The Talking Hedge

MJBiz has been acquired by Emerald X (NASDAQ: EEX) for $120 million in cash plus potential earnouts.

The transaction reflects the ongoing mainstream acceptance of the once-counterculture cannabis plant – and the multibillion-dollar industry that has blossomed around it over the past quarter century.

The deal includes a variable earnout based on financial performance. In 2021, MJBiz’s revenues were approximately $27 million, which were near pre-pandemic levels. The third-quarter figure was more than half of 2020’s total of $127.4 million. By comparison, 2019 revenue was $360.9 million.

Like other major event organizers, both privately held MJBiz and publicly held Emerald suffered financial fallout from the emergence of the coronavirus pandemic in early 2020. The pandemic forced the cancellation of hundreds of conferences and trade shows around the globe.

Episode 868 The #TalkingHedge talks about MJ Biz Con with George Jage, CEO at Jage Media, Inc. | MJ Unpacked | MJ Brand Insights ...

https://youtu.be/vJypPilhzo4

SPACS have been a significant part of the cannabis landscape since the late 2017 IPO of Cannabis Strategies Acquisition Corp, now AYR Wellness.  

Twenty-three Cannabis SPAC IPOs have been completed for total proceeds of $4.24B:

Of these, 5 SPACs with original IPO proceeds of $920M acquired non-cannabis businesses ranging from Wine to Space.  

Eight representing initial IPO proceeds of $1.72B, merged with cannabis-related companies, and 10 representing original IPO proceeds of $1.60B are still either looking for deals ($1.2B) or have transactions pending ($.4B).

California competitors in the group have been harshly punished.  In the 11 months since its de-SPAC transaction TPCO (OTC: GRAMF) is down 85.5% ( 88% annualized). Similarly, Glass House Brands (OTC: GLASF) in the less than six months since its de-SPAC is down 65.7% (73% annualized). Ironically, TPCO and GLASF were the two largest IPOs on the list at $575M and $402.5M, respectively.

Most importantly, the most recent SPACs have had a less receptive market to use their stocks as acquisition currency.

The group's performance may help explain why the most recent SPAC IPO, Canna-Global had to use a whole warrant in its $230M IPO last week.

Episode 867 The #TalkingHedge looks at Viridian Capital Advisors chart of the week…

https://youtu.be/KghzWiEANvw

#AlternativeInvestors #CannabisIndustry #AngelInvestors #FamilyOffices #HighNetWorthInvestors #WealthManagers #PrivateBankers #FinancialAdvisors #PrivateEquity #VentureCapital #AssetManagers #fundmanagement #fundraising #cannabisinvesting #limitedpartners #growthcapital #acquisitions #Cannabis #CBD #VC #Capital #InvestmentBanking #cannabisBusiness #Investing #Trading #FinTech #RoboAdvisor #AltFinance

Chatting with George Jage, CEO, Jage Media Inc. about crystal ball predictions within the Cannabis Industry and 2022 being the year of the brand.

Summary:

* George talks about retailers historically owning the relationship with the consumer based on limited shelf space and significant category duplicity.  

* Expanding distribution capabilities, more significant investment into brand marketing and emerging DTC models

* MJ Brand Insights is predicting brands will gain ground to own the relationship with the consumer moving forward

Episode 866 The #TalkingHedge chats with George Jage, CEO at Jage Media, Inc. | MJ Unpacked | MJ Brand Insights  

https://www.linkedin.com/in/georgejage/…

https://youtu.be/Cn8aSLVcSeY

Pfizer entered the medical cannabis industry betting on a promising cannabinoid-based bowel disease treatment, signing an agreement with the clinical-stage company Arena Pharmaceuticals for a total equity value of around $6.7 billion in an all-cash transaction.

The interest of cannabis’ many benefits from the global pharmaceutical industry, known as #BigPharma, will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless companies.

"The proposed acquisition of Arena complements our capabilities and expertise in Inflammation and Immunology, a Pfizer innovation engine developing potential therapies for patients with debilitating immuno-inflammatory diseases with a need for more effective treatment options." 

Pharmaceutical companies will lean on drugs that contain synthetic versions of CBD and THC, while continuing to acquire patents to secure the rights to various CBD extraction methods and concoctions designed to treat a myriad of ailments.

Episode 865 The #TalkingHedge dives into Forbes’ article...

https://youtu.be/IpnZxGiOLOA

There’s been a significant shift in cannabis debt issuance, transitioning from equity-linked debt to straight debt. This shift reflects the industry's growing maturity and profitability (at least in the U.S.)

In early 2018, nearly all cannabis debt issues were convertibles, and many issues had additional attached warrants to achieve total coverages of over 100%.  

As the U.S. MSOs became EBITDA positive in 2020, issuance of straight coupon debt began in earnest, led by the $300M Curaleaf deal in December 2020 and followed shortly after that by $100M and $120M deals by Cresco and TerrAscend, respectively.

Most of the top MSOs, including Ascend, AYR, Cresco, Curaleaf, Jushi, TerrAscend, Trulieve, and Verano, have now completed straight coupon issues in $100M+ sizes at rates between 8% and 10%.

The ability of Acreage Holdings and Glass House Brands to issue debt with no or little equity linkage is somewhat more surprising but explainable.  

The key is that in a credit market starving for yield, the Glass House issue is priced at 890 basis points over U.S. Treasuries. Investors are being paid a sizable premium for taking cannabis risks, believed to be on par with a CCC rated bond.

Episode 863 The #TalkingHedge looks at Viridian Capital Advisors chart...

https://youtu.be/XysKOUGX-so

#AlternativeInvestors #CannabisIndustry #AngelInvestors #FamilyOffices #HighNetWorthInvestors #WealthManagers #PrivateBankers #FinancialAdvisors #PrivateEquity #VentureCapital #AssetManagers #fundmanagement #cannabisinvesting #limitedpartners #Cannabis #CBD #VC #Capital #InvestmentBanking #cannabisBusiness #Investing #AltFinance

The Taliban regime in Afghanistan announced that it had reached an agreement with a German company to grow and manufacture cannabis products in the country.

A company called Cpharm made a $400M investment to create a factory to produce marijuana. Talks started with Afghanistan in 2017 when their parliament passed a medical cannabis law.

In November 2020, the infrastructure to build the laboratory finally began, delayed due to the previous government that was put in place by the U.S. was apparently "very corrupt."

CPharm will engage in contract farming, building an extraction center to process cannabis grown on plots of land by local landowners. Local growers will receive German seeds to meet their industry standards.

Episode 864 The #TalkingHedge dives into Benzinga’s article…

https://youtu.be/FNmiVcdbl5c

Ontario is one of the most exciting cannabis markets to watch as it expands with new retailers, brands, and products.  

In Headset’s report, we will explore trends and behaviors of cannabis consumers in Ontario by analyzing different age groups and identifying growth and changes in spending habits of different cannabis categories year over year.

When we look at age groups in Ontario, we notice some unique differences in cannabis shopping behaviors among the different groups.

For example, when we compare November 2020 to November 2021, we see that all age groups are buying significantly more cannabis than last year. The Gen Z age group, however, is the fastest growing age group with sales more than doubling (137%) from November 2020 to November 2021.

Looking specifically at Female consumers within the Gen Z age group and comparing them to their counterparts in the Alberta and California markets, we find that Gen Z Females in Ontario are spending much more of their wallet share on Flower (48.2%) than in Alberta (42.6%) and California (33.9%).

Episode 862 The #TalkingHedge dives into Headset’s report…

https://youtu.be/Ui8DhII0NyQ

#CannabisIndustry #CannabisData #MarijuanaData #CannabisAnalytics #MarijuanaAnalytics #CannabisSalesData #MarijuanaSalesData

the opportunities presented in the United States #cannabis market have been consistently increasing year over year since the inaugural states of Colorado and Washington voted in 2013 for #legalization.  

Despite the piecemeal approach we have seen in new states approving and implementing adult-use cannabis markets, we are seeing synergies within regional approaches and established operators improving scalability across distinct cannabis markets. With public support increasing for advancement in #MMJ and recreational cannabis, we expect to see the total addressable market in cannabis continue to increase.

By 2025, Headset is predicting that the total annual United States cannabis market has the potential to reach $45.8 billion.  

Episode 861 The #TalkingHedge looks at Headset’s report on Florida, New York, New Jersey, Virginia, & Ohio #CannabisMarkets…

https://youtu.be/0JbszyBwAv8

#CannabisIndustry #CannabisData #MarijuanaData #CannabisAnalytics #MarijuanaAnalytics #CannabisSalesData #MarijuanaSalesData

Canadian Cannabis Recap

While national regulations remain restrictive, including limitations such as permitting a maximum of 10 milligrams of THC in drinks and edibles, provinces across the country have licensed more retailers and loosened certain regulations, opening regions such as Ontario for strong growth.

According to the governmental statistics agency StatsCan, spending on regulated adult-use cannabis has outpaced that of the legacy market in every quarter since Q3 2020, largely following a period where brands focused on bringing flower products to market that undercut legacy prices.

2021 saw significant product innovation, especially in previously neglected Cannabis 2.0 categories including concentrates and topicals, as well as a proliferation of craft brands competing with large LPs for the increasingly sought-after premium flower segment, which offers margins as much as 4x higher than value flower products.

Episode 860 The #TalkingHedge dives into Brightfield Group’s article...

https://youtu.be/FieVnZbYHjc

#CannabisIndustry #CannabisData #MarijuanaData #CannabisAnalytics #MarijuanaAnalytics #CannabisSalesData #MarijuanaSalesData

Since 2019, capital raises in the cannabis industry have totaled $25B reflecting investment in more diverse and innovative products, improved therapeutic outcomes, and ancillary services.  

New Frontier Data’s report on Cannabis Finance & Investment, uncovers emerging trends, challenges and opportunities as they relate to Federal Prohibition, Capital Risks, M&A Investment Trends and Global Expansion.

Cannabis normalization has bolstered investor confidence in federal reform.  

Investments in cultivation and retail facilities accounted for 60% of 2021 deals (over $6 billion), but investors also bet big on technologies companies, with 2021 seeing the largest tech deals to date.

As liberalization progresses across emerging global markets, Canadian and American companies are deploying capital in global emerging markets as a strategic foundation to capture the near $500 billion opportunity.

Episode 859 The #TalkingHedge dives into New Frontier Data’s article...

https://youtu.be/vjHqoZmJTPI