February 25 2023,
THE BIG IDEA
WHAT YOU MISSED IN WEEDWEEK CALIFORNIA PRO
Why is TPCO merging with Gold Flora?
The Parent Company’s (TPCO’s) announcement this week of a “merger of equals” with privately-held Gold Flora has observers scratching their heads.
The all-stock deal would combine TPCO with the owner of well-regarded Airfield Supply shop in San Jose, as well as brands, manufacturing and cultivation businesses. The resulting vertically-integrated player would be among the largest in California. The press release argues the combined company would have the footprint and economies of scale necessary to compete in the state’s punishing market.
Colin Campbell, an LA-based managing director at M&A advisory Sharp Capital Advisors, a boutique M&A advisory, called the deal “encouraging in the sense that it recognizes the government isn’t going to step in with a “silver bullet” like federal banking reform. “It’s two companies trying to figure out, ‘How do we survive?”
Amid California’s punishing market, similar tie-ups have been widely expected. Morgan Paxhia, Managing Director of Poseidon Asset Management, wrote in Kiplinger this week that there’s a “natural need” for M&A.
So why is he, like several observers I spoke to, “mixed to negative” on the deal?
TPCO and Gold Flora declined to comment.
LOOKING FOR A BETTER JOB?
"THE PINOCCHIO OF POT"
At the beginning of the pandemic, Raw’s 52-year old founder and social media star Josh Kesselman, told Forbes about the company’s factory in Alcoy, Spain:
“Alcoy is insulated; we’re up in the mountains, not down where the Covid really is in Spain. We’re one of the few real businesses in Alcoy.”
There was, however, one very real problem with Kesselman’s factory in Alcoy– it doesn’t exist.
- U.S. Rep. Barbara Lee (D-Oakland), a member of Congress’ cannabis caucus, is running for U.S. Senate.
- Despite a tough climate for equity funding, Florida-based fintech Green Check Verified raised a $6M Series A led by Mendon Venture Partners. (Disclosure: Green Check is a WeedWeek advertiser.)
- Strapped MSO MedMen is thinking about selling assets in Illinois, Arizona and Nevada. The SoCal-based company said it has cut its payroll by 34%.
- RIV Capital and JW Asset Management (which is led by Jason Wild, chairman of MSO Terrascend) settled their differences over RIV’s acquisition of New York license holder Etain.
Green Market Report
- Clark Hill lawyer Robert Hoban discusses where the industry goes after “its first true down cycle.“
- New Cannabis Ventures spoke to Craig Snyder, the new CEO of ancillary conglomerate Greenlane, which faced a severe cash crunch in the fall.
- Stock analyst Alan Brochstein looks at 13 cannabis ETFs.
State and local:
- Annual California REC sales declined in 2022, the first time that’s happened. The drop owes to declining wholesale prices, the illegal market and the inability to open shops in much of the state. Nevada sales fell 13%.
- A MED bill advanced in North Carolina. A REC bill advanced in Minnesota.
AP, Marijuana Moment
- New York City Mayor Eric Adams (D) asked the state for help combatting the illegal market.
- The Oklahoman has a point (by a grandma) and a counterpoint (by a retired journalist an a retired cop) on whether state voters should go REC in March.
- Michigan regulators suspended a company for mixing illegal and legal product.
- Western Massachusetts gentleman’s club Club Castaway has a “new vision” for installing a topless dispensary inside.
Daily Hampshire Gazette
- The Oregon industry is fighting a proposed sales tax hike.
- In Vegas, operators are bristling over a buffer rule for consumption lounges that would block the creation of a “New Amsterdam” area in the Arts District or downtown.
Fun and interesting:
- Golf Digest checks out the country’s only pot shop on a golf course. It’s near Seattle.