Exhibit 99.1
FORM 7
MONTHLY PROGRESS REPORT
Name of Listed Issuer: Curaleaf Holdings, Inc. (the “Issuer” or “Curaleaf”).
Trading Symbol: CURA
Number of Outstanding Listed Securities: 567,632,882 Subordinate Voting Shares
Date: December 9, 2020
This Monthly Progress Report must be posted before the opening of trading on the fifth trading day of each month. This report is not intended to replace the Issuer’s obligation to separately report material information forthwith upon the information becoming known to management or to post the forms required by Exchange Policies. If material information became known and was reported during the preceding month to which this report relates, this report should refer to the material information, the news release date and the posting date on the Exchange website.
This report is intended to keep investors and the market informed of the Issuer’s ongoing business and management activities that occurred during the preceding month. Do not discuss goals or future plans unless they have crystallized to the point that they are "material information" as defined in the Policies. The discussion in this report must be factual, balanced and non-promotional.
General Instructions
(a) | Prepare this Monthly Progress Report using the format set out below. The sequence of questions must not be altered nor should questions be omitted or left unanswered. The answers to the items must be in narrative form. State when the answer to any item is negative or not applicable to the Issuer. The title to each item must precede the answer. |
(b) | The term “Issuer” includes the Issuer and any of its subsidiaries. |
(c) | Terms used and not defined in this form are defined or interpreted in Policy 1 – Interpretation and General Provisions. |
Report on Business
1. | Provide a general overview and discussion of the development of the Issuer’s business and operations over the previous month. Where the Issuer was inactive disclose this fact. |
General
Curaleaf Holdings, Inc. (“Curaleaf” or the “Company”) operates as a life science company developing full scale cannabis operations, with core competencies in cultivation, manufacturing, dispensing and medical cannabis research. Curaleaf is a leading vertically integrated medical and wellness cannabis operator in the United States. Headquartered in Wakefield, Massachusetts, the Company has operations in 23 states including operating 95 dispensaries, 22 cultivation sites and 30 processing sites with a focus on highly populated, limited license states, including New York, New Jersey, Florida and Massachusetts. The Company leverages its extensive research and development capabilities to distribute cannabis products with the highest standard for safety, effectiveness, consistent quality and customer care. The Company is committed to leading the industry in education and advancement through research and advocacy. The Company markets to medical and adult-use customers through brand strategies intended to build trust and loyalty.
Recent developments regarding the Issuer’s business and operations
On November 5, 2020, Curaleaf announced it completed its acquisition of Alternative Therapies Group’s cultivation and processing operations.
Please see the Issuer’s press release dated November 5, 2020 filed on the Issuer’s website for more information.
On November 6, 2020, Curaleaf announced it had signed a definitive agreement for an asset divestiture in Maryland for $31.5 million.
Please see the Issuer’s press release dated November 6, 2020 filed on the Issuer’s website for more information.
On November 9, 2020, Curaleaf announced its Select brand had expanded into Pennsylvania.
Please see the Issuer’s press release dated November 9, 2020 filed on the Issuer’s website for more information.
On November 17, 2020, Curaleaf announced its CEO succession effective January 2021.
Please see the Issuer’s press release dated November 17, 2020, filed on the Issuer’s website for more information.
On November 17, 2020, Curaleaf reported its third quarter 2020 financial and operations results.
Please see the Form 5 and financials filed with the CSE on November 30, 2020 and the Issuer’s press release dated November 17, 2020, filed on the Issuer’s website for more information.
On November 20, 2020, Curaleaf announced the launch of fast onset NANO Chews in Florida.
Please see the Issuer’s press release dated November 20, 2020 filed on the Issuer’s website for more information.
2. | Provide a general overview and discussion of the activities of management. |
Boris Jordan, Executive Chairman, was featured prominently in both a Bloomberg online article and a New Cannabis Ventures interview on November 4, 2020. He also participated in broadcast interview on Bloomberg TV on November 6 and was profiled by Forbes on November 27, 2020. Boris also participated in the Prohibition Partners Live 2020. Mr. Jordan also participated in the “US MSOs: The South” at the Cowen’s 3rd Annual Boston Cannabis Conference.
Joseph Lusardi, Chief Executive Officer, participated in broadcast interviews with Cheddar and Yahoo! Finance on November 4 and November 6, 2020, respectively.
Joseph Bayern, President, was featured in the New York times on November 19 and in Business Insider on November 20, 2020. Joe participated in CannaVest’s Cannabis Business Summit: Multi-State Operator Roundtable.
Jason White, Chief Marketing Officer, participated in a radio interview on WARC on November 17, 2020. Jason participated in the Global Cannabis Intelligence European Cannabis Summit, as well as the Forbes CMO summit.
3. | Describe and provide details of any new products or services developed or offered. For resource companies, provide details of new drilling, exploration or production programs and acquisitions of any new properties and attach any mineral or oil and gas or other reports required under Ontario securities law. |
On November 20, 2020, Curaleaf announced the launch of fast onset of NANO Chews in Florida.
Please see the Issuer’s press release dated November 20, 2020 filed on the Issuer’s website for more information.
4. | Describe and provide details of any products or services that were discontinued. For resource companies, provide details of any drilling, exploration or production programs that have been amended or abandoned. |
N/A
5. | Describe any new business relationships entered into between the Issuer, the Issuer’s affiliates or third parties including contracts to supply products or services, joint venture agreements and licensing agreements etc. State whether the relationship is with a Related Person of the Issuer and provide details of the relationship. |
On November 9, 2020 Curaleaf announced continued expansion of its Select brand into the state of Pennsylvania.
Please see the Issuer’s press release dated November 9, 2020 filed on the Issuer’s website for more information.
6. | Describe the expiry or termination of any contracts or agreements between the Issuer, the Issuer’s affiliates or third parties or cancellation of any financing arrangements that have been previously announced. |
N/A
7. | Describe any acquisitions by the Issuer or dispositions of the Issuer’s assets that occurred during the preceding month. Provide details of the nature of the assets acquired or disposed of and provide details of the consideration paid or payable together with a schedule of payments if applicable, and of any valuation. State how the consideration was determined and whether the acquisition was from or the disposition was to a Related Person of the Issuer and provide details of the relationship. |
Massachusetts
On November 5, 2020, Curaleaf announced it completed its acquisition of Alternative Therapies Group’s cultivation and processing operations.
Please see the Issuer’s press release dated November 5, 2020 filed on the Issuer’s website for more information.
Maryland
On November 6, 2020, Curaleaf announced it had signed a definitive agreement for an asset divestiture in Maryland for $31.5 million.
Please see the Issuer’s press release dated November 6, 2020 filed on the Issuer’s website for more information.
8. | Describe the acquisition of new customers or loss of customers. |
N/A
9. | Describe any new developments or effects on intangible products such as brand names, circulation lists, copyrights, franchises, licenses, patents, software, subscription lists and trade-marks. |
N/A
10. | Report on any employee hirings, terminations or lay-offs with details of anticipated length of lay-offs. |
Issuer has a total of 3,590 employees, which includes 188 new hires and 75 terminations in the month of November.
11. | Report on any labour disputes and resolutions of those disputes if applicable. |
N/A
12. | Describe and provide details of legal proceedings to which the Issuer became a party, including the name of the court or agency, the date instituted, the principal parties to the proceedings, the nature of the claim, the amount claimed, if any, if the proceedings are being contested, and the present status of the proceedings. |
Curaleaf may become threatened by a party, or otherwise become party to litigation from time to time in the ordinary course of business which could adversely affect its business. Among other disputes, Curaleaf (1) is defending against claims in arbitration relating primarily to a lock-up agreement that the former minority shareholders of Curaleaf’s Connecticut operations signed in connection with their receipt of Subordinate Voting Shares of the Issuer in exchange for their minority interest; (2) is defending against purported securities class actions alleging similar claims based on the FDA’s July 22, 2019 warning letter to Curaleaf and the promotion of Curaleaf’s CBD products; and (3) defending against purported class actions alleging, among other things, claims of mislabeling and fraud.
Connecticut
No update since last reporting of this item on Form 7 filed with the CSE on November 8, 2020.
FDA
No update since last reporting of this item on Form 7 filed with the CSE on April 9, 2020.
13. | Provide details of any indebtedness incurred or repaid by the Issuer together with the terms of such indebtedness. |
N/A
14. | Provide details of any securities issued and options or warrants granted |
Security | Number Issued | Details of Issuance | Use of Proceeds(1) | ||||||
Subordinate Voting Shares | 581,595 | Shares issued in connection with option exercises | The proceeds from payment of the option exercise price will be used for general working capital purposes. | ||||||
Subordinate Voting Shares | 245,629 | Shares issued in connection with settlement of debt. See Form 9 filed with CSE on November 27, 2020 | N/A |
(1) | State aggregate proceeds and intended allocation of proceeds. |
15. | Provide details of any loans to or by Related Persons. |
N/A
16. | Provide details of any changes in directors, officers or committee members. |
N/A
17. | Discuss any trends which are likely to impact the Issuer including trends in the Issuer’s market(s) or political/regulatory trends. |
Adverse publicity reports or other media attention regarding the safety, efficacy and quality of marijuana in general, or associating the consumption of adult-use and medical marijuana with illness or other negative effects or events, could have such a material adverse effect. There is no assurance that such adverse publicity reports or other media attention will not arise. A negative shift in the public's perception of cannabis, including vaping or other forms of cannabis administration, in the U.S. or any other applicable jurisdiction could cause State jurisdictions to abandon initiatives or proposals to legalize medical and/or adult-use cannabis, thereby limiting the number of new State jurisdictions into which Curaleaf could expand. Recent medical alerts by the CDC and future bans on the sale of vaping products in the locations we serve, and recent state health agencies’ approaches to vaping related illness and other issues directly related to cannabis consumption could potentially create an inability to fully implement Curaleaf's expansion strategy and may have a material adverse effect on Curaleaf's business, results of operations or prospects.
2020 Elections
The results of the 2020 Presidential and Congressional elections may impact the likelihood of any legal developments regarding cannabis at the national level, including the passage of the Secure and Safe Enforcement (SAFE) Banking Act and the Marijuana Opportunity Reinvestment and Enforcement (MORE) Act, measures and initiatives, as well as potential executive action to clarify federal policy toward the industry, although it is uncertain whether and in what manner any such federal changes will occur. On a federal level, former Vice President Joe Biden, who campaigned on a platform that included cannabis decriminalization, is widely recognized as President-Elect. However, it appears that Congress will remain split: Democrats, who are generally more supportive of federal cannabis reform than Republicans, maintained their majority in the House of Representatives, although at a smaller margin than initially expected, and gained seats in the Senate, although the ability for Democrats to gain a majority in the Senate, including a Vice Presidential tie-breaking vote, is uncertain and will depend on the outcome of the January 2021 Georgia runoff election. Although the House of Representatives voted to pass the MORE Act on December 4, 2020, which would remove cannabis from the Controlled Substances Act, the prospect of its passage in the Senate and final enactment remains unclear.
On a state level, the November 2020 elections included multiple initiatives on state ballots regarding cannabis, all of which passed. In Arizona and New Jersey, two markets where the Company already has medical operations described herein, adult use cannabis ballot initiatives passed. Similarly, adult use passed in Montana, medical use passed in Mississippi, and both adult use and medical use passed in South Dakota. Barring any further legal challenges, these states are expected to adopt governing rules and regulations to expand their cannabis programs accordingly.
COVID-19
The novel coronavirus commonly referred to as "COVID-19" was identified in December 2019 in Wuhan, China. On January 30, 2020, the World Health Organization declared the outbreak a global health emergency, and on March 11, 2020, the spread of COVID-19 was declared a pandemic by the World Health Organization. On March 13, 2020, the spread of COVID-19 was declared a national emergency by President Donald Trump. The outbreak has spread throughout Europe, the Middle East and North America, causing companies and various international jurisdictions to impose restrictions such as quarantines, business closures and travel restrictions. While these effects are expected to be temporary, the duration of the business disruptions internationally and related financial impact cannot be reasonably estimated at this time. The rapid development of the COVID-19 pandemic and the measures being taken by governments and private parties to respond to it are extremely fluid. While the Company has continuously sought to assess the potential impact of the pandemic on its financial and operating results, any assessment is subject to extreme uncertainty as to probability, severity and duration of the pandemic as reflected by infection rates at local, state, and regional levels. The Company has attempted to assess the impact of the pandemic by identifying risks in the following principle areas:
• Mandatory Closures. In response to the pandemic, many states and localities implemented mandatory closures of, or limitations to, businesses to prevent the spread of COVID-19; this impacted the Company’s operations. Subsequently, the Company’s business was deemed an "essential service," permitting us to stay open despite the mandatory closure of non-essential businesses. More recently, the mandatory closures that impacted the Company’s operations were lifted and the Company resumed full operations, albeit subject to various COVID-19 related precautions and changes in local infection rates. The Company’s ability to generate revenue would be materially impacted by any future shut down of its operations.
• Customer Impact. While the Company has not experienced an overall downturn in demand for its products in connection with the pandemic, if its customers become ill with COVID-19, are forced to quarantine, decide to self-quarantine or not to visit its stores or distribution points to observe "social distancing" it may have material negative impact on demand for its products while the pandemic continues. While the Company has implemented measures, where permitted, such as "curb side" sales and delivery, to reduce infection risk to our customers, regulators may not permit such measures, or such measures may not prevent a reduction in demand.
• Supply Chain Disruption. The Company relies on third party suppliers for equipment and services to produce its products and keep its operations going. If its suppliers are unable to continue operating due to mandatory closures or other effects of the pandemic, it may negatively impact its own ability to continue operating. At this time, the Company has not experienced any failure to secure critical supplies or services. However, disruptions in our supply chain may affect our ability to continue certain aspects of the Company’s operations or may significantly increase the cost of operating its business and significantly reduce its margins.
• Staffing Disruption. The Company is, for the time being, implementing among its staff where feasible "social distancing" measures recommended by such bodies as the Centers for Disease Control (CDC), the Presidential Administration, as well as state and local governments. The Company has cancelled non-essential travel by employees, implemented remote meetings where possible, and permitted all staff who can work remotely to do so. For those whose duties require them to work on-site, measures have been implemented to reduce infection risk, such as reducing contact with customers, mandating additional cleaning of workspaces and hand disinfection, providing masks and gloves to certain personnel, and contact tracing following reports of employee infection. Nevertheless, despite such measures, the Company may find it difficult to ensure that its operations remain staffed due to employees falling ill with COVID-19, becoming subject to quarantine, or deciding not to come to come to work on their own volition to avoid infection. At certain locations, the Company has experienced increased absenteeism due to increased COVID-19 infection rates in certain locales. If such absenteeism increases, the Company may not be able, including through replacement and temporary staff, to continue to operate in some or all locations.
• Regulatory Backlog. Regulatory authorities, including those that oversee the cannabis industry on the state level, are heavily occupied with their response to the pandemic. These regulators as well as other executive and legislative bodies in the states in which we operate may not be able to provide the level of support and attention to day-to-day regulatory functions as well as to needed regulatory development and reform that they would otherwise have provided. Such regulatory backlog may materially hinder the development of the Company’s business by delaying such activities as product launches, facility openings and approval of business acquisitions, thus materially impeding development of its business. The Company is actively addressing the risk to business continuity represented by each of the above factors through the implementation of a broad range of measures throughout its structure and is reassessing its response to the COVID-19 pandemic on an ongoing basis. The above risks individually or collectively may have a material impact on the Company’s ability to generate revenue. Implementing measures to remediate the risks identified above may materially increase our costs of doing business, reduce our margins and potentially result in losses. While the Company is not currently in financial distress, if the Company’s financial situation materially deteriorates as a result of the impact of the pandemic, the Company could eventually be unable to meet its obligations to third parties, including observing financial covenants under the Facility, which in turn could lead to insolvency and bankruptcy of the Company.
This document contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements or information. Generally, forward-looking statements and information may be identified by the use of forward-looking terminology such as "plans", "expects" or, "proposed", "is expected", "intends", "anticipates", " or "believes", or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. More particularly and without limitation, this news release contains forward-looking statements and information concerning (i) the Issuer’s current litigation and arbitration proceedings, (ii) the potential impacts of adverse publicity reports or other media attention regarding the safety, efficacy and quality of marijuana in general, or associating the consumption of adult-use and medical marijuana and (iii) the potential impacts of the COVID-19 pandemic on the Issuer’s business and operations. Such forward-looking statements and information reflect management's current beliefs and are based on assumptions made by and information currently available to the company with respect to the matter described in this new release. Forward-looking statements involve risks and uncertainties, which are based on current expectations as of the date of this release and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Additional information about these assumptions and risks and uncertainties is contained under "Risk Factors and Uncertainties" in the Company's Annual Information Form filed on September 25, 2020, which is available under the Company's SEDAR profile at www.sedar.com, and in other filings that the Company has made and may make with applicable securities authorities in the future. Forward-looking statements contained herein are made only as to the date of this press release and we undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. We caution investors not to place considerable reliance on the forward-looking statements contained in this press release.
[signature page follows]
Certificate of Compliance
The undersigned hereby certifies that:
1. | The undersigned is a director and/or senior officer of the Issuer and has been duly authorized by a resolution of the board of directors of the Issuer to sign this Certificate of Compliance. |
2. | As of the date hereof there is no material information concerning the Issuer which has not been publicly disclosed. |
3. | The undersigned hereby certifies to the Exchange that the Issuer is in compliance with the requirements of applicable securities legislation (as such term is defined in National Instrument 14-101) and all Exchange Requirements (as defined in CNSX Policy 1). |
4. | All of the information in this Form 7 Monthly Progress Report is true. |
Dated | December 9, 2020. | |
Michael Carlotti | ||
Name of Director or Senior Officer | ||
/s/ Michael Carlotti | ||
Signature | ||
Chief Financial Officer | ||
Official Capacity |
Issuer Details Name of Issuer Curaleaf Holdings, Inc. | For Month Ended November 30, 2020 | Date of Report YY/MM/D December 9, 2020 | ||
Issuer Address 301 Edgewater Place #405 | ||||
City/Province/Postal Code Wakefield, MA 01880 USA | Issuer Fax No. ( ) | Issuer Telephone No. (781) 451-0150 | ||
Contact Name Dan Foley | Contact Position Vice President of Investor Relations | Contact Telephone No. (781) 451-0150 | ||
Contact Email Address dfoley@curaleaf.com | Web Site Address www.curaleaf.com |