Each month Grown In reports significant Midwestern cannabis fundraising transactions. Have a news tip on a private pot transaction? Email brad@grownin.com.
Gage Cannabis closes $50 million Reg A, tier two financing round
Detroit-based Gage Cannabis on January 28 announced a final close of a $50 million Reg A, Tier Two financing round that was initiated in late 2020. Gage has announced plans to become publicly traded within the next two months.
The financing was led by existing investor JW Asset Management, which is based in New York and has multiple Midwest-based cannabis companies in its portfolio.
Bruce Linton, formerly CEO and Chairman of Canadian pot pioneer Canopy Growth Corp, is leading Gage during this expansion phase.
Gage currently operates exclusively in Michigan, where it is vertically-integrated with licenses for 13 provisioning centers, 20 Class C grow licenses and three processing facilities. The company’s website points to six currently open provisioning centers, including Cookie’s-branded locations in Detroit and Kalamazoo.
Under Linton’s watch, beginning in 2014, Ontario-based Canopy raised several billion dollars from private and public investors, including a $4 billion capital infusion from Chicago-based beverage distributor Constellation Brands in 2018.
Reg A financing structures enable U.S. and Canadian-based companies to raise an initial $20 million and ultimately up to $50 million through quasi-private placements that require reporting to the U.S. Security and Exchange Commission.
In November, JW Asset Management closed an initial $20 million round. According to Crunchbase, JW, also a backer of Chicago-based cannabis marketing software startup Fyllo, was the lead investor in Gage’s initial $10 million in venture financing.
Proceeds from the round will be used to open more locations, make acquisitions, and market the Gage brand in Michigan, according to press releases.
Canadian cannabis investor and longtime retail executive Richard Mavrinac also joined Gage’s board of directors.
Caltabiano and Kadens raise $100m for “second mover” cannabis SPAC
Choice Consolidation Corp., a British Columbia-based Special Purpose Acquisition Corporation (SPAC) backed by the co-founders of Chicago-based cannabis companies Cresco Labs and Green Thumb Industries (GTI), on January 21 released a preliminary prospectus for a $100 million initial public offering.
Led by former Cresco Labs president Joe Caltabiano, Choice secured an initial $32.5 million in commitments to pursue an acquisition strategy predicated on second mover advantage in the cannabis industry. The so-called “second mover” thesis, adopted and evangelized by many cannabis companies right now, says the days of loosy-goosy business practices are gone in favor of more enterprise-minded management systems for maturing markets.
“We believe that as the cannabis industry has continued to evolve, increased focus has been placed on business operations and profitability,” reads the prospectus. “The Corporation believes that it can optimize operations due to its second mover advantage of leveraging efficiencies gained across all aspects of the supply chain and that it can further capitalize on the significant scale advantage that could be gained from combining single state operators and sub-scale multi state operators.”
Former GTI CEO Pete Kadens is a director of Choice, which touts a management team that closed 25 M&A deals over the last two years. The same team also has experience in winning licenses in states with a finite number of operators including Illinois, Maryland, Pennsylvania, Ohio, New Jersey, and Massachusetts.
Kadens, who served as CEO of GTI from 2016 through 2018 and sat on the company’s board until February 2019, is a board director of the Cannabis Trade Federation which lobbies for passage of federal legislation of normalized cannabis banking. He is also a board member of cannabis real estate investment trust NewLake Capital.
Caltabiano co-founded Cresco in 2013 and served as the company’s president until last March. Former Cresco CFO and current advisor Ken Amann is also a director of Choice.
Verano Holdings secures $100m in anticipation of public offering
Chicago-based Verano Holdings on January 21 announced it completed a $100 million financing associated with an imminent reverse-takeover of a Canadian shell company.
An investor deck circulated since December asked shareholders of Majesta Minerals to approve a transaction that would value Verano at approximately $2.8 billion through a $75 million offering on the Canadian Securities Exchange. That deal is expected to close in “early February”.
Founded in 2014, Verano currently operates in 14 states and reported $155 million in revenue in the first nine months of 2020. The company in November “joined forces” with Florida-based AltMed. Verano co-founder George Archos will run the publicly traded company.
Ten months ago, Verano’s $850 million planned merger with Arizona-based Harvest Health & Recreation was halted during a period of tight liquidity in the cannabis sector. Verano owns one of the largest cultivation facilities in Illinois in addition to multiple retail outlets in Illinois, Michigan, and licenses to operate in Missouri.
