Bad Name, Broken Deals: Five of ten planned deals for Schwazze, a (weirdly named) Colorado-based would-be vertically integrated operator, have fallen through, canceled by either Schwazze or the target. Only the acquisition of MesaPur, which required a relatively smaller amount of cash, has transacted, while the remainder remain in limbo, as tight capital markets have collided with a declining stock price at Schwazze to create an unfavorable climate for deals. Schwazze needed at least $96 million in cash to complete the deals, and still needs $70+ million to close those that are still active (including the 14 dispensary Starbuds acquisition).
Why It Matters: Deals… seem to be dead. It’s a little hard to sort out what the real situation is at The Company Formerly Known As Medicine Man Technologies. It’s possible this announce-and-kill pattern reflects strategic prioritization - at least some of its deals (Los Suenos and Dabble) were killed off by the company itself, ostensibly because of diligence issues, and Starbuds, as the by-far largest acquisition, looms large. But the question of whether Schwazze really has the wherewithal to do any of the deals remains.
The Name Tells It All...: dot.LA has an absolutely riveting multi-article series going on the collapse of the (ironically named) Los Angeles-based Genius Fund, which blew $164 million in Russian oligarch money in less than two years. The company aspired to build a vertically-integrated cannabis business, starting or investing in a large hemp farm in northern California, cannabis kiosks and a line of CBD products like sparkling water and candles, a retail presence, production facility, and more. Nearly all were failures, as inexperienced executives, inordinate spend, little industry familiarity, and shady dealings combined to sink the enterprises.
Why It Matters: Man, could you imagine a better candidate for a movie covering the 2016 - 2018 cannabis bubble? The story is one that continuously gets both more insane and more believable, encapsulating how the worst the industry has seen - an unbelievable amount of money burnt for essentially no value in a blaze of inexperience, greed, incompetency, and potential fraud (with a now-dead Russian billionaire’s dollars, to keep things extra spicy). More than anything, I’m still wondering -- how did this company spend $165 million… and I’ve barely heard of them?