Newsletter 003: Regulatory momentum continues to drive the cannabis industry forward

Progressive regulatory changes have been thrusting the sector forward. These changes account for much of the 45% growth in legal cannabis sales in the United States last year, rising from $13.2bn to $19.1bn. Canada’s cannabis industry has also continued to mature and develop, forecast to reach $2.5bn this year from $1.6bn in 2019. A lack of supply, access and variety of product had blighted the early phase of federal legalisation IN Canada but new regulations have allowed an increase in stores and form factors. Europe’s cannabis market is still a way behind its North American cousins but is growing fast. Growth of 25% was realised in 2020 but a massive CAGR of 52% is forecast over the next 5 years, reaching $3.1bn by 2025. Much of this growth is predicated on continued regulatory developments. Below we will discuss a few of the major regulatory changes that have occurred in just the last month at both national and international levels.

Earlier this month, the US House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act). The vote passed with 228 votes to 164 and would remove cannabis from the US schedule of Controlled Substances if it came into law. The act would bring an end to the contradiction between current state and federal cannabis policy and would aim to provide restorative justice for the communities of colour that have been damaged by the US ‘War on Drugs’.

The More Act would be a major boost to the cannabis industry and would open up the capital markets to the sector. This would allow US companies to list on a major exchange, and trigger a wave of institutional investment into the industry. Anticipation of these changes is driving US cannabis markets higher, which is similar to what was seen in Canada prior to their cannabis legalisation in 2018. During that time we saw some Canadian cannabis indices increasing more than 10 times, and a similar effect in the US would not be surprising in the coming years.

Additionally, the MORE Act would be expected to generate substantial income for the US treasury, as well as reducing the pressures on the federal prison system. According to a non-partisan report by the Congressional Budget Office (CBO), the MORE Act would likely generate $13.7bn in taxes and cut nearly $1bn in federal prison spending over the next decade.

The recent vote is significant but may only be symbolic for the time being given the Senate, in its current incarnation, is unlikely to vote through the act. Even if the Democrats win both of the Georgia runoffs next month and manage to achieve a 50/50 share of the Senate, 10 Republican would be required to back the act for it to pass.

There is some hope though, pressure on Republican senators to vote in favour of cannabis legalisation is increasing. The number of Republican senators in states with medical cannabis is now 22, of which 6 are in states that have fully legalised. Many view their position to be hypocritical in blocking progressive federal legislation while their states benefit from the growth of the industry and this could force a shift in position if public sentiment is strong enough.

In mid-November, following a case between a CBD vape manufacturer and the French state, the EU Court of Justice ruled that CBD should not be considered a narcotic and therefore the trade of legally produced CBD products should not be restricted. The landmark case provides clarity around the legal status of CBD in the EU and will allow the industry to thrive.

Specifically the ruling will allow CBD, extracted from the hemp flower (as opposed to the seeds or fibre), to be sold without restriction across the customs union. This is especially significant in France, the biggest hemp grower in Europe, as farmers will now be able to switch their hemp cultivation from fibre to the potentially more lucrative cannabinoid production.

The ruling applies to the whole customs union and we expect to see its effects across the EU in the coming months. In Germany we have already seen politicians joining calls for easier CBD access and these voices are only growing.

Additionally, the decision discussed the validity of existing CBD marketing bans. It stated that countries may only ban the marketing of CBD products if the risk to public health is “sufficiently established”. The burden of evidence is certainly on the side of CBD businesses in this regard, given the safety data from licenced CBD based medicines, such as Epidiolex.

This decision will be a substantial boost to the cannabinoid industry in Europe and will open up new markets.

The global prohibition of cannabis and its derivatives was triggered by the signing of the 1961 UN Single Convention on Narcotic Drugs. Cannabis was placed in Schedule I and IV of this convention, a combination reserved for substances with extremely limited or no medical value, despite evidence to the contrary. However, this month the UN Commission on Narcotic Drugs agreed to remove cannabis from Schedule IV.

Although cannabis remains in Schedule I, the removal from Schedule IV will provide countries with greater freedom to implement regulatory reform in relation to cannabis, in particular when it comes to medical cannabis. The removal of this structural barrier is a substantial development and will be a significant boost to the rapidly growing industry across North America, Europe and beyond.

This decision to reschedule cannabis was made following the recommendation of the World Health Organisation (WHO) in January 2019 and, although this one was accepted, there were an additional 4 recommendations that were not agreed by the Commission. These included the deletion of extracts and tinctures from Schedule I, the removal of THC from all schedules and the rescheduling of THC and Dronabinol from Schedule II to I. We anticipate that these additional recommendations will be accepted in the coming years

Encouraging signs have been emanating from UK regulators as well. Earlier this year the FCA provided clarification for the listing requirements for medical cannabis and CBD companies, opening up yet another global financial market to the industry. In 2021, we expect to see several medical cannabis and CBD companies listing on both the LSE Main Market and AIM. They are likely to perform well as European institutional investors look for exposure to the sector.

The opening up of new regional and global stock exchanges is a positive development and provides additional viable exit routes for companies in the sector. The growing adoption of the sector and the progressive regulatory changes will re-assure banks, private equity funds and institutions that medical cannabis is now a viable asset class for investment.

Other upcoming changes to look out for

Looking into 2021 there are a number of other countries that should be on the radar of investors interested in the cannabis sector:

• Mexico will vote on an adult-use cannabis legalisation in early 2021 and could become the biggest cannabis market in the world (120m people and c70% adult population)

• Israel is expected to legalise recreational cannabis market Q2- or Q3-2021 and could have a domino effect on other Mediterranean countries

• Luxembourg was due to legalise cannabis in 2020 but has delayed to 2021 due to the pandemic

• Netherlands will begin a recreational cannabis trial with 11 cultivators in 2021 and is very much seen as the prelude to full legalisation in the next couple of years

• China is opening up to the sector with domestic provinces having issued 15 licenses for CBD extraction and 60 for hemp farming (CBD exports were $964 million in 2019)

• Thailand’s Ministry of Tourism and Sports has announced they will start to develop the medical cannabis tourism industry in early 2021

For those interested to hear more about Verdite’s investment strategy and how the team expect to generate >30% IRRs, please contact verdite@chrystalcapital.com.

Newsletter 002: US Election & Cannabis Reform

HIGHLIGHTS

• Cannabis ETFs/Indices up over 30% in week following the election

• 4 states voted to legalise adult-use cannabis (NJ, AZ, SD, MT)

• 2 states voted to legalise medical use cannabis (SD, MS)

• Additional states around New Jersey expected to follow NJ lead (NY, CT, PA)

• Republican controlled senate has the potential to block federal legalisation

• Banking reforms (SAFE Banking Act) likely to have cross party support

It is now 2 weeks since the American people went to the polls to elect a new President and, for most of the watching world, it appears clear that Joe Biden is going to be the next President of the United States. However, it was not only the next President that was on the ballot, 5 states were voting on medical and adult-use cannabis legalisation and there were all important Senate and House seats up for grabs. Now that some of the dust has settled, we wanted to take this opportunity to discuss the election results and the potential implications for the cannabis industry.

It is safe to say that cannabis has been a clear winner in this election with 5 states voting for new medical and/or adult use cannabis legalisation and a cannabis-positive Democratic administration in the White House. Following the announcement, cannabis stocks saw a swift uptick with most cannabis ETFs/indices up over 30% week on week and some stocks up by more than 130%. Surprisingly, many Canadian stocks actually outperformed their US counterparts post election. We believe this is in part due a renewed enthusiasm for the sector as a whole, and part as a result of investors having factored in the expected uplift to US stocks prior to the election. Some US cannabis indices are up over 120% over the last 6 months in comparison to +40% for Canadian indices, suggesting this is the case.

Above: Map of United States showing cannabis legalisation by state

All 5 states in which cannabis regulations were on the ballot passed the proposals.
• New Jersey – 67% voted to legalise cannabis for adult-use
• Arizona – 60% voted to legalise cannabis for adult-use
• Mississippi – 68% voted to legalise cannabis for medical use
• South Dakota – 70% voted to legalise cannabis for medical use and 54% for adult-use
• Montana – 57% voted to legalise cannabis for adult-use

This brings the total tally of states with legal medical cannabis to 35 and states with legal adult-use cannabis to 15. This equates to more than two thirds of the country’s population with access to medical cannabis and one third with access to adult-use. A new Gallup poll mirrors this momentum, with the survey indicating that public approval for cannabis legalisation has surpassed two thirds of the population this year. With state regulations moving in one direction, we can now look to those states that are likely to be next and whether federal legalisation is on the agenda for the upcoming presidential term.

Above: Gallup poll of Americans' views on legalising cannabis

Following New Jersey's vote to legalise adult-use cannabis, a domino effect is expected in the surrounding states. This group of highly populated states has indicated their intentions to progress their cannabis regulations in line with one another. Therefore, it is highly likely we will see New York, Connecticut and Pennsylvania propose similar changes to their regulations in the coming months. Beyond these, it is possible we will also see Florida, Ohio and Maryland move from medical to adult-use next year and South Carolina, North Carolina and Kentucky may potentially become the next states to legalise medical use.

At the federal level, the path to progress is less clear cut. On the positive side, come January we will have a cannabis positive administration in the White House. Biden has publicly declared his support for decriminalisation and federal legalisation of medical cannabis. While Harris is the lead Senate sponsor of the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act, which seeks to end the federal prohibition of cannabis and provides inducements for states to expunge the records of those with cannabis-related convictions. The Democrat controlled House of Representatives is scheduled to vote on the MORE Act in December and it is expected to pass. However, it will be in the Republican controlled Senate that barriers remain.

Senate majority leader, Mitch McConnell, has been a staunch opponent to cannabis legalisation and has blocked numerous cannabis reforms. Prior to the 2022 mid-terms, his continued presence would seem to block the passage of the MORE Act or the STATES Act, which would exempt federal enforcement of cannabis and defer to state regulations. Of the two, the STATES Act is more likely to gain support from Senate Republicans due to the libertarian nature of the legislation. Additionally, the growing number of Republican Senators in states with adult-use cannabis (8) may also add weight to the side federal legalisation.

Other cannabis reforms may also be able to garner cross party support. We expect the Secure and Fair Enforcement (SAFE) Banking Act (which will provide cannabis companies with improved access to banking services) and amendments to 280E of the tax code (which currently prohibits cannabis companies from benefiting from federal tax credits and deductions) to pass either as part of Covid Relief Bill or as standalone pieces of legislation. Administrative action to re-schedule cannabis is also possible.

The North American cannabis industry has had a rocky last 18 months but this election has highlighted the continued progress the industry is making despite structural barriers remaining in place. Piece by piece these barriers are being torn down and the sector is reaping the benefits. Increasingly, any stigma associated with cannabis is falling away, indeed this is the year that we saw many US states declaring medical, and in some cases adult-use, cannabis to be an essential product.

The Chrystal Capital team remain very positive for the prospects of the industry globally. We believe that medical cannabis has become a new viable alternative asset class that is only going to become more established and pervasive in the coming years. We have launched Verdite to provide investors with diversified exposure to this high growth industry and welcome the opportunity to discuss our views with you further.

Verdite Newsletter: Bruce Linton Interview

Interview with Bruce Linton, founder and ex-CEO & Chairman of Canopy Growth Corporation

Bruce Linton, founder and ex-CEO & Chairman of Canopy Growth Corporation

Geordie Hadden-Paton 

Today I'm joined by Bruce Linton, founder and ex-chairman & CEO of Canopy Growth Corporation and member of the Verdite Advisory Board. He's here today to answer a few questions on the current state of the cannabis sector and where opportunities exist for investors. Bruce, thank you for coming and looking forward to hearing your answers.

First up, do you think we are experiencing the end of cannabis 1.0?

Bruce Linton
Cannabis 1.0 is legal production of the plant and that isn't over, because there are a whole bunch of places where it's not yet in production, or on sale, so there's still room for that to develop, but its diminishing.

2.0 is when you turn the product into formats that are enjoyable, interesting and reliable, but not scientifically validated. So a 5mg dose, is always a 5mg dose and a 2.5mg beverage, is always a 2.5mg beverage at tasting.

The third phase is when you actually use science and process to validate benefits. For instance, if you take this capsule or this input, you will get seven to eight hours of uninterrupted non-disruptive REM sleep. The product has gone through a validation process so that you know that you're actually getting a wellness product that could, overtime, become an insurance covered product. Phase three is where you can actually define an outcome.

I would say each of the phases needs more development, and each is a function of both progression of regulatory permissions and competent execution.
 

GHP: Given your experience and longevity in the industry, what lessons have been learned and how can they be applied to the next phase of growth?

BL: What we've learned in the last few years, is that cannabis has a lot in common with porridge, it can be too hot, too cold and just right. In that when the price per gram of cannabis was extraordinarily high everybody wanted to get into the business. Then when the price per gram fell through the floor and many participants failed as a result. Only the well-managed, balance sheet capable entities were able to sell at a value based price that made sense. So we have already seen several markets going through these phases. One too hot, one too cold, and one just right.

GHP: So what do you expect from this new phase we are now entering?

BL: I think there will be a bit of consolidation for competency and there will be a bit of disintegration for those that just showed up thinking it would be easy. The ones that disintegrate are not going to get bought up because they didn't allocate their capital towards creating valuable enterprises. And that’s the reason an investor needs an experienced team like Chrystal representing their capital. You need sector expertise to know whether or not a company is going to consolidate, be consolidated or disintegrate and those are very different rates of return.

GHP: Thanks. What do you think about the significance of cannabis being designated an essential product during this pandemic?

BL: I think it's remarkable because most those states that declared cannabis to be essential, a year, two,  or five earlier marginally passed cannabis as a ballot initiative. To go from a legal ballot, to a pandemic making it essential, there is nothing else in American society which has had such a dramatic change of position and progression, over that period of time.

GHP: Looking at the market now, what excites you and in particular which subsectors do you think investors should be paying attention to?

BL: I think that states that have financial problems are going to seek a solution and some of the solutions will include cannabis. When I say states, I don't mean just US states, I mean globally. Federal and or lower level officials will say “we need income and this is an untapped source”. I think this is an important thing to look for.

Currently, most of the discussion and debate has been about two ingredients that come from a plant with over 100 ingredients, CBD and THC. There will be successful scientific endeavours to determine what the other ingredients are in terms of isolation, activation inside of your body and what benefits they have. And the outcome could be massively disruptive, like treating obesity, dealing with Glaucoma, managing chronic pain to a threshold before treatment goes to opioids and veterinarian care. The science of ingredients is going to be critical.

GHP: What are the key catalysts that will drive the industry forward. You already mentioned science, are there others?

BL: People want to operate in a legal framework and they want to be allowed to choose things as adults that are legal and credibly permissible and they want to buy outcomes not ingredients. So you don't want to hear about milligrams of an ingredient, they want to hear “I will sleep better, that it will be affecting on my REM and my deep sleep pattern”. And so the transition of the discussion is going to go from ingredients which are THC and CBD, to outcomes, with sleep as an example.

GHP: In terms of geographic development, what regions do you expect to see the most growth in the next five years?

BL: The US is the kick-off, we're facing whether or not the Democrats have done enough and if at least one of the Houses shifts, you're going to see cannabis in the US become a really big deal. Europe is close, because you're starting to see really advanced regulation in places like Germany, Denmark and the Czech Republic and so that means that countries like France, the UK and others are going to start having increased pressure to continue moving at a good pace. The wild card for production is South America, but really I would say currently we have less than 10% of global population with rational governance of cannabis.

GHP: In terms of where we are at in the development of the sector, why is now an exciting time to get involved?

BL: Seven years ago would have been more exciting, but also more dangerous. There is a continuum of opportunity where I would say many of the lessons have been learned in small geographies of population like Canada, and now they can be globally applied, as the remaining 90% of the world evolves. So while you may have missed the first mega wave, there are many subsequent waves coming and the comprehensive knowledge of how to harness those waves exists but hasn't yet been fully exploited.

GHP: Do you think there's a preference between public or private investing at this stage in the cycle?

BL: I would have a preference to a bit of a mix. Private has typically more upside as long as founders and entrepreneurs are rational. Investing in private companies you have to be more inquisitive, but I like a majority private as long as you have insightful people doing the investing. But there is still quite a lot of difference in terms of valuation of public companies between the really big and the less big, in terms of multiple of revenue and the valuation of the enterprise. I think there are some serious arbitrage opportunities where some medium sized companies that we've seen will have big gains, but I don't know that I want to buy into any of those really large public companies.

GHP: What are the benefits of a fund approach in the cannabis market and how difficult do you think it is as a private investor to invest?

BL: You can either go to your barber, or your baker, or your friend in the pub for a good investment idea and that sometimes works. Or you can allow people who've been involved in the sector for a significant time and have a combined 40 or 50 years of relevant regulated experience. Absolute capacity to identify, select, and avoid the pitfalls will enhance multiples and returns. Do I want to participate with experts in a field that has few, or do I want to listen to my barber?

GHP: In what ways can investors add additional value to the companies that they put capital to work in?

BL: If it’s a fund and you invest, then you need to look at the rest of the ecosystem and maybe at an acquisition or acquirer that comes around. There may be a licensing opportunity for someone operating in state A, that could use in the state B. You can use the combined entities to offset the total cost of science and have a common license pool of IP, investors can bring key personnel.

I would say that the sector is still young enough that companies don't necessarily openly share and collaborate, but the investors, by cross investing and seeing the bigger picture, can actually do that to their portfolio.

GHP: And finally, what do you think triggers greater institutional and blue chip involvement in the sector?

BL: Well, let's break it down.

There is not a consumer packaged goods company on the planet that doesn't have an internal group contemplating “What can we do with cannabinoids?”. There's no alcohol company that does not have a team looking at cannabinoids. There's no tobacco company that does not have a team that looks at cannabinoids.

I guarantee you, all the pharmaceutical companies are looking at cannabinoids to some degree, but they are currently reluctant to execute based on the existing regulatory landscape.

As soon as the US federal policy shifts, the dominoes will start to fall and all these companies sitting on the sidelines will enter the market, and it will be a terrific boost for existing shareholders. These new entrants are not going to go and start growing their own product, they're going to buy up existing product and businesses that give them an accelerated point of entry. And so they all have a plan and the plan depends principally on things like federal regulation in the US and new markets opening across Europe and globally.

GHP: Thank you Bruce, it has been a pleasure speaking with you today.

Newsletter 001: Interview with Bruce Linton, founder and ex-CEO & Chairman of Canopy Growth Corporation

Bruce Linton, founder and ex-CEO & Chairman of Canopy Growth Corporation

Geordie Hadden-Paton 

Today I'm joined by Bruce Linton, founder and ex-chairman & CEO of Canopy Growth Corporation and member of the Verdite Advisory Board. He's here today to answer a few questions on the current state of the cannabis sector and where opportunities exist for investors. Bruce, thank you for coming and looking forward to hearing your answers.

First up, do you think we are experiencing the end of cannabis 1.0?

Bruce Linton
Cannabis 1.0 is legal production of the plant and that isn't over, because there are a whole bunch of places where it's not yet in production, or on sale, so there's still room for that to develop, but its diminishing.

2.0 is when you turn the product into formats that are enjoyable, interesting and reliable, but not scientifically validated. So a 5mg dose, is always a 5mg dose and a 2.5mg beverage, is always a 2.5mg beverage at tasting.

The third phase is when you actually use science and process to validate benefits. For instance, if you take this capsule or this input, you will get seven to eight hours of uninterrupted non-disruptive REM sleep. The product has gone through a validation process so that you know that you're actually getting a wellness product that could, overtime, become an insurance covered product. Phase three is where you can actually define an outcome.

I would say each of the phases needs more development, and each is a function of both progression of regulatory permissions and competent execution.
 

GHP: Given your experience and longevity in the industry, what lessons have been learned and how can they be applied to the next phase of growth?

BL: What we've learned in the last few years, is that cannabis has a lot in common with porridge, it can be too hot, too cold and just right. In that when the price per gram of cannabis was extraordinarily high everybody wanted to get into the business. Then when the price per gram fell through the floor and many participants failed as a result. Only the well-managed, balance sheet capable entities were able to sell at a value based price that made sense. So we have already seen several markets going through these phases. One too hot, one too cold, and one just right.

GHP: So what do you expect from this new phase we are now entering?

BL: I think there will be a bit of consolidation for competency and there will be a bit of disintegration for those that just showed up thinking it would be easy. The ones that disintegrate are not going to get bought up because they didn't allocate their capital towards creating valuable enterprises. And that’s the reason an investor needs an experienced team like Chrystal representing their capital. You need sector expertise to know whether or not a company is going to consolidate, be consolidated or disintegrate and those are very different rates of return.

GHP: Thanks. What do you think about the significance of cannabis being designated an essential product during this pandemic?

BL: I think it's remarkable because most those states that declared cannabis to be essential, a year, two,  or five earlier marginally passed cannabis as a ballot initiative. To go from a legal ballot, to a pandemic making it essential, there is nothing else in American society which has had such a dramatic change of position and progression, over that period of time.

GHP: Looking at the market now, what excites you and in particular which subsectors do you think investors should be paying attention to?

BL: I think that states that have financial problems are going to seek a solution and some of the solutions will include cannabis. When I say states, I don't mean just US states, I mean globally. Federal and or lower level officials will say “we need income and this is an untapped source”. I think this is an important thing to look for.

Currently, most of the discussion and debate has been about two ingredients that come from a plant with over 100 ingredients, CBD and THC. There will be successful scientific endeavours to determine what the other ingredients are in terms of isolation, activation inside of your body and what benefits they have. And the outcome could be massively disruptive, like treating obesity, dealing with Glaucoma, managing chronic pain to a threshold before treatment goes to opioids and veterinarian care. The science of ingredients is going to be critical.

GHP: What are the key catalysts that will drive the industry forward. You already mentioned science, are there others?

BL: People want to operate in a legal framework and they want to be allowed to choose things as adults that are legal and credibly permissible and they want to buy outcomes not ingredients. So you don't want to hear about milligrams of an ingredient, they want to hear “I will sleep better, that it will be affecting on my REM and my deep sleep pattern”. And so the transition of the discussion is going to go from ingredients which are THC and CBD, to outcomes, with sleep as an example.

GHP: In terms of geographic development, what regions do you expect to see the most growth in the next five years?

BL: The US is the kick-off, we're facing whether or not the Democrats have done enough and if at least one of the Houses shifts, you're going to see cannabis in the US become a really big deal. Europe is close, because you're starting to see really advanced regulation in places like Germany, Denmark and the Czech Republic and so that means that countries like France, the UK and others are going to start having increased pressure to continue moving at a good pace. The wild card for production is South America, but really I would say currently we have less than 10% of global population with rational governance of cannabis.

GHP: In terms of where we are at in the development of the sector, why is now an exciting time to get involved?

BL: Seven years ago would have been more exciting, but also more dangerous. There is a continuum of opportunity where I would say many of the lessons have been learned in small geographies of population like Canada, and now they can be globally applied, as the remaining 90% of the world evolves. So while you may have missed the first mega wave, there are many subsequent waves coming and the comprehensive knowledge of how to harness those waves exists but hasn't yet been fully exploited.

GHP: Do you think there's a preference between public or private investing at this stage in the cycle?

BL: I would have a preference to a bit of a mix. Private has typically more upside as long as founders and entrepreneurs are rational. Investing in private companies you have to be more inquisitive, but I like a majority private as long as you have insightful people doing the investing. But there is still quite a lot of difference in terms of valuation of public companies between the really big and the less big, in terms of multiple of revenue and the valuation of the enterprise. I think there are some serious arbitrage opportunities where some medium sized companies that we've seen will have big gains, but I don't know that I want to buy into any of those really large public companies.

GHP: What are the benefits of a fund approach in the cannabis market and how difficult do you think it is as a private investor to invest?

BL: You can either go to your barber, or your baker, or your friend in the pub for a good investment idea and that sometimes works. Or you can allow people who've been involved in the sector for a significant time and have a combined 40 or 50 years of relevant regulated experience. Absolute capacity to identify, select, and avoid the pitfalls will enhance multiples and returns. Do I want to participate with experts in a field that has few, or do I want to listen to my barber?

GHP: In what ways can investors add additional value to the companies that they put capital to work in?

BL: If it’s a fund and you invest, then you need to look at the rest of the ecosystem and maybe at an acquisition or acquirer that comes around. There may be a licensing opportunity for someone operating in state A, that could use in the state B. You can use the combined entities to offset the total cost of science and have a common license pool of IP, investors can bring key personnel.

I would say that the sector is still young enough that companies don't necessarily openly share and collaborate, but the investors, by cross investing and seeing the bigger picture, can actually do that to their portfolio.

GHP: And finally, what do you think triggers greater institutional and blue chip involvement in the sector?

BL: Well, let's break it down.

There is not a consumer packaged goods company on the planet that doesn't have an internal group contemplating “What can we do with cannabinoids?”. There's no alcohol company that does not have a team looking at cannabinoids. There's no tobacco company that does not have a team that looks at cannabinoids.

I guarantee you, all the pharmaceutical companies are looking at cannabinoids to some degree, but they are currently reluctant to execute based on the existing regulatory landscape.

As soon as the US federal policy shifts, the dominoes will start to fall and all these companies sitting on the sidelines will enter the market, and it will be a terrific boost for existing shareholders. These new entrants are not going to go and start growing their own product, they're going to buy up existing product and businesses that give them an accelerated point of entry. And so they all have a plan and the plan depends principally on things like federal regulation in the US and new markets opening across Europe and globally.

GHP: Thank you Bruce, it has been a pleasure speaking with you today.

Announcement: Chrystal 10th anniversary

10th anniversary celebrations at Chrystal Capital’s Summer Party in Mayfair, London

On Thursday 11th July, Chrystal Capital celebrated its 10th anniversary at the company’s annual Summer Party hosted at The Terrace, No. 4 Hamilton Place in Mayfair, London.

Rooftop terrace with G&T’s at sunset

Overlooking Hyde Park, the rooftop terrace served as an excellent location for over 300 of Chrystal’s broad investor network who joined in the birthday celebrations.  

Keeping all things British, HMS Spirits served up their quintessential G&T along with the 'stonkingly good' English sparkling wine offered by Nyetimber.  Internationally renowned DJ Guy Preston - who has performed alongside artists such as Beyonce, Sting and Kanye West -  kept the party rocking, while world-class magician Archie Manners had everyone guessing.

Anniversary Celebrations

Celebrating its 10th anniversary in 2019, Chrystal Capital are proud of the entrepreneurial and innovative approach to financing which has seen the corporate finance and investment house proliferate over the past decade.

Deal Announcement: Candid Co.

Candid Closes $63 Million Series B

Candid, a direct-to-consumer brand expanding access and affordability to oral health care, announced it raised a $63.4M Series B financing round. Participating in the round were Candid’s Seed and Series A investors, including Greycroft, Bessemer, and e.ventures, and featured participation from new investors, including RiverPark Funds, blisce, Redesign Health’s limited partners, and Mousse Partners. This brings Candid’s total funding to nearly $90 million.

The Series B round will fuel Candid’s rapid growth through both its retail and at-home channels, as well as provide capital to double the number of employees to 550 by the end of the year. Candid will be opening an additional 50 Candid Studios across the United States — bringing the total number of retail locations to more than 60 — offering an unparalleled in-person experience to those who seek it while continuing to offer remote treatment for patients in harder-to-access areas of the country. In just 18 months of operation, Candid has already opened 13 studios in major cities across the U.S. and served tens of thousands of customers.

Candid also announced it is donating $25 from every set of aligners it sells to Smile Train , a charity that supports free cleft surgery and comprehensive cleft care for children around the world. This partnership will result in at least 1,000 more cleft surgeries for children in 2019.

For more information or to view Candid’s studio locations visit Candidco.com

Chrystal Capital launches a new look and reflects on its achievements in 2018

Reflecting on 2018, Chrystal Capital had an exceptional year advising and fundraising on transactions valued at over USD400 million for new and existing clients. 

The year started with two rounds into a long-standing client that saw our global network of Single Family Offices (SFOs) and Ultra High Net Worth Individuals (UHNWIs), continue to fund a new social and environmental presence in London, The Conduit.  Embracing our client’s ethos, we introduced both capital and contacts to support this socially impactful members’ club.  

Co-investment leads the way

Our newly created co-investment team went from strength to strength during 2018. Led by Chrystal Capital partner, Stephen Ford, the team worked on multiple private equity co-investment fundraises that enabled our investor community to take advantage of our growing institutional partnerships.  

Both family offices and UHNWIs were able to cherry pick from a curated selection of high-quality investments, from a USD80 million Series E SaaS fundraise to an exciting new fashion discovery platform labelled the “Netflix of Fashion.” 

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Demand for off-market deals increased in 2018 

Our Special Situations team advised on and raised more than USD270 million for off-market, esoteric businesses globally.  

The demand from SFOs and private investors to invest in non-standard business opportunities was welcomed by the companies whose desire for flexible capital meant each Chrystal Capital fundraise was heavily oversubscribed.  

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Anniversary celebrations in 2019

Celebrating our 10th anniversary in 2019, we are excited to announce a refreshed Chrystal Capital.  

Visually embracing our namesake, our new brand design reflects both the Chrystal Capital ethos and our personality as an entrepreneurial and innovative corporate finance and investment firm.  

We have also expanded our resources by offering our global network of investors a curated portfolio of services that include a corporate and family office advisory team, and a private office service.  

For us, best-of-breed is standard practice.  

Chrystal Capital picks hot topic Succession Planning as first in series of breakfast talks

Earlier today, Chrystal Capital hosted the first in a new series of breakfast talks, and this mornings topic is considered one of the most significant concerns among family offices’ - Succession Planning.

Chaired by David Alexander from Pall Mall Family Office, over 18 SFOs gathered for breakfast at 5 Hertford Street to hear from two next-generation family members who have been or are currently going through the succession planning process.

Both Ben Goldsmith and H.E. Sheikh Nasser Bin Abdulaziz Al-Thani talked openly about their experiences, and offered our network insight into the challenges and, interestingly, the cultural differences that prevail in succession planning.

It is estimated that in the next 15 years over 69%* of single family offices are expected to undergo a generational transition. Securing a willing and able next generation of family members, who want to be involved in the management of their families’ wealth requires succession planning. In 2017, almost half of the family offices interviewed in the Campden Wealth Report stated that they have some form of plan in place, with another third still developing their strategies.

This event was the first in a newly launched Petit Déjeuner Breakfast Series organised by Chrystal Capital, where our investor network has the opportunity to hear first hand from their peers whose experiences have garnered significant recognition within their respected industry.

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*Campden Waalth Report 2017/2018.

Deal Announcement: The Conduit

Chrystal Capital embraces The Conduit’s mission introducing both capital and members

Chrystal Capital has closed on a successful fundraise that saw family offices, UHNWIs, and entrepreneurs invest over £10.2million into London based  home for social change, The Conduit. This funding round followed the completion of two earlier fund raises in 2017. 

Embracing their client’s ethos, Chrystal Capital utilised its strong network to introduce both capital and contacts to support this socially impactful members’  club.    

A club with a social and environmental purpose 

The Conduit has a mission: to serve as a home for the diverse community of people passionate about social change. Acting as a catalytic platform, this  newly-founded club housed in the centre of London will bring  together social entrepreneurs, investors, creatives, business leaders, policy-makers and civil society to help tackle some of the most pressing challenges facing the world today. 

“Chrystal Capital were valued partners who introduced us to a global network of investors. They worked tirelessly, providing a strong mix of corporate advisory and fund-raising services.”

— Nick Hamilton, Co-Founder, The Conduit

Chrystal Capital saw significant buy in from family offices, whose desire to invest in social impact projects that are both profitable and socially responsible, paved the way for The Conduit opportunity to be a huge success. 

“We have now worked with The Conduit on three rounds of funding to assist in the completion of their first project in London. The concept and ethos of The Conduit  to support social change by impact investing and support to scale-ups is something many of the family offices  that we work with around the world  are also committed to.”

— James Innes, Partner, Chrystal Capital

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Deal Announcement: MPX Bioceutical Corp

MPX Raises US$40 Million Secured Convertible Loan to Fund Capacity Development of MPX Assets and Acquisitions

MPX Bioceutical Corporation (“MPX” or the “Company”) (CSE:MPX) (OTC:MPXEF) is pleased to announce that it has successfully completed a US$40,000,000 secured convertible original issue discount loan (the “Convertible Loan”) financing (the “Offering”) maturing on May 25, 2021 (the “Maturity Date”). While non-interest bearing, the Convertible Loan has been issued at a discount price of US$812.06 per US$1,000 of principal and will accrue value at a rate of 7% per annum compounding on a quarterly basis until the Maturity Date. The Convertible Loan has been issued through a wholly-owned Luxembourg subsidiary of MPX (“MPX Luxembourg”). 

Use of Proceeds

The proceeds of the Offering will be used primarily for accretive activities including capacity expansion, acquisitions, and to support activities involved with securing new cannabis extraction, production and dispensary licenses in various jurisdictions in both the United States and Canada.

In addition, US$9,500,000 will be reserved for payment of the seller notes due on June 30, 2018 in respect of the acquisition of 99% of the membership units of GreenMart of Nevada NLV, LLC in December 2017.

“The pace of growth in our industry continues to accelerate with several U.S. states launching new cannabis legalization programs, the Canadian provinces designing and implementing retailing initiatives and acquisition opportunities arising on both sides of the border and, indeed globally. We have been introduced to multiple expansion opportunities and will be providing our shareholders and the market with an update on our progress on several of these in the next few days”

— W. Scott Boyes, Chairman, President and CEO of MPX

“We are also witnessing the emergence of significant consolidation activity as several larger North American industry participants have made announcements regarding transactions that would result in larger national, or international, footprints for the combined entities. Larger cannabis entities will facilitate more effective brand awareness, product development and cost efficiencies. These are exciting times for our industry and having access to capital is critical for MPX to exploit the growth opportunities presented by this market. This current funding was arranged in a few short weeks without the need for the involvement of an investment bank demonstrating the confidence of shareholders and the capital markets in MPX’s business plans, its execution to-date and its growth trajectory”

— Mr. Boyes

About MPX Bioceutical Corporation

MPX, an Ontario corporation, through its wholly-owned subsidiaries in the U.S., provides substantial management, staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to three medicinal cannabis enterprises in Arizona operating under the Health for Life (dispensaries) and the award-winning Melting Point Extracts (high-margin concentrates wholesale) brands. The successful Health for Life brand operates in the rapidly growing Phoenix Metropolitan Statistical Area.  With the acquisition of The Holistic Center, MPX adds another operating medical cannabis enterprise to its footprint in Arizona.

GreenMart of Nevada NLV, LLC (“GreenMart NV”) is an award winning licensed cultivation, production and wholesale business, licensed for both the medical and “adult use” sectors in Las Vegas, Nevada, and is already selling wholesale into the Nevada medical cannabis market. GreenMart NV has also optioned suitable locations and intends to enter the higher-margin retail arena by applying for at least two dispensary licenses in the Las Vegas market which will operate under the “Health for Life” brand.

In Massachusetts, MPX is building out and will operate a cultivation and production facility as well as up to three dispensaries and manages three full service dispensaries and one producer in Maryland.

The Company also leases a property in Owen Sound, Ontario, for which an application to Health Canada has been made for a cannabis production and sales license. In addition, the Company will continue its efforts to develop its legacy nutraceuticals business.