Level Brands Announcement

Friends, as a corollary to my most recent email, Level Brands announced a deal to acquire cbdMD for stock (~$65mm based on 2018 $3.2mm of revenue and $353,561 loss through August, plus a five-year earnout for an additional 15.525mm shares, but I’m not writing today about valuations).  Level Brands owns a bunch of wellness brands, including a licensing deal for CBD products.

What’s interesting about this deal is that one of the closing conditions is the passage of the 2018 Farm Bill with descheduling of CBD (CBD generally, not just hemp-based CBD).  Although the cannabis industry hasn’t been shy about selling CBD products, now that there’s a possibility of legalization, someone (a lawyer, perhaps?) apparently now sees a risk to the industry and/or the market if the bill passes without CBD legalization.   http://ir.levelbrands.com/node/6901/html

Also, since I have your attention if you’ve made it this far, the Wine & Spirits Wholesalers of America are still in support of cannabis legalization, which is good.  What’s notable about this story, which has a copy of the group’s talking points, is that the group is (unsurprisingly) opposed to vertical integration.  This is, in my opinion, going to be a giant lobbying battle that no one is really focused on yet – whether the three-tier system is replicated in cannabis post-legalization.  It’ll be fun to watch. https://www.marijuanamoment.net/major-alcohol-association-briefs-congress-on-marijuana-legalization/

By: Marc Hauser