💸 High Impact

Another One Bites The Dust

Eaze, is hitting the brakes and shutting down operations by December 31st. CEO Cory Azzalino announced the company's winding down in a candid LinkedIn post, marking a dramatic turn for what was California's largest cannabis delivery service. The closure isn't just a buzzkill for Eaze; it's a symptom of the broader malaise afflicting California's legal cannabis market.

Let's rewind. Founded in 2014, Eaze soared to the top in the post-legalization euphoria of 2018, when investors were high on the prospects of legal pot and valuations were sky-high. The company promised seamless cannabis delivery at the click of a button, capturing the imagination of consumers and venture capitalists alike. But as the smoke cleared, operational challenges and legal hurdles began to mount. In 2021, a former CEO pleaded guilty to bank fraud, casting a long shadow over the company's leadership.

The ownership saga reads like a Silicon Valley drama. Billionaire tech investor James Henry Clark, co-founder of Netscape and a man with a Stanford building bearing his name, injected $36.9 million into Eaze in 2022. But the honeymoon was short-lived. Legal squabbles with other investors ensued, leading Clark's company, FoundersJT, to foreclose on Eaze earlier this year. In August, FoundersJT purchased Eaze for $54 million at auction, effectively sidelining other investors and taking the helm. Yet, instead of steering the ship to calmer waters, the new ownership has decided to dock it indefinitely.

According to Azzalino, Eaze might "reopen under a new corporate structure potentially with new management," but that's as clear as smoke rings in the wind. Nearly 500 employees are facing layoffs, and while some may be rehired in 2025, uncertainty looms large. Jim Araby, vice president at the United Food Commercial Workers International Union, expressed frustration over the lack of concrete answers regarding which depots might reopen.

So, what's fueling this downfall? High taxes and a thriving black market are choking the life out of legal operators like Eaze. Consumers faced with exorbitant prices at licensed retailers are turning to unregulated sellers who offer tax-free deals—deals that legitimate businesses can't compete with. Araby calls it "continuing dysfunction," a perfect storm of policy failures that's led to the loss of hundreds of union jobs.

This isn't just a cautionary tale for Eaze but a wake-up call for California's legislators and regulators. The state’s cannabis industry was supposed to be a gold rush, but instead, it's mired in red tape and taxed to the hilt. The black market remains robust, undermining legal enterprises and siphoning off billions in potential tax revenue.

Even the state's Department of Cannabis Control is taking notice. Nicole Elliott, the department's director and an appointee of Governor Gavin Newsom, liked Azzalino's LinkedIn post announcing the shutdown—a digital nod that doesn't go unnoticed in today's connected world.

Investors who once saw green are now seeing red. The collapse of Eaze underscores the perilous landscape of the legal cannabis industry in California. Without significant regulatory reforms and tax relief, more companies might find themselves in Eaze's unenviable position. As we watch this space, one thing is clear: the dream of a thriving, legal cannabis market is still just that—a dream, hazy and elusive, much like the product it sells.

📈 Dog Walkers

Trulieve Opens Another Location In South Florida

Trulieve Cannabis Corp. (CSE: TRUL) is making moves in Florida, with a new medical cannabis dispensary opening in Hallandale Beach on October 11th. Expect music, specials, and patient education sessions at the grand opening, plus a push for #YesOn3—the ballot initiative for legalizing adult-use cannabis in Florida. CEO Kim Rivers highlighted Trulieve's commitment to affordable, high-quality products and top-notch service. Located at 2100 East Hallandale Beach Blvd, the new spot will offer Trulieve’s in-house brands and partner favorites like Alien Labs and Khalifa Kush. With extended hours and express pickup, this is set to be a high-traffic location for Broward County’s cannabis community.

TerrAscend To Report Q3 on 11/6

TerrAscend Corp. (TSX: TSND) is set to light up the earnings scene with its Q3 2024 results on November 6th. The cannabis company will drop the numbers after market close and follow up with a conference call at 5:00 p.m. ET. Investors, get your dial-in details ready—this call could be a high point for your portfolio!

Curaleaf To Report Q3 on 11/6

Curaleaf Holdings (TSX: CURA, OTCQX: CURLF) is gearing up to release its Q3 2024 financial results on November 6th after the market closes. Management will host a conference call at 5:00 p.m. ET, featuring prepared remarks and a Q&A session. Investors, get ready—this is your chance to hear how one of cannabis’ global leaders is navigating the market and what’s on the horizon for Curaleaf’s operations.

MariMed To Report Q3 on 11/6

MariMed Inc. (CSE: MRMD, OTCQX: MRMD) is set to unveil its Q3 2024 financial results on November 6, after markets close. Management will break down the numbers during a conference call on November 7 at 8:00 a.m. EST. A webcast will be available on MariMed’s Investor Relations website for those looking to dig deeper into the details, with a playback option for the ultimate convenience.

Legal Eagles Take Flight Around Amendment 3

In a move that has everyone talking, Florida Senator Jason Pizzo is suing the state for using taxpayer dollars to fund a controversial anti-cannabis PSA ahead of next month’s vote on marijuana legalization. The ad claims that DUI crashes spike in states with legal cannabis—a statement Pizzo says crosses into unconstitutional political messaging. He’s seeking an injunction against the Florida Department of Transportation, claiming this ad is using public funds to influence voters. With $15 million on the line, even former Senator Jeff Brandes weighed in, calling it “desperation.” Trulieve, a corporate backer of the legalization initiative, has also filed a defamation suit against Florida’s Republican Party for misleading voters about Amendment 3’s potential impact.

RIV Has Blast Off In NY

RIV Capital Inc. (CSE: RIV, OTC: CNPOF) is lighting up the New York cannabis scene as its subsidiary, Etain, launches adult-use sales at its Kingston dispensary located at 445 NY-28. Following the buzz from their Manhattan debut and the MOODS product line rollout, Etain is strategically positioning itself in the heart of the Catskills—an area known for its artistic vibe and historical significance as New York's first capital. The revamped dispensary boasts a flower bud bar and sleek electronic POS systems for speedy checkouts, aiming to attract both locals and the Woodstock-bound crowd. Meanwhile, RIV Capital is set to introduce Fluent's brands to the Empire State, syncing up with their integration of Cansortium Inc. before the anticipated merger closure in Q4 2024.

🗞️ The News

Trulieve to Open Medical Cannabis Dispensary in Hallandale Beach, Florida

TerrAscend to Host Third Quarter 2024 Earnings Conference Call

Curaleaf to Report Third Quarter 2024 Financial and Operational Results

Florida Senator Sues State Over Anti-Marijuana Ad, Alleging Unconstitutional Use Of Taxpayer Dollars Ahead Of Legalization Vote

New Jersey Senate Panel Approves Psilocybin Therapy Legalization Bill

📺 YouTube

Why Cannabis Companies Use Adjusted EBITDA | Trade to Black

What we covered:

✅ Today, we’re diving into a topic that’s crucial for understanding the financial health of cannabis companies: adjusted EBITDA.

As the cannabis industry continues to grow and evolve, many companies report their earnings using this metric. But what exactly is adjusted EBITDA, and why is it important for cannabis companies?

When we talk about "adjusted" EBITDA, we refer to modifications made to the standard EBITDA calculation to exclude one-time expenses, non-recurring costs, or other factors that may distort the true operating performance of a business. This adjustment provides a clearer picture of a company’s ongoing profitability and operational efficiency.

We discuss why cannabis companies, in particular, rely on adjusted EBITDA. The cannabis industry as you know is unique and faces several challenges that make traditional financial metrics less informative. Here are a few key reasons in our latest Trade To Black podcast.