View:
January 17, 2020
Benjamin Kovler
Founder, Chairman of the Board and Chief Executive Officer
Green Thumb Industries Inc.
325 West Huron Street, Suite 412
Chicago, IL 60654
Re: Green Thumb Industries Inc.
Registration Statement on Form 10-12G
Filed December 20, 2019
File No. 000-56132
Dear Mr. Kovler:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response and any amendment you may file in response
to these
comments, we may have additional comments.
Registration Statement on Form 10-12G
General Development of the Business, page 4
1. Please revise to discuss the development of the retail and consumer
packaged goods
businesses over the past five years. In this regard, we note that your
disclosure on page 72
indicates that Mr. Kolver founded GTI in 2014. Also, revise the
disclosures on page 4 to
discuss the purpose of the January 1, 2018 and June 12, 2018 transactions
and indicate, if
applicable, whether they were conducted with third parties or with
related parties.
ITEM 1. BUSINESS
Description of the Business, page 7
2. With reference to the first paragraph of Regulation S-K, Item 101(c)(1),
please revise and
expand your Business discussion to include separate descriptions, where
appropriate,
concerning your consumer products operations and your retail operations.
For instance,
Benjamin Kovler
FirstName LastNameBenjamin Kovler
Green Thumb Industries Inc.
Comapany NameGreen Thumb Industries Inc.
January 17, 2020
January 17, 2020 Page 2
Page 2
FirstName LastName
we note that you currently present a unified discussion concerning
competitive conditions
in the industry and your U.S. national growth strategy without regard
to segment.
Similarly, we note that your geographic information disclosure on page
4 is not segment
specific.
3. Revise to provide the revenue history by product class as required by
Item 101(c)(1)(i) of
Regulation S-K or advise.
4. Please revise to provide additional disclosure concerning your retail
chains, Rise and
Essence. For instance, revise, as applicable, to discuss whether there
are differences in
terms of their respective markets and customers.
5. Please revise to clarify your disclosure concerning your "ability to
open a total of 96
stores." In this regard, please clarify whether this means that you
have the licenses as well
as the funds to open 60 new/additional stores. Discuss, as applicable,
your plans and the
status of these additional stores.
Intellectual Property - Patents and Trademarks, page 9
6. We note your disclosure on page 9 that you own or have licenses "under
patents." With
respect to material patents, please revise your disclosure to identify
the specific product(s)
to which such patents relate and the scope of patent protection.
Indicate whether the
patents are owned or licensed from third parties.
Working Capital , page 10
7. Your disclosures on pages 10 and 45 explain that effective inventory
management is
critical to your ongoing success and that you face supply and demand
risks. Accordingly,
please revise your discussion concerning your consumer products
segment to provide
additional disclosure describing your distribution arrangements with
vendors. With
reference to Item 101(c)(1)(viii) of Regulation S-K, also revise to
provide disclosure
concerning backlog orders.
The Corporation may be subject to constraints on marketing its products, page
37
8. Please revise here, and elsewhere as applicable, to identify and
discuss the restrictions that
may limit your ability to compete for market share.
Our use of joint ventures may expose us to risks associated with jointly
owned..., page 41
9. Your risk disclosure indicates that you currently operate parts of
your business through
joint ventures. Please revise your Business section to discuss your
use of joint ventures
and other strategic alliances. With reference to your disclosure on
page 35, also tell us
whether state limitations on licenses necessitate use of joint
ventures. In your revised
disclosure, describe how your joint ventures are typically structured
and discuss the
material terms of your current joint ventures. Also, tell us whether
Exhibit 21.1 reflects
all or some of your joint venture arrangements.
Benjamin Kovler
FirstName LastNameBenjamin Kovler
Green Thumb Industries Inc.
Comapany NameGreen Thumb Industries Inc.
January 17, 2020
January 17, 2020 Page 3
Page 3
FirstName LastName
Risks Related to Our Securities, page 49
10. With reference to your disclosure on page 87, please revise to add a
risk factor that
addresses your ability to issue an unlimited number of Voting Shares,
Multiple Voting
Shares, and Super Voting Shares.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
53
11. Please quantify in your disclosure, if possible, how much of the
material increase in net
revenues is due to business combinations, increased sales volume,
introduction of new
products, or increased sales prices. Refer to Item 303(a)(3)(iii) and
Instruction 4 of
Regulation S-K, Section III.D of Release No. 33-6835, and Section
III.B of Release No.
33-8350.
Year Ended December 31, 2018, page 56
12. Please expand your disclosure of the factors causing material changes
in your gross profit
percentage. For example, describe the significant causes underlying
the increase in your
gross profit percentage from 41% for 2017 to 45% for 2018. Refer to
Instruction 4 to Item
303(a) of Regulation S-K.
Critical Accounting Estimates, page 62
13. Please disclose material implications of uncertainties associated with
the methods,
assumptions and estimates underlying the fair value of your licenses
and permits
intangible assets. Refer to Release 33-8350.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS, page 69
14. Please revise this section to clearly disclose each officer and
director's business
experience during the past five years. Refer to Item 401(e) of
Regulation S-K.
Green Thumb Industries Inc. Consolidated and Combined Financial Statements
Consolidated Statements of Operations, page F-3
15. Please show us the calculation of the weighted average number of
shares outstanding for
2018 (130,102,523 shares) and how this amount reflects the Transaction
described in Note
3 and the issued and outstanding shares in Note 13. Provide us the
same analysis for your
weighted average number of shares outstanding for the nine months
ended September 30,
2019 (190,126,766 shares).
Consolidated Statements of Changes in Shareholders' Equity , page F-4
16. With respect to your non-controlling interest, please tell us why the
non-controlling
interest received a $27.8 million allocation of net income in 2018.
Also, tell us the nature
of the contribution from limited liability company unit holders of
$17,297,494, non-
Benjamin Kovler
FirstName LastNameBenjamin Kovler
Green Thumb Industries Inc.
Comapany NameGreen Thumb Industries Inc.
January 17, 2020
January 17, 2020 Page 4
Page 4
FirstName LastName
controlling interest adjustment for change in ownership of
$(10,439,741), and distribution
to limited liability company unit holders of $(14,821,657). Provide us
calculations of the
amounts where necessary for an understanding of the nature of the
item.
Note 3. Reverse Takeover Transaction, page F-18
17. Please explain to us your accounting for the Transaction. Include an
explanation of the
Canadian three-cornered amalgamation and each of the U.S.
reorganization steps and how
you calculated the reverse takeover amount of $3,002,634 (F-4). Tell
us the sequence
followed and parties involved at each stage. As applicable,
cross-reference your
response to the chart on page 3 and Exhibit 21.1.
Note 7. Acquisitions
(b) KSGNF, LLC, page F-23
18. Please disclose the method of determining the fair value of the
Multiple Voting shares
issued in the acquisition. Refer to ASC 805-30-50-1(b)(4). Tell us why
the 32,965
Multiple Voting Shares have an implicit value of $1,507.33 per share.
Note 20. Segment Reporting, page F-41
19. As required by ASC 280-10-50-22, please disclose a measure of profit
or loss and total
assets for each reportable segment.
Note 21. Subsequent Events, page F-42
20. Please describe in your disclosure the contingent consideration
arrangements as well
as the other disclosures required by ASC 805-30-50-1(c), 50-2, and
50-3 for the
arrangements.
21. Please disclose the method of determining the fair value of the shares
issued for the
acquisitions. For your acquisition of For Success Holding Company,
also disclose the
acquisition-date fair value of the shares issued and the number of
shares issued. Refer to
ASC 805-30-50-1(b)(4) and 50-2.
Green Thumb Industries (GTI) Group of Companies, Combined Financial Statements
Note 2. Significant Accounting Policies
(d) Basis of Combination, page F-54
22. Please explain to us why you concluded that you controlled the
entities under common
control and common management. Refer to ASC 810-10-25.
Integral Associates, LLC Combined Financial Statements, page F-78
23. Please tell us why you did not include financial statements for the
most recent interim
period prior to the acquisition. Refer to Rule 3-05(b)(2) and Rules
3-01 and 3-02 of
Regulation S-X.
Benjamin Kovler
Green Thumb Industries Inc.
January 17, 2020
Page 5
Unaudited Pro Forma Condensed Combined Financial Statements, page PF-1
24. Please tell us why the number of shares used in the calculation of the
pro forma per share
data on pages PF-4 and PF-5 do not reflect adjustments for the effect of
shares issued in
the acquisitions. Refer to Item 11-02(b)(7) of Regulation S-X.
25. Please include pro forma condensed combined statements of operations for
the period
from the most recent fiscal year end to the most recent interim date for
which a balance
sheet is required. Refer to Item 11-02(c)(2)(i).
General
26. Pursuant to Section 12(g)(1) of the Exchange Act, the Form 10 becomes
effective
automatically 60 days after the initial filing date. At that time, you
will be subject to the
reporting requirements of the Exchange Act. In addition, we will continue
to review your
filing until all of our comments have been addressed. If the review
process has not been
completed before the effectiveness date you should consider withdrawing
the Form 10
registration statement to prevent it from becoming effective and, as
applicable, file a new
Form 10 registration at such time as you are able to respond to any
remaining issues or
comments.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Franklin Wyman at 202-551-3660 or Kate Tillan at
202-551-3604 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jeffrey Gabor at 202-551-2544 or Joe McCann at 202-551-6262 with any
other
questions.
Sincerely,
FirstName LastNameBenjamin Kovler
Division of
Corporation Finance
Comapany NameGreen Thumb Industries Inc.
Office of Life
Sciences
January 17, 2020 Page 5
cc: Martin Glass, Esq.
FirstName LastName