Cannabis News

Leamington, Ontario and Nanaimo, British Columbia – December 16, 2020 – PRESS RELEASE – Aphria Inc., a global cannabis company, and Tilray, Inc., a cannabis research, cultivation, production and distribution company, today announced that they have entered into a definitive agreement to combine their businesses and create the world’s largest global cannabis company based on pro forma revenue. The deal is pursuant to a plan of arrangement under the Business Corporations Act, and the implied pro forma equity value of the combined company is approximately C$5.0 billion, based on the share price of Aphria and Tilray at the close of market on Dec. 15, 2020. Following the completion of the arrangement, the combined company will have principal offices in the United States (New York and Seattle), Canada (Toronto, Leamington and Vancouver Island), Portugal and Germany, and it will operate under the Tilray corporate name with shares trading on NASDAQ under ticker symbol “TLRY.”

The combined company, supported by low-cost, state-of-the-art cultivation, processing and manufacturing facilities, will have a complete portfolio of branded Cannabis 2.0 products in Canada. Internationally, the combined company will be well-positioned to pursue growth opportunities with Aphria’s medical cannabis and distribution footprint in Germany, and Tilray’s European Union Good Manufacturing Practices (EU-GMP) low-cost cannabis production facility in Portugal, which has export capabilities and tariff-free access to the European Union (EU) to meet increasing global demand for medical cannabis. In the United States, the combined company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater Brewing Company, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a leading hemp food manufacturer and a pioneer in branded CBD and wellness products. The combined company is expected to have a strong, flexible balance sheet, cash balance and access to capital giving it the ability to accelerate growth and deliver attractive returns for stockholders.

Under the terms of the arrangement, the shareholders of Aphria will receive 0.8381 shares of Tilray for each Aphria common share, while holders of Tilray shares will continue to hold their Tilray shares with no adjustment to their holdings. Upon the completion of the arrangement, Aphria Shareholders will own approximately 62% of the outstanding Tilray Shares on a fully diluted basis, resulting in a reverse acquisition of Tilray, representing a premium of 23% based on the share price at market close on Dec. 15, 2020 to Tilray shareholders. On a pro forma basis for the last twelve months reported by each company, the combined company would have had revenue of C$874 million (US$685 million).

Proven Leadership Team

The combined company will be led by a best-in-class management team and board of directors, with strong track records in consumer-packaged goods and cannabis experience internationally. Upon completion of the arrangement, Aphria’s current Chairman and Chief Executive Officer Irwin D. Simon will lead the combined company as chairman and chief executive officer. The board of directors will consist of nine members, seven of which, including Simon, are current Aphria directors and two of which will be from Tilray, including Brendan Kennedy, and one of which is to be designated. Aphria and Tilray are confident that the leadership team and proposed board of directors of the combined company provides a strong foundation for the combined company to accelerate growth. Additional senior leadership positions at the combined company will be named at a later date.

“This is an exciting day for both companies including our 2,500 employees, for the cannabis industry, and for patients and consumers around the world. We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S. and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” said Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.

“I am honored to work with Brendan Kennedy, a pioneer in the cannabis industry, and the Tilray team as they join forces with our talented employees at Aphria,” continued Simon. “I look forward to leading the talented teams of both Aphria and Tilray as we seek to create a leading global cannabis and consumer packaged goods company with a portfolio of medical, wellness and adult-use brands consumers love.”

Kennedy, Tilray’s chief executive officer, commented, “We are thrilled to bring together two cannabis industry leaders. At this nascent stage of development and expansion of the global cannabis market, we believe companies with leading geographic scale, product range and brand expertise are most likely to benefit long-term. By leveraging our combined strengths and capabilities, we expect to be able to meet the needs of consumers more effectively all over the world and advance patient care. With a strong financial profile, low-cost production, leading brands, distribution network and unique partnerships, we believe the combined company will be well-positioned to deliver sustainable, attractive returns for stockholders. I look forward to working with Irwin and the combined company’s management team to make our consumer products more accessible around the world.”

Strategic and Financial Benefits

The combined company will be the largest global cannabis company based on pro forma revenue for the last twelve months reported by each company with scale and breadth across major geographies and a complete portfolio of market leading brands in the major Cannabis 2.0 product categories. Aphria and Tilray each believe the business combination pursuant to the arrangement will provide the following financial and strategic benefits, among others:

• Financial Strength and Flexibility: The combined company will enjoy an attractive financial profile with pro forma revenue of C$874 million (US$685 million) for the last twelve months reported by each company, the highest in the global cannabis industry. In Canada, the combination of Aphria and Tilray will create the leading adult-use cannabis company with gross revenue of C$296 million (US$232 million) in the adult-use market for the twelve months reported by each company. Aphria has generated positive adjusted EBITDA over the last six quarters, which in combination with the synergies to be realized, provides a robust platform for future profitability and cash flow generation for the combined company. This, collectively with the strength of the combined company’s balance sheet and access to capital, is expected to help accelerate global growth and value for the combined company’s stakeholders.
• Creates the Leading Canadian Adult-Use Cannabis Licensed Producer: Together, Aphria and Tilray will be the leading adult-use cannabis Canadian Licensed Producer based on revenue for the last 12 months by combining their respective brands, distribution networks and world-class facilities. In Canada’s C$3.1 billion adult-use, retail market, the combined company will have one of the lowest cost production operations with its state-of-the-art facilities. In addition, the combined company will have a portfolio of carefully curated brands across all consumer segments that are sold through its distribution partners. On a pro forma basis, for the period August to October 2020, the combined company would have held a 17.3% retail market share, the largest share held by any single Licensed Producer in Canada and 700 basis points higher than the next closest competitor.
• Increases Product Breadth and Commitment to Innovation: Leveraging both Aphria and Tilray’s commitment and culture of innovation and brand building, the combined company will serve clients with a complete portfolio of Cannabis 2.0 products and sales and service infrastructure supported by leading distribution partners. Aphria and Tilray’s complementary brands will be available across economy, value, core, premium and premium plus product offerings. In addition, the combined company will have a complete breadth of products in every major cannabis category, including flower, pre-roll, oils, capsules, vapes, edibles and beverages.
• Establishes an Unrivaled European Platform: The combined company will be well-positioned to pursue growth opportunities with its end-to-end EU-GMP supply chain and distribution, which includes Aphria’s German medical cannabis distribution footprint and Tilray’s 2.7-million-square-foot European EU-GMP low-cost cannabis cultivation and production facility in Portugal. In Germany, Aphria’s wholly-owned subsidiary, CC Pharma GmbH, will provide the combined company with distribution capabilities for the Aphria and Tilray medical cannabis brands to more than 13,000 pharmacies. In Portugal, Tilray’s EU-GMP cultivation and production facility will provide the combined company with the capacity to cultivate and produce medical cannabis products in order to meet international demand and has export capabilities, which provides tariff-free access to the EU.
• Enhances Consumer Packaged Goods Presence and Infrastructure in the U.S.: In the United States, the combined company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a pioneer in branded hemp, CBD and wellness products with access to 17,000 stores in North America. The combined company is expected to leverage SweetWater’s craft beer manufacturing and distribution network to build brand awareness for the combined company’s brands via craft beers, hard seltzers and other beverages as it seeks to take advantage of opportunities for both the adult-use and health and wellbeing beverage trends. The combined company also expects to pursue the opportunity to expand with new or existing CBD or other cannabinoid brands leveraging Manitoba Harvest’s strong hemp and wellness product platform. When U.S. regulations allow, the combined company expects to be well-positioned to compete in the U.S. cannabis market given its existing strong brands and distribution system in addition to its track record of growth in consumer-packaged goods and cannabis.
• Positions Combined Company to Continue to Grow in the Beverage Segment: The combined company believes it will be well-positioned to pursue an accelerated rate of growth in the Canadian and the U.S. beverage industries by leveraging SweetWater’s innovation, knowledge and expertise to introduce adult-use cannabis brands via craft beers and other beverages. This includes leveraging Aphria and Tilray’s proven distribution networks in Canada to sell SweetWater’s 420 cannabis lifestyle brand in Canada.
• Substantial Synergies: The combination of Aphria and Tilray is expected to deliver approximately C$100 million of annual pre-tax cost synergies within 24 months of the completion of the transaction. The combined company expects to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales and marketing and corporate expenses. This is expected to include the opportunity for Aphria’s Leamington, Ontario operations to provide additional volume for Tilray’s brands and to replace the need for Tilray to use wholesale cannabis purchases from other licensed producers. Tilray’s London, Ontario facility will also provide Aphria with excess capacity to increase production of additional form factors including their branded edibles and beverages.  The combined company is considering utilizing Tilray’s existing Nanaimo, British Columbia facility for Aphria’s premium Broken Coast brand to increasingly meet consumer demand for its products. The combined company plans to capitalize on opportunities for growth through a broadened product offering and additional form factors, with the aim of increasing adult-use cannabis brand availability across certain Canadian provinces to an expanded customer base with the combined company’s scalable infrastructure. Internationally, the combined company will have the opportunity to reach additional pharmacies and patients via distribution relationships. The combination is expected to unlock significant shareholder value.

Agreement Details

Under the terms of the agreement, the arrangement will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) and will require the approval of at least two-thirds of the votes cast by the Aphria Shareholders at a special meeting. Approval of a majority of the votes cast by Tilray stockholders will be required to, among other things contemplated by the agreement, authorize the issuance of Tilray shares to Aphria shareholders pursuant to the arrangement. Following completion of the arrangement, Aphria will become a wholly-owned subsidiary of Tilray, with Aphria shareholders owning approximately 62% of Tilray.

Completion of the arrangement is subject to regulatory and court approvals and other customary closing conditions. Regulatory approvals expected to be required include Competition Bureau (Canada), U.S. HSR and Germany FDI. The agreement includes certain reciprocal customary provisions, including covenants in respect of the non-solicitation of alternative transactions, a right to match superior proposals and C$65 million (US$50 million) reciprocal termination fee payable under certain circumstances. The arrangement is expected to close in the second quarter of calendar year 2021 following the receipt of such regulatory approvals, as well as court approval of the arrangement.

Each of Aphria’s and Tilray’s respective directors and officers and certain principal Tilray Stockholders have entered into voting support agreements agreeing to vote their Aphria Shares or Tilray Shares, as applicable, in favor of the resolutions put before them pursuant to the agreement.

For further information on the terms and conditions of the arrangement, please refer to the agreement in its entirety, which will be available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Full details of the arrangement will be included in a management information circular of Aphria and in a proxy statement of Tilray to be delivered to Aphria Shareholders and the Tilray Stockholders, respectively, in the coming weeks.

Board of Directors’ Approval

Each of Aphria’s and Tilray’s respective board of directors has unanimously approved the agreement and the arrangement. Jefferies LLC provided a fairness opinion to the Board of Directors of Aphria on Dec. 15, 2020, stating that, as of the date of such opinion and based upon the scope of review and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to the Aphria Shareholders. Cowen provided a fairness opinion dated Dec. 15, 2020 to the board of directors of Tilray stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to Tilray.

Advisors

Jefferies LLC is serving as financial advisor and DLA Piper LLP (US), DLA Piper (Canada) LLP and Fasken Martineau Dumoulin LLP are acting as legal counsel to Aphria. Cowen is serving as financial advisor and Cooley LLP and Blake, Cassels and Graydon LLP are acting as legal counsel to Tilray.

Conference Call & Webcast Presentation

Aphria and Tilray executives will host a conference call and webcast with a supplemental presentation to discuss the strategic business combination today, Dec. 16, 2020 at 8:30 a.m. Eastern Time.

To listen to the live call, dial (647) 427-7450 from Canada and the U.S. or (888) 231-8191 from international locations and use the passcode 4334816. A telephone replay will be available approximately two hours after the call concludes through January 13, 2021. To access the recording dial (855) 859-2056 and use the passcode 4334816.

There will also be a simultaneous, live webcast and supplemental presentation available on the Investors section of Aphria’s and Tilray’s website at aphriainc.com and Tilray.com. The webcast will be archived for 30 days.

Solventless extraction can be a profitable and attractive option for cannabis processors, especially when they avoid common pitfalls.

For someone looking to launch a new extraction facility, the equipment, setup and buildout are significantly less expensive for solventless than other extraction methods, according to Ben Britton, founder and CEO of PurePressure, a solventless extraction equipment manufacturer. While solvent-based extraction equipment requires special ventilation considerations, for example, this isn’t the case with solventless, so the upfront cost of the facility buildout and equipment is generally lower. 

In addition, solventless products typically sell for a premium and are popular with connoisseurs at dispensaries, Britton says.

“It also opens you up to the ability to make quality product, something that is unadulterated and hasn’t been modified by chemicals,” he says.

Here, Britton outlines his top advice for launching a profitable solventless extraction business, from acquiring high-quality raw material to establishing efficient processes.

1. Control your raw material.

Two common roadblocks for anyone processing cannabis are quality and yield, Britton says.

“At the end of the day, everybody wants the highest-quality product, and they want the most of it so that they can be profitable,” he says.

Solventless extractors use mechanical methods to separate the resin glands from the plant, and Britton says this must be a meticulous process to ensure that no particulates are lost.

Controlling the raw material is one way that processors can ensure that they have a consistent supply of high-quality cannabis that can be easily separated, Britton says.

“Time and time again, we see that the most successful businesses have really great relationships with their grow, or they’re vertically integrated, meaning that they have a grow under their umbrella,” he says. “If you can properly grow cannabis, that means that you’re properly growing good trichome heads, and that’s ultimately what we’re harvesting here. A good grow creates consistent, large, nice, bulbous trichome heads that we can then separate from the plant and collect for processing.”

For those who aren’t cultivating, creating relationships with grow wholesalers to provide great cannabis for solventless is crucial, Britton adds.

2. Start with high-quality material.

While low yield is often a common complaint with solventless extraction, Britton says this can be avoided by using high-quality material with high oil content.

“We want to make sure that we have high-quality material to start with,” he says. “You can’t extract oil that isn’t there to begin with. The maximum yield is only whatever is on that plant when you start the process.”

Yields are typically measured relative to the weight of the raw material, but if a processor knows the oil or resin content, then yields should ideally be measured against those metrics to ensure that most, if not all, of that oil is extracted, Britton says.

“That’s kind of a good way to think about things: let’s see what’s available to extract and start with something that’s as potent as possible.”

3. Handle the raw material and equipment properly.

Solventless extraction often involves fresh frozen material—a live cannabis plant that is frozen within 30 minutes of cutting and stored in a vacuum-sealed container to ensure that it has the highest terpene retention. If fresh frozen resin glands are exposed to higher-than-ideal temperatures, which exceed 40 degrees Fahrenheit, they can easily transfer, melt or be lost entirely, Britton says, so it is critical to handle and store the material properly throughout the extraction process.

If a processing facility does not have its own grow attached, vendors should maintain the fresh frozen flower at freezing temperatures during transit, and this should be maintained within the extraction lab until it is processed.

“We just see those steps being overlooked,” Britton says. “A lot of people are excited to get the new extraction equipment that they know is going to produce the oil, but maybe look over some of the finer details in between.”

When the material is ready to be processed, extractors must ensure that their equipment, such as rosin presses and hash washing gear, is in proper working order to maximize yield, he adds.

“When we’re going through the filtration process with ice water extraction, we’re typically filtering micron-sized particles anywhere in the neighborhood of 25 to 160 microns in diameter, and we’re straining that out of, say, 65 gallons of water,” Britton says. “You’ve always got the opportunity for that particulate to be lost if, let’s say, your filtration media has a hole in it, or you have a leak somewhere.”

Therefore, processors must be meticulous, ensuring that their filtration media is inspected and that all gaskets are in place before use.

“These are simple things that sound trivial, but it ends up having a pretty dramatic impact,” Britton says. “Make sure that before you start washing to make ice water hash, that your water and your vessels and all of your fittings have actually come to temperature at about 32 to 33 degrees Fahrenheit. You don’t want that material to come into contact with a warm vessel wall, or it is going to stick to that vessel.”

4. Lay out an efficient extraction process.

Extractors should have a clear and defined processing schedule for their facilities to ensure that material moves smoothly through the process, Britton says. This is especially important for processors who use solventless extraction, as they often deal with fresh frozen material that must be handled properly throughout the process to avoid damage and loss.

“Having a good extraction process laid out will help you with your efficiency and making sure that when the product finishes from one process, you’re ready for it to move on to the next process, or you at least have a way to store that material,” Britton says. “We’ve seen issues where people just kind of go in gung-ho and start producing, but they don’t have all their subsequent processes lined up or timed properly. It’s the equivalent of having the turkey on Thanksgiving come out at noon and everything else is ready at 4 in the afternoon—it’s not going to work out so well.” 

Britton encourages those looking to launch or optimize their solventless extraction operations to contact PurePressure for additional information.

Trimming is a crucial step in the post-harvest process and one that can directly impact the value of a grower’s products. An over-trimmed bud might have bag appeal, but the loss of valuable biomass to trim can hurt a grower’s potential revenue. Meanwhile, an under-trimmed bud can look sloppy and unappealing to consumers.

Given the balancing act cannabis cultivators must perform, it’s no wonder that 74% of participants in Cannabis Business Times’ Cannabis Post-Harvest Report mentioned hand-trimming as their greatest post-harvest challenge, with trimming efficiency (29%), consistency (22%) and quality (12%) being among the top issues.

So, what exactly makes a good trim?

To answer that, Cannabis Business Times and Hemp Grower interviewed Sara Morse, lead trimmer for LOWD Cannabis in Portland, Ore., who shares her trimming philosophy, how LOWD trims its high-end line of Smoke Like a Grower (SLAG) bud using stick trimming, how she keeps her 7-person trim team motivated to repeatedly produce high-quality work, and more in this interview.

Editor’s note: This interview has been edited for length, style and clarity.

Brian MacIver: What’s your personal philosophy when it comes to trimming? Or, in other words, what effect should a good trim have on the product?

Sara Morse: We spend months growing these buds and the trim team is kind of the last line of defense in really making sure that we’re letting the truest expression of that genome, of that … strain, really express itself and make sure that we’re leaving all the little beautiful little nuances of different strains intact.

When we’re approaching a different strain or when I have a new trimmer that hasn’t worked with a strain that we grow before, I encourage them to take a little piece of a branch with a couple of buds on it, or cola, and kind of hold it at arm’s length and look at that bud objectively and be like, “What on this bud would I want to smoke and what on this bud am I going to want to take off before I smoke?”

BM: LOWD treats its SLAG products to a stick trim. How is stick trimming done and what are its benefits?

SM: Our guy that leads up our operations team, one of our head growers, he will take some of the plants that got especially nice and hang those to the side as we’re harvesting. Then me and Jesce, our CEO, will go into the dry room and we spend half the day just going through all of the curtains of our cured product and picking out our favorite branches, the branches of the plants that have just the most beautiful buds. We’ll get maybe one or two buds that actually meet SLAG bud standards from each branch. It takes us quite a while to really make sure that we really feel like we’re getting the very best buds of our whole harvest to be able to stick trim.

I have myself and my two top trimmers in the trim room for that process. We’ll take a whole branch and we hold it by the bottom of the stick, so we don’t ever actually touch the bud. We’re not handling them anymore than we have to, and that’s to be able to really preserve as much [of] those trichomes. They can shake off and they stick to your fingers every time you touch the bud. We hold them at the stick and then just use the very tip of our scissors to clip the stems of the little leaves that we want to clip out, making sure that we’re not even getting anywhere near those little hairs, those little trichomes so that they all stay on there. We just clip it straight into the jar.

 

READ ALSO: The Interview: Jesce Horton Shares the Story of LOWD

 

BM: How do you train a new trim team member to quickly get them up to speed on what you expect?

SM: That can definitely be tough. I have high enough standards in my trim room that it’s been really difficult for us to be able to give the opportunity to somebody who doesn’t have any trim experience at all to be able to have a shot in our trim room just because, in order to be able to be on schedule, to be able to keep up with the rotation of the plants, we all have to be able to trim a pound a day.

The way that I’ve tried to approach it, when I am bringing a new person into the trim team, or making sure that everyone’s on the same page, is I will seat them in our trim room in between a couple of my more experienced, faster trimmers. And I’ll encourage both of them to be keeping an eye on the pace that the prospective new trimmer is working at, and then every half an hour or so I’ll peek in at their pool and see how they’re doing, and then sometimes we’ll sit down and we’ll trim together and I’ll kind of be helping, giving pointers about organization.

A lot of maintaining quality while still trimming a pound a day has to do with organization at your trim station and making sure you’re cutting down on any kind of superfluous motions with your scissors or with supplies at the table. If you’re trimming a pound a day, that’s many, many buds. So, every little motion that you make with every trimmed bud really adds up.

BM: How do you keep a trim team motivated to do such a repetitive task over an eight-hour shift?

SM: That can be tricky. There are a lot of kind of social and environmental factors right now that have led most of the people on my team to have some perspective about how amazing it is to have a job where we work full-time and very much enjoy the company of our coworkers and have great bosses and have a great job because that definitely feels like it’s a little bit of a luxury in today’s world.

I also have been working on building an incentives program, which Jesce has been very receptive to. So, we track what everybody trims every day, and then we tally those up by the week. At the end of each harvest, we have an average of how many grams everybody trimmed each day [relative to] how many hours everyone was there to come up with an average of what everyone’s trimming per hour. Halfway through the harvest, we’ll buy a bunch of gift cards from a local coffee shop, or there’s also a little grocery store a half-block away from work that some of us go to, to pick up lunch and stuff like that. And so sometimes they’ll get a gift card for that, and I’ll get like a little handheld back massager.

BM: What tips do you have to offer on increasing the quality of the hand trim?

SM: Make sure that your team is very clear on how it is that you want your buds to look by the time it’s done being trimmed. In my experience, a lot what helps people be able to pick up their efficiency and pick up their speed and their numbers and still have a really good looking trim at the end of the day definitely has to do with making sure that each individual person feels confident in how it is that the trim leader or the grower expects their finished product to look.

BM: What tips do you have to increase trimmer efficiency?

SM: If the trimmer is confident in what they’re doing, then they can kind of zone in. It’s confidence that the job that you’re doing is exactly what is required that helps you to really be able to move faster. If you’re not fully confident on how to handle it, you’re just really not going to be able to move fast because you don’t want to screw it up. It’s a fact that sometimes buds get over-trimmed; sometimes you’ve got a newer person that’s not super sure what they’re doing and they trim for an hour, and they were just shaving everything and then you can’t use those buds. Then that definitely puts into the trimmer’s mind that, ‘I just ruined all these beautiful buds,’ and that takes away all their confidence. I get them more confident by encouraging them and the things that they are doing correctly.

Another tip on efficiency would be making sure that you’re very organized. I have a method that I have everybody use, no matter how much trim experience at other places that they’ve had or ways they’ve tackled it before: We take our trim tray and then we put all of the buds that we’re about to trim in the top part of the tray. As we’re trimming, we’re pulling any little sticks out of the tray, putting those separate as we go. We’re taking any smaller “B-buds” that we don’t necessarily want in our nice big half-ounce jars out as we go.  We’re making sure that we’re not wasting any time trimming “B-buds” when we’re actually going for the “A-buds.”

Trimming is a crucial step in the post-harvest process and one that can directly impact the value of a grower’s products. An over-trimmed bud might have bag appeal, but the loss of valuable biomass to trim can hurt a grower’s potential revenue. Meanwhile, an under-trimmed bud can look sloppy and unappealing to consumers.

Given the balancing act cannabis cultivators must perform, it’s no wonder that 74% of participants in Cannabis Business Times’ Cannabis Post-Harvest Report mentioned hand-trimming as their greatest post-harvest challenge, with trimming efficiency (29%), consistency (22%) and quality (12%) being among the top issues.

So, what exactly makes a good trim?

To answer that, Cannabis Business Times and Hemp Grower interviewed Sara Morse, lead trimmer for LOWD Cannabis in Portland, Ore., who shares her trimming philosophy, how LOWD trims its high-end line of Smoke Like a Grower (SLAG) bud using stick trimming, how she keeps her 7-person trim team motivated to repeatedly produce high-quality work, and more in this interview.

Editor’s note: This interview has been edited for length, style and clarity.

Brian MacIver: What’s your personal philosophy when it comes to trimming? Or, in other words, what effect should a good trim have on the product?

Sara Morse: We spend months growing these buds and the trim team is kind of the last line of defense in really making sure that we’re letting the truest expression of that genome, of that … strain, really express itself and make sure that we’re leaving all the little beautiful little nuances of different strains intact.

When we’re approaching a different strain or when I have a new trimmer that hasn’t worked with a strain that we grow before, I encourage them to take a little piece of a branch with a couple of buds on it, or cola, and kind of hold it at arm’s length and look at that bud objectively and be like, “What on this bud would I want to smoke and what on this bud am I going to want to take off before I smoke?”

BM: LOWD treats its SLAG products to a stick trim. How is stick trimming done and what are its benefits?

SM: Our guy that leads up our operations team, one of our head growers, he will take some of the plants that got especially nice and hang those to the side as we’re harvesting. Then me and Jesce, our CEO, will go into the dry room and we spend half the day just going through all of the curtains of our cured product and picking out our favorite branches, the branches of the plants that have just the most beautiful buds. We’ll get maybe one or two buds that actually meet SLAG bud standards from each branch. It takes us quite a while to really make sure that we really feel like we’re getting the very best buds of our whole harvest to be able to stick trim.

I have myself and my two top trimmers in the trim room for that process. We’ll take a whole branch and we hold it by the bottom of the stick, so we don’t ever actually touch the bud. We’re not handling them anymore than we have to, and that’s to be able to really preserve as much [of] those trichomes. They can shake off and they stick to your fingers every time you touch the bud. We hold them at the stick and then just use the very tip of our scissors to clip the stems of the little leaves that we want to clip out, making sure that we’re not even getting anywhere near those little hairs, those little trichomes so that they all stay on there. We just clip it straight into the jar.

 

READ ALSO: The Interview: Jesce Horton Shares the Story of LOWD

 

BM: How do you train a new trim team member to quickly get them up to speed on what you expect?

SM: That can definitely be tough. I have high enough standards in my trim room that it’s been really difficult for us to be able to give the opportunity to somebody who doesn’t have any trim experience at all to be able to have a shot in our trim room just because, in order to be able to be on schedule, to be able to keep up with the rotation of the plants, we all have to be able to trim a pound a day.

The way that I’ve tried to approach it, when I am bringing a new person into the trim team, or making sure that everyone’s on the same page, is I will seat them in our trim room in between a couple of my more experienced, faster trimmers. And I’ll encourage both of them to be keeping an eye on the pace that the prospective new trimmer is working at, and then every half an hour or so I’ll peek in at their pool and see how they’re doing, and then sometimes we’ll sit down and we’ll trim together and I’ll kind of be helping, giving pointers about organization.

A lot of maintaining quality while still trimming a pound a day has to do with organization at your trim station and making sure you’re cutting down on any kind of superfluous motions with your scissors or with supplies at the table. If you’re trimming a pound a day, that’s many, many buds. So, every little motion that you make with every trimmed bud really adds up.

BM: How do you keep a trim team motivated to do such a repetitive task over an eight-hour shift?

SM: That can be tricky. There are a lot of kind of social and environmental factors right now that have led most of the people on my team to have some perspective about how amazing it is to have a job where we work full-time and very much enjoy the company of our coworkers and have great bosses and have a great job because that definitely feels like it’s a little bit of a luxury in today’s world.

I also have been working on building an incentives program, which Jesce has been very receptive to. So, we track what everybody trims every day, and then we tally those up by the week. At the end of each harvest, we have an average of how many grams everybody trimmed each day [relative to] how many hours everyone was there to come up with an average of what everyone’s trimming per hour. Halfway through the harvest, we’ll buy a bunch of gift cards from a local coffee shop, or there’s also a little grocery store a half-block away from work that some of us go to, to pick up lunch and stuff like that. And so sometimes they’ll get a gift card for that, and I’ll get like a little handheld back massager.

BM: What tips do you have to offer on increasing the quality of the hand trim?

SM: Make sure that your team is very clear on how it is that you want your buds to look by the time it’s done being trimmed. In my experience, a lot what helps people be able to pick up their efficiency and pick up their speed and their numbers and still have a really good looking trim at the end of the day definitely has to do with making sure that each individual person feels confident in how it is that the trim leader or the grower expects their finished product to look.

BM: What tips do you have to increase trimmer efficiency?

SM: If the trimmer is confident in what they’re doing, then they can kind of zone in. It’s confidence that the job that you’re doing is exactly what is required that helps you to really be able to move faster. If you’re not fully confident on how to handle it, you’re just really not going to be able to move fast because you don’t want to screw it up. It’s a fact that sometimes buds get over-trimmed; sometimes you’ve got a newer person that’s not super sure what they’re doing and they trim for an hour, and they were just shaving everything and then you can’t use those buds. Then that definitely puts into the trimmer’s mind that, ‘I just ruined all these beautiful buds,’ and that takes away all their confidence. I get them more confident by encouraging them and the things that they are doing correctly.

Another tip on efficiency would be making sure that you’re very organized. I have a method that I have everybody use, no matter how much trim experience at other places that they’ve had or ways they’ve tackled it before: We take our trim tray and then we put all of the buds that we’re about to trim in the top part of the tray. As we’re trimming, we’re pulling any little sticks out of the tray, putting those separate as we go. We’re taking any smaller “B-buds” that we don’t necessarily want in our nice big half-ounce jars out as we go.  We’re making sure that we’re not wasting any time trimming “B-buds” when we’re actually going for the “A-buds.”

Trimming is a crucial step in the post-harvest process and one that can directly impact the value of a grower’s products. An over-trimmed bud might have bag appeal, but the loss of valuable biomass to trim can hurt a grower’s potential revenue. Meanwhile, an under-trimmed bud can look sloppy and unappealing to consumers.

Given the balancing act cannabis cultivators must perform, it’s no wonder that 74% of participants in Cannabis Business Times’ Cannabis Post-Harvest Report mentioned hand-trimming as their greatest post-harvest challenge, with trimming efficiency (29%), consistency (22%) and quality (12%) being among the top issues.

So, what exactly makes a good trim?

To answer that, Cannabis Business Times and Hemp Grower interviewed Sara Morse, lead trimmer for LOWD Cannabis in Portland, Ore., who shares her trimming philosophy, how LOWD trims its high-end line of Smoke Like a Grower (SLAG) bud using stick trimming, how she keeps her 7-person trim team motivated to repeatedly produce high-quality work, and more in this interview.

Editor’s note: This interview has been edited for length, style and clarity.

Brian MacIver: What’s your personal philosophy when it comes to trimming? Or, in other words, what effect should a good trim have on the product?

Sara Morse: We spend months growing these buds and the trim team is kind of the last line of defense in really making sure that we’re letting the truest expression of that genome, of that … strain, really express itself and make sure that we’re leaving all the little beautiful little nuances of different strains intact.

When we’re approaching a different strain or when I have a new trimmer that hasn’t worked with a strain that we grow before, I encourage them to take a little piece of a branch with a couple of buds on it, or cola, and kind of hold it at arm’s length and look at that bud objectively and be like, “What on this bud would I want to smoke and what on this bud am I going to want to take off before I smoke?”

BM: LOWD treats its SLAG products to a stick trim. How is stick trimming done and what are its benefits?

SM: Our guy that leads up our operations team, one of our head growers, he will take some of the plants that got especially nice and hang those to the side as we’re harvesting. Then me and Jesce, our CEO, will go into the dry room and we spend half the day just going through all of the curtains of our cured product and picking out our favorite branches, the branches of the plants that have just the most beautiful buds. We’ll get maybe one or two buds that actually meet SLAG bud standards from each branch. It takes us quite a while to really make sure that we really feel like we’re getting the very best buds of our whole harvest to be able to stick trim.

I have myself and my two top trimmers in the trim room for that process. We’ll take a whole branch and we hold it by the bottom of the stick, so we don’t ever actually touch the bud. We’re not handling them anymore than we have to, and that’s to be able to really preserve as much [of] those trichomes. They can shake off and they stick to your fingers every time you touch the bud. We hold them at the stick and then just use the very tip of our scissors to clip the stems of the little leaves that we want to clip out, making sure that we’re not even getting anywhere near those little hairs, those little trichomes so that they all stay on there. We just clip it straight into the jar.

 

READ ALSO: The Interview: Jesce Horton Shares the Story of LOWD

 

BM: How do you train a new trim team member to quickly get them up to speed on what you expect?

SM: That can definitely be tough. I have high enough standards in my trim room that it’s been really difficult for us to be able to give the opportunity to somebody who doesn’t have any trim experience at all to be able to have a shot in our trim room just because, in order to be able to be on schedule, to be able to keep up with the rotation of the plants, we all have to be able to trim a pound a day.

The way that I’ve tried to approach it, when I am bringing a new person into the trim team, or making sure that everyone’s on the same page, is I will seat them in our trim room in between a couple of my more experienced, faster trimmers. And I’ll encourage both of them to be keeping an eye on the pace that the prospective new trimmer is working at, and then every half an hour or so I’ll peek in at their pool and see how they’re doing, and then sometimes we’ll sit down and we’ll trim together and I’ll kind of be helping, giving pointers about organization.

A lot of maintaining quality while still trimming a pound a day has to do with organization at your trim station and making sure you’re cutting down on any kind of superfluous motions with your scissors or with supplies at the table. If you’re trimming a pound a day, that’s many, many buds. So, every little motion that you make with every trimmed bud really adds up.

BM: How do you keep a trim team motivated to do such a repetitive task over an eight-hour shift?

SM: That can be tricky. There are a lot of kind of social and environmental factors right now that have led most of the people on my team to have some perspective about how amazing it is to have a job where we work full-time and very much enjoy the company of our coworkers and have great bosses and have a great job because that definitely feels like it’s a little bit of a luxury in today’s world.

I also have been working on building an incentives program, which Jesce has been very receptive to. So, we track what everybody trims every day, and then we tally those up by the week. At the end of each harvest, we have an average of how many grams everybody trimmed each day [relative to] how many hours everyone was there to come up with an average of what everyone’s trimming per hour. Halfway through the harvest, we’ll buy a bunch of gift cards from a local coffee shop, or there’s also a little grocery store a half-block away from work that some of us go to, to pick up lunch and stuff like that. And so sometimes they’ll get a gift card for that, and I’ll get like a little handheld back massager.

BM: What tips do you have to offer on increasing the quality of the hand trim?

SM: Make sure that your team is very clear on how it is that you want your buds to look by the time it’s done being trimmed. In my experience, a lot what helps people be able to pick up their efficiency and pick up their speed and their numbers and still have a really good looking trim at the end of the day definitely has to do with making sure that each individual person feels confident in how it is that the trim leader or the grower expects their finished product to look.

BM: What tips do you have to increase trimmer efficiency?

SM: If the trimmer is confident in what they’re doing, then they can kind of zone in. It’s confidence that the job that you’re doing is exactly what is required that helps you to really be able to move faster. If you’re not fully confident on how to handle it, you’re just really not going to be able to move fast because you don’t want to screw it up. It’s a fact that sometimes buds get over-trimmed; sometimes you’ve got a newer person that’s not super sure what they’re doing and they trim for an hour, and they were just shaving everything and then you can’t use those buds. Then that definitely puts into the trimmer’s mind that, ‘I just ruined all these beautiful buds,’ and that takes away all their confidence. I get them more confident by encouraging them and the things that they are doing correctly.

Another tip on efficiency would be making sure that you’re very organized. I have a method that I have everybody use, no matter how much trim experience at other places that they’ve had or ways they’ve tackled it before: We take our trim tray and then we put all of the buds that we’re about to trim in the top part of the tray. As we’re trimming, we’re pulling any little sticks out of the tray, putting those separate as we go. We’re taking any smaller “B-buds” that we don’t necessarily want in our nice big half-ounce jars out as we go.  We’re making sure that we’re not wasting any time trimming “B-buds” when we’re actually going for the “A-buds.”

Trimming is a crucial step in the post-harvest process and one that can directly impact the value of a grower’s products. An over-trimmed bud might have bag appeal, but the loss of valuable biomass to trim can hurt a grower’s potential revenue. Meanwhile, an under-trimmed bud can look sloppy and unappealing to consumers.

Given the balancing act cannabis cultivators must perform, it’s no wonder that 74% of participants in Cannabis Business Times’ Cannabis Post-Harvest Report mentioned hand-trimming as their greatest post-harvest challenge, with trimming efficiency (29%), consistency (22%) and quality (12%) being among the top issues.

So, what exactly makes a good trim?

To answer that, Cannabis Business Times and Hemp Grower interviewed Sara Morse, lead trimmer for LOWD Cannabis in Portland, Ore., who shares her trimming philosophy, how LOWD trims its high-end line of Smoke Like a Grower (SLAG) bud using stick trimming, how she keeps her 7-person trim team motivated to repeatedly produce high-quality work, and more in this interview.

Editor’s note: This interview has been edited for length, style and clarity.

Brian MacIver: What’s your personal philosophy when it comes to trimming? Or, in other words, what effect should a good trim have on the product?

Sara Morse: We spend months growing these buds and the trim team is kind of the last line of defense in really making sure that we’re letting the truest expression of that genome, of that … strain, really express itself and make sure that we’re leaving all the little beautiful little nuances of different strains intact.

When we’re approaching a different strain or when I have a new trimmer that hasn’t worked with a strain that we grow before, I encourage them to take a little piece of a branch with a couple of buds on it, or cola, and kind of hold it at arm’s length and look at that bud objectively and be like, “What on this bud would I want to smoke and what on this bud am I going to want to take off before I smoke?”

BM: LOWD treats its SLAG products to a stick trim. How is stick trimming done and what are its benefits?

SM: Our guy that leads up our operations team, one of our head growers, he will take some of the plants that got especially nice and hang those to the side as we’re harvesting. Then me and Jesce, our CEO, will go into the dry room and we spend half the day just going through all of the curtains of our cured product and picking out our favorite branches, the branches of the plants that have just the most beautiful buds. We’ll get maybe one or two buds that actually meet SLAG bud standards from each branch. It takes us quite a while to really make sure that we really feel like we’re getting the very best buds of our whole harvest to be able to stick trim.

I have myself and my two top trimmers in the trim room for that process. We’ll take a whole branch and we hold it by the bottom of the stick, so we don’t ever actually touch the bud. We’re not handling them anymore than we have to, and that’s to be able to really preserve as much [of] those trichomes. They can shake off and they stick to your fingers every time you touch the bud. We hold them at the stick and then just use the very tip of our scissors to clip the stems of the little leaves that we want to clip out, making sure that we’re not even getting anywhere near those little hairs, those little trichomes so that they all stay on there. We just clip it straight into the jar.

 

READ ALSO: The Interview: Jesce Horton Shares the Story of LOWD

 

BM: How do you train a new trim team member to quickly get them up to speed on what you expect?

SM: That can definitely be tough. I have high enough standards in my trim room that it’s been really difficult for us to be able to give the opportunity to somebody who doesn’t have any trim experience at all to be able to have a shot in our trim room just because, in order to be able to be on schedule, to be able to keep up with the rotation of the plants, we all have to be able to trim a pound a day.

The way that I’ve tried to approach it, when I am bringing a new person into the trim team, or making sure that everyone’s on the same page, is I will seat them in our trim room in between a couple of my more experienced, faster trimmers. And I’ll encourage both of them to be keeping an eye on the pace that the prospective new trimmer is working at, and then every half an hour or so I’ll peek in at their pool and see how they’re doing, and then sometimes we’ll sit down and we’ll trim together and I’ll kind of be helping, giving pointers about organization.

A lot of maintaining quality while still trimming a pound a day has to do with organization at your trim station and making sure you’re cutting down on any kind of superfluous motions with your scissors or with supplies at the table. If you’re trimming a pound a day, that’s many, many buds. So, every little motion that you make with every trimmed bud really adds up.

BM: How do you keep a trim team motivated to do such a repetitive task over an eight-hour shift?

SM: That can be tricky. There are a lot of kind of social and environmental factors right now that have led most of the people on my team to have some perspective about how amazing it is to have a job where we work full-time and very much enjoy the company of our coworkers and have great bosses and have a great job because that definitely feels like it’s a little bit of a luxury in today’s world.

I also have been working on building an incentives program, which Jesce has been very receptive to. So, we track what everybody trims every day, and then we tally those up by the week. At the end of each harvest, we have an average of how many grams everybody trimmed each day [relative to] how many hours everyone was there to come up with an average of what everyone’s trimming per hour. Halfway through the harvest, we’ll buy a bunch of gift cards from a local coffee shop, or there’s also a little grocery store a half-block away from work that some of us go to, to pick up lunch and stuff like that. And so sometimes they’ll get a gift card for that, and I’ll get like a little handheld back massager.

BM: What tips do you have to offer on increasing the quality of the hand trim?

SM: Make sure that your team is very clear on how it is that you want your buds to look by the time it’s done being trimmed. In my experience, a lot what helps people be able to pick up their efficiency and pick up their speed and their numbers and still have a really good looking trim at the end of the day definitely has to do with making sure that each individual person feels confident in how it is that the trim leader or the grower expects their finished product to look.

BM: What tips do you have to increase trimmer efficiency?

SM: If the trimmer is confident in what they’re doing, then they can kind of zone in. It’s confidence that the job that you’re doing is exactly what is required that helps you to really be able to move faster. If you’re not fully confident on how to handle it, you’re just really not going to be able to move fast because you don’t want to screw it up. It’s a fact that sometimes buds get over-trimmed; sometimes you’ve got a newer person that’s not super sure what they’re doing and they trim for an hour, and they were just shaving everything and then you can’t use those buds. Then that definitely puts into the trimmer’s mind that, ‘I just ruined all these beautiful buds,’ and that takes away all their confidence. I get them more confident by encouraging them and the things that they are doing correctly.

Another tip on efficiency would be making sure that you’re very organized. I have a method that I have everybody use, no matter how much trim experience at other places that they’ve had or ways they’ve tackled it before: We take our trim tray and then we put all of the buds that we’re about to trim in the top part of the tray. As we’re trimming, we’re pulling any little sticks out of the tray, putting those separate as we go. We’re taking any smaller “B-buds” that we don’t necessarily want in our nice big half-ounce jars out as we go.  We’re making sure that we’re not wasting any time trimming “B-buds” when we’re actually going for the “A-buds.”

Earlier this month, the U.S. House of Representatives made history with the passing of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. The bill removes cannabis from the DEA’s Controlled Substances Act schedule, effectively decriminalizing it nationally and allowing individual states to regulate their own markets. It also calls for the reinvestment of tax money from cannabis into community grants for job training, youth recreation and other programs in areas hit hardest by prohibition.

And while the passing of the bill was lauded by many cannabis advocates and executives, others feel it doesn’t go far enough in creating a fair industry for everyone. Cannabis Business Times and Cannabis Dispensary spoke to leadership figures in the cannabis equity movement to learn about the specific issues with the MORE Act.    

Breaking Down the MORE Act’s Shortcomings

Although the bill represents a significant step in federal cannabis legislation, experts identified four specific points where its provisions fall short of establishing an industry accessible to everyone: 

Felony exclusions 

A late-added provision in the bill would prevent anyone with even a pending felony charge from getting a license in the cannabis industry. Cannabis equity advocates in Congress, such as Earl Blumenauer (D-OR) and Barbara Lee (D-CA), expressed displeasure at the last-minute addition, but stopped short of pulling the bill from a full floor vote.

Amber Littlejohn, executive director of the Minority Cannabis Business Association (MCBA), said the organization was able to ensure this add-on would not be present in the final version of the bill that is passed by both chambers of Congress.

“At the last moment, MCBA was able to work with House leadership to get their commitment to ensuring the exclusion would not stand and impacted communities would remain at the forefront of any future legislation,” Littlejohn wrote in an email to Cannabis Business Times and Cannabis Dispensary.

Dasheeda Dawson, cannabis program supervisor for the city of Portland, Ore., agreed. “Over the past few years, the definition of cannabis equity has centered on providing opportunities to those most adversely harmed,” she said via email. “Undoubtedly this starts with those who were previously arrested or incarcerated for cannabis.”

Payments to law enforcement

Another problematic provision in the MORE Act involves payments made directly to law enforcement. 

A full 60% of the bill’s “Opportunity Trust Fund” is devoted to helping the U.S. Attorney General carry out a program that offers grants to local police departments. Many believe this represents a missed opportunity for allocation of those funds.

“I would argue that our investment in law enforcement has proven to be disproportionate to the need and this is likely the best place to start shifting the spending,” said Dawson. “For example, the DEA spends millions per year on the Cannabis Eradication and Suppression program, but those millions could be used instead for creating a cannabis expungement and re-education program.”

No mandatory expungement

The “E” in “MORE” stands for one of its key provisions, the expungement of previous marijuana-related convictions. The ACLU estimates that 88% of the 8.2 million Americans who were arrested for cannabis between 2001 and 2010 were charged with possession. Arrest rates also indicate that African-Americans are arrested nearly four times as often as whites, despite similar usage rates. 

And while the bill does offer an opportunity for expungement on a national level, advocates believe that isn’t enough.

“This bill only does part of the job with automatic federal expungement. It fails to include a mandate for states to do the same, which leaves the vast majority of people in limbo still struggling to clear their records,” said Dawson. “There are also a few states that will absolutely only expunge records if required by a federal mandate.”

By and large, the MORE Act leaves decisions like this to the states, essentially legitimizing much of the regulatory power structure in cannabis presently. 

Even where federal and state-level expungement pathways are offered, the process can be confusing and unclear. It also varies on a state-by-state basis—the lack of a strong federal mandate for expungement means these provisions won’t have as much of an impact as they could.

Federal fees in licensing

Right now, states are managing the process for cannabis licensing and regulation. Under the MORE Act, federal licensing would be required for most of the main varieties of cannabis businesses. 

Experts believe these extra layers of regulation will ultimately translate into additional fees that would shut out small businesses and help large multi-state operators with the cash to spend on acquiring licenses.

“Adding an additional layer of licensing regulation is unnecessary, especially for small, local cannabis businesses and it creates additional costs, favoring big tobacco, pharmaceutical and retail companies,” said Dawson. States like Michigan, Massachusetts and Illinois have already taken steps to help mitigate the costs of cannabis licenses. 

“Coupling decriminalization with a regulatory framework that lacks an accompanying expanse of economic opportunity is like a double negative,” added Dr. Rachel Knox, an endocannabinologist who chairs the Oregon Cannabis Commission and sits on the board of Doctors for Cannabis Regulation.

MORE Act’s Murky Future

Problems with the bill may lead to disagreements within the cannabis industry—but under current Republican leadership, it’s not likely to receive a hearing in the U.S. Senate, meaning it will remain in limbo well into the new year. Georgia’s January runoffs will determine control of the Senate, which will in turn determine whether or not the bill has any chance of a hearing in the next session of the upper chamber.

Whatever the future holds, the passing of the MORE Act and the election of a Democratic administration makes it clear that cannabis is set to take a much larger role in the next legislative session. Advocates have promised to continue fighting to ensure the forming industry is accessible to everyone, especially those harmed most by prohibition.

“Despite its issues, the MORE Act sent a clear message to lawmakers and the cannabis industry that equity will be a cornerstone of federal cannabis policy,” Littlejohn said.

While the mergers and acquisitions (M&A) space in the cannabis industry has significantly slowed in 2020, it certainly hasn’t stopped—not even during a pandemic.

According to S&P Global Market Intelligence, “a drop in company valuations complicated by the coronavirus-triggered capital squeeze” were the two major reasons for the slowdown. Still, S&P Global reports U.S. and Canadian cannabis and cannabis-related companies completed 124 deals in 2020, worth a combined $615.1 million—compared to 249 deals in 2019 and 324 deals in 2018.

We also learned this year, according to a Department of Justice (DOJ) whistleblower, that “U.S. Attorney General William Barr was motivated by his personal dislike of the cannabis industry when he launched multiple Antitrust Division merger investigations into nearly a dozen cannabis deals last year,” Cannabis Business Times reported in July. According to Eric Berlin, co-chair of Denton’s Cannabis Practice, “Many of the cannabis mergers under investigation did not get closed … due to these additional costs and time delays, and now, not only are the companies involved left with little to no recourse, but the DOJ’s actions have dramatically slowed the M&A activity in the industry.”

However, recovering valuations and renewed investor interest are expected to increase deals in 2021, according to the S&P Global. Not to mention, it was a monumental year for cannabis legalization in the U.S. And, cannabis businesses in most states and provinces were considered essential services. As we wait to see what 2021 deal-making brings, we’ve rounded up some of the most notable deals that closed, and those that fell through, in 2020.

 

1. Cresco Labs Acquires Origin House

Before the coronavirus pandemic, Cresco Labs officially closed its acquisition of Canada-based cannabis company Origin House. The deal was originally valued at C$1.1 billion, though the deal’s value ended up being lower amidst declining stocks and antitrust review delays. Perhaps the biggest cannabis transaction in the year, the move paved the way for Cresco Labs’ entry into the United States’ largest cannabis market: California.

“The acquisition of Origin House makes Cresco a leading wholesale distributor in California, selling into over 575 dispensaries, representing approximately 65% of California’s storefront dispensaries. Origin House’s Continuum distribution platform distributes 13 third-party brands, including Kings Garden,” according to a press release.  

Cresco Labs’ brands are currently distributed in seven states, including Arizona, California, Illinois, Massachusetts, New York, Ohio and Pennsylvania.

 

2. Cresco Labs Terminates Tryke Companies Purchase Agreement

In September 2019, Cresco Labs announced its intention to acquire Tryke Companies, which included the Reef Dispensary portfolio in Nevada and Arizona. The purchase consideration at the time was $252.5 million for Tryke’s operating assets, plus $30 million for the company’s real estate assets. However, in April 2020, the agreement was terminated mutually, according to a press release.

Cresco Labs CEO and Co-Founder Charlie Bachtell said, “Our acquisition of Tryke has been impacted by regulatory delays, a decline in capital markets, and now COVID-19, which brought additional risk to this transaction. Given these events, we feel the resources previously targeted for this transaction are better invested in our existing markets, where we have high visibility and certainty of return on capital.”

 

3. Canopy Growth Corp. and Acreage Holdings Amend Merger Terms

Canopy Growth made global headlines and sent stocks surging in April 2019 when it announced it would acquire Acreage Holdings for $3.4 billion with one significant contingency: the United States federally legalizes cannabis. At the time, Acreage Holdings held licenses in 20 states, and shareholders were expected to receive a $300-million upfront cash payment when the deal closed. Acreage was also to gain access to Canopy’s Tweed and Tokyo Smoke brands.

Since the announcement, Canopy CEO Bruce Linton was terminated. And in June, the Canopy/Acreage deal was amended. Still contingent upon federal legalization, the value of the deal was brought down to $843 million, with an upfront payment of $37.5 million to Acreage. And the same update, Acreage CEO Kevin Murphy announced his resignation, though he still serves as chairman and sits on the board of directors. Bill Van Faasen was appointed interim CEO. 

 

4. Curaleaf Acquires Grassroots

In a $700-million deal, Curaleaf acquired Grassroots Cannabis in late July. According to the company’s executive chairman on CNN Business in July, the acquisition makes Curaleaf the biggest cannabis company in the world, based on its reported $1 billion in annual revenue.

Curaleaf is now operational in 23 states, with 88 operational dispensaries and 22 cultivation sites with 1.6 million square feet of cultivation capacity.

“Many of the MSOs have … retrenched into markets where they were performing well or where they have capital to build out, whereas Curaleaf has really continued to keep our foot on the accelerator and expand into more markets—given where we have a strong balance sheet and we can actually take on those projects,” according to Curaleaf CEO Joseph Lusardi.

 

5. Aurora Cannabis and Aphria Make More Moves Into the U.S.

Canadian cannabis powerhouses Aurora Cannabis and Aphria strengthened their footholds in the U.S. cannabis market this year.

Aurora Cannabis completed its acquisition of Reliva LLC, a hemp-derived CBD manufacturer that sells products in the United States, in May.

And this month, Aphria closed its acquisition of SweetWater Brewing Company, a U.S.-based independent craft brewer. According to a CBT report: “Aphria plans to introduce its adult-use cannabis brands, such as Broken Coast, Riff, Soleil and Good Supply, to the U.S. market as cannabis-free beverages through SweetWater products and harness SweetWater’s expertise in what [Aphria CEO and Chairman Irwin Simon] said is the growing, $29-billion craft beer market in the U.S.”

 

6. Trulieve Enters its Fifth State with Two Acquisitions in Pennsylvania

In September, multi-state operator Trulieve (whose most significant foothold is Florida’s medical cannabis market), announced it had entered into definitive agreements PurePenn LLC and Pioneer Leasing & Consulting LLC and Keystone Relief centers (dba Solevo Wellness), according to a press release. The deals are pending closing conditions and regulatory approvals.

The move will create Trulieve’s vertical integration in Pennsylvania—with three retail licenses and 35,000 square feet of cultivation (with plans to expand to 90,000 square feet by Q1 2021). 

According to the press release, “Under its current 100% wholesale model, PurePenn’s sizeable cultivation footprint supplies an extensive distribution network, including Solevo and other private and public medical marijuana companies.” 

 

7. Stem Holdings Acquires Driven Deliveries

In a data-centric rebrand, multi-state, vertically integrated operator Stem Holdings announced its definitive agreement to acquire Driven Deliveries.

The $31 million deal emphasizes a growing trend in an increasingly contactless COVID-19 economy: delivery.

“In May 2020, Driven Deliveries reported it notched an 18% increase in new consumers over April and a more than 20% increase in gross collections,” CBT reported. 

“The story of cannabis M&A in recent years has been one of market share and multi-state expansion. Now, with capital markets running dry and a global pandemic continuing to exert economic pressures across the board, the strategy is tightened. Technology assets can help build a vertically integrated portfolio in different ways than pure geographic reach,” according to CBT’s report.

 

8. Columbia Care Acquires The Green Solution

Multi-state, vertically integrated cannabis company Columbia Care closed its transaction with The Green Solution, one of Colorado’s largest vertically integrated operators, in September, bringing Columbia Care’s footprint to 95 facilities open or under development in the United States and European Union.

According to a press release, “The TGS acquisition establishes Columbia Care as the leader in the $1.75B Colorado market, the second largest cannabis market in the world. With 23 dispensaries, many located in the Denver metro area and tourist destinations such as Aspen, TGS supplies its own dispensaries along with its wholesale distribution network from its six operational cultivation facilities and one highly automated manufacturing facility. Additionally, a Columbia Care affiliate was recently awarded the opportunity to pursue a marijuana hospitality business license in Adams County, one of the first consumption lounges in the state.”

 

9. Verano Holdings Acquires AltMed

In November Verano Holdings announced it would acquire Florida-based AltMed, which would form one of the largest privately held cannabis companies in the United States, according to a CBT report.

Verano, which is vertically integrated in 12 states, made headlines in 2019 when multi-state operator Harvest Health & Recreation announced plans to acquire the company. At the time, the deal would have brought Harvest to 200 cannabis facilities in 16 states. And combined, the megadeal would have made Harvest one of the largest operators in the United States. However, in March of this year, the two companies announced their mutual termination of their Business Combination Agreement., citing COVID-19 and regulatory challenges.

The AltMed merger takes Verano in a new direction in Arizona and in Florida, where Verano had divested its assets in the Harvest transaction, Verano CEO George Archos said. “Florida was always an attractive market for us. They have a great patient base, a great population and limited licenses. In Florida, you have to basically depend on yourself in order to succeed. It’s a vertically integrated business, so you have to produce all your own flower and all your own products to sell through your stores, which is something that we’re very good at, and so is AltMed,” Archos told CBT.

 

10. High Times Gets Into the Retail Game

Hightimes Holdings Corp., which publishes the cannabis magazine High Times, announced on April 28 a definitive agreement to acquire 13 California cannabis retail licenses from Harvest Health & Recreation, according to a press release.

The mostly stock-based transaction would make High Times a significant retailer player in the United State’s largest cannabis market “overnight,” according to the April release. The intention is to rebrand the Harvest dispensaries to become “High Times destinations,” leveraging its iconic brand its built over more than 45 years.

However, since April, the deal has been amended to be valued at $67.5 million and include 10 dispensaries, according to Green Market Report. And in September, Hightimes lost its lease on two San Francisco retail locations due to non-payment of rent, according to SF Weekly.

Editor’s note: Bookmark this pagefor more news on the latest mergers and acquisitions in the cannabis industry.