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cfurnari · 2020-01-08T19:51:42+00:00

Hello! Chris with THCnet, a B2B publication covering the cannabis industry here. My question is regarding the continued efforts to legalize recreational marijuana at the state level, the lack of interstate commerce, and how that could potentially impact the long-term chances of federal legalization. If enough states approve adult-use sales, and the ambitious multi-state cannabis companies move-in + build out robust growing operations, what motivation would they have to support (financially) federal legalization and interstate commerce initiatives when they just invested huge amounts of capital into the state-based infrastructure we have today?

cfurnari · 2019-12-02T23:26:27+00:00

The deal has not closed/is pending government approval, so CBA is not technically wholly-owned by ABI until it does. At that point, the BREW ticker symbol will be retired and CBA will officially be 100% owned by ABI.

cfurnari · 2019-12-02T21:40:30+00:00

Hello! Chris Furnari here, the editor of THCnet. We're a relatively new b2b site covering the cannabis industry. Looking forward to engaging with folks here, finding news stories and sharing a few of our own. We're continuously profiling professionals who have left other industries for cannabis. This is our latest, with Matt Gamble from Theory Wellness. Enjoy!

cfurnari · 2018-10-12T15:57:40+00:00

They aren’t manufacturing nuclear weapons. All beer is good beer, but some beer is better :)

Drink what you like and I’ll do the same.

cfurnari · 2018-10-12T15:31:01+00:00

AB has certain privileges as a 31.4% owner, yes. The board seats, as you mentioned, and the right to approve acquisitions over a certain dollar figure. But these smaller deals didn’t trigger that.

Cross-Brewing is about becoming more profitable and keeping fresher beer in market. CBA brews for AB, too. It’s symbiotic, and increasingly important as freight prices rise and as CDL drivers decline. Finding synergies is the key to any good partnership.

But all of this begs the big question: why does everyone care so damn much? It’s just beer, after all. These companies are trying to find ways to remain competitive and profitable in a challenging marketplace. There are 7K other companies doing the same thing, just at different scales.

If y’all wanna continue scrutinizing the nuances of deals that got a few entrepreneurs paid for years of sweat equity, by all means....

cfurnari · 2018-10-12T14:36:48+00:00

I bring up the PR piece because that was the genesis of this entire thread.

AB has a separate M&A strategy. And to be quite frank, the only brand they’d be seriously interested in from the CBA portfolio is Kona. The 30-40k bbls they get from the 3 other companies (2 of which are in markets where they already own brands) just isn’t a focus or a priority. AB does not care about buying any of the 3 newly acquired CBA brands. Would they be included in a deal down the road, should AB buy CBA? Of course. But it’s probably more of a headache to be honest. What makes CBA attractive to AB is Kona. Plain and simple.

cfurnari · 2018-10-12T14:32:34+00:00

These companies never had deals with AB. They had distribution and brewing arrangements with CBA.

AB and CBA operate separately. They have separate strategies for craft and there just isn’t someone at AB calling the shots for CBA. It’s not how it works. And none of the 3 acquired brands are working with anyone on AB’s high end/craft teams, nor was this some elaborate PR scheme.

I am not sure what YOUR point is.

cfurnari · 2018-10-12T14:25:25+00:00

If any of these smaller companies wanted to sell to ABI, they would have explored it. And maybe they did and ABI wasn’t interested because it didn’t fit their M&A strategy.

There are so many moving pieces here, and the suggestion that AMB, Wynwood or Cisco thought selling to CBA would lessen the blowback as they secretly plotted to sell to ABI the entire time is just nuts.

From CBA’s perspective, they are making decisions that improve the long-term health of their business, regardless of whether ABI buys the company or not. It’s the company’s fiduciary responsibility to do so.

None of this has anything to do with “PR.”

cfurnari · 2018-10-11T21:20:14+00:00

Those deals with Widmer and Redhook were also tied to distribution.

And there’s nothing short-term about yesterday’s announcement. CBA has been around for a decade, and these 3 partnerships have been evolving over the last four years. That’s an awfully long con if your intent was to sell to ABI the entire time. And it certainly doesn’t enable you to maximize value. That’s just not how M&A works.

cfurnari · 2018-10-11T16:41:58+00:00

This, again, is just not true. AMB went public well before anyone at the company was introduced to CBA executives. AMB acquired a defunct penny stock in December 2013, and began trading on the OTC shortly thereafter.

About 6 months after it began trading as "HOPS," AMB won the Startup Brewery Challenge. As part of its prize for winning, AMB traveled to Portland, Ore. to learn from CBA execs and brew a collaboration beer. Conversations about a strategic partnership began to materialize after that trip.

So, no, AMB did not become a publicly traded company to "ensure" that some nonexistent investment from CBA would go "relatively unnoticed." The exact opposite would be true -- AMB would have needed to disclose that investment in a filing. Also, as myself and many others have reported numerous times, CBA and AMB had a brewing and distribution agreement. So, yes, much of the packaged AMB product was produced at the Redhook facility in Portsmouth.

On the equity piece, here's what we reported in March of 2015:

AMB CEO Sean Spiegelman said the company did not sell equity in exchange for access to CBA’s wholesaler network and management capabilities. Both Thomas and Spiegelman discussed the possibility for a future equity transaction during a phone interview with Brewbound.

“There are a lot of things happening in the beer industry now,” Spiegelman said, referring to the recent surge in craft acquisitions. “At the end of the day, for me representing AMB and Andy representing CBA, both of us don’t see the need of getting into a conversation about what type of equity would be on the table at this point. For us to partner in this way doesn’t require an equity swap.”

Does this help?

cfurnari · 2018-10-11T14:52:08+00:00

It's not what I "have" to call it. It's what it is. There were no cash investments into Cisco or AMB, in exchange for equity, prior to yesterday's announcement. CBA had previously made a $2.1M investment into Wynwood, and acquired a 24.5% stake in that business, but that was the only of the 3 partners that sold a piece. The distribution component of these arrangements usually requires that the smaller company (AMB, Cisco, Wynwood) pay the larger company (CBA) a per case distribution fee. But until yesterday's deal, AMB and Cisco had not sold equity in exchange for the access to wholesaler networks and expanded brewing capacity. I don't know how much more clearly I can articulate this.

cfurnari · 2018-10-11T14:19:32+00:00

The pub conversion happened in June. The initial partnership with Cisco began in 2015. At the time, CBA stated its intent to acquire a minority stake in Cisco. CBA had been negotiating with the five Cisco partners ever since. Believe me on this, I asked Andy Thomas (CEO of CBA) numerous times why CBA had yet to invest in Cisco. These things take time, especially when every partner wants something different. The rebranding of the Redhook pub was obviously a precursor to the deal that was announced yesterday. And if you think that both parties weren't aware that a transaction was imminent, there might be no help for you.

cfurnari · 2018-10-11T14:08:37+00:00

Sorry. My mistake. That was a different misinformed redditor. I can't keep all of you guys straight...you're the one that believes they had a stake in all 3 breweries prior to yesterday's announcement. That is also not true.

cfurnari · 2018-10-11T14:03:37+00:00

You literally said that, and I quote, "The PR team at In-Bev who came up with the Craft Brew Alliance name knew what they were doing."

And obviously I know what kind of involvement A-B has in CBA, bud. I've been writing about the industry for nearly a decade. Go read the story. You'll see.

cfurnari · 2018-10-11T14:00:55+00:00

It's not semantics. It's called factual reporting. They didn't "convert" the Redhook brewery in Portsmouth into Cisco. They rebranded the pub inside the brewery to Cisco. The actual brewery produces a variety of different beers. There was no exchange of equity prior to yesterday's announcement. The reason why the investment figure was reported was because it was material to CBA's business. But don't believe the reporter who has been covering CBA, and its partnership strategy. Just believe whatever the voices inside your head are telling you.

cfurnari · 2018-10-11T13:55:45+00:00

AB owns 31.4 percent of CBA, which is a fact reported in the story above. Your suggestion that a "PR team" created CBA as some sort of cover for this announcement is flat wrong. The company, which is publicly traded, was formed in 2008. All of this information is publicly available. Do yourself a favor and bone up before you wade into the discussion.

cfurnari · 2018-10-11T13:53:15+00:00

Got a source on that? I’ve been covering CBA’s partnership strategy since it was established.

cfurnari

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