It’s time for your Daily Hit of cannabis financial news for June 9 2020.
On The Site
Legal cannabis sales continue to grow despite the strength of the illegal market. The new State of Legal Cannabis Markets report from The Arcview Group highlights the strengths of the industry going into 2020, while also acknowledging the challenges ahead.
Arcview partnered with analytics firm BDSA and is forecasting that worldwide spending on legal cannabis will grow 38% to $20.4 billion in 2020. Despite this, the lions share of purchases occur in the illegal markets. The report estimates that in 2019 $214 billion was spent in the illicit channels, while $14.8 billion was spent in the legal market.
Harborside has new tax lawyers. Harborside’s (OTC:HSDEF) new tax lawyers have appealed the DECISION of the United States Tax Court entered October 19, 2019, that determined Harborside has deficiencies in income tax in the total amount of $11,013,236.75 for the years 2007-2012.
Harborside has appealed this DECISION to the Ninth Circuit Court of Appeals. Harborside filed its Opening Brief on May 26, 2020. [See Case: 19-73078, 05/26/2020, ID: 11701759, DktEntry: 19-1]
The determination Harborside has an additional $11+M federal income tax liabilities for the years 2007-2012 is based on Judge Mark V. Holmes’ Opinion on the substantive income tax issues filed November 29, 2018. Patients Mut. Assistance Collective Corp v. Comm’r, 151 T.C. 176 (2018).
Physician-led, science-focused, multi-state cannabis company Vireo Health International, Inc. (OTCQX: VREOF) said that it has elected to terminate its employment agreement with Bruce Linton as Executive Chairman, on an entirely without-cause basis, effective immediately.
“We wish Bruce well in his future endeavors,” said Kyle Kingsley, M.D., Chief Executive Officer & Founder of Vireo. “Our organization will remain focused on executing a strategy which benefits all stakeholders and developing our core medical markets of Arizona, Maryland, Minnesota, New Mexico, New York, and Pennsylvania.” At this time, the company does not expect to fill the role of Executive Chairman.
In Other News
Akerna Corp. (Nasdaq: KERN) has closed a $17 million debt financing with two institutional investors. Proceeds from the financing will be used to support Akerna’s ongoing growth initiatives, continued investment in technology infrastructure and general corporate purposes.
“This financing further strengthens our balance sheet and gives us the ability to capitalize on the significant opportunities that are emerging for Akerna on the heels of the COVID-19 epidemic,” said Jessica Billingsley, chief executive officer, Akerna. “We are seeing more states pursue accelerated cannabis legalization as a means to close budget gaps, as the industry is proving to be recession resilient and, in many states, has been deemed an essential industry. With this financing, we are taking advantage of our unique access to the capital markets to fortify our position as the only scaled technology provider serving the cannabis industry.”
The financing is in the form of a Senior Secured Convertible Note (the “Note”), which is convertible into common stock at $11.50 per share. The Note, maturing on June 1, 2023, has a face value of $17 million and is being issued with an original issue discount of approximately 12%. The Note does not bear interest except upon the occurrence of an event of default and is to be repaid in monthly installments beginning on October 1, 2020.
Organigram Holdings Inc. (NASDAQ: OGI) has entered into a multi-year agreement for supply of dried flower to one of Israel’s largest and most established medical cannabis producers, Canndoc Ltd. a subsidiary of InterCure Ltd. (TASE: INCR/INCR.TA).
Canndoc has been a pioneer in pharmaceutical-grade cannabis for more than 12 years. Under the terms of Organigram’s supply agreement with Canndoc, the company will provide a guaranteed 3,000 kg of high quality, indoor-grown dried flower product to Canndoc by December 31, 2021 for processing and distribution into the Israeli medical market, and may provide an additional 3,000 kg during the same time period at Canndoc’s option, subject to certain conditions.