Reviewing the Cover Progress Ecosystem – New Hashish Ventures

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This can be a copy of the July seventh version of our weekly E-newsletter, which now we have been publishing since October 2015.

Pals,

This weeks’s announcement by Cover Progress that its Board of Administrators had eliminated Co-Founder Bruce Linton from the corporate he began seven years in the past stunned the business. We’re unhappy for our pal and colleague with how his time got here to an abrupt finish and congratulate him for all that he did for the corporate and the worldwide business.

Change on the prime is nothing new for the sector, as a number of LPs have seen management adjustments by means of consolidation in addition to inside adjustments. Aphria introduced in outsider Irwin Simon, who remains to be Interim CEO however possible, in our view, to shed the “interim” shortly. Aurora Hashish moved CEO and Co-Founder Terry Sales space below the Govt Chairman. CannTrust named Peter Aceto to interchange its founder late final yr. Two years in the past, Organigram introduced in a brand new CEO, Greg Engel, who changed its founder. In fact, Tilray had earlier changed him as CEO. These corporations are 6 of the present 7 main LPs by way of income, and there are examples from different corporations as properly.

Whereas buyers actually wish to know what lies forward for Cover Progress, there’ll possible be some uncertainty till a brand new CEO is known as. In our view, the corporate ought to have the ability to appeal to some unbelievable expertise, and we sit up for seeing this course of play out. Within the meantime, new CFO Mike Lee, a Constellation veteran, actually has his eye on the ball. We extremely suggest that readers evaluation his strategic priorities that he shared on the convention name final month. Particularly, he referred to as for reviewing the worldwide ERP technique, strengthening monetary reporting and controls and accelerating acquisition integrations. All of that is designed to create scalable development, and we anticipate that the brand new CEO picked by Constellation will probably be one the corporate expects can drive development in a extra scalable method than the corporate has achieved so far.

Within the quick aftermath, NY Consultant Chuck Schumer was fast to affirm that Cover Progress will probably be continuing with its New York hemp actions, as reported by Marijuana Second. Cover Progress has an in depth ecosystem of strategic companions, and we predict it might be smart for buyers in these corporations, a lot of that are publicly-traded, to affirm that these relationships will proceed below the brand new management. To be very clear, now we have no purpose to imagine that they received’t, however we wish to ensure our readers are conscious of the a number of corporations that could be going through some uncertainty throughout this management transition at Cover Progress.

On the prime of the record is Cover Rivers, which additionally dismissed Linton from his roles there. The corporate was Bruce Linton’s concept, and it seeks to leverage Cover Progress’s infrastructure and capital by offering monetary and working help to corporations throughout the business. Cover Progress owns 27% of the issued shares and over 85% of the voting energy.

One other apparent query is what the change means for Acreage Holdings. We checked in with CEO Kevin Murphy, who is very optimistic that the affiliation will proceed. As a reminder, he and his shareholders simply obtained an possibility fee of $2.63 per share ($300 million in complete) for a future potential acquisition when permissible at a the mounted share worth of .5812 shares of Cover for every share of Acreage. We interviewed Murphy earlier this yr, and he shared his expectation that in the end Constellation will purchase in each Cover Progress and his firm.

Cover Progress has two important stakes in U.S. operators past its association with Acreage Holdings, together with non-voting inventory in TerrAscend in addition to warrants in SLANG Worldwide. One space the place the corporate has cast a number of strategic partnerships is in extraction, with suppliers together with MediPharm Labs, Neptune and Valens GroWorks, all publicly-traded, in addition to HollyWeed North, which is predicted to debut in public buying and selling close to the tip of the yr.

Whereas many had been stunned by the sudden transfer by the Cover Progress Board of Administrators, we predict buyers ought to be ready for extra adjustments forward after a interval of considerable M&A and capital elevating and an evolving market that’s turning into extra international and supported by institutional buyers.


In contrast to the enterprise mannequin of most operators, DionyMed is a multi-state cannabis distribution and direct-to-consumer supply platform that is bringing right now’s main cannabis manufacturers to shoppers. Creating each wholly owned in-house manufacturers and promoting a curated portfolio of companion manufacturers to over 900 retail dispensaries throughout the nation, DionyMed is discovering success because it scales up. The corporate not too long ago acknowledged Q1 income of $14.4M and has signed three agreements to accumulate and develop into new markets.

To be taught extra about DionyMed, often known as DYME Manufacturers, a shopper of New Hashish Ventures, go to the corporate’s Investor Dashboard that we keep on its behalf and click on the blue Comply with Firm button to get updates with their progress.


New Hashish Ventures publishes curated articles in addition to unique information. Right here is a number of the most fascinating enterprise content material from this week:


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Discover your home within the cannabis business by visiting our Careers and Jobs Web page and be taught which corporations are hiring aggressively.

Sincerely,

Alan & Joel

Alan Brochstein, CFA
Primarily based in Houston, Alan leverages his expertise as founding father of on-line communities 420 Investor, the primary and nonetheless largest due diligence platform targeted on the publicly-traded shares within the cannabis business. Together with his in depth community within the cannabis group, Alan continues to seek out new methods to attach the business and facilitate its sustainable development. At New Hashish Ventures, he’s chargeable for content material improvement and strategic alliances. Earlier than shifting his focus to the cannabis business in early 2013, Alan, who started his profession on Wall Avenue in 1986, labored as an impartial analysis analyst following over twenty years in analysis and portfolio administration. A prolific author, with over 650 articles printed since 2007 at Looking for Alpha, the place he has 70,000 followers, Alan is a frequent speaker at business conferences and a frequent supply to the media, together with the NY Occasions, the Wall Avenue Journal, Fox Enterprise, and Bloomberg TV. Contact Alan: Twitter | Fb | LinkedIn | E-mail

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