iAnthus, Cresco Labs gain adult-use approvals in Massachusetts; KushCo Holdings hopeful for NASDAQ
- sci
- Jan 24, 2020
- 4 min read
Updated: May 2, 2020
iAnthus Receives Approval for Adult-Use Cultivation and Product Manufacturing in Massachusetts
On Thursday, the Massachusetts Cannabis Control Commission issued a notice of authorization for Mayflower Medicinals, an iAnthus subsidiary, to commence cultivating and manufacturing adult-use cannabis products. The company is eligible to begin these operations as early as January 27.
Originally opened in January 2018 to solely serve the state's medical marketplace, iAnthus presently operates a 36,000 square foot manufacturing facility in Holliston, alongside a medical-only dispensary in Boston.
Back in the Summer 2019, iAnthus was also awarded the license to operate a 2,837 square foot adult-use dispensary in Worcester, the second largest city in the state. With the store design projected to be aligned with the company's retail model "Be.", iAnthus anticipates this dispensary to be operational – pending regulatory approval – in the first quarter of 2020.
Initially launching back in November 2018, the State of Massachusetts raked in nearly $400 million during its first year of adult-use sales. This robust sales number came amid just 36 adult-use retail storefronts, and some reports project that the state could do over $1 billion in sales in 2021.
Speaking on the company's third quarter conference call this past November, iAnthus' Chief Operating Officer, Pat Tiernan, detailed plans to double their Massachusetts cultivation capacity in Q2 with a 41,000 square foot production facility in Fall River:
"So, we sell everything we make. Our flower, Mayflower flower, is noted as the best. The feedback from our consumers there is nothing short of fantastic. I personally wish I had more flower capacity today.
... Our Fall River facility, which essentially doubles our current capacity, depending on when the authorities say we can open it—probably thinking about that .. in the May time frame on the medical side—would have essentially double that capacity from our Fall River cultivation, and add significant kitchen facilities, as well."
At present, the company's Holliston facility supplies approximately 30 other Massachusetts dispensaries on a wholesale basis with products including Mayflower branded flower, pre-rolls and concentrates.
iAnthus (CSE: IAN, OTC: ITHUF) has fully owned this Massachusetts entity since April 2018, and shares of the company ended flat on Thursday.
Cresco Labs' Massachusetts Subsidiary Secures Authorization for Adult-use Retail Sales, Cultivation, and Production
Additionally, Cresco Labs' acquiree, Hope Heal Health, was also issued a similar notice on Thursday.
The Massachusetts Cannabis Control Commission gave authorization to the Fall River operator to commence adult-use retail, cultivation, and product manufacturing beginning on January 27.
Alongside their Fall City dispensary, Hope Heal Health also operates a cultivation facility in the same town. In a late-2019 presentation, Cresco Labs management estimated that this facility would encompass 13,000 square feet of processing and cultivation size by the end of calendar 2019 while manufacturing products such as vape cartridges, tinctures, topicals, concentrates, and flower.
Previously announced in December 2018, Cresco Labs' proposed acquisition of of Hope Heal Health is to be paid for with "cash and the assumption of certain indebtedness". As of its most recent Management Discussion & Analysis filing, the transaction is expected to close in the first quarter of 2020.
Cresco Labs (CSE: CL, OTC: CRLBF) shares finished Thursday up roughly 3.5%.
KushCo Holdings Appears to Revivify Hope for NASDAQ Uplisting
A late Thursday SEC filing was published by KushCo Holdings that seems would appear to put to rest issues surrounding the company's path towards an uplisting to the NASDAQ.
KushCo Holdings had originally announced its filing of an application to uplist on the NASDAQ Global Select Market back in July 2019. Just a couple days later on July 11, the company received a subpeona from the U.S. Securities and Exchange Commission (the "SEC") requesting information and documents as it related to the company's restatement of its consolidated financial information for the fiscal years ended August 31, 2018 and 2017, and for the three months ended November 30, 2018 and 2017.
KushCo EVP of General Counsel, Arun Kurichety, on the company's second quarter earnings call, had this to say regarding the subpoena and its hindrance on the company's intention to list on the NASDAQ:
"As we previously discussed on an 8-K filed on July 8, 2019, we did submit an application to be listed on the NASDAQ Global Select Market, the highest tier on NASDAQ. As we also previously disclosed on April 9, 2019, through an 8-K, company did receive a subpoena from the Securities and Exchange Commission related to the companies voluntarily – voluntary restatement of certain financials related to the year ended August 31, 2018 and 2017 and interim financial statements relate to that same period. We believe that once we resolve the SEC subpoena, we will be back on track to continuing moving forward in the NASDAQ approval process."
In Thursday's SEC filing, the company revealed that they received written notification from the SEC on January 21, 2020, that the Commission had concluded its investigation and - based on the information provided - did not intend to recommend an enforcement action against the company.
Shares of KushCo (OTC: KSHB) ended Thursday's trading session down roughly five percent.
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