Cannabis Capital Tracker: PharmaCann, Red White & Bloom, Green Thumb Industries, Silver Therapeutics

PharmaCann secures more than $200 million in debt and equity raises

Chicago-based PharmaCann, the largest privately-held cannabis corporation in the Midwest, raised $110 million from equity investors and an additional $80 million from lenders in separate transactions in June. 

On June 25, PharmaCann announced that it completed an $85 million convertible debt offering of 12 percent senior secured notes due June 30, 2025. The company said net proceeds of $79.9 million secured from the transaction, facilitated by Canaccord Genuity Corp, will be used to fund strategic growth opportunities and general corporate operations.  

On June 14, Toronto-based cannabis corporation Cronos Group acquired an approximately 10.5 percent equity-stake in PharmaCann for $110.4 million. Proceeds from that transaction were distributed directly to PharmaCann shareholders. The Altria Group, formerly known as Phillip Morris, is a major shareholder of Cronos. New York-based investment bank Cowen advised Cronos on the transaction while Canaccord Genuity Corp represented PharmaCann.

Concurrent with the transaction, the companies announced a commercial agreement that enables each entity to sell cannabis through each other’s distribution channels. 

PharmaCann plans to eventually go public via a U.S. stock exchange, according to CEO Brett Novey, who explained to Crain’s Chicago Business June 14, “the prevailing thought is that we will be able to go public in the United States. We are keeping our options open to list in the U.S. rather than do an RTO in Canada.”

As the industry awaits anticipated changes to U.S. federal banking laws, reverse takeovers (RTO) of publicly-held Canadian companies has been a common pathway for U.S.-based cannabis corporations to become publicly traded. Earlier this year, Chicago-based Verano Holdings went public through a reverse takeover of a Canadian company.  

Red White & Bloom’s Florida subsidiary raises $30 million

Red White & Bloom (RWB), a Toronto-based cannabis corporation with pending cultivation and retail operations in Michigan as well as a pending acquisition of one of the 20 existing cultivation licenses in Illinois, announced on June 7 that it raised $30 million through various capital raises associated with its recently established Florida subsidiary.

In April, RWB closed on a $60 million acquisition of the Florida assets of New York-based Acreage Holdings, which includes a 114,000 square foot cultivation facility. RWB noted in a press release that equity investors in the RWB Florida purchased an approximate 17 percent equity stake in the entity.

As RWB awaits regulatory approval for acquisitions in Michigan and Illinois, the company last week began selling its High Times-branded vapes in Michigan. RWB’s website claims that upon regulatory approval, it will be the largest cannabis operator in Michigan. 

Last year, RWB committed to pay approximately $40 million to acquire Illinois cultivation operations initially secured by nonprofit Shelby County Community Services. Concurrent with that announcement, RWB said it planned to transfer Shelbyville’s license to cultivate to its existing 3.6 million hemp cultivation in Granville, Illinois. This unprecedented move would encroach into exclusive cultivation operations in a Illinois State Police District currently occupied by Chicago-based Green Thumb Industries. 

Numerous Illinois-based medical marijuana operators tell Grown In they believe such a move is not possible according to state statute, but the ultimate decision rests with regulators in the Illinois Department of Agriculture.

Green Thumb Industries officially in Virginia as Dharma acquisition closes

Chicago-based Green Thumb Industries, the largest cannabis operator in the Midwest and second largest in the United States behind Mass.-based Curaleaf, officially acquired Virginia-based Dharma Pharmaceuticals on July 1.

Terms of the transaction were not disclosed.

Virginia, which in April became the first southern U.S. state to legalize cannabis for recreational adult use, becomes the 13th state where GTI operates. With ownership of one operating production facility and one retail outlet, GTI is one of five vertical operators in Virginia, which likely won’t begin recreational sales until 2024.  

Grassroots Cannabis co-founder invests in Maine-based Silver Therapeutics 

Joshua Joseph, a co-founder of Chicago-based Grassroots cannabis which was acquired by Mass.-based Curaleaf for $840 million in 2020, on June 25 announced that he invested in Maine-based cannabis operator Silver Therapeutics

Maine, which officially began an adult-use sales program in October, generated $5 million in recreational cannabis sales in May. Silver Therapeutics currently operates three dispensaries and one grow and processing facility in the limited licensed state. 

Joseph will sit on the company’s board and focus on acquisitions and capital raising. His Nashville-based family office Big Plan Holdings is also an investor CBD company Third Eye Hi, a women-owned subscription box startup co-founded by former Grassroots Director of Community Outreach Mahja Sulemanjee.