The Valens Company To Acquire Leading Premium Craft Licensed Producer, Citizen Stash Cannabis Corp.

Accretive acquisition strategically accelerates Valens’ entry into the approximately $2.7 billion flower-based market through an asset-light model that leverages a robust network of craft contract growing partners1

Catapults Valens into the high margin premium flower category with the leading Citizen Stash brand which is the #1 flower brand by market share with an average retail price over $13.00/gram2

Significant revenue and cost synergies are anticipated through the combination of the Citizen Stash brand with Valens’ buying power and low-cost, manufacturing infrastructure

CANADA: The Valens Company Inc. and Citizen Stash Cannabis Corp. (formerly Experion Holdings Ltd) are pleased to announce they have entered into an arrangement agreement pursuant to  which Valens will acquire all of the issued and outstanding common shares of Citizen Stash by way of a court-approved plan of arrangement under the Canada Business Corporations Act, in an all share transaction.  The transaction is valued at approximately $54.3 million on an enterprise value basis.

Under the terms of the Arrangement Agreement, Citizen Stash shareholders will receive 0.1620 of a Valens common share for each Citizen Stash Common Share held. The Exchange Ratio implies a premium per Citizen Stash Common Share of approximately 35.1% based on the 15-day volume-weighted average price of the Citizen Stash Common Shares on the TSX-V and the Valens Shares on the TSX as of the close of markets on August 27, 2021.

The Citizen Stash Acquisition is expected to be accretive to Valens in 2021 and 2022 before synergies, and will provide Valens with a strategic, asset-light expansion into flower and pre-rolls, the largest segments of the Canadian cannabis market currently accounting for over 70% of retail sales. This acquisition is anticipated to solidify Valens’ position as a top tier cannabis company by enhancing the Company’s market share and adding an innovative, premium flower brand to its portfolio. Closing of the Citizen Stash transaction will mark the third acquisition Valens has made this year, which will accelerate Valens’ strategic initiative to create a leading global manufacturing platform, capture market share through innovative product launches with unique consumer experiences, and expand on its existing domestic and international distribution network to better capitalize on the global opportunity.

Key Transaction Highlights

  • Top premium craft flower brand meets top cannabis product manufacturer to create a best-in-class cannabis company: Leading premium flower brand, a full suite of innovative product manufacturing capabilities, scale, and operational and financial flexibility best position the pro forma company to close the significant trading discount to the large cap cannabis peer group3 currently experienced by both companies.
  • Competitively positioned to win: The Citizen Stash complementary award-winning brand portfolio will bring over 40 provincial listings to Valens’ growing house of brands across seven provinces which will bring the proforma company to over 220 provincial listings as of August 2021.
  • Accretive transaction: Expected to be accretive to the Company in 2021 and 2022 before synergies. The Acquisition represents an attractive revenue multiple of approximately 4.3x first half fiscal 2021 annualized revenue.
  • Asset-light model aligns with Valens’ philosophy of operational flexibility and continued financial discipline: Utilization of Citizen Stash’s craft contract growing model will provide Valens with operational flexibility to work with industry leading growers, efficiently manage proprietary strain rotation, reduce risk, and avoid the challenges a large growing infrastructure creates.

Citizen Stash is a licensed cultivator and processor of premium craft cannabis products based in Mission, British Columbia, and will provide Valens the opportunity to unlock additional growth with its extensive and specialized product portfolio in the premium flower and pre-roll segments. Citizen Stash operates a unique, asset-light platform comprised of a network of craft contract growing partners from which it selectively sources premium bulk flower grown from Citizen Stash’s industry leading proprietary genetics. Citizen Stash manufactures and packages flower and pre-roll products primarily through manual processes.

Citizen Stash is one of the top performing premium brands in the flower and pre-roll categories. Based on Hifyre data for the flower category during March to May 2021 in the markets of Ontario, Alberta and British Columbia, Citizen Stash is the highest ranked premium brand by market share in the flower category with an average selling price above $13.00 per gram and is the only brand in the top 20 by market share with an average selling price above $13.00 per gram. Within the pre-roll category during March to May 2021 in the markets of Ontario, Alberta and British Columbia, Citizen Stash is the third highest ranked premium brand with average selling price above $13.00 per gram and one of only five within the top 20 overall brands. The Citizen Stash brand has demonstrated very impressive strength in the competitive flower and pre-roll categories with year-over-year market share gains unlike many other competitor brands – a testament to the product quality and consumer loyalty borne out of Citizen Stash’s industry leading genetics.

Tyler Robson, Chief Executive Officer and Chair of the Board of The Valens Company, said, “We are excited to join forces with Citizen Stash’s experienced team and broaden our offerings in the flower and pre-roll verticals with a best-in-class brand. The premium price tier of the flower and pre-roll segments represents the best expansion opportunity for Valens in the flower category, as premium brands are the hardest to build, while also capturing the highest margins. Citizen Stash’s asset light model, and proprietary genetics will provide us significant operational flexibility and an opportunity to leverage the growing capabilities of our existing LP partners.  In short, this strategic acquisition will allow Valens to significantly expand its presence in the recreational market and capture a share of the largest categories of the Canadian cannabis space without the burden of a high-cost growing infrastructure. We are opportunistically expanding our product offering to align with consumer demand for high quality craft cannabis flower and pre-rolls.”

Jarrett Malnarich, Chief Executive Officer of Citizen Stash, said, “Combining our business with The Valens Company represents an outstanding opportunity for our company and the shareholders of Citizen Stash and is wholeheartedly endorsed by our Board of Directors. We look forward to the full integration of Citizen Stash with The Valens Company. We believe the combination will create a leading platform in the Canadian cannabis industry which spans all categories, while focusing on profitability and creating value for all shareholders. Together we look forward to taking the Citizen Stash brand to new heights that Citizen Stash could not have achieved on its own, by leveraging Valens’ best-in-class, low-cost manufacturing capabilities and industry leading distribution scale. In our collaboration with Valens to date, Citizen Stash has come to realize the common values we share centered around providing consumers with the highest quality cannabis products. We anticipate that the future of our combined company will be filled with product innovation fueled by our shared entrepreneurial vision and mission to provide outstanding consumer experiences in both domestic and global markets. We look forward to the support of our shareholders in completing this transaction and the full integration of our two businesses.”

Trulieve Becomes First MSO to Launch Clone Sales in Massachusetts

Company successfully launches cannabis clone sales, emphasizing support of home grow for Massachusetts residents and expanding product variety in Northampton location

FLORIDA:  Trulieve Cannabis Corp., a leading and top-performing cannabis company in the United States, today announced it has successfully launched a pilot program selling its premium-quality cannabis clones at its Northampton, MA dispensary, in accordance with state law. This marks a significant first-to-market entry for the Company, where it is now the only multi state operator (MSO) to provide home growers with its products in the form of consistent, healthy, top-tier plants.

“Trulieve supports home grow initiatives in Massachusetts and we are excited to offer our top-tier genetics to those who would prefer to grow their own cannabis plants at home,” said Kim Rivers, CEO of Trulieve. “We’re delivering on our promise to meet cannabis consumers wherever they are in their level of experience, as well as our commitment to expanding access to the plant as we continue to grow in the Massachusetts market.”

At the time of program launch, Trulieve is releasing a limited amount of its Chocolope NewBerry Sativa strain, which can be ordered online through the Company’s Northampton location website and will be available for in-store pickup at 216 North King Street, Northampton, MA beginning Friday, August 20. Clones will be sold in packs of three and sales limited to one per customer during the initial launch phase. In the future, the Company plans to offer different strains based on consumer feedback and will expand clone availability across its Massachusetts locations.

For citizens of Massachusetts interested in home grow, the launch of Trulieve’s clone program represents a new opportunity to access the highest-quality genetics in a ready-to-grow format and ensures clone consistency and quality not previously available in the state. Cannabis clones carry the exact same genetic potential as their mother plant and will have similar cannabinoid and terpene profiles when grown properly. When clones are selected from healthy, high-quality mother plants, they also inherit their vigor, and natural resistance to mold, mildew, and pests.

For further information on the Massachusetts home grow program, please see the guidance document provided by the Cannabis Control Commission and refer to the home cultivation section of the Commission’s website.

Ayr Wellness Enters the Cannabis-Infused Beverage Market with Proposed Acquisition of Levia

NEW YORK: Ayr Wellness Inc., a leading vertically integrated cannabis multi-state operator (“MSO”), has announced that it has entered into a binding letter of intent to acquire Cultivauna, LLC, the owner of Levia branded cannabis infused seltzers and water-soluble tinctures.

“Ayr wants something exciting to offer every cannabis consumer of today and the future cannabis customer of tomorrow. Infused beverages, done right, will be game changing to the mainstreaming of cannabis in the U.S., providing an approachable and sessionable form factor to new and existing customers. The acquisition of Levia brings Ayr into this rapidly growing segment with delicious, market-leading infused seltzer. We are excited to have Levia join Kynd premium flower and Origyn extracts in Ayr’s suite of premier national brands,” said Jonathan Sandelman, CEO of Ayr Wellness.

“With a formula that provides consistently great flavor and zero calories in an infused beverage experience, we believe Levia has enormous potential as an alcohol alternative. In just six months since its initial launch in Massachusetts, Levia has become the top selling THC beverage. As we finalize our updated national brand portfolio to address all segments and form factors, Levia will play a marquee role in each market where we operate,” Mr. Sandelman concluded.

Ayr intends to purchase 100% of the equity interests of Cultivauna, LLC. The terms of the transaction include $20 million in upfront consideration, made up of up to $10 million in cash with the remainder in stock. An earn-out payment of up to an additional $40 million will be paid in shares based on the achievement of revenue targets in 2022 and 2023.

Levia Cannabis Infused Seltzers provide for rapid onset of the effects of THC, typically 15-20 minutes, allowing for a more consistent consumption experience than many edible products. Levia is currently available in Massachusetts in three experiences and flavors:

  • “Achieve” Raspberry Lime (Sativa)
  • “Celebrate” Lemon Lime (Hybrid)
  • “Dream” Jam Berry (Indica)

Each flavor is available in 12-ounce slim cans and contains 5 mgs of THC. Levia is also available in water soluble tinctures in the same formulations.

The acquisition is subject to customary closing conditions and regulatory approvals, as well as the execution of a binding definitive agreement. The acquisition is expected to close by the end of 2021.

Trulieve Announces the Largest US Cannabis Transaction; Acquisition of Harvest Health & Recreation Inc., Creates the Most Profitable Multi-State Operator in the World’s Largest Cannabis Market

Combined Company Will Maintain Industry Leading Scale in Retail, Cultivation & Production

Footprint Provides National Scale with a Deep Regional Focus in Attractive Markets

Expanded Runway for Growth with new Southwest Hub and Expanded Northeast and Southeast Hubs

Combined Consensus 2021E Revenue of $1.2 Billion

 

FLORIDA & ARIZONA: Trulieve Cannabis Corp. and Harvest Health & Recreation Inc. announce they have entered into a definitive arrangement agreement pursuant to which Trulieve will acquire all of the issued and outstanding subordinate voting shares, multiple voting shares and super voting shares of Harvest. Under the terms of the Arrangement Agreement, shareholders of Harvest will receive 0.1170 of a subordinate voting share of Trulieve for each Harvest subordinate voting share (or equivalent) held, representing total consideration of approximately $2.1 billion based on the closing price of the Trulieve Shares on May 7, 2021.

Trulieve, a leading multi-state operator with a focus on the northeast and southeast regions of the United States, and Harvest, a leading multi-state operator with a focus on the west coast and northeast regions of the United States, have built deep, vertically integrated operations in their key markets, becoming leading operators in the United States, the world’s largest regulated cannabis market.

Upon completion of the Transaction, as well as the closing of other previously announced acquisitions by Harvest and Trulieve, the combined business will have operations in 11 states, comprised of 22 cultivation and processing facilities with a total capacity of 3.1 million square feet, and 126 dispensaries serving both the medical and adult-use recreational cannabis markets.

Key Transaction Highlights and Benefits

  • Increases Scale Across Our Hub Markets – through the creation of the largest U.S. cannabis operator on a combined retail and cultivation footprint basis;
  • Creates the Most Profitable US MSO – with combined 2020 Adjusted EBITDA of $266 million1,2 and combined 2021E consensus Adjusted EBITDA3 of $461 million, delivering an unparalleled platform for continued growth;
  • Delivers a Superior Existing Retail and Distribution Model – from a robust retail network of 126 dispensaries across 11 states, the combined company will have leading market shares in Arizona and Florida;
  • Strong and Expanding Multi-State Presence – bolsters Trulieve’s expansion in US northeast and southeast hubs in Florida, Pennsylvania and Maryland, and establishes a southwest hub in core markets including Arizona, where recreational adult use of cannabis was recently legalized;
  • Optimizes Nationwide Presence – through well-established retail and wholesale channels across markets, as well as the ability to reach an estimated total addressable market of US$19.3 billion in 2025E (Arcview market estimate);
  • Adds Premium Brands – to Trulieve’s portfolio of in-house brands and national brand partners with a successful line of products across multiple form factors;
  • Leverages Expert Operating Teams and Best Practices – from each of Trulieve and Harvest, enhancing operational excellence by combining unparalleled knowledge of, and success in winning, state license application processes and the ability to rapidly bring operations to market; and
  • Accretive Transaction Reinforces Trulieve’s Leading Financial Metrics – by reinforcing superior financial performance relative to peers through industry-leading margins and strong projected profitable growth.

Management Commentary

“Today’s announcement is the largest and most exciting acquisition so far in our industry, creating the most profitable public multi-state operator.  Importantly, our companies share similar customer values with a focus on going deep in core markets. This combination offers us the opportunity to leverage our respective strong foundations and propel us forward with an unparalleled platform for future growth,” stated Kim Rivers, Chief Executive Officer of Trulieve. “Harvest provides us with an immediate and significant presence in new and established markets and accelerates our entry into the adult use space in Arizona. Trulieve and Harvest are leaders in our markets, recognized for our innovation, brands, and operational expertise with true depth and scale in our businesses. We look forward to providing best-in-class service to patients and customers on a broader national scale as we create an iconic US cannabis brand.”

“We are thrilled to be joining Trulieve, a company that has achieved unrivaled success and scale in its home state of Florida,” said Steve White, Chief Executive Officer of Harvest.  “As one of the oldest multi-state operators, we believe our track record of identifying and developing attractive market opportunities combined with our recent successful launch of adult use sales in Arizona will add tremendous value to the combined organization as it continues to expand and grow in the coming years.”

Terms of the Transaction

The Transaction will be effected by way of a plan of arrangement pursuant to the Business Corporations Act (British Columbia). Under the terms of the Arrangement Agreement, Trulieve will acquire all of the issued and outstanding Harvest Shares, with each Harvest Shareholder receiving 0.1170 of a Trulieve Share for each Harvest Share, implying a price per Harvest Share of US$4.79, which represents a 34% premium to the May 7, 2021 closing price of the Harvest Shares. After giving effect to the Transaction, Harvest Shareholders will hold approximately 26.7% of the issued and outstanding pro forma Trulieve Shares (on a fully-diluted basis). The Exchange Ratio is subject to adjustment in the event that Harvest completes certain interim period refinancing measures, with the potential adjustment in proportion to the incremental costs from such financing relative to the Transaction value. Additional details of the Transaction will be described in the management information circular and proxy statement that will be mailed to Harvest Shareholders in connection with a special meeting of Harvest Shareholders expected to be held in the third quarter to approve the Transaction.

The Transaction has been unanimously approved by the Boards of Directors of each of Trulieve and Harvest. Harvest Shareholders holding more than 50% of the voting power of the issued and outstanding Harvest Shares have entered into voting support agreements with Trulieve to vote in favor of the Transaction.

The Arrangement Agreement provides for certain customary provisions, including covenants in respect of non-solicitation of alternative transactions, a right to match superior proposals, US$100 million reciprocal termination fees under certain circumstances and reciprocal expense reimbursement provisions in certain circumstances.

The Transaction is subject to, among other things, the approval of the necessary approvals of the Supreme Court of British Columbia, the approval of two-thirds of the votes cast by Harvest Shareholders at the Special Meeting, receipt of the required regulatory approvals, including, but not limited, approval pursuant to the Hart–Scott–Rodino Antitrust Improvements Act, and other customary conditions of closing. Approval of Trulieve Shareholders is not required. Additional details of the Transaction will be provided in the Circular.

The Board of Directors of Harvest has unanimously determined, after receiving financial and legal advice and following the receipt and review of a unanimous recommendation of a special committee of independent directors, that the Transaction is in the best interests of Harvest, and that, on the basis of the Fairness Opinion (as defined herein), that the consideration to be received by the Harvest Shareholders is fair, from a financial point of view, to the Harvest Shareholders.

The Harvest Board unanimously recommends that Harvest Shareholders vote in favor of the resolution to approve the Transaction. The Special Committee obtained a fairness opinion from Haywood Securities Inc., which provides that, as at the date of such opinion and based upon and subject to the assumptions, procedures, factors, limitations and qualifications set forth therein, the consideration to be received by the Harvest Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Harvest Shareholders.

Tilray & Aphria Announce Closing of Transaction That Creates the “New” Tilray – a Global Cannabis Leader

Operational Efficiencies Expected to Generate Approximately US$81 Million Annual Pre-Tax Cost-Saving Synergies for New Tilray Within Eighteen Months

NEW YORK & CANADA: Tilray, Inc. and Aphria Inc. today announced the completion of the previously announced business combination, ushering in a new era in the global cannabis industry. The combined company, which will operate as Tilray (the “Company”), brings together two highly complementary businesses to create the leading cannabis-focused consumer packaged goods (“CPG”) company with the largest global geographic footprint in the industryThe combined company had a market cap of approximately US$8.2 billion based on the closing stock prices on April 30, 2021.

 

The Company’s class 2 common stock (“Tilray Shares”) will continue to trade on the Nasdaq Global Select Exchange under the ticker symbol “TLRY” and will commence trading on the Toronto Stock Exchange under the ticker symbol “TLRY” on May 5, 2021. As previously announced, each Aphria shareholder received 0.8381 of a Tilray Share for each Aphria common share (each an “Aphria Share”) held on April 30, 2021, the effective time of the transaction. Holders of Tilray Shares prior to the completion of the transaction continue to hold their Tilray Shares with no adjustment as a result of the transaction. An early warning report in respect of the Company’s acquisition of all of the outstanding Aphria Shares pursuant to the transaction will be filed on SEDAR and will be ‎available under Aphria’s issuer profile at www.sedar.com.‎

Irwin D. Simon, the Company’s Chairman and Chief Executive Officer, commented, “Our focus now turns to execution on our highest return priorities including business integration and accelerating our global growth strategy. Covid-19 related lockdowns have presented unique challenges across Canadian and German markets. As these markets begin to re-open, Tilray is poised to strike and transform the industry with our highly scalable operational footprint, a curated portfolio of diverse medical and adult-use cannabis brands and products, a multi-continent distribution network, and a robust capital structure to fund our global expansion strategy and deliver sustained profitability and long-term value for our stakeholders.”

Mr. Simon continued, “Our global team is laser-focused on turning potential into performance and addressing consumer and patient needs for safe, innovative, and high-quality products. We are eager to get to work and want to thank both the Aphria and the Tilray Boards of Directors and especially Brendan Kennedy for his spirit of partnership and irrepressible belief in the art of ‘what’s possible.’ We will benefit enormously from his legacy and continued service on the Tilray Board.”

We expect that the business combination will provide, among others, the following financial and strategic benefits:

World’s Largest Global Cannabis Company. The combination of Aphria and Tilray brings together two highly complementary businesses to create the leading cannabis-focused CPG company with the largest global geographic footprint in the industry.

Strategic Footprint and Operational Scale. We believe that the Company has the strategic footprint and operational scale necessary to compete more effectively in today’s consolidating cannabis market with a strong, flexible balance sheet, strong cash balance, and access to capital, which we believe will give the Company the ability to accelerate growth and deliver long-term sustainable value for stockholders.

Low-cost, State-of-the-Art Production & the Leading Canadian Adult-Use Cannabis Producer. The demand for the Company’s products will be supported by low-cost state-of-the-art cultivation, processing, and manufacturing facilities, and it will have a complete portfolio of branded cannabis 2.0 products to strengthen its leadership position in Canada.

Positioned to Pursue an Accelerated International Growth Strategy. The Company is well-positioned to pursue international growth opportunities with its strong medical cannabis brands, distribution network in Germany, and end-to-end European Union Good Manufacturing Practices (“EU-GMP”) supply chain, which includes its production facilities in Portugal and Germany.

Enhanced Consumer Packaged Goods Presence and Infrastructure in the U.S. In the United States, Tilray has a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater, a leading cannabis lifestyle branded craft brewer, and Manitoba Harvest, a pioneer in branded hemp, CBD and wellness products with access to 17,000 stores in North America. In the event of federal permissibility, the Company expects to be well-positioned to compete in the U.S. cannabis market given its existing strong brands and distribution system in addition to its track record of growth in consumer-packaged goods and cannabis products.

Substantial Synergies. The Company expects to deliver approximately US$81 million (C$100 million) of annual pre-tax cost synergies within eighteen months and plans to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales, and marketing, and corporate expenses.

Tilray’s new leadership team and board of directors will provide a strong foundation for the Company to accelerate growth and capitalize on the business combination’s many benefits.

Effective on closing, the senior management team and Board of Directors of the Company were reconstituted as follows:

  • Irwin D. Simon, Chairman and Chief Executive Officer
  • Carl Merton, Chief Financial Officer
  • Denise Faltischek, Head of International and Chief Strategy Officer
  • Jim Meiers, President, Canada
  • Jared Simon, President, Manitoba Harvest and Tilray Wellness
  • Rita Seguin, Chief Human Resources Officer
  • Dara Redler, Interim Chief Legal Officer and Corporate Secretary
  • Berrin Noorata, Chief Corporate Affairs Officer
  • Lloyd Brathwaite, Chief Information Officer
  • Freddy Bensch, Chief Executive Officer, SweetWater

Board of Directors:

  • Irwin D. Simon, Chairman
  • Renah Persofsky, ICD.D, Vice-Chair (Lead Director) and Chair of the Nominating and Governance Committee, Independent Director
  • Jodi Butts, Nominating & Governance Committee Member, Independent Director
  • David Clanachan, Newly Appointed Independent Director
  • John M. Herhalt Chair of the Audit Committee, Independent Director
  • David Hopkinson, Nominating and Governance Committee & Compensation Committee Member, Independent Director
  • Brendan Kennedy, Current Director and Former CEO, Tilray
  • Tom Looney, Audit Committee & Compensation Committee Member, Independent Director
  • Walter Robb, Chair of the Compensation Committee & Audit Committee Member, Independent Director

New Tilray Branding

The new Tilray logo blends both Aphria and legacy Tilray’s branding into a design that reflects the new Company’s growing portfolio of brands across cannabis-lifestyle and wellness product categories, including medical, adult-use, hemp foods, and beverages. The continued use of “Tilray” as the Company’s name evokes hard work and hope – til shortened from tilling the soil and ray as in a ray of sunshine. Tilray is a pioneer navigating toward the end of prohibition and built to deliver on the collective wellbeing of the Company’s employees, consumers, patients, partners, and local communities.

Acreage Announces Sale Of Florida Operations To Red White & Bloom Brands

NEW YORK:  Acreage Holdings, Inc. announced its subsidiary, High Street Capital Partners, LLC, has entered into a definitive agreement with Red White and Bloom Brands, Inc., pursuant to which the Buyer will purchase all of the issued and outstanding shares of common stock of Acreage Florida, Inc. for an aggregate purchase price of $60,000,000. Acreage Florida is licensed to operate medical marijuana dispensaries, a processing facility, and a cultivation facility in the state of Florida. The deal also includes the sale of property in Sanderson, Florida.

“The sale of our Florida operations is a significant step in our previously announced operating strategy to focus on those core markets that we believe will accelerate our path to profitability and position us for significant long-term growth and cash generation,” said Peter Caldini, Chief Executive Officer of Acreage Holdings. “The cash proceeds will significantly bolster our balance sheet and position us to accelerate our cultivation expansion projects and open additional dispensaries to support our growth into key adult-use cannabis states such as Illinois and New Jersey.”

Last summer, Acreage announced a focused core-market operating strategy in nine states in the Northeast, Mid-Atlantic and Midwest. The Company currently has active operations and licenses in 13 states and continues to pursue divestitures of its remaining non-core state operations and licenses.

Deal Terms

Aggregate Purchase Price: $60,000,000 in cash, stock, and other cash considerations including:

  • An up-front cash payment of $5,000,000 upon execution of the definitive agreement.
  • An additional $20,000,000 in cash, $7,000,000 in the Buyer’s common stock, and $28,000,000 in promissory notes upon closing the transaction.

Acreage anticipates closing the transaction during the second quarter of 2021.

Survey Finds Changing Cannabis Consumer & Consumption Habits

MASSACHUSETTS:  A new survey conducted by The Harris Poll on behalf of Curaleaf Holdings, Inc., a leading U.S. provider of consumer products in cannabis, finds that 42% of adults aged 21+ who have ever consumed cannabis have started or increased their consumption since the beginning of the pandemic.

According to the survey by the independent pollster, conducted online in October 2020 among nearly 2,000 U.S. adults aged 21+, the main reasons many Americans have chosen to start or increase their cannabis consumption since the pandemic began include:

  • to reduce stress and anxiety (54%; women (64%) and men (47%))
  • to relax (50%; women (50%) and men (49%))
  • to help them sleep (48%; women (52%) and men (45%))

This shift in consumption habits extends to parents of children under 18 (“parents”). In fact, more than half (52%) of parents who have ever consumed cannabis say they have started or increased their cannabis consumption since the beginning of the pandemic, compared to 33% of those who are not parents of children under 18. These moms and dads of children under 18 are also more likely to consume cannabis primarily for medical use (58% vs. 44%).

The survey also found that more than half (57%) of parents with children under 18 who have ever consumed cannabis have reduced or replaced their alcohol consumption with cannabis since the start of the pandemic.

Overall, amongst all adult cannabis consumers aged 21+, 45% say they have reduced or replaced their alcohol consumption with cannabis, and one-third (33%) of those who consume cannabis for adult use say they prefer cannabis to alcohol.

“Educating consumers around cannabis consumption is so important,” said Stacia Woodcock, PharmD and Dispensary Manager for Curaleaf in New York. “Curaleaf’s pharmacists and committed dispensary associates make it a priority to educate our patients and consumers and help them find the right products to make cannabis a part of their lives.”

The survey results come as the cannabis industry continues to become destigmatized and evolve into an increasingly mainstream role within society. Governors across the country designated the industry an “essential service” throughout the pandemic, acknowledging the important role cannabis plays serving the health and wellness needs of consumers. In November, voters in five states approved ballot measures expanding access to cannabis. Medicinal cannabis will be available in 36 states and adult-use in 15 states and Washington D.C.

“Since the start of the pandemic, we have seen an increase in new consumers at our dispensaries with more people exploring cannabis,” said Joe Bayern, President of Curaleaf. “The liberalization of the plant — and the increasing diversity among consumers who enjoy it — will continue as the general public become more interested in incorporating cannabis into their health and wellness routines.”

The survey also found similarities in cannabis consumption regardless of educational level or marital status, and across different regions of the country.

Massachusetts Cannabis Control Commission Approves Final Adult Use, Medical Use of Marijuana Regulations and Rescinds Colocated Regulations

MASSACHUSETTS: The Cannabis Control Commission (Commission) today approved new medical- and adult-use regulations and phased out 935 CMR 502, Colocated Adult-Use and Medical-Use Marijuana Operations, after bringing sufficient parity to the medical- and adult-use regulations.

“I’m excited that the revised medical- and adult-use regulatory revisions poise the Commission to make significant progress in our mission and statutory mandates on equity, patient access, and public health and safety,” Chairman Steven J. Hoffman said. “While we’ve made tremendous headway over the past three years, we now turn to critical work to implement new provisions, including; the increased caregiver/patient ratio, development of guidance documents, rollout of the Delivery Operator application, and a host of provisions establishing a more equitable and safe industry.”

In the coming weeks, the final regulations will be filed with the Secretary of State’s Regulation Division for promulgation and published on the Commission’s website.

Approved policies include:

Medical Use of Marijuana Program

  • Optimizing Patient access and preserving public safety by:
    • Allowing Caregivers to care for up to five Patients with a Canopy not in excess of 500 square feet;
    • Clarifying that Caregivers may seek a waiver to care for more than five Patients but cannot exceed the 500-square-foot limitation;
    • Preventing perceived risk of diversion by requiring Caregivers to create a log-of-growing and make that log available to the Commission upon request;
    • Broadening the types of physicians who can serve as the second physician making the recommendation for pediatric patients;
    • Requiring Certifying Health Care Providers (Providers) to have a plan to provide discounts to low-income Patients;
    • Allowing Patients with certain hardships to renew every two years instead of one year;
    • Permitting Patients to cultivate up to 12 flowering plants without hardship cultivation, and if more are needed, requiring hardship cultivation;
    • Allowing certain out-of-state Patients to be certified and registered as a Patient in Massachusetts; and
    • Restricting Caregivers from participating in paid advertising.

Equity Programming

  • Promoting a more inclusive and diverse industry by:
    • Waiving all Delivery application and license fees for Certified Economic Empowerment Priority Applicants (EEA) and Social Equity Program (SEP) participants in their first year of licensure under the exclusivity period;
    • Reducing annual license fees by 50%, or to $2,500, for EEAs and SEP participants upon renewal and all subsequent years for applicants;
    • Expanding SEP eligibility to certain categories of individuals and EEAs;
    • Requiring majority ownership by SEP participants in order to access license-related benefits, and potentially expanding these program benefits to microbusinesses and minority-owned, veteran-owned, and women-owned businesses; and
    • Clarifying that individuals who are EEAs, whether on their own or as part of a business entity, can apply as part of a new entity with EEA status so long as it continues to meet three or more of the six criteria, at least one of which shall be a majority-equity-ownership criterion.

Delivery

  • Increasing adult-use access and evolving the Delivery license type by:
    • Approving the Delivery Operator license type, which allows licensees to purchase wholesale Finished Marijuana Products with stringent requirements to warehouse;
    • Clarifying the statutory allowance of up to three Retail licenses and the regulatory allowance of up to a combined total of two Marijuana Courier and/or Delivery Operator licenses;
    • Extending the initial exclusivity period to three-years;
    • Allowing Third-Party Technology Platform Providers to contract with an unlimited number of Delivery Licensees;
    • Authorizing Delivery Operator Licensees to white label, or affix a product label that includes the branding (name and logo) of a specific Marijuana Establishment (ME) to a finished marijuana product that was previously produced and packaged by a licensed Product Manufacturer, Cultivator, Microbusiness, or Craft Marijuana Cooperative for sale to consumers;
    • Allowing Delivery Licensees to sell marijuana accessories and ME-branded goods and non-edible items directly to consumers; and
    • Automatically converting existing Pre-Certified “Delivery-Only” applicants to Delivery Courier Applicants.

Ownership & Control

  • Tightening stringent ownership and control measures further by:
    • Requiring EEAs to report to the Commission all changes of ownership and control and upon renewal and certifying to the Commission that the requisite ownership and control has been maintained by the requisite class of people identified on the EEA’s certification;
    • Preventing monopolies with the addition of safeguards between Third-Party Technology Platforms and Delivery Licensees by explicitly prohibiting:
      • monopolization or attempts at monopolization;
      • inducements;
      • direct or indirect investments from Third-Party Technology Platforms; and
      • restricting determinations of product and licensee placement on an app to objective, customer-oriented criteria.
    • Updating the definition of Persons or Entities with Direct Control by encompassing the equivalent of a Director in a business entity such as a Limited Liability Company, which has Managers in lieu of a Board of Directors, and setting a specific dollar amount with respect to what the Commission considers “significant contracts;” and
    • Confirming that EEAs hold majority ownership (51% or more) over the license to maintain priority status.

Product Database

  • Ensuring that the public is knowledgeable of the hallmarks of legally sourced products, preventing underage access, and lowering the risk of purchasing illicit products by adopting a requirement that Marijuana Establishments, including Delivery Operators, and MTCs comply with the Product Database requirement, just as adult-use licensees must.

Advertising and Branding

  • Modifying advertising and branding regulations by:
    • Allowing of branding sponsorships at certain events, with continued prohibitions on activities that target underage participants or entrants; and
    • Approving targeted advertising through mechanisms such as geofencing, provided they retain documentation of audience composition data related to these marketing activities.

Testing

  • Increasing testing accountability for licencees by:
    • Allowing marijuana products that fail initial contaminant screens to be:
      • Reanalyzed;
      • Remediated and retested by at least the original Independent Testing Laboratory, and a different Independent Testing Laboratory; or
      • Licensees may attempt remediation of a batch that has failed a second test prior to disposal or destruction.
    • Adding new pesticides to the list of pesticides currently required of Independent Testing Laboratory protocols; and
    • Requiring continued testing for vitamin E acetate and a secondary screen for heavy metals from finished vapes.

Video recordings of the Commission’s previous policy discussions and public hearings regarding the new regulations are available on Facebook and YouTube.

Massachusetts Marijuana Retailers Surpass $1 Billion In Gross Sales

Milestone reached nearly two years after adult-use sales started in Massachusetts; progress continues to achieve industry goals

MASSACHUSETTS: Adult-use Marijuana Retailers in Massachusetts have now tallied more than $1 billion in gross sales, according to information reported in the state’s mandatory seed-to-sale tracking system, the Cannabis Control Commission announced Tuesday.

At close of business on Friday, October 30, aggregate data recorded in Metrc by 80 Marijuana Retailers operating statewide reached $1,000,521,905, coming nearly two years after the first two adult-use stores on the East Coast opened their doors November 20, 2018.

“This sales milestone represents licensees’ ability to successfully support a safe, accessible, and effective adult-use industry, and I am pleased the resulting tax benefits will have a significant impact on communities throughout the Commonwealth,” Commission Chairman Steven J. Hoffman said. “These numbers also speak to Commission licensing and enforcement staff working around the clock to make sure these businesses and their products comply with all of our regulations, especially the health and safety provisions. Each year, as this marketplace matures, the public will continue to see progress on state mandates and Commission objectives, including our commitment to equity, and the steps we have taken in 2020 are evidence of that.”

Source: Cannabis Control Commission’s Open Data Platform

Over the first year of adult-use sales, from November 2018 to November 2019, 33 Marijuana Retailers generated $393.7 million in gross sales, before licensees ultimately tallied $444.9 million for the full calendar year of 2019.

Since January 1, 2020, Marijuana Establishments have already surpassed those figures, generating $539 million in gross sales despite two months of closures as a result of the COVID-19 public health emergency in Massachusetts. During the pandemic, the Commission has implemented numerous protocols, including social distancing requirements, sanitation measures, and curbside service at licensed locations throughout the state that put first the health and safety of employees, patients, and consumers, while also supporting Marijuana Establishments’ ongoing operations. Read more at MassCannabisControl.com/COVID19.

Licensing, Agents, and Equity

Since Massachusetts’ first two Marijuana Retailers opened in 2018, 82 more have received notices from the Commission to commence operations statewide and are in the process of opening. Another 201 Marijuana Retailers with provisional or final license approval are completing the Commission’s inspection and compliance procedures towards that end.

In total, the Commission has licensed 688 Marijuana Establishments, including Cultivators, Product Manufacturers, Independent Testing Laboratories, Microbusinesses, and more. Currently, 40 Cultivators are open for business, with the capacity to grow up to a maximum of 1.26 million square feet of canopy in the Commonwealth.

The Commission is also in the process of finalizing changes to its adult-use regulations that will support home delivery of marijuana and marijuana products, after launching the initial license applications for adult-use Delivery-Only operators in May. To further the agency’s mission of ensuring industry participation by communities that have been disproportionately harmed by marijuana prohibition, the evolving Marijuana Courier and Marijuana Delivery Operator license types will be exclusively available to certified Economic Empowerment Applicants (EEAs) and Social Equity Program (SEP) Participants for a minimum of three years. So far, the Commission has issued two Delivery-Only—or Marijuana Courier—licenses to such applicants and pre-certified 47 more who are interested in offering delivery services in Massachusetts.

To date, two EEA licensees, two SEP licensees, and five Disadvantaged Business Enterprises (DBE) – or state-certified minority-, woman-, or veteran-owned companies – have opened. Additionally, the Commission has issued provisional licenses to 14 more EEAs, 21 more SEP Participants, and 87 DBEs that represent they have attended the state’s Supplier Diversity Office class and received expedited review from the Commission. Another four provisional licenses have gone to applicants who maintain both EEA status and participate in SEP, while seven more provisional licenses have gone to SEP Participants who are also DBE certified.

As of October, across all categories of licenses, the adult-use cannabis industry in Massachusetts consists of nearly 10,300 active Marijuana Establishment Agent registrations, up from 6,700 in November 2019. Of those, approximately 33 percent identify as female and 66 percent identify as male, while 74.2 percent of registered and proposed agents identify as White, 6.7 percent identify as Hispanic, Latino, or Spanish, and 5.9 percent identify as Black or African American.

This spring, the Commission’s first cohort of 143 SEP Participants received technical assistance and training across four teaching tracks. For the second cohort, 285 applicants qualified and now have access to technical assistance and training that started in July and continues through this winter. Participants who are approved for the program based on three criteria receive automatic program benefits, such as expedited application review by the Commission’s licensing team, certain fee waivers, and exclusive access to license types such as the Marijuana Courier and Marijuana Delivery Operator licenses.

Public Health, Safety, and Research

Throughout 2020, the Commission has continued to lead on initiatives that prioritize the public health and safety of Massachusetts residents and increase patient and consumer awareness. As part of its multimillion-dollar campaign, More About Marijuana, which has traditionally focused on responsible use and preventing youth access, the Commission has incorporated new educational materials about the dangers of home manufacturingCOVID-19 safety tips for cannabis consumers, and the risks of vaping, in response to statutory requirements and recent health emergencies.

The Commission issued three industrywide emergency orders over the past year in response to reported occurrences of e-cigarette, or vaping, product use-associated lung injury (EVALI) in the Commonwealth and across the nation. Staff also surveyed licensees to understand the ingredients and sources of additives used in licensed products, published multiple sets of testing results pertaining to regulated vapes—effectively clearing their use of Vitamin E acetate—and issued new packaging, labeling, and testing requirements, including the testing of finished vaping products to protect consumers against hazardous additives and contaminants. This summer, the Commission’s Second Amended Quarantine Order Applying to Vaporizer Products provided several options for licensees to address previously quarantined products manufactured prior to December 12, 2019:

  • Voluntarily disposing of vaporizer products;
  • Releasing vaporizer products from quarantine for sale if first retested or remediated; or
  • Repurposing quarantined vaporizer products into other marijuana products after reclaiming marijuana oil from the quarantined product.

The Commission continues to develop a product database that will enable law enforcement, state and local officials, such as school administrators, and parents, to determine whether products that may be illegally diverted into the hands of youth and/or the public came from a licensed source or the illicit market.

Finally, the Commission released five comprehensive research reports in the past year which focus on youth usagepreliminary industry assessmentthe impact of legalizationthe state of the data, and the effectiveness of the Commission’s public awareness campaign. Work is underway to conduct a baseline assessment of impacts to the healthcare system, adult-use cannabis behaviors, the utility in using public safety data to assess social equity provisions, legal and illicit market cannabis use behaviors, cannabis-related disciplinary actions in schools, as well as continuing the primary collected surveys included in the Marijuana Baseline Health Study.

Additional information about the Commission’s sales, licensing, and equity data is available by visiting MassCannabisControl.Com, by contacting the Commission by phone (774-415-0200) or email (Commission@CCCMass.Com), or following the agency on Facebook and Twitter.

Burns & Levinson Hosts Fourth Annual State Of The Cannabis Industry Conference Virtually On October 29, 2020

Cannabis startups invited to apply for opportunity to present one-on-one to investors in “Capital Connection” program.

MASSACHUSETTS: Burns & Levinson will host its fourth annual “State of the Cannabis Industry” conference – which will be held virtually and will focus on critical issues in the multi-billion dollar cannabis industry – on October 29, 2020 from 9:00 a.m. to 2:00 p.m. ET. In addition to the event’s Q&A sessions, expert panels and keynote, Burns & Levinson is launching a new “Capital Connection” program to match cannabis industry startups with investors looking for early-stage companies to potentially fund or mentor. Cannabis startups will be selected through a competitive process to present their companies in private 20-minute online meetings with capital providers from 2:00 p.m. to 5:00 p.m. Emerging cannabis companies can apply here until October 16, but companies are encouraged to apply early.

The conference will feature an interview with Commissioner Steven Hoffman, Chairman of the Massachusetts Cannabis Control Commission, in an exclusive one-on-one Q&A with Frank A. Segall, co-chair of the Cannabis Business & Law Advisory Group at Burns & Levinson. Keynote speakers include: Joseph Lusardi, CEO of Curaleaf, and Mitchell Kahn, co-founder and CEO of Grassroots. Curaleaf, which is a leading medical and wellness cannabis operator in the U.S., closed a landmark $830 million acquisition of Grassroots in July 2020 – creating the world’s largest cannabis company.

The expert panels and Q&A sessions will tackle a wide range of issues impacting the cannabis industry including capital markets, M&A and investments, secured lending, workouts and restructurings, and developments in the hemp and CBD market.

“Despite the pandemic, we are still seeing significant business opportunities in the capital markets, investments and M&A areas to invest in and acquire cannabis, hemp/CBD and cannabis-related companies. We look forward to fostering these relationships through our Capital Connection program,” said Segall. “Even though we can’t physically be together like in previous years, we are very excited about this year’s conference and the opportunities for participants to make connections, develop partnerships and learn from our peers and industry leaders,” added Scott Moskol, who co-chairs Burns’ Cannabis Business & Law Advisory Group with Segall.

The conference sponsors include: Cohn Reznick, Hub International, GFA Federal Credit Union, Nucleus One, Green Check Verified, Paragon Payroll, and Elevate Northeast.

Burns & Levinson was the first major Boston corporate law firm to develop a cannabis business practice, and has been advising cannabis businesses, entrepreneurs and investors across the country for over seven years. The firm has unrivaled experience in cannabis and hemp/CBD business formation and corporate structuring, private placements, venture capital, M&A, securities, banking issues, fund formation, debt and equity financing, restructuring and receiverships, real estate acquisitions and leasing, intellectual property protection, 280E taxation issues, and cannabis litigation.

The firm is well-known for its role in the cannabis banking industry and has worked with multiple financial institutions to establish a framework that allows them to accept cannabis-derived deposits. Burns & Levinson is currently working with regulated financial institutions and non-regulated private funds to set up first-of-their-kind cannabis lending programs. The firm is also among the top law firms in the country handling high-level corporate and financing deals in the private and public markets in the cannabis market.

For more information about the conference and to register click here. For information on sponsorship opportunities, please contact Kristen Weller at kweller@burnslev.com.