In a groundbreaking step for California’s cannabis industry, the iconic Harborside dispensary chain has just announced that it is going public and will be listed on the Canadian Securities Exchange.
The move comes following a “reverse takeover” — a strategy that has often been used by U.S. cannabis companies to be listed on Canadian exchanges. Merging with a Canada-registered company is mandated by the continuing (although now bending) prohibition on the listing of such companies on U.S. exchanges. According to the May 31 press release announcing the move, Harborside will also have a new board of directors.
The California company involved in the merger is actually FLRish Inc, which folded in Harborside’s nonprofit entities in preparation for last year’s transition to a legal adult-use market in the Golden State. (Under the old medical-marijuana system, for-profit entities were not allowed in the cannabis sector; this changed when the adult-use regulations took effect in January 2018.) The Canadian company is Lineage Grow, which is based in Toronto but has a cultivation facility in California’s Yolo County and a dispensary in San Jose. The new company is to be renamed simply Harborside, and will be listed on the CSE as HBOR.
Harborside, with dispensaries in Oakland and San Jose, will now have two dispensaries in the latter city following the merger, as well as the Yolo County grow site and the Terpene Station chain of dispensaries in Oregon. Harborside also has its own cultivation campus in Salinas.
Since its founding 13 years ago as the Harborside Health Center, with its flagship location on the Oakland waterfront, the company now known as simply Harborside has taken in over $400 million in sales, and currently serves some 300,000 customers annually. It has been something of an economic salvation for cash-strapped Oakland: The city government backed the company up in its legal showdown with the Internal Revenue Service.
In what the company boasted as an “historic agreement,” the Justice Department dropped its forfeiture case against Harborside in 2016.
At its 10th anniversary that year, Oakland’s KTVU hailed Harborside as “a solid, respected business with 200 employees and contractors.” The company has also been accused by some Oakland residents of fueling “cannabis gentrification.”
Surviving in the Globalized Cannabis Market
After the merger and listing were announced, Cannabis Now spoke with the founder and (as he describes himself) “chairman emeritus” of Harborside, Steve DeAngelo, who guided the company from its founding in Oakland in 2006.
“In order to survive in a competitive market, we need to grow the capital and continue to expand our footprint in California,” DeAngelo says. “We also have national aspirations. We want to expand our portfolio, looking ahead to the day we have interstate sales.”
With over 100 U.S. cannabis companies now publicly listed in Canada, DeAngelo sees a sense of inevitability to Harborside’s move. “MedMen just opened right down the street from me in San Jose,” he notes. MedMen, an emerging giant of the industry, announced a year ago that it is to be listed on the CSE.
As for the complicated maneuver of the reverse takeover, DeAngelo says, “All these somersaults are due to the refusal of the U.S. federal government to open the U.S. exchanges to public companies.”
“It’s a huge giveaway of value,” he complains. “Canadians are taking over the industry, after all the effort we put into it here in California.”
Seeking to expand beyond running dispensaries, DeAngelo notes that Harborside is now marketing two brands of “premium quality flowers, pre-rolls, vape pens, edibles and live resin.” This last item is resin collected from living plants, “so an optimum terpene profile is preserved.” The eponymous Harborside brand is mostly intended for sale within the company’s own dispensaries. A new brand, dubbed Key Cannabis, is more geared for other dispensaries, which may not want to run the brand name of a competitor. DeAngelo says it is especially designed for “people who are just beginning to explore cannabis.”
“Unlock your mind,” he says, explaining the name. “It’s the key to understanding and discovery, the key to wellness.”
With a new board taking over at Harborside, DeAngelo is increasingly devoting himself to advocacy work. He recently launched the Last Prisoner Project, which he describes as “an Innocence Project for cannabis prisoners,” referring to the famous advocacy group that challenges wrongful convictions.
He says the Last Prisoner Project will attempt to free as many cannabis convicts as possible, through expediting expungement, and clemency petitions. He hopes to work with law schools and the National Association of Criminal Defense Lawyers “to push for retrials, resentencing and public opinion campaigns.”
DeAngelo also recently returned from a visit to the Colombian village of Toribio, an indigenous community in the heart of the cannabis-growing Cauca region. DeAngelo sees this as an example of the “old legacy industry from the unregulated market still around and the new industry coming in, and the often-fractious relations between them.” In the Toribio area, there are “5,000 indigenous growers on indigenous land, and by terms of the peace accord they’re allowed to grow cannabis and coca. The real promise of the Colombian peace accords is bringing these people above ground.”
DeAngelo hopes to help such evolutions along, as a successful entrepreneur with a social conscience. He sums up: “I’m going ‘round the world spreading my message that cannabis is a positive social good and should be embraced as such by every government on the planet.”
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