ayr calculates Adjusted EBITDA and Adjusted Gross Profit and reconciles them to IFRS figures is provided below. As well, the Company reminds you that Adjusted EBITDA and Adjusted Gross Profit are non-IFRS measures. Additional reconciliations and other disclosures concerning non-IFRS measures will be provided in our MD&A for the 3 months and year ended December 31, 2019, when filed.

About Ayr Strategies Inc.

Ayr Strategies (Ayr) is an expanding vertically integrated, U.S. multi-state cannabis operator, focusing on high-growth markets. With anchor operations in Massachusetts and Nevada, the company cultivates and manufactures branded cannabis products for distribution through its network of retail outlets and through third-party stores. Ayr strives to enrich and enliven consumers experience every day helping them to live their best lives, elevated.

Ayrs leadership team brings proven expertise in growing successful businesses through disciplined operational and financial management, and is committed to driving positive impact for customers, employees and the communities they touch. For more information, please visit www.ayrstrategies.com.

Company Contact:

Jennifer Drake, COO
T: (212) 299-7606

Investor Relations Contact:

Sean Mansouri, CFA or Cody Slach
Gateway Investor Relations
T: (949) 574-3860
Email: ayr@gatewayir.com

Original press release

MedMen Revenue Grows 11% Sequentially in Q2 as Operating Loss Expands – New Cannabis Ventures

February 26, 2020

MedMen Reports Second Quarter Fiscal 2020 Financial Results Designated News Release
  • Second quarter revenue of $44.1 million (excluding Arizona), up 50% year over year and 11% sequentially
  • Opened five new retail locations during the quarter, including four in Florida and one in Illinois
  • Corporate SG&A decreased by 11% sequentially and 30% from the prior year period
  • Company appointed new board of director members, including Cameron Smith, former US Securities
  • Exchange Commission Officer and Mel Elias, former President and CEO of The Coffee Bean & Tea Leaf
  • Announces sale of non-core Illinois cultivation license for total gross proceeds of $17 million

LOS ANGELES, Feb 26, 2020–(BUSINESS WIRE)–MedMen Enterprises Inc. (MedMen or the Company) (CSE: MMEN) (OTCQX: MMNFF) today released its consolidated financial results second quarter 2020 ended December 28, 2019. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

Management Commentary

We feel positive about the progress made while remaining aware there is still substantial work to be done. The business is focused on the execution of a strategy to streamline operations, strengthen its balance sheet and bring in additional capital. The sustained power of the brand and consistent consumer loyalty is a regular reminder of our strengths and the opportunities within reach, said Ben Rose, executive chairman of the Board and Chief Investment Officer of Wicklow Capital.

This is a pivotal time for the Company where we have the opportunity to re-assess the business and narrow the focus on what we do best retail, to continue to cut costs and to execute on four-wall economics with a path to profitability.

Ryan Lissack, Interim Chief Executive Officer

I look forward to transitioning the company into its next chapter, which will be defined by financial discipline and strategic growth to drive long-term value creation for the Company and its stakeholders.

Second Quarter Fiscal 2020 Review

Financials:

  • Revenue: Systemwide revenue across MedMen’s operations in California, Nevada, New York, Illinois and Florida increased to $44.1 million for the quarter, up 50% year-over-year and 11% sequentially. Revenue figures do not include the Companys operations in Arizona, which are in the process of being divested and are classified as discontinued operations in the Companys financials.
  • Retail Gross Margin: Gross margins across retail operations were 51% compared to 52% in the prior quarter. In California, retail gross margin was 52%, compared to 53% in the previous quarter.
  • Corporate SG&A: Corporate SG&A totaled $26.8 million, a 30% decrease from fiscal second quarter 2019, representing $46 million in annualized savings since the initial cost-cutting efforts began. The Company revised its corporate SG&A target to an annualized run-rate of $65 million to be achieved by MedMens fiscal third quarter 2020.
  • Adjusted EBITDA: The Company reported an Adjusted EBITDA loss of $35.1 million for the quarter. The Adjusted EBITDA for the quarter does not include additional headcount reduction and retail optimization efforts the Company executed on subsequent to the quarter end. The Companys cultivation and manufacturing facilities contributed to $11.4 million of the total EBITDA loss.
  • California Retail EBITDA: Across its California retail footprint, the Company recorded a four-wall EBITDA margin before local taxes and distribution expenses of 16%, compared to 17% in the previous quarter.

Retail Highlights:

  • California: California retail revenue totaled $32.4 million for the second quarter, representing an 8% sequential increase from the previous quarter, and 37% increase from the same period last year. On a same-store basis, California retail stores are up 16% from the same period last year. The Beverly Hills, Santa Ana, LAX, Abbot Kinney and Downtown Los Angeles locations were up 43%, 43%, 40%, 30% and 30%, respectively, compared to the same period last year.
  • Nevada: Nevada retail revenue totaled $5.9 million for the second quarter, representing a 10% sequential increase from the previous quarter, and a 75% increase from same period last year. MedMen Paradise, the Companys flagship store in Las Vegas, recorded a 10% sequential revenue increase. The store was not open for the full second quarter 2019 for a year-over-year comparison.
  • Florida: During the quarter, the Company opened four locations in Florida, which include retail stores in Jacksonville Beach, Orlando-International Drive, Tallahassee and Sarasota. The Company operates a total of eight stores across the state. The Company is currently undergoing a strategic review of its Florida footprint to determine timing of additional store openings.
  • Illinois: The Company began operating its second store in Illinois, located in Evanston, on December 3, 2019. Both the new Evanston store and existing Oak Park store are currently serving recreational customers. The Company expects to have a total of four stores in Illinois by end of calendar year 2020.
  • Massachusetts: The Companys Fenway location is pending final regulatory approval and construction is anticipated to begin in calendar year 2020. In Newton, Massachusetts MedMen has signed a lease on a retail location and now is awaiting regulatory approvals.
  • New York: The Company operates four medical dispensaries in the state, with a flagship location on Fifth Avenue near Bryant Park.
  • Arizona: The Company is currently in the process of divesting its Arizona footprint, which includes three retail locations and various cultivation and manufacturing operations.

Capital Markets and Financing Activities:

  • Credit Facility: On November 27, 2019, the Company closed on $10 million of additional funding under Tranche 3 of the existing facility with Gotham Green Partners and its affiliates. As part of the amendments which were executed along with the funding, additional changes were made to the facility to provide greater flexibility to the Company.
  • Equity Investment: On December 27, 2019, the Company announced that it signed definitive documentation for its offering of Class B subordinate voting shares for aggregate gross proceeds of $20 million at a price per share of $0.43. Closing of the equity placement occurred in January 2020.

Corporate Governance:

  • On December 10, 2019, Co-Founder Andrew Modlin granted Ben Rose, Executive Chairman of the Board, a limited proxy in respect of 815,295 Class A Super Voting shares, which represented 50% of the total Class A Super Voting Shares for a period of one year. Such proxy may not be used to eliminate or change the rights of such shares or otherwise alter or amend the organizational documents of the Company.
  • Effective February 1, 2020, Adam Bierman, Co-Founder and Chief Executive Officer stepped down as Chief Executive Officer and agreed to surrender his Class A Super Voting shares. The board of directors named the Companys Chief Technology Officer, Ryan Lissack, as Interim Chief Executive Officer. Following expiration of the limited proxy granted by Andrew Modlin to Ben Rose, MedMen will only have one class of outstanding shares, Class B subordinate voting shares, each of which entitle the holder to one vote.

Subsequent Events:

  • Definitive Agreement on Sale of Non-Core Asset: On February 25, 2020 the Company entered into definitive agreements to assign its rights to acquire a licensed cultivation and manufacturing facility in Hillcrest, Illinois (Hillcrest Facility) for total gross proceeds of $17 million (Hillcrest Transaction). The Company previously received the right to acquire the Hillcrest Facility as part of its merger termination agreement with PharmaCann, LLC (PharmaCann). As part of the Hillcrest Transaction, the Company received an initial payment of $10 million (the Initial Payment). The second payment of $7 million is due prior to the closing of the Hillcrest Transaction, expected in the coming weeks.
  • MedMen 2020 Annual General Meeting Results: The Annual General Meeting of MedMen shareholders was held on February 21, 2020 in Toronto, Canada under Executive Chairman, Ben Rose. Shareholders adopted all the resolutions submitted for approval. Shareholders re-elected Ben Rose, Adam Bierman and Jay Brown to the Board of Directors and added new members Mel Elias, Cameron Smith, and Chris Ganan. MNP LLP was re-appointed as the auditors of the Company.
  • Secured Term Loan Amendment: On January 14, 2020, the Company announced the execution and closing of definitive documentation for amendments to the terms and conditions of the $78 million senior secured term loan with funds managed by Stable Road and its affiliates.

New Independent Board Members:

  • Mel Elias: Mr. Mel Elias, an active investor, entrepreneur and developer in Los Angeles has past and present board experience in CPG and consumer retail businesses both in the US and internationally. He was President and CEO of The Coffee Bean & Tea Leaf for 6 years, until it was sold in 2013.
  • Cameron Smith: Mr. Cameron Smith currently operates a private angel investment and advisory fund that focuses on health food. Prior to his investment and advisory business, Mr. Smith was General Counsel of The Island ENC, Inc., President of Quantlab Financial and worked at the SEC.

ADDITIONAL INFORMATION

Additional information relating to the Companys fiscal second quarter 2020 results is available on SEDAR at www.sedar.com in the Companys Interim Financial Statements and Management Discussion & Analysis (MD&A) for the quarter.

MedMen refers to certain non-IFRS financial measures such as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, less certain non-cash equity compensation expense, including one-time transaction fees and all other non-cash items) and four-wall retail gross margins. These measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers.

Please see the Supplemental Information (Unaudited) Regarding Non-IFRS Financial Measures at the end of this press release and the MD&A for more detailed information regarding non-IFRS financial measures.

CONFERENCE CALL AND WEBCAST:

MedMen Enterprises will host a conference call and audio webcast with Executive Chairman, Ben Rose, Interim Chief Executive Officer Ryan Lissack and Chief Financial Officer Zeeshan Hyder today at 5:00 pm Eastern to discuss the financial results in further detail.

Webcast Information:
A live audio webcast of the call will be available on the Events and Presentations section of MedMens website at: https://investors.medmen.com/events-and-presentations/default.aspx and will be archived for replay.

Calling Information:
Toll Free Dial-In Number: (844) 559-7829
International Dial-In Number: (647) 689-5387
Conference ID: 8898600

ABOUT MEDMEN:

MedMen is North Americas premium cannabis retailer with flagship locations in Los Angeles, Las Vegas, Chicago and New York. Through a robust selection of high-quality products, including MedMen-owned brands [statemade], LuxLyte and MedMen Red, and a team of cannabis-educated associates, MedMen has defined the next generation discovery platform for cannabis and all its benefits. MedMens industry-leading technology enables a fully compliant, owned-and-operated delivery service and MedMen Buds, a nationwide loyalty program. MedMen believes that a world where cannabis is legal and regulated is safer, healthier and happier. Learn more at www.medmen.com

Original press release

 

Utah Medical Cannabis Program Set to Launch Next Week – New Cannabis Ventures

February 26, 2020

Effective March 1, Utah will officially launch its medical cannabis program when the states Department of Health begins accepting applications for medical cannabis patient cards. The following day, March 2, Dragonfly Wellness, the states first medical cannabis pharmacy, is slated to open, with others soon to follow, In this review, we take a look at the history of Utahs cannabis program, the existing marketplace and potential for future growth.

History

The Beehive State legalized medical cannabis on Dec. 3, 2018 with the passage of HB 3001, the Utah Medical Cannabis Act. It amended Ballot Proposition 2, which was approved by Utah voters during the November 2018 general election by a vote of 52.75% to 47.25%. On Sept. 16, 2019, during a special session of Utahs legislature, lawmakers passed SB 1002, which made further amendments to the law. Most notably, it did away with plans to purchase medical marijuana from licensed private cultivators and distribute it to qualified patients through local health departments. The state also had planned to license five private companies to distribute medical cannabis creating a hybrid program. However, on the advice of attorneys, Utah decided against getting into the business, fearing that county health workers could be prosecuted for marijuana distribution because there is no exemption under the federal Controlled Substances Act that would permit such sales.

Existing Marketplace

When Utah opened up the application process for pharmacies, it received 130 applications from 60 different companies. On Jan. 3, 2020, Utah awarded 14 licenses to medical cannabis pharmacies, two of which (Columbia Care and Curaleaf) are owned by public companies:

  • Beehives Own (two licenses)
  • Bloom Medicinals
  • Columbia Care (NEO: CCHW) (OTC: CCHWF)
  • Curaleaf (CSE: CURA) (OTC: CURLF)
  • Deseret Wellness (two licenses)
  • Dragonfly Wellness
  • Justice Grown Utah (two licenses)
  • Pure UT, a wholly owned subsidiary of Moxie.
  • True North of Utah (two licenses)
  • Wholesome Therapy
Bloom Medicinals was one of 14 companies selected to open a pharmacy in Utah.

Three of the selected pharmacies also were awarded marijuana cultivation licenses. They are: Dragonfly Wellness, True North of Utah and Wholesome Therapy.

Because Utah has lots of land, but a spread-out population, the licenses were divided among four geographic regions. The pharmacies will open in two phases, with eight pharmacies able to open in March. Another six will be allowed to open as early as July.

Although the law allows for up to ten cultivation licenses to be issued, citing concern of oversaturating the market, the Utah Department of Agriculture and Food and the Utah Division of Purchasing selected just eight companies to participate in Utahs Medical Cannabis Cultivation Program from a total of 81 applicants. They are:

  • Dragonfly Greenhouse
  • Harvest of Utah, which is part of Harvest Health (CSE: HARV, OTC: HRVSF)
  • Oakbridge Greenhouses
  • Standard Wellness Utah
  • True North of Utah
  • Tryke Companies Utah (Cresco Labs (CSE: CL) (OTC: CRLBF) is in the process of purchasing Tryke)
  • Wholesome Ag.
  • Zion Cultivars

Seven of the eight licensees have crops in the ground. Several of the growers have harvested their first crop, according to a spokesperson for the Utah Department of Agriculture and Food.

Utah has one processor in operation thus far Dragonfly Processing LLC. However, on Jan 14, Curaleaf Holdingsannounced that it has received preliminary approval for a processing license by the Utah Department of Agriculture and Food. And, on Jan. 30, Toronto-based TerrAscend (CSE: TER; OTC: TRSSF) announced it was awarded approval for a Medical Cannabis Processor License by the Utah Department of Agriculture and Food. Standard Wellness, which has a cultivation license, noted on its website that it had applied for a processing license and planned to submit a pharmacy application in Utah, but no announcement has been made that it was awarded either license.

Utah patients with qualifying conditions have been able to use medical cannabis with a doctors letter since December 2018. However, they have had to cross state lines to get it. The online application process for medical cannabis cards for Utah purchases doesnt begin until March 1, so there are no figures as yet as to how many people have applied or received cards.

However, Utah did put together two statistical approaches suggesting that either there will be about 11,102 medical cannabis cardholders in the first year, increasing to approximately 38,350 by year five of the program. Or, under a second scenario, the state projects there will be about 16,399 medical cannabis card holders in the first year and 56,598 by year five. Thats just a fraction of Utahs overall population, which stands at about 3.16 million.

The Utah Department of Health is the organization managing participating healthcare providers. There are 17 providers on the current list of participating Qualified Medical Providers who have consented to share their information online. The law permits physicians, osteopathic physicians, advanced practice registered nurses (APRNs) and physician assistants (PAs) to prescribe.

Utah has a fairly liberal list of qualifying medical conditions as seen in the chart below.

Utah qualifying medical conditions

However, providers are limited and may not recommend medical cannabis treatment to more than 175 of the qualified patients at one time, or to no more than 300 patients, if the provider is board certified in the area in which he or she is prescribing.

Allowable forms range from pills to unprocessed cannabis flower as seen in the chart below.

Utah allowable cannabis forms

Future Growth

So far, Utah lawmakers are holding firm on their promise to keep recreational marijuana from becoming legal. Meantime, the existing cannabis laws are a moving target with several more amendments being proposed during this current legislative session. SB 121 makes further tweaks to the Medical Cannabis Act including the removal of a blister park requirement for cannabis flower and the expungement of criminal charges for past users who qualified for medical cannabis before the law passed.

One downside right now is the limited number of qualified medical professionals willing to prescribe cannabis fearing legal ramifications. Another is the fact that growers only recently got crops in the ground, so there will be a limited supply when it goes on sale. For Utah, the thinking right now appears to be slow and steady wins the race.

Green Leaf Medical Looks to Expand in Core Eastern Cannabis Markets – New Cannabis Ventures

February 25, 2020

Exclusive Interview with Green Leaf Medical CEO Phil Goldberg

East coast MSO Green Leaf Medical has taken a calculated approach to growth, first focusing on winning licenses organically in its markets. Now, it is planning to go deeper into those markets with acquisitions. CEO Phil Goldberg spoke with New Cannabis Ventures about his companys multi-state footprint, its pending applications and the revenue outlook for the next few years. The audio of the entire conversation is available at the end of this written summary.

Corporate Culture at Green Leaf Medical

Goldberg was running an ad agency, which he started from the ground up in the late 1990s, when Maryland began to allow cultivation, extraction, and retail licenses. He and his brother Kevin Goldberg, now Green Leaf’s General Counsel, applied for licenses in the state and started the company.

Green Leaf prides itself on its corporate culture, according to Goldberg. The company offers its employees a matching 401(k) and full healthcare coverage. Green Leaf also focuses on its employee training program, run by Kristin Cousin, which includes classroom and on-the-job education.

Green Leaf Medical Team Members

The companys leadership also stands out in terms of diversity. Goldberg highlighted a number of team members including Executive Vice President Joy Strand, HR Director Kelly Collins, and Compliance Director Meagan Zaffaroni. Strand, former executive director of the Maryland Medical Cannabis Commission, brings her experience in government relations to the team, a major strength as the company enters new markets with different regulatory structures. Collins previously ran a human resources program in the healthcare space, and Zaffaroni oversees compliance across the companys multiple markets.

Goldberg has seen other companies rush to make acquisitions in strong markets only to find themselves without strong operators. Green Leaf is focused on building its business with the help of the strongest talent possible.

Multi-State Operations

Green Leaf has operations in Maryland, Pennsylvania, Ohio, and Virginia. In Maryland, its vertically integrated footprint includes cultivation, extraction, and retail. A 20,000-square-foot expansion of its cultivation facility in the state will take production from 500 pounds per month to 1,000 pounds per month, according to Goldberg. The Maryland extraction lab makes a number of products, and the company is looking to add more dispensaries in the state.

In Pennsylvania, Green Leaf has a 275,000-square-foot facility. A total of 100,000 square feet houses its cultivation and extraction operations, and the company is in the process of completing the remaining 175,000 square feet. The facility will have a total production capacity of 5,500 pounds per month.

Green Leaf’s Pennsylvania Facility

In Ohio, the company has dispensary operations. Its retail locations are performing well, but the market is taking longer to develop, according to Goldberg.

The company is one of five vertically integrated license holders in Virginia. Operations are located in Richmond, and the company is in the process of adding five additional dispensaries to its license.

Green Leaf is largely focusing on limited license states. It has pending applications for vertically integrated licenses in New Jersey and West Virginia. Georgia and Colorado are also states of interest. In Georgia, the company has started the Georgia Cannabis Industry Association in an effort to support the best possible regulations in the state, according to Goldberg. In Colorado, the company is exploring a potential acquisition.

The gLeaf Brand

The companys products are sold under the gLeaf brand. Flower, including pre-rolls, accounts for approximately 60 percent of its sales. The remaining sales are of concentrates, including vape cartridges and solid concentrates. Green Leaf is also building out a kitchen in Maryland in anticipation of forthcoming edibles regulations in the state.

Green Leaf Products Are Sold Under the gLeaf Brand

A Balanced Approach to Growth

Historically, Green Leaf has been built by entering new markets and winning licenses. Now, when the company plans to go deeper into its markets, it will explore possible acquisitions. For example, it is looking to add dispensaries to its Pennsylvania operations through acquisition. With its 275,000-square-foot facility in the state, Goldberg is confident in the size of the companys operations, but he sees additional dispensaries as an insurance policy in the case that the state issues additional licenses.

Equity, Debt, and Sale-Leasebacks

At the beginning of 2019, Green Leaf raised $20 million to fund its northeastern expansion, and the company still has approximately $7 million of capital. It has no remaining capital expenditures. Goldberg sees the company as well-positioned for the future.

Green Leaf has raised $27 million from the sale of equity to date, and it is in the process of shutting down its Series G. Goldberg recognizes that the sale of equity is dilutive, and now, the company is focused more on sale-leasebacks and debt. The company has worked with Innovative Industrial Properties to execute sale-leasebacks, and it is exploring another possible sale-leaseback deal for its expansion in Pennsylvania. Additionally, Green Leaf has a potential debt option, which it could use to complete some dispensary acquisitions in Pennsylvania.

The company has been approached by other MSOs and SPACs interested in a merger, but it hasnt moved forward with any of those proposals. For now, the company is focused on building its business through organic means and smart acquisitions. It will be ready to enter the public markets when the timing is right, according to Goldberg.

Revenue in 2020 and Beyond

Green Leaf has been steadily building its revenue over time. In 2018, the company did about $10 million sales and grew i 2019 to approximately $22 million. With Pennsylvania fully operational, the company expects to do $90 million in sales in 2020. As Virginia comes online, revenue is expected to grow to $160 million in 2021 and to $250 million in 2022, according to Goldberg.

As the company continues to grow, Goldberg is conscious of taking a measured pace. A lot of distressed assets are going to be coming onto the market, and it is going to be tempting to snap them up, he said. But, Green Leaf will remain dedicated to building a strong team and making carefully calculated acquisitions.

To learn more, visit the Green Leaf Medical website. Listen to the entire interview:

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