It’s been another action-packed week in cannabis with new public listings, big earnings news and more signals that institutional investors are stepping off the sidelines and dipping their toes into legal marijuana markets.
Here are the top newsmakers and deals that caught our eyes here at Investor Intelligence – plus a look at what we’ll be watching next week:
What’s behind Gotham Green’s $250 million investment in MedMen?
Private equity investor Gotham Green Partners plans to drop up to $250 million into California-based multistate cannabis operator MedMen (CSE: MMEN).
The capital is being targeted for potential acquisitions, tech upgrades and boosting cultivation and production.
A noteworthy highlight behind the headline: MedMen noted the strategic investment stems from its relationship with Canadian licensed producer Cronos Group (Nasdaq: CRON; TSX: CRON). Green Gotham is an investor in Cronos, and its founder and managing partner Jason Adler is a Cronos board member.
Investors might recall that Cronos and MedMen previously announced a joint venture to develop branded products, conduct research and open a chain of retail stores across Canada.
Since the joint venture was announced, some analysts and observers have pondered whether the cozy relationship could yield the first mega cross-border marijuana merger.
With Green Gotham now claiming a stake in both firms, this is a trifecta worth watching.
Curaleaf doubles up on its ‘institutional stamp of approval’
Massachusetts-based Curaleaf (CSE: CURA) grabbed headlines Wednesday when it revealed during its Q4 earnings call that the CVS pharmacy chain agreed to begin selling its hemp products at 800 stores in 10 states. Curaleaf’s hemp lotions and transdermal patch products started hitting store shelves this week, executives said.
The timing of the announcement (as part of an earnings call rather than a news release) surprised most analysts, including Andrew Kessner of New York investment advising firm William O’Neil, who called the deal an “institutional stamp of approval.”
The institutional interest keeps on growing: The company is also garnering interest from Wall Street titan BlackRock. The world’s largest asset manager has an $11 million stake in Curaleaf, according to an annual filing with the U.S. Securities and Exchange Commission.
BlackRock’s Resource & Commodities Strategy Trust held 1.07 million shares at the end of 2018, representing less than 1% of the fund’s year-end net assets. Still, the entry by BlackRock is a clear signal that institutional behemoths are beginning to dip their toes in the rapidly growing cannabis sector.
Curaleaf reported fourth-quarter revenue of $31.9 million, up from $6.2 million for the same period in 2017. Full-year fiscal 2018 revenue totaled $77 million, nearly triple 2017.
Net losses totaled $16.5 million for Q4 and $61.8 million for 2018. The full-year net loss includes a $25.1 million one-time adjustment associated with the company’s reverse takeover that led to its Canadian Securities Exchange listing last year.
Going, Going, Gone … Public
- Vireo Health, a Minnesota-based multistate operator, started trading Wednesday on the Canadian Securities Exchange after completing a $50 million private placement reverse takeover of a public shell company. Vireo has cultivation, dispensary and processing operations in six states. The company is trading under the ticker symbol VREO.
- Vancouver, British Columbia-based Nextleaf Solutions began trading Thursday on the CSE under the ticker symbol OILS. The company uses its technology to extract and process cannabinoid distillate, which can be used for premium infused products.
- Miami-based multistate operator Cansortium closed a $56 million raise ahead of going public via an initial public offering Friday. The firm’s shares began trading on the CSE as TIUM.U. The company operates four cultivation operations and 11 dispensaries in Florida, Pennsylvania, Texas and Puerto Rico.
Next Week:
- March 26: Cronos Group will report its fourth-quarter and full-year earnings. The Toronto-based vertically integrated cannabis company had revenue of $3.8 million for the third quarter.
- March 28: Ontario-based cannabis producer CannTrust Holdings (NYSE: CTST) will report its fourth-quarter and full-year 2018 earnings March 28 at 6 a.m. ET. Earlier this month, CannTrust filed plans to raise up to CA$700 million ($522 million) for projects that include potential acquisitions.
