Cannabis Sector Weekly Roundup

Key Points

  • Israeli Cannabis Operator InterCure Pre-Announced Q3 Revenue at NIS 61 Million.
  • Hydrofarm Signed a $58 Million Acquisition Deal.
  • AFC Gamma Raised $100 Million at 5.75% for five and a half years to Fund Cannabis Industry Expansion Projects.
  • International Sales Drive HEXO Q4 Revenue 71% Higher to $38.7 Million.
  • Tilray Expanded Medical Cannabis Footprint in Europe.
  • Awakn Life Sciences Signed LOI with MINDCURE to Distribute Ketamine Protocol for Alcohol Use Disorder into Clinics Across the United States and Canada.
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Next month is when many large marijuana companies report their earnings, and there are plenty of storylines to follow as there has been a lot of major news in the sector of late. Mergers and acquisitions have picked up this year, and more states have continued to legalize marijuana.

There are many companies that investors will be watching closely in November. Here, we will have a roundup on some of the companies in the sector which have a high optimism of continuing to do great in the coming months.

#1: Hydrofarm Holdings Group

Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM) entered an agreement to acquire Illinois-based Innovative Growers Equipment (IGE) for $58 million; this was the cannabis cultivation equipment maker’s fifth acquisition in 2021.

Pennsylvania-based Hydrofarm said in a news release that it would fund the acquisition through cash, a new credit agreement, and $11.6 million in stock. The acquisition deal will close in early November.

IGE is a manufacturer of LED lighting systems, racking, and horticulture benches, a product range that complements Hydrofarm’s product line. Hydrofarm said it expects IGE to generate $48 million in sales in 2021.

Since May, Hydrofarm has acquired Greenstar Products in Canada, Aurora Innovations in Oregon, House & Garden, and Heavy 16 in California.

Additionally, Hydrofarm announced a $125 million senior secured, seven-year loan at a current annual interest rate of 6.5%. Some of the funds from that credit facility will be used to finance the acquisition of IGE. Hydrofarm also released preliminary financial results for its third quarter ended September 30. Those results include estimated net income between $13.3 million and $18.3 million, based on sales ranging from $121 million to $124 million.

#2: InterCure

InterCure Ltd. (NASDAQ: INCR) is the leading, profitable, and fastest-growing cannabis company outside North America.

Canndoc, a wholly-owned subsidiary of InterCure, is Israel’s largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products.

On Monday, October 25, 2021, InterCure announced preliminary unaudited revenue for the third quarter of 2021.

The report announced that the record revenue is expected to be an estimated CAD$24 million (NIS 61 million), three times greater than Q3 2020 and up more than 36% compared to the prior quarter sequentially. The company also reported an increase in the market share due to solid demand for Canndoc’s branded products and the relentless expansion of InterCcure’s retail footprint across the various markets.

Furthermore, the company also reported a further increase in EBITDA.

#3: Awakn Life Sciences

Awakn Life Sciences Corp (NEO: AWKN) is a biotechnology company with clinical operations; researching, developing, and delivering psychedelic medicine to treat addiction better. Awakn’s scientific advisory board includes world-leading chemists, scientists, psychiatrists, and psychologists.

Awakn Life Sciences Corpannounced the success of phase one of its new chemical entity (NCE) development program to strengthen Awakn’s pipeline for the treatment of a broad range of both substance and behavioral addictions. Novel MDMA-like NCE chemical series have been identified with drug-like properties, which was the aim of phase one of the process. Four leading compounds have been selected to be taken into in vivo efficacy analysis. The data generated will be used to support patent applications and to facilitate the development of additional lead compounds for clinical development. The Company has also announced the progression of its programme into lead optimisation working with Evotec.

This week, Mind Cure Health Inc. (CSE: MCUR), which is a leader in advanced proprietary technology and research for psychedelics, signed a non-binding letter of intent (“LOI”) with Awakn.

MINDCURE will become the distributor of Awakn’s ketamine-assisted psychotherapy for Alcohol Use Disorder (AUD)  protocol in the US and Canada. Awakn’s protocol will be distributed through iSTRYM, which is MINDCURE’s digital therapeutics platform.

In addition, Awakn announced the success of phase one of its New Chemical Entity (NCE) development program, which aims to strengthen Awakn’s pipeline to treat a broad range of both substance and behavioral addictions.

Dr. Shaun McNulty, Awakn’s CSO, commented, “The success of our NCE project has exceeded expectations, delivering robust data and clear steps forward in a short time period. The positive data we obtained will drive the identification and characterization of clinical candidates to develop the next generation of psychedelic medicines to treat addiction. Our strong development pipeline now positions Awakn at the vanguard of the psychedelic biotechnology industry.”

#4: HEXO

Canadian cannabis producer HEXO Corp. (NASDAQ: HEXO) reported its financial results for the fourth quarter and fiscal year ended July 31, 2021, on Friday, October 29, 2021. The company recorded a high adult-use marijuana revenue and a very significant growth in international sales.

Hexo’s fourth-quarter sales of CA$38.7 million were its best to date, and it was a massive increase from CA$22.6 million in the previous quarter. This was the first quarter where HEXO included revenue from Zenabis, which Hexo acquired on June 1, adding CA$6.8 million in sales over two months.

The company also announced a CA$85.5 million loss from operations, which substantially improved over the previous year’s CA$476.6 million loss.

In other categories, the company reported that the Cannabis beverage sales rose to CA$15.8 million, up from CA$2.8 million last year. The company also reported a significant increase in International revenue, whereby the income grew to CA$9.9 million, increasing from the previous year’s CA$1.3 million.

#5: AFC Gamma

AFC Gamma, Inc. (NASDAQ: AFCG) is an institutional lender leading cannabis companies with stable operations and cash-flow prospects, real-estate-security and other collateral, and locations in states with favorable supply/demand fundamentals and legislative environments.

AFC provides innovative and customized financing solutions through first-lien loans, mortgage loans, construction loans, and bridge financings. An example is the company’s role in helping fund a $120 million loan to Verano Holdings Corp. (OTCMKTS: VRNOF) in October

AFC Gamma priced an offering of $100 million aggregate senior notes to qualified institutional investors; the West Palm Beach, Florida-based company announced this key development on Friday, October 28, 2021.

AFC Gamma said it would use the proceeds from the offering to fund loans to existing borrowers and for companies operating in the cannabis industry. The notes, which have an interest rate of 5.75%, will mature on May 1, 2027.

#6: Tilray

Tilray, Inc. (NASDAQ: TLRY) reached a deal with Luxembourg’s Ministry of Health to supply the small European country with medical cannabis, the company announced on Tuesday, therefore becoming the third Canadian cannabis producer since 2019 to supply the burgeoning market.

Tilray, which has offices in Leamington, Ontario, and New York, will provide a variety of pharmaceutical-grade medical marijuana products such as extracts and dried flowers, according to the announcement.

“We believe that Tilray’s growth potential in the European Union represents a $1 billion opportunity, and today’s announcement affirms that we are turning potential into performance,” CEO Irwin Simon said in a statement.

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