VANCOUVER, British Columbia – MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF) (“MYM”) and Biome Grow Inc. (CSE:BIO) (CNSX:BIO.CN) (Frankfurt:6OTA) (OTC:BIOIF) (“Biome”) are pleased to announce that they have entered into an agreement whereby MYM has agreed to acquire 100% of Biome’s wholly-owned subsidiary Highland Grow Inc. (“HGI”), which is licensed under the Cannabis Act (Canada ) to cultivate, process, and distribute cannabis from its facility located in Antigonish, Nova Scotia. As part of the transaction, Biome will become the largest shareholder of MYM.
The total consideration to be paid by MYM for the acquisition will be approximately $12,898,727 consisting of: (i) $1.5 million in cash; (ii) 42,813,985 common shares in the capital of MYM (each a “MYM Share”) at a deemed per share price of $0.065, representing 19% of MYM’s total issued and outstanding share capital post-closing (the “Consideration Shares”); and (iii) 132,551,040 newly-created non-voting Class A Special Shares of MYM, which non-voting shares may be exchanged for MYM Shares in accordance with the Class A Special Shares’ rights and restrictions; and (iv) MYM’s agreement to make the Loan (as described below).
“We are extremely excited to welcome Highland Grow to the MYM family”, said Robin Linden, interim CEO of MYM Nutraceuticals. “The Highland Grow cultivation and distribution facility in Nova Scotia will expand MYM’s cannabis footprint, enabling us to immediately supply the Canadian market with premium craft cannabis, including product grown in our Quebec based facility.”
“This is a great opportunity that benefits all of our stakeholders,” said Khurram Malik, CEO of Biome Grow. “This transaction allows Biome to become the largest single shareholder in a much bigger operating platform than it could currently create on its own, an ability to address our significant liabilities stemming from our previously abandoned capital intensive strategy, and it gives Biome greater flexibility on how to evolve the business in this fast changing industry.”
To finance the acquisition and to provide additional working capital, MYM has entered into a loan facility (the “Loan Facility”) with 1909203 Ontario Inc. (the “Facility Lender”) whereby MYM will borrow $3 million for a term of 18 months with an option to extend for an additional 6 months at the sole discretion of MYM upon MYM paying the Facility Lender an extension fee. 1909203 Ontario Inc. is controlled by Michael Wiener and parties related to him. The Loan Facility shall bear interest at a face rate of 17.5% per annum. MYM shall also pay the Facility Lender a set-up fee equal to 3% of the amount advanced and an immediate interest payment equal to 5% of the amount advanced separate from and in addition to the 17.5% per annum interest payable under the Loan Facility. The Loan Facility is secured against all of MYM’s current and future acquired assets. At any time during the term of the Loan Facility, at MYM’s discretion, MYM may borrow an additional $1 million from the Facility Lender on the same terms and conditions as the $3 million loan upon issuing the Facility Lender warrants to purchase 28,571,429 common shares of MYM with an exercise price of $0.07 per common share.
MYM has also agreed to loan Biome an amount equal to $1 million (the “Biome Loan”) for a term of 18 months with an option to extend for an additional 6 months at the sole discretion of Biome upon Biome paying an extension fee. The Biome Loan shall bear interest at a face rate of 17.5% per annum. Biome shall also pay a set-up fee equal to 3% of the amount advanced and an immediate interest payment equal to 5% of the amount advanced separate from and in addition to the 17.5% per annum interest payable under the Biome Loan. Interest on the Loan shall be payable monthly beginning on the day that is 4 months following the advance of the Loan. Requiring no further loan of cash by MYM, the principal amount of the Biome Loan shall be increased by the amount of certain liabilities of HGI, which will continue to be owing by HGI post-closing estimated to be approximately $1.4M.
Upon completion of the transaction, Michael Wiener will resign as a director of Biome and will be appointed as Chief Executive Officer and a director of MYM. Robin Linden will resume his role as a director and Chief Marketing Officer of MYM. Robert Wolf will also be appointed a director of MYM.
The cash proceeds of the transaction and the Biome Loan will principally be used by Biome to satisfy outstanding obligations owing to its senior lender. In connection with the pre-payment of that loan facility, Biome has agreed to pay a pre-payment fee of $44,402.81, which amount will be satisfied by Biome issuing 417,535 common shares in the capital of Biome at a deemed price per share of $0.08.
As security for the Loan, 38,461,538 Consideration Shares will be placed into escrow and released to Biome on regular intervals. Any proceeds received by Biome from the sale of such Consideration Shares shall be used to repay the Loan until such time as the Biome Loan is discharged in full.
The completion transactions described herein are subject to certain conditions precedent, and if such conditions are not satisfied or waived by August 7, 2020 (or a later date if extended in accordance with the SPA), the SPA, may be terminated. There can be no assurance that these transactions will be completed.
The parties acknowledge that the Facility Lender is a company related to Michael Wiener and will be loaning monies to MYM to allow it to make the cash payments to Biome to complete the share purchase and Biome Loan transactions. As such this these transactions could be considered a related party transaction pursuant to Multilateral Instrument 61-101- Protection of Minority Shareholders in Special Transactions (“MI 61-101”). Notwithstanding the forgoing, Biome has determined that the related party portion of these transactions are exempt from the valuation and minority approval requirements of MI 61-101, on the basis that the value of the related party portion of these transactions does not exceed 25% of the market capitalization of Biome as of the date hereof.
About MYM Nutraceuticals Inc.
MYM is a licensed cannabis producer in Canada. It is uniquely positioned to opportunistically acquire and/or invest in companies within the cannabis and hemp industries that are in need of capital and management support. Our senior management team is made up of experts engaged in a wide array of disciplines – upper level management of public companies, finance, law, master growing, plant pathology, agricultural economics, pharmaceutical, engineering, global marketing, product development and branding, distribution and seed genetics. MYM is a shareholder in two production projects in Quebec and is actively looking to acquire complementary businesses and assets in the cannabis sector. MYM shares trade in Canada, Germany and the United States under the following symbols: (CSE: MYM) (OTC: MYMMF) (FRA:0MY) (DEU:0MY) (MUN:0MY) (STU:0MY).
Biome is a Canadian-based company with national and international business interests in the cannabis industry. Its wholly owned subsidiary Highland Grow Inc., is licensed to cultivate, process, and sell cannabis under the Cannabis Act (Canada).
Jay-Z announces new line of cannabis products dubbed Monogram
Rapper and entrepreneur Jay-Z is launching his own cannabis brand in partnership with Caliva, the California-based weed company that hired the star as its chief brand strategist last year.
Named Monogram, Jay-Z’s line of marijuana products launched its website and social media accounts on Friday.
“Monogram marks a new chapter in cannabis defined by dignity, care and consistency. It is a collective effort to bring you the best, and a humble pursuit to discover what the best truly means,” Monogram’s website highlights.
No further information on the specific products that will be sold under the Monogram brand has been released yet.
However, according to the website, the flower used in Monogram’s products is grown in small batches, with a board of “cannabis experts” tasked with grading and hand-selecting each flower that goes into the line.
The New York rapper joined Caliva in 2019 as a brand strategist, which entailed overseeing the creative direction of the company. Furthermore, Jay was focused on Caliva’s social equity efforts as he aimed to increase economic participation of people disproportionately harmed by marijuana prohibition in the newly legal industry.
As for when consumers can expect to try Jay-Z new products, a spokesperson told the New York Daily News Monogram still hasn’t set its dispensary release schedule. The line will “definitely be available across all of California,” according to the spokesperson.
In other news, basketball star Shawn Kemp who played for the Seattle SuperSonics is also showing his love of pot. Kemp is set to open Seattle’s first black-owned marijuana dispensary this Friday. The Sonics legend named his dispensary Shawn Kemp’s Cannabis and is hoping to serve as a model for others in the black community who might be interested in foraying into the legal marijuana business in the area.
“I’m looking forward to welcoming Sonics fans on a regular basis, starting with opening day. I hope that Shawn Kemp’s Cannabis will be an inspiration for people to get involved with the legal cannabis industry, especially people of color,” the Reign Man said in a press release.
Analysis: Legal weed in Texas would generate over $500 million in tax revenue per year
Legalizing marijuana in Texas could generate over half a billion dollars in tax revenue per year and create more than 40,000 new jobs, according to the results of a report released by Vicente Sederberg LLP earlier this month.
Legal cannabis sales in Texas would reach about $2.7 billion annually based on the fact that there are more than 1.5 million residents over the age of 21 that consume pot on a monthly basis, the analysis calculated.
The estimated tax revenue was calculated under the assumption Texas would tax marijuana sales at the same rate as Colorado at 20.6%. This would amount to $1.1 billion in taxes per biennium, while Texas could collect an additional $10 million per year through the issuing of marijuana business licenses.
The report notes Colorado has raised nearly $13 million on average per year just from license and application fees. Furthermore, the report indicated that current taxpayer dollars that go towards marijuana arrests and prosecutions amount to $311 million per year – money that Texas would save should it legalize pot.
“States across the country are seeing the benefits of legalizing and regulating cannabis. It is inspiring lawmakers in prohibition states to reexamine the efficacy and costs of their current policies and take a closer look at the alternatives,” said Shawn Hauser, a partner at Vicente Sederberg.
“The goal of this report is to provide a snapshot of the economic benefits Texas would experience if it started treating cannabis more like alcohol for adults 21 years of age and older,” he commented on the new report.
Aside from the tax revenue that legal weed in Texas could generate, the report highlighted marijuana’s job creation potential. An estimated 20,000 to 40,000 new jobs would be available in the newly legal industry, with tens of thousands of additional indirect positions, the report estimated.
Hauser also pointed out the added economic benefits of legalization in Texas given current uncertainties provoked by the coronavirus pandemic.
“Texas is leaving an enormous amount of money on the table by keeping cannabis illegal,” according to him.
Texas was once known for having the strictest drug laws in the U.S., but the state has softened its stance on cannabis in recent years. A very limited medical marijuana program was established in 2015, while, more recently, cannabis possession arrests in the state have been significantly declining after hemp became legal.
Cannabis Businesses Invest in Their Futures with Political Donations
Cannabis companies have been making political donations for years, and in 2020, those donations have continued to grow. In fact, some companies are investing aggressively to shape the future of the cannabis industry either by donating directly to campaigns and politicians or through political action committees (PACs) that support cannabis-friendly candidates and legislation.
So far in 2020, the Center for Responsive Politics reports that the leading cannabis companies, cannabis-related companies, and cannabis trade associations making donations to federal candidates, parties, and outside groups are (in order of 2020 donation amounts to date):
- Canty Ventures
- National Cannabis Industry Association (NCIA)
- Have A Heart
- Beyond Broadway LLC
- Sea Hunter Therapeutics
- Cannabis Trade Federation
- Dan Kopp & Co
- Acreage Holdings
Compare that list to the list of large cannabis company donors in 2019, which included Curaleaf, Parallel Brands (formerly Surterra Wellness), Tweed Inc. (part of Canopy Growth Corporation), Canndescent, and Trulieve. Even ancillary cannabis companies like Dama Financial, WeedMaps, and Acreage Holdings donate large sums of money in 2019 according to data from the Center for Responsive Politics.
State Donations in 2020
There are a number of legalization (adult-use and/or medical use) and decriminalization measures on state ballots in 2020, and cannabis companies, ancillary companies, and professional associations have been actively donating directly to related campaigns and initiatives at the state level.
In Arizona, Harvest is the biggest donor in support of legalization (Prop. 207) followed by Curaleaf, MedMen, Cresco Labs, Copperstate Farms, Arizona Dispensaries Association, Herbal Wellness Center, and Oasis Dispensaries.
Mississippi’s medical marijuana initiative on the November ballot (Initiative 65) has received donations from the CEO of Heritage Properties (George Walker III), Ghost Management Group (which owns Weedmaps), and the owner of ABKO Labs (Robert Lloyde II).
Ghost Management Group and its Weedmaps subsidiary also donated to support Montana’s and New Jersey’s legalization initiatives. In addition, New Jersey’s legalization Question 1 on the November ballot received donations directly from The Scotts Company (the maker of Scotts Miracle Gro), Pashman Stein Walder Hayden (a New Jersey cannabis law firm), and Compassionate Care Research Institute (a New Jersey dispensary).
Keep in mind, these donations don’t include the donations that cannabis companies and ancillary businesses donate to PACs or that they invest in lobbying. The Center for Responsive Politics reports that the biggest investments in lobbying from cannabis companies, ancillary companies, and trade associations in 2020 have come from the Cannabis Trade Federation, National Cannabis Roundtable, Canopy Growth Corp, Curaleaf, Global Alliance for Cannabis Commerce, Parallel Brands, Cronos Group, Charlotte’s Web, NCIA, Acreage Holdings, Dama Financial, Trulieve, California Cannabis Association, and Oregon Cannabis Association.
Political Donations from Cannabis Interests Are Not New
One of the biggest political donation stories happened in California when cannabis businesses donated aggressively to former Lieutenant Governor Gavin Newsom’s campaign to become the state’s governor in the 2018 election. According to the Los Angeles Times, he secured hundreds of thousands of dollars in donations from cannabis cultivators, processors, and retailers.
By May 2018, Newsom had raised nearly $500,000 from cannabis companies, but he wasn’t the only politician in California to receive money from cannabis interests. At the time, the state’s Treasurer, John Chiang, and Attorney General, Xavier Becerra, also secured donations from the cannabis industry
And of course, these donation numbers don’t even include the many donations from PACs that businesses and individuals working in the cannabis industry donate to. Many of these funds go directly to specific candidate’s fundraising efforts. For example, the Coastal Pacific Political Action Committee held a fundraiser in June 2017, and six days later, the PAC donated $50,000 to Newsom’s campaign.
Another noteworthy political donation happened in Florida over the course of multiple years. The Miami Herald reported that Surterra donated $1.1 million to Florida political candidates and committees between the summer of 2016 and March 2018. Trulieve donated $564,000 during the same period, and Curaleaf donated $469,000.
In Illinois, the doors for cannabis companies to make political donations opened in March 2017 when a federal judge ruled an Illinois provision that did not allow marijuana companies to make campaign contributions in the state was unconstitutional.
According to the Chicago Tribune, the provision prevented contributions to political committees that were established for the purpose of promoting candidates for public office. Since that decision was made, cannabis companies like PharmaCann and Cresco Labs have donated significant amounts to the state’s political candidates and committees.
Business and individual donations to marijuana-friendly political candidates have also become standard in Nevada and Colorado. During the 2016 elections, dozens of marijuana cultivators, processors, and dispensaries donated $75,000 to Nevada legislators according to the Nevada Independent.
Looking back further in history, Florida Senator Rob Bradley received his first donation from a cannabis company in 2015 when Costa Farms donated $10,000 to his political committee.
Similarly, cannabis businesses have actively contributed to Colorado political campaigns for years, and many of those businesses have been holding political fundraisers to support their preferred candidates. PBS reported back in 2014 that Colorado’s congressional delegation had received $20,000 during the first nine months of 2014 from marijuana businesses. Also in 2014, a fundraiser to support political candidates that was held by Tripp Keber of Denver, Colorado’s Dixie Elixirs & Edibles generated $40,000 in donations.
What’s Next for Political Campaign Donations from Cannabis Businesses?
As the cannabis industry continues to grow and more states legalize medical and/or recreational cannabis, laws will continue to evolve. Cannabis businesses and ancillary businesses should absolutely be concerned about which politicians are making those laws.
With that said, it’s safe to assume that political donations from the cannabis industry will get larger and more frequent in the coming years. Let’s put the donations from cannabis companies to political campaigns into perspective. During the first half of 2019, the cannabis industry gave more than $200,000 to members of Congress, which was up from $248,504 donated throughout all of 2018. Compare that to the $42 million that pharmaceutical companies donated to political campaigns across the United States in 2018.
With those numbers in mind, it’s guaranteed that political donations from cannabis and cannabis-related companies will continue to grow. Savvy businesses are paying attention and getting involved in an attempt to influence the regulations that could make or break their companies’ futures.
Originally published 8/24/17. Updated 10/23/20.
Susan Gunelius, Director of Email Marketing Strategy for Cannabiz Media, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her nearly 30-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. She has been working with clients in the cannabis industry since 2015. Susan has written 11 marketing-related books, including the highly popular Ultimate Guide to Email Marketing for Business, Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.
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