Key Takeaways; Cannabis Sector

• Ascend Wellness reported Q2 revenue growth amid rising competition and profit decline.
• Green Thumb Industries surpassed Q2 expectations with 11% revenue growth.
• Trulieve beat Q2 sales estimates with 8% revenue growth.
• Ayr Wellness reported modest Q2 growth
• Verano Holdings reported a Q2 revenue decline, missing analysts’ expectations.
• Curaleaf reported 2% revenue growth in Q2 2024 amid ongoing losses and leadership changes.
• The Cannabist reported Q2 revenue drop but beat expectations.

Key Takeaways; Psychedelic Sector

• Awakn initiated phase 3 trial of AWKN-001 for severe alcohol use disorder.
• Mind Medicine announced a public offering to raise $75 million.

This week marked a significant moment in the cannabis sector as earnings season kicked off, with numerous companies releasing their financial reports. The results sparked a wave of reactions and discussions among investors, offering fresh insights into the industry’s growth and overall health. Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Ascend Wellness

Ascend Wellness Holdings, Inc. (OTC: AAWH) reported a mixed performance for Q2 2024, highlighting both growth and challenges. During the quarter, the company saw a 15% increase in revenue, reaching $141.5 million, compared to the same period last year. However, in terms of profitability, Ascend took a hit with a net loss of $21.8 million, which was a sharp decline from the $800,000 net income recorded in Q2 2023.

Despite a 33% year-over-year rise in adjusted EBITDA to $28.3 million, the figure dropped by 12.7% from the previous quarter. According to the company, increased competition, particularly in Illinois, New Jersey, and Massachusetts, contributed to the downturn, though the company stated that some retail growth was noted in Pennsylvania and Maryland.

Additionally, Ascend revised its 2024 revenue growth forecast to 11-13%, down from the initial 12-15%, citing intensified competition and declining wholesale profitability. Nonetheless the company promised that it will continue to expand, open new dispensaries and secure a cultivation license in Massachusetts. 

During the quarter, Ascend also announced that it had closed a $235 million private placement of senior secured notes, to refinance existing debt, signaling ongoing efforts to strengthen their financial position despite market pressures.

#2: Green Thumb Industries

Green Thumb Industries Inc. (CSE: GTII) (OTC: GTBIF), a leading cannabis company based in Chicago, reported strong second-quarter results for 2024, with revenue increasing by 11% year-over-year to $280 million, surpassing analyst expectations of $277.36 million. The company’s net income also rose to $20.7 million, up from $13.4 million in the same period last year.

The company’s adjusted EBITDA reached $93.8 million, representing 33.5% of revenue, a significant 23.7% increase from the previous year. Additionally, Green Thumb generated $20 million in cash flow from operations, this is despite paying over $50 million in taxes. The company currently maintains a solid cash position of $196.1 million.

Moreover, Green Thumb opened five new Rise dispensaries across Florida and New York, expanding its retail presence to 97 locations in 14 states. The company is also set to benefit from Ohio’s new adult-use cannabis market, which launches this week.

Despite its strong performance, uncertainties remain at the federal level, particularly regarding cannabis rescheduling. During the earnings conference call, GTI Founder and CEO Ben Kovler urged the DEA to expedite the rescheduling process and emphasized the company’s commitment to long-term value creation for shareholders. 

#3: Trulieve

Florida-based Trulieve Cannabis Corp. (CSE: TRUL) (OTC: TCNNF) reported a strong second quarter for 2024, with revenue reaching $303 million, an 8% increase from the same period last year, surpassing analyst expectations of $293.63 million. This marked the third consecutive quarter of revenue growth for the company, which according to the company was driven by higher retail traffic and increased wholesale revenue.

Despite beating the analyst estimates, the company reported a net loss of $12 million, which was a 48% improvement from the previous quarter and a 97% improvement from the $403.8 million loss in the same quarter last year. Trulieve’s adjusted EBITDA rose to $107 million, representing 35% of revenue, and a 36% year-over-year increase. The company also achieved a gross margin of 60%, with a GAAP gross profit of $182 million, and ended the quarter with a strong cash position of $356 million.

Additionally, Trulieve continued its retail expansion during the quarter, opening three new dispensaries in Florida and acquiring two in Ohio, bringing its total to 206 locations across the U.S. The company also launched adult-use cannabis sales at three Ohio locations, marking its entry into the state’s recreational market.

Trulieve’s CEO, Kim Rivers, highlighted the company’s solid foundation for long-term success and its leading position for future growth catalysts. Additionally, Trulieve supported the Smart and Safe Florida campaign to legalize recreational marijuana in Florida with its “#YesOn3” product line, aiming to open a significant new market in the state.

Trulieve also received $2 million in tax refunds related to its challenge of the 280E tax code, though details on the ongoing tax dispute were not disclosed. The company’s performance and scale in key markets position it well for upcoming growth opportunities. 

#4: Ayr Wellness

Ayr Wellness Inc. (OTC: AYRWF) reported a slight revenue increase for second quarter 2024 results, with earnings of $117 million, a modest 0.5% improvement compared to the same quarter last year but a 0.6% decline from Q1 2024. This performance fell short of analysts’ estimates, which forecasted $119 million.

The decline was attributed to an 8.6% drop in same-store sales, though this was partially offset by gains from new store openings and acquisitions. Notably, wholesale revenues surged by 51.8%, driven by expansions in New Jersey and other markets.

Despite a 10.4% reduction in operating expenses, net losses grew to $38 million, up from $29 million in the previous year, due to higher income taxes and increased interest expenses according to the company. The company reported an earnings per share loss of ($0.34), missing the expected ($0.25).

Looking ahead, Ayr expects Q3 2024 revenue growth in low to mid-single digits and aims to improve EBITDA margins as operational efficiencies and market expansions take hold in the latter half of the year. The company also anticipates positive cash flow for the full year, assuming the elimination of certain tax liabilities.

#5: Verano Holdings

Verano Holdings Corp. (OTC: VRNOF), a prominent player in the cannabis industry, reported a slight dip in revenue for Q2 2024, falling short of analysts’ expectations. The company posted revenues of $222 million for the quarter ending June 30, reflecting a 0.5% increase from the previous quarter but a 5% decline year-over-year. Despite this, the revenue aligned with the company’s earlier guidance for flat to low single-digit growth. However, it narrowly missed the average analyst projection of $224.36 million.

The company reported a net loss of $22 million, an increase from the $13 million loss in the same period last year. Verano’s gross profit stood at $114 million, representing 51% of revenue, while SG&A expenses accounted for 39% of revenue.

Verano Founder and CEO, George Archos, highlighted several strategic initiatives, including a share repurchase program and capital investments aimed at strengthening the business. He also pointed to several near-term growth opportunities in the cannabis sector, such as the recent launch of adult-use cannabis sales in Ohio and potential legislative changes in Florida and Pennsylvania.

Additionally, during the quarter Verano expanded its retail footprint with new dispensary openings in Florida, Connecticut, and Pennsylvania. 

Moreover, recently the company also announced its intent to acquire operations from The Cannabist Company Holdings Inc. (OTC: CBSTF) in Arizona and Eastern Virginia, a move which is expected to drive future growth.

However, due to uncertainties surrounding pending acquisitions, Verano declined to provide financial guidance for the upcoming quarters. The company ended the quarter with $130 million in cash and cash equivalents.

#6: Curaleaf

Curaleaf Holdings, Inc. (OTC: CURLF) reported a net loss of $49.8 million for the second quarter ended June 30, 2024, totaling over $100 million in losses for the year-to-date. Despite the losses, the company saw a 2% increase in revenue, reaching $342.2 million for the quarter, up from $335.5 million a year earlier. For the first half of 2024, revenue stood at $681.2 million, compared to $668.1 million in the same period last year.

Curaleaf generated $6 million in free cash flow and $30.2 million in operating cash flow during the quarter. CEO Boris Jordan, who took over from Matt Darin, highlighted the benefits of recent business streamlining and efficiency improvements. Jordan anticipates continued growth as markets in New York, Ohio, and Germany mature, and the company’s new hemp division expands. “Our global strategic vision is playing out on multiple fronts, yet there is much more for us to accomplish,” Jordan said.

During the quarter, Curaleaf also made significant strides in its global presence, opening its 62nd dispensary in Florida, acquiring Northern Green Canada, and expanding medical cannabis sales in Germany. The company has also entered the hemp sector and recently expanded its operations in New York and Ohio.

As of June 30, Curaleaf’s total assets were valued at $3 billion, with $89.3 million in cash and an equal amount in liabilities. The new CEO, Jordan, also expressed gratitude to Darin, who will remain as an advisor until the end of the year to support the transition.

#7: The Cannabist

For the second quarter ending June 30, 2024, The Cannabist Company Holdings Inc. (OTC: CBSTF) (formerly Columbia Care), which is one of the most experienced cultivators, manufacturers and retailers of cannabis products in the U.S., reported a mixed performance. Revenue grew sequentially by 2% to $125 million but fell short of last year’s $129 million. Despite this, the company surpassed analysts’ revenue estimates of $124 million. Net losses were reduced to $14 million from $35 million in the same period last year. Earnings per share improved to ($0.03), beating the anticipated ($0.05).

Cash from operations was negative $3 million, an improvement from the previous quarter’s negative $6.2 million. The company’s cash reserves decreased to $22 million from $44 million.

During the earnings release, the company’s CEO, David Hart, highlighted progress in their corporate restructuring, which is expected to save about $10 million annually. Key achievements included a 24% increase in wholesale revenue and improved wholesale gross margins due to successful brand partnerships and a shift towards finished goods. During the quarter, the company also adjusted its retail footprint, opening one store in Richmond and closing four others.

Looking ahead, The Cannabist is optimistic about continued growth, particularly in its mid-Atlantic markets and the recent expansion into adult-use cannabis sales in Ohio.

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) announced on Friday that it had screened the first patient for its Phase 3 trial of AWKN-001, a novel treatment for severe Alcohol Use Disorder (AUD). The trial, which is known as MORE-KARE, is a significant study aimed at evaluating AWKN-001’s effectiveness.

AWKN-001 is a novel medication-assisted treatment that combines intravenous ketamine, an N-methyl-D-aspartate receptor modulator, with structured psycho-social support. This approach is designed to address severe AUD by reducing heavy drinking days and improving overall outcomes.

The MORE-KARE study, which is co-funded by the UK’s Medical Research Council (MRC) and the National Institute for Health and Care Research (NIHR), along with Awakn Life Sciences, will be conducted at eight NHS sites across the UK. The trial will assess the impact of AWKN-001 through various endpoints, including reductions in heavy drinking days and continuous abstinence over a six-month period.

Professor Celia Morgan, who is the trial’s lead from the University of Exeter, highlighted the urgent need for effective treatments for AUD, noting that current options have low success rates. She expressed enthusiasm for this groundbreaking study, which aims to address the significant gap in treatment options.

Additionally, Awakn’s Chief Scientific Officer, Professor David Nutt, also emphasized the potential of this trial to transform the treatment landscape for severe AUD, offering new hope to those with limited options.

This Phase 3 trial follows a successful Phase 2 study, which demonstrated promising results with high abstinence rates and a significant reduction in heavy drinking days.

#2: Mind Medicine

Mind Medicine (MindMed) Inc. (NASDAQ: MNMD) announced a new public offering aimed at raising $75 million by selling approximately 9.2 million shares at $7 each. The company is also offering about 1.4 million shares at a slight discount of $6.99 to select investors. The offering is expected to close on August 12, with Leerink Partners and Evercore ISI serving as the joint bookrunning managers.

According to the company, the funds will be allocated to research and development for MindMed’s psychedelic treatments, which are currently in clinical trials for anxiety. 

During the first fiscal quarter earnings call in May, the company reported holding $252.3 million in cash, which it stated would sustain operations until 2026. However, it also reported a $54.4 million net loss for the first quarter of 2024 and an accumulated deficit of $344.6 million.

Currently, MindMed is advancing its development pipeline, including MM120, an LSD-based drug targeting generalized anxiety disorder, which has received Breakthrough Therapy designation from the U.S. Food and Drug Administration. This designation highlights the potential of MindMed’s psychedelic treatments to make significant progress toward market introduction.

Key Takeaways; Cannabis Sector

• Tilray’s is expanding in Europe with new milestones in Germany and Portugal.
• Glass House Brands celebrated court victory with dismissal of Catalyst lawsuit
• GrowGeneration announced revenue growth amidst store closures.

Key Takeaways; Psychedelic Sector

• Awakn provide updates on a new chemical entity patent portfolio.
• Compass Pathways received ‘outperform’ rating from RBC.

Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Tilray

Tilray Brands, Inc. (NASDAQ: TLRY), a global leader in cannabis research, cultivation, production, and distribution, recently achieved significant milestones in Europe, particularly in Germany and Portugal. 

On July 22, 2024, Tilray announced that its subsidiary, Aphria RX, which is based in Neumünster, Germany, received the first medical marijuana cultivation license under Germany’s newly enacted Cannabis Act. The new German Cannabis Act, which was approved on February 23, 2024, and took effect from April 1, 2024, removed marijuana from the narcotics list and legalized possession for adults of up to 25 grams. 

The law also allowed the establishment of “cannabis clubs” and amended Germany’s Medicinal Cannabis Act (MedCanG). Under the revised MedCanG, operators can market and distribute their harvests themselves but must comply with stringent quality requirements, they must also obtain authorization from the German Federal Institute for Drugs and Medical Devices.

Aphria RX’s new license enables the company to cultivate and manufacture a broad range of medical cannabis, significantly expanding its production capacity and increasing the number of approved cannabis strains from three to 31.

In addition to its achievements in Germany, Tilray also made strides in Portugal. On July 24, 2024, Tilray Medical received approval for its third medical cannabis product in Portugal, the Tilray Solução Oral THC10. This approval follows the successful introduction of Tilray Medical’s whole flower THC 18 and its first cannabis extract in Portugal earlier this year.

Tilray’s recent licensing and product approvals in Germany and Portugal mark substantial advancements in the European medical cannabis market. The company continues to lead in the global medical cannabis industry, offering a diverse portfolio of EU-GMP certified medicinal cannabis products across over 20 countries. These milestones reflect Tilray’s strategic growth and dedication to providing high-quality medical cannabis to patients, reinforcing its position as a global leader in the industry.

#2: Glass House

A civil complaint against Glass House Brands Inc. (OTC: GLASF) by Catalyst Cannabis Co. was dismissed, with a summary judgment issued in favor of Glass House. The Superior Court of California in Los Angeles County ruled on July 15, ordering Catalyst’s holding company, 562 Discount Med, to cover legal costs related to the lawsuit.

Glass House President Graham Farrar expressed relief over the dismissal, labeling the lawsuit as frivolous. “But more importantly we are happy to be able to put the waste of time and energy and resources, for all sides, behind us,” he said via text.

“We are hopeful that we can stop the infighting and instead unite as an industry on the many common challenges, like over taxation and not enough legal access, that would benefit patients, consumers and all of the industry overall.”

The dispute began in June 2023 when Catalyst CEO Elliot Lewis accused Glass House of being a major black market cannabis operator. The court dismissed these allegations, indicating that addressing such claims would overstep the functions of California’s Department of Cannabis Control.

Prior to the court’s decision, Glass House had dropped its defamation suit against Catalyst in May, citing concerns about exposing sensitive customer information. 

Despite the legal battles, both companies remain significant players in California’s cannabis market, with Catalyst operating 30 retail locations and Glass House being a large vertically integrated operator. Glass House’s shares saw a 1.8% increase to $7.05 following the news.

#3: GrowGeneration

GrowGeneration Corp. (NASDAQ: GRWG) announced a mixed update for its second quarter 2024 preliminary results, highlighting both revenue growth and significant store closures. The company reported a 10.6% sequential increase in net revenue, reaching over $53 million compared to $47.9 million in the previous quarter. This growth was driven primarily by commercial customers.

The company’s CEO, Darren Lampert, emphasized that the company aims to enhance its market reach and profitability by focusing on proprietary brands and an enhanced B2B e-commerce platform. 

To support this shift, GrowGeneration stated that it’s implementing a comprehensive restructuring plan. This includes closing 19 underperforming stores, with seven already closed in the first half of 2024 and the remaining closures expected within 90 days, leaving 31 operational stores. According to the company, the restructuring plan aims to improve inventory management, sales, and marketing, targeting $12 million in cost savings over the next year. 

Looking ahead, GrowGeneration aims to have 35% of its sales from proprietary brands by the end of 2025 and plans to introduce 50 new products in the next 12 months. Additionally, the company plans to launch a B2B e-commerce portal in the fourth quarter of this year to transition more transactional activities online.

In addition to announcing the preliminary results, GrowGeneration announced it had scheduled its second quarter 2024 earnings release conference call for August 8, 2024, after market close. The announcement will be followed by a live earnings conference call at 4:30 p.m. ET.

Top Psychedelic Companies for Week

#1: Awakn

On July 22, 2024, Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF), a clinical-stage biotechnology company focused on therapeutics for substance use addictions and mental health disorders, provided an update on its intellectual property (IP) portfolio for its Aminoindane new chemical entity (NCE) series. This portfolio is being developed in collaboration with Graft Polymer (UK) Plc (LSE: GPL).

The Aminoindane NCEs are novel small molecule empathogens that enhance the release of serotonin, dopamine, and noradrenaline while inhibiting their reuptake. These compounds are targeted for treating trauma-related mental health disorders, such as post-traumatic stress disorder, which affects millions globally.

Awakn filed provisional patent applications for the Aminoindane NCEs in 2021, covering pharmaceutical compositions and innovative treatment methods. Since then, the patent portfolio has shown promising progress across multiple jurisdictions including The United States, Europe, and Canada.

Awakn initiated its IP protection strategy in May 2021 with two provisional patent applications. In May 2022, a Patent Cooperation Treaty (PCT) application was filed, claiming priority to these provisional applications. In August 2022, the European Patent Office issued a favorable search report and written opinion, confirming the novelty and inventiveness of Awakn’s lead compounds. 

The PCT application was published in November 2022, followed by the International Preliminary Report on Patentability in November 2023, and entry into national phase in the US and Canada, and European regional phase in December 2023. In April 2024, a petition for the U.S. application to join the Patent Prosecution Highway was granted, indicating a likely U.S. patent grant.

Prof. David Nutt, Awakn’s CEO, commenting on these updates stated, “These advancements in our patent portfolio demonstrate the innovative potential of our Aminoindane NCEs. We are committed to progressing these compounds through the development pipeline to address substantial unmet needs in mental health and addiction treatment.”

#2: Compass Pathways

On July 23, 2024, RBC Capital Markets initiated coverage on COMPASS Pathways plc (NASDAQ: CMPS), a company that specializes in mental health care treatments, with an Outperform rating and set a price target of $23 per share. According to RBC this optimistic outlook is largely based on the company’s promising phase III clinical trials in the emerging field of psychedelic treatments for mood disorders, with a high likelihood of positive results expected in the fourth quarter of 2024.

Despite recent market downturns in the psychedelic sector, RBC Capital views current conditions as advantageous for investors, recognizing challenges such as commercialization and intellectual property concerns but still recommending Compass Pathways as a strong investment opportunity. RBC’s confidence is bolstered by a revenue projection of $2.3 billion, indicating significant growth potential.

Compass Pathways has recently taken strategic steps to prepare for potential regulatory approval and commercialization of its psilocybin formulation, COMP360, for treatment-resistant depression. This includes the appointment of Lori Englebert as Chief Commercial Officer and substantial progress in clinical studies, with key data expected by the end of 2024 and mid-2025.

Financially, the company reported $20.8 million used in operations and maintains a robust cash reserve of $262.9 million, which is projected to support operations until 2026. These developments is what has kept investors and market observers like RBC closely monitoring Compass Pathways.

Key Takeaways; Cannabis Sector

• Cansortium and RIV Capital announced a merger to form a new four-state cannabis MSO.
• Canopy Growth reported mixed financial results amid revenue decline and strategic restructuring.
• Trulieve settled litigation with Harvest of Ohio, as the company aims to expand its footprint in Ohio.
• Goodness Growth is seeking $860 million from Verano over the failed acquisition deal.

Key Takeaways; Psychedelic Sector

• FSD Pharma emerged victorious in legal battle against former CEO.
• Awakn recently concluded a feasibility study with Catalent Pharma.

Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Cansortium

Cansortium Inc. (OTC: CNTMF), a vertically integrated cannabis operator based in Florida, is set to merge with RIV Capital Inc. (CSE: RIV) (OTC: CNPOF), which operates the Etain Health marijuana brand in New York. This strategic merger aims to create a robust multistate operator (MSO) with a significant presence in four key markets: Florida, New York, Pennsylvania, and Texas.

Under the terms of the merger agreement, Cansortium will acquire all issued and outstanding Class A common shares of RIV Capital in exchange for Cansortium shares. Shareholders of Toronto-based RIV will receive 1.245 Cansortium shares for each RIV share. Once the merger is complete, Cansortium shareholders will own approximately 51.25% of the combined entity, while RIV shareholders and The Hawthorne Collective, a subsidiary of The Scotts Miracle-Gro Company (NYSE: SMG), will hold the remaining 48.75%.

The combined company will operate under the Cansortium name and maintain its headquarters in Tampa, Florida. It will feature eight cultivation and processing facilities and 42 dispensaries across the four states. The merger is projected to yield annual cost savings of $5 million to $10 million through efficiencies in cultivation, processing, and administration.

The new entity will also have a pro forma cash balance of approximately $74 million, which will support accretive growth initiatives. Additionally, the merger will alleviate $175 million of debt for The Hawthorne Collective by exchanging its existing convertible notes in RIV for a new class of nonvoting exchangeable shares of Cansortium.

Cansortium CEO Robert Beasley will continue as CEO of the merged company. Beasley emphasized the focus on growth and profitability, leveraging core principles in cultivation, operating efficiencies, and inventory optimization to deliver strong cash flows for shareholders.

“The merger brings together two companies with core strengths in key growth states, positioning us to drive near-term synergies and capitalize on long-term value creation opportunities,” Beasley said. The combined company’s 2023 pro forma revenue is estimated at $105 million, with a net debt of just $5 million.

The merger, which is expected to close by the fourth quarter of this year, still requires shareholder and court approvals. If the deal falls through under certain specified circumstances, Cansortium will receive a $3 million termination fee, while RIV Capital will get a $5 million fee if the merger does not proceed.

#2: Canopy Growth

Canopy Growth Corporation (NASDAQ: CGC) reported its financial results for the fourth quarter and fiscal year ending March 31, 2024, revealing a mixed performance. The company’s fourth-quarter revenue increased by 7% year-over-year to $72.8 million, surpassing Yahoo Finance analyst estimate of $52.99 million. However, the net loss for the quarter grew by 84% to $94.7 million. For the full fiscal year, total revenue declined to $343 million from $381 million in 2023 and $537 million in 2022. Additionally, net revenue for 2024 was $297.1 million, down from $333.3 million in 2023.

The decline in annual revenue was largely attributed to the divestiture of Canopy’s retail business in Canada, alongside reduced business-to-business sales in Canada. Despite these setbacks, the company saw growth in the Canadian medical market and international cannabis sales, particularly through Storz & Bickel, whose net revenue increased by 43% due to strong sales of the new Venty portable vaporizer.

Moreover, Canopy Growth managed to significantly reduce its net loss for the fiscal year to $657 million, a substantial improvement from the $3.2 billion loss in the previous year. The loss per share also improved to ($8.79) from ($70.69) last year. The company’s cash reserves fell from $667 million in 2023 to $170 million by the end of 2024. However, it addressed financial pressures through measures such as a $35 million private placement, proceeds from asset sales, and debt restructuring.

Canopy’s CEO, David Klein, emphasized the company’s strategic focus on cannabis and its readiness to capitalize on regulatory developments in Germany; Furthermore, Canopy U.S. CFO, Judy Hong, highlighted significant progress in reducing expenses, cash burn, and debt, positioning Canopy Growth for future opportunities.

#3: Trulieve

Trulieve Cannabis Corp. (CSE: TRUL) (OTC: TCNNF) recently resolved its litigation with Harvest of Ohio, LLC, marking a significant expansion in Ohio’s evolving cannabis market. This settlement paves the way for Trulieve to acquire key assets while facilitating the continued growth of Harvest of Ohio’s operations under new ownership.

This settlement resolved a year-long legal dispute centered on an alleged $24 million debt. As part of the agreement: Trulieve will acquire licenses for medical cannabis dispensaries in Columbus and Beavercreek; Ariane Kirkpatrick, the current majority owner of Harvest of Ohio, will assume full ownership of the Athens dispensary, which will be rebranded as Mavuno, making her the first Black woman to fully own a vertically integrated cannabis company in Ohio; Additionally, the production facility in Ironton will be sold to unrelated third parties.

The dispute originated from a partnership between Harvest of Ohio, a Black woman-owned and family-operated business led by Ariane Kirkpatrick, and Harvest Health and Recreation, an Arizona-based multi-state operator, which was later acquired by Trulieve in a $2.1 billion mega-deal. The conflict escalated when Trulieve sued Harvest of Ohio over a $24 million debt. Harvest of Ohio accused Trulieve of attempting to undermine its operations and exploit Ohio’s social equity provisions to dominate the market. Trulieve, in turn, claimed that Harvest of Ohio misused the funds for personal gains while seeking additional capital.

Trulieve’s entry into the Ohio market is timely, as the state prepares for the launch of adult-use cannabis sales. Having legalized recreational cannabis in November 2023, Ohio is poised for significant market growth. The state’s medical marijuana dispensaries, which reported $484 million in sales last year, are expected to be the first venues to offer adult-use sales. Business applications for new licenses are set to be available from June 7, signaling the beginning of a new era for Ohio’s cannabis industry.

#4: Goodness Growth

Goodness Growth Holdings, Inc. (OTC: GDNSF) is seeking $860.9 million in damages from Verano Holdings Corp. (OTC: VRNOF), claiming breach of contract after Verano terminated its acquisition agreement back in 2022. Goodness Growth, which is headquartered in Minneapolis, filed an expedited summary trial request on May 2 with the Supreme Court of British Columbia. Both companies are incorporated in British Columbia and listed on Canadian stock exchanges.

The 2022 acquisition deal, initially valued at $413 million, was terminated by Verano, which led to significant financial strain for Goodness Growth. The termination, according to Goodness Growth, denied them essential capital, exacerbating their debt challenges and operational vulnerabilities. Verano, however, filled a counterclaim stating that Goodness Growth breached the agreement by withholding crucial information and misleading shareholders.

Goodness Growth’s CEO, Josh Rosen, attributed Verano’s actions to “buyer’s remorse” as cannabis stock prices fell. Goodness claim outlined the severe impact of the failed deal, including debt maturities, workforce reductions, asset sales, and high-interest debt capital raises. Despite these challenges, Rosen remains determined to fight, stating the company has navigated through the worst part of the crisis.

Verano, which faces over $1 billion in liabilities, in its quarterly report acknowledged the potential adverse effects of the litigation on its operations. And many financial analysts estimate that even a settlement significantly lower than $860 million would impact Verano severely. 

Top Psychedelic Companies for Week

#1: FSD Pharma

FSD Pharma Inc. (NASDAQ: HUGE) emerged victorious in its prolonged legal battle against its former CEO, Dr. Raza Bokhari. Following years of litigation and an extensive eight-day evidentiary hearing, FSD Pharma announced a favorable ruling from the Arbitrator, who issued three awards in favor of the company. These awards included damages and reimbursements for FSD’s incurred fees and costs.

On May 29, 2024, the United States District Court for the Eastern District of Pennsylvania confirmed FSD Pharma’s petition to uphold the arbitration awards against Dr. Raza Bokhari, issued by a Canadian arbitrator in 2022. The company now intends to seek a final judgment against Bokhari.

The roots of the conflict trace back to a proxy battle instigated by Bokhari, stemming from disagreements over company acquisitions between him and FSD’s founders. Despite Bokhari’s claims of wrongful termination and demands for a $30 million payout, the legal outcome has shifted dramatically in FSD’s favor. Contrary to Bokhari’s demand for a multimillion-dollar payout for alleged wrongful dismissal, FSD Pharma will instead receive payments from him, including various sums with accrued interest.

#2: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) in collaboration with Catalent Pharma, recently successfully completed a feasibility study confirming the stability of MDMA when applied to Catalent’s advanced Zydis® (ODT) technology. This development is significant as it affirms the compatibility of MDMA with pre-gastric absorption, addressing key pharmacokinetic challenges associated with the drug. 

MDMA, which is an Investigational Medicinal Product (IMP), that is known for its role as a serotonin, norepinephrine (NE), and dopamine releaser and reuptake inhibitor, has shown promising efficacy in clinical trials for treating Alcohol Use Disorder (AUD) and Post Traumatic Stress Disorder (PTSD), both conditions are often linked to trauma. The drug also holds potential for treating other trauma-related addictions and mental health conditions.

Awakn entered into an exclusive development agreement with Catalent to create and test a proprietary MDMA formulation utilizing Catalent’s Zydis® ODT technology. This collaboration aims to deliver a market-ready product with optimized delivery mechanisms.

Catalent’s Zydis® ODT technology features a unique, patent-protected freeze-dried oral solid dosage form that disperses almost instantly in the mouth, typically within three seconds, without the need for water.

The successful completion of the feasibility study marked a crucial step forward in the development of MDMA as a viable therapeutic option. Awakn Life Sciences, through its collaboration with Catalent, is poised to advance MDMA treatment by leveraging the innovative Zydis® ODT technology, potentially transforming the landscape of trauma-related mental health and addiction treatments.

Key Takeaways; Cannabis Sector

• Agrify converted $13.8m debt to equity to regain Nasdaq compliance.
• Glass House Brands is seeking Canadian funding through shelf prospectus.
• TILT Holdings’ cannabis sales are stable despite vape supply disruptions, debt and stock dilution concern; analyst says.

Key Takeaways; Psychedelic Sector

• Awakn recently concluded a feasibility study with Catalent Pharma.
• Lucy Scientific is on a surge despite mounting challenges and NASDAQ compliance pressure.

This week marked a significant milestone in the cannabis sector as the Drug Enforcement Administration (DEA) published its proposed rescheduling of cannabis and initiated a comment period ending on July 22nd. The most notable outcome of rescheduling cannabis from Schedule I to Schedule III would be the elimination of the burdensome 280E taxation. The end of 280E taxation is expected to boost cash flow and net income for companies that grow, process, or sell cannabis in the United States. This is why many stakeholders in the cannabis industry are closely monitoring this development.

Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Agrify

Agrify Corporation (NASDAQ: AGFY), a cannabis technology company, converted approximately $13.8 million in debt to equity to comply with Nasdaq’s stock listing requirements. According to the company, this strategic move aims to enhance the company’s financial stability and ensure its continued listing on the Nasdaq exchange.

The conversion, which was announced on Wednesday, followed Agrify’s and Nature’s Miracle Holding Inc. (NASDAQ: NMHI) mutual decision to terminate a merger plan that would have allocated Agrify shareholders roughly 30% ownership in the combined entity. Both companies said that the cancellation was due to “unfavorable market conditions.”

Entities affiliated with Agrify’s CEO, Raymond Chang, played a significant role in this conversion. CP Acquisitions LLC, which is controlled by Chang and board member I-Tseng Jenny Chan, converted $11.5 million of senior convertible notes into pre-funded warrants, exercisable for up to 8.6 million Agrify shares. Additionally, GIC Acquisitions LLC, also associated with Chang, converted $2.29 million of junior secured notes into pre-funded warrants for up to 3.2 million shares.

This substantial debt-to-equity conversion boosted Agrify’s shareholders’ equity above Nasdaq’s minimum requirement of $2.5 million, which is crucial for maintaining its listing. CEO Raymond Chang highlighted the importance of this move, stating it demonstrated the management and shareholders’ dedication to Agrify’s future, and their desire to provide a cleaner balance sheet to fuel the company’s growth.

Agrify, which has been restructuring since 2022 following significant losses, ended 2023 with an accumulated deficit of approximately $265.8 million. Additionally, despite a 55% decline in first-quarter revenue to $2.6 million, cost reductions in administration and marketing resulted in a net loss of just $38,000.

Furthermore, the conversion included provisions for adjustments if Agrify undertakes equity financing within the next 12 months, pending shareholder approval. This strategic financial restructuring is expected to stabilize Agrify’s financial position and support its growth trajectory.

#2: Glass House Brands

Glass House Brands Inc. (OTC: GLASF), a cannabis company based in Long Beach, California, is exploring opportunities to raise significant capital by selling shares in Canada. The company announced on Wednesday that it has filed a shelf prospectus with Canadian regulators, aiming to issue up to C$782 million (US$576 million) in new equity shares by April 2026.

This strategic move provides Glass House with the flexibility to quickly raise funds through equity offerings if favorable opportunities arise. Despite no immediate plans to sell shares, the prospectus positions the company to act swiftly in the future. 

Chairman and CEO Kyle Kazan highlighted the company’s strong performance and growth potential, stating that the shelf prospectus will allow them to add growth capital and reduce capital costs; “With our strong operating performance, long-term growth prospects, and increase in share price over the past 18 months, having a base shelf will provide additional flexibility to add growth capital and lower our cost of capital when we judge the time to be right,” Kyle Kazan said in a statement.

Many US marijuana operators are in the pursuit of Canadian funding, due to the limited access to traditional financing sources like bank loans, because of the federal illegality of marijuana in the United States. Canadian investors, however, offer a viable alternative as the cannabis sector continues to navigate federal uncertainties in the USA.

Glass House ended 2023 with a revenue of $271 million, marking a 56% increase from the previous year. Despite being unprofitable and having an accumulated deficit of $209 million as of March 31, the 2023 financial results did not indicate any significant litigation or financial instability. Additionally, the company recently dropped defamation claims against Catalyst defendants and won a $2.865 million judgment in a fraud case involving its subsidiary GH Group.

#3: TILT Holdings

TILT Holdings Inc. (OTC: TLLTF) recently reported stable first-quarter 2024 financial results, despite facing supply chain disruptions in its vape hardware segment, which contributed 71% of its 2023 sales. Analyst Pablo Zuanic highlighted that supply chain issues have temporarily hindered sales, but the company’s custom business and hemp-derived vape segments showed promise, mainly supported by TILT’s position as the largest CCELL distributor in the U.S.

Additionally, the company’s cannabis operations in Massachusetts, Ohio, and Pennsylvania remain stable despite market deflation and rising competition. Massachusetts, which is responsible for two-thirds of TILT’s sales, benefits from strong brand performance. Furthermore, TILT is eyeing expansion in Pennsylvania and Ohio through strategic partnerships.

As of March 2024, TILT’s net debt increased to $56 million from $49 million at the end of 2023. Moreover, concerns arise from the company’s break-even EBITDA, negative cash flow, and the potential for stock dilution due to debt. Nevertheless, Zuanic finds TILT’s valuation attractive, trading at 0.7 times EV/sales compared to the 1.8 times average for multi-state operators.

Despite the stock’s 25% decline over the past 90 days and low trading liquidity, Zuanic maintains an “Overweight” rating, citing TILT’s solid market positioning and growth potential in both vape hardware and cannabis segments.

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) in collaboration with Catalent Pharma, recently successfully completed a feasibility study confirming the stability of MDMA when applied to Catalent’s advanced Zydis® (ODT) technology. This development is significant as it affirms the compatibility of MDMA with pre-gastric absorption, addressing key pharmacokinetic challenges associated with the drug. 

MDMA, which is an Investigational Medicinal Product (IMP), that is known for its role as a serotonin, norepinephrine (NE), and dopamine releaser and reuptake inhibitor, has shown promising efficacy in clinical trials for treating Alcohol Use Disorder (AUD) and Post Traumatic Stress Disorder (PTSD), both conditions are often linked to trauma. The drug also holds potential for treating other trauma-related addictions and mental health conditions.

Awakn entered into an exclusive development agreement with Catalent to create and test a proprietary MDMA formulation utilizing Catalent’s Zydis® ODT technology. This collaboration aims to deliver a market-ready product with optimized delivery mechanisms.

Catalent’s Zydis® ODT technology features a unique, patent-protected freeze-dried oral solid dosage form that disperses almost instantly in the mouth, typically within three seconds, without the need for water.

The successful completion of the feasibility study marked a crucial step forward in the development of MDMA as a viable therapeutic option. Awakn Life Sciences, through its collaboration with Catalent, is poised to advance MDMA treatment by leveraging the innovative Zydis® ODT technology, potentially transforming the landscape of trauma-related mental health and addiction treatments.

#2: Lucy Scientific

Lucy Scientific Discovery Inc. (NASDAQ: LSDI), a company in the psychedelic sector, is facing a growing array of issues with limited solutions in sight. Recently, Lucy failed to file its first-quarter earnings for the period ending in March by the May 15 deadline, and it’s uncertain when these reports will be submitted. This delay was compounded by significant resignations, including that of CFO Brian Zasitko on May 3, effective May 17, and board member Livio Susin.

Adding to its woes, Lucy is under pressure from NASDAQ to maintain its listing. In February 2024, NASDAQ notified Lucy that it no longer met the $2.5 million stockholders’ equity requirement, with equity standing at just $81,158 as of December 31, 2023. The company also failed to meet alternative market value or net income criteria. After an unsuccessful appeal in March, NASDAQ planned to suspend trading on May 16, but Lucy’s request for a hearing allowed continued trading during the appeal process. 

Despite these setbacks, Lucy’s stock has seen a temporary surge recently, on May 16 LSDI traded 69 million shares versus an average of 1.2 million, hitting a high of $2.12 before falling back to $1.17. This spike led to its inclusion in the meme stock frenzy and received favorable ratings from trading programs like Stock Invest.

Nonetheless, Lucy’s path to financial stability remains unclear. A planned merger with Bluesky Biologicals collapsed in March, which was expected to be a significant revenue source. Furthermore, the company abandoned its Controlled Drugs and Substances Dealer’s Licence in Canada and discontinued the development of TerraCube. As a result, Lucy recorded a loss of $1.7 million from discontinued operations for the nine months ending March 31, 2024.

Moreover, the company’s potential deal with High Times Holding also remains uncertain, as the bidding period for High Times’ assets ended on May 17. Lucy’s financial outlook is bleak, with an accumulated deficit of $43 million and no clear revenue streams apart from issuing more shares and incurring additional debt.

Key Takeaways; Cannabis Sector

• Ayr Wellness reported solid first quarter results.
• Cresco Labs reported stagnant sales but an optimistic outlook for 2024.
• Tilray announced a $250 million equity offering to fund U.S. asset acquisitions amid legalization optimism.
• Flora Growth is strategizing on cannabis reform to its reverse financial trend.

Key Takeaways; Psychedelic Sector

• Enveric Biosciences is eyeing $410 million licensing deals as the company advances its depression treatment program. 
• Awakn is facing hurdles amid financial filing delay.

Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Ayr Wellness

Ayr Wellness Inc. (OTC: AYRWF) delivered promising financial results for the first quarter ending March 31, 2024. The company reported a slight revenue increase of 0.3% to $118 million compared to $117 million last year, and a 2.8% sequential growth. The net loss for the quarter was reduced to $106 million from last year’s $194 million, which according to the company, was influenced by the discontinuation of its Arizona business. This year’s net loss included a $79,172 loss related to debt restructuring.

Ayr’s cash levels rose to $71 million, up from $50 million at the end of 2023, and it reported a working capital of $98 million, a significant improvement from a negative $7.2 million. Retail revenues saw a decline of $3.5 million due to an 8% decrease in same-store sales transactions, offset by $4.5 million from new store openings and acquisitions. Wholesale revenues increased by $3.8 million, driven by New Jersey store openings and higher Ohio sales.

Operating expenses were cut to $52 million from last year’s $69 million, primarily due to lower stock compensation and payroll expenses.

Looking ahead, Ayr expects second-quarter revenue to be flat or slightly up, with stronger growth anticipated in the second half of 2024. The company maintains an adjusted EBITDA margin target of approximately 25% and aims for positive cash flow for the year.

#2: Cresco Labs

Cresco Labs Inc. (OTC: CRLBF), a prominent cannabis company and owner of Sunnyside, announced its financial results for the first quarter of 2024, which ended on March 31. The company reported stable revenue at $184 million, narrowly surpassing analyst estimates by $1.2 million.

Despite flat sales, Cresco achieved notable financial improvements. Adjusted gross profit increased by 7% to $95 million, achieving a 51% gross margin—an enhancement of 580 basis points. Additionally, the company successfully cut its adjusted selling, general, and administrative (SG&A) expenses by 24% to $52 million, making up 28% of total revenue.

Cresco reported $16 million in income before taxes but faced a net loss of $2 million for the quarter. Nevertheless, adjusted EBITDA rose significantly by 82% to $53 million, reflecting a 1,380-basis point increase in the adjusted EBITDA margin, which now stands at 29%.

A highlight of the report was Cresco’s remarkable cash flow generation, with operating cash flow soaring by 1,000% year-over-year to $36 million and free cash flow reaching $33 million. 

Cresco’s CEO, Charles Bachtell, attributed this success to the company’s focus on efficient execution and the strengthening of its teams, he also hinted at future growth opportunities for the company; “The continued development of our teams’ capabilities and our relentless focus on efficient execution is leading to very strong performance across our retail and branded product business resulting in a 10x increase in operating cash flow year-over-year,” Charles Bachtell said in a statement.

Cresco continues to maintain strong market positions in Illinois, Pennsylvania, and Massachusetts. Its diverse brand portfolio includes Cresco, High Supply, FloraCal, Good News, Wonder Wellness Co., Mindy’s, and Remedi.

Looking ahead, Cresco is optimistic about leveraging upcoming adult-use cannabis markets to drive further growth and cash flow generation in 2024. 

#3: Tilray

Tilray Brands, Inc. (NASDAQ: TLRY) announced plans to raise up to $250 million through an at-the-market equity offering to fund potential acquisitions in the U.S., anticipating changes in cannabis legalization. According to the company, this strategic move is not intended for general working capital but specifically to capitalize on the evolving regulatory landscape in the U.S. cannabis market.

On May 13, Tilray revealed plans to issue 13.1 million shares of common stock in exchange for $19.8 million in principle of the 2024 Convertible Notes, reducing the outstanding principal amount to $330,000 as of May 14, 2024.

The Biden administration has shown a clear intent to advance the legalization process. On May 16, President Biden announced the push to submit the proposed rescheduling to the Federal Register, initiating a 60-day comment period. As a result, many Canadian cannabis companies like Tilray and Canopy Growth Corporation (NASDAQ: CGC) are increasingly targeting the larger U.S. market for growth once the regulatory landscape changes, due to the relatively smaller scale of the Canadian market. 

Financially, Tilray reported a 30% increase in net revenue for the recent quarter, reaching $188.3 million, up from $145.6 million the previous year. Despite this growth, the company adjusted its fiscal year 2024 EBITDA guidance to $60-63 million, down from an earlier projection of $68-78 million, and acknowledged challenges in achieving positive adjusted free cash flow due to delays in asset sale collections.

Tilray has over 800 million shares outstanding, with a recent trading price of $1.98 per share and a 52-week high of $3.40. Many analysts have maintained a four-star rating for Tilray, though some have recently lowered the price target, reflecting cautious optimism amidst ongoing market and regulatory developments in the cannabis sector.

#4: Flora Growth

Flora Growth Corp. (NASDAQ: FLGC), a Florida-based cannabis company, recently reported a net loss of $3.4 million for the first quarter ending March 31, 2024. This marked a return to losses after a brief period of profitability last year, with revenues slightly declining to just over $18 million from $19.3 million the previous year. Operating expenses also decreased to $6.3 million from $7.7 million.

Despite these challenges, Flora Growth remains hopeful due to anticipated cannabis reforms in key markets such as the United States and Germany. CEO Clifford Starke expressed confidence in the progressive cannabis agendas in these regions; “Legislators in the primary markets in which we operate, namely the U.S. and Germany, have demonstrated a willingness to advance a progressive cannabis agenda,” Clifford Starke said in a statement.

In Germany, where Flora Growth recently entered through the acquisition of TruHC, the company plans to capitalize on the consumer-focused market by selling home cannabis grow kits, seeds, and cuttings.

Through expanding its European presence, Flora Growth has secured distribution partnerships in the United Kingdom, Poland, and Israel. Additionally, the company closed a $3.23 million underwriting deal and entered into a sales agreement for $3.8 million with Aegis Capital Corp.

With $24.2 million in total assets, including $4.1 million in cash, against $21.1 million in total liabilities, Flora Growth feel it is strategically positioned to navigate the evolving cannabis landscape and potentially reverse its recent financial downturn.

Top Psychedelic Companies for Week

#1: Enveric Biosciences

Enveric Biosciences, Inc. (NASDAQ: ENVB) announced efforts to secure licensing contracts for its drug pipeline, following a recent partnership with MindBio Therapeutics (CNSX: MBIO). 

The company’s CEO, Joseph Tucker, highlighted significant interest from strategic pharmaceutical partners for Enveric’s new drug candidates targeting mental health disorders. The company’s lead asset, EB-003, is a non-hallucinogenic compound aimed at treating depression and anxiety, progressing towards an investigational new drug application and a planned Phase 1 clinical trial.

Enveric has executed seven non-binding term sheets with four potential partners, which could result in up to $410 million in milestone payments and future royalties. These partnerships are centered on compounds developed via Enveric’s AI platforms, Psybrary and PsyAI, generating over 1,000 molecules across various therapeutic areas, including neuropsychiatric conditions, cancer, and joint disease.

Additionally, the clinical-stage biotech company, which focuses on developing treatments for depression and anxiety, reported a net loss of $2.46 million for first quarter 2024 but maintained $6.36 million in cash, bolstered by $4.5 million raised through warrant and equity issuances.

The first quarter was described as “highly productive,” by the company’s CEO, who reflected the company’s strategic advancements and ongoing efforts to expand its therapeutic portfolio and partnerships.

#2: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) a clinical-stage biotechnology company focusing on medication-assisted treatments for addiction, particularly Alcohol Use Disorder (AUD), recently disclosed its plan to file its audited annual financial statements and MD&A for the financial year ended January 31, 2024, by May 30, 2024. This announcement came in line with the standard timeline applicable to venture issuers.

The company underwent a significant change in February 2024, when it delisted its common shares from Cboe Canada and listed them on the Canadian Securities Exchange (CSE). This transition made the company a venture issuer under Canadian securities law. However, due to the listing occurring twelve days after the financial year’s end, the filing deadline for financial statements technically remained that of non-venture issuers, which is 90 days from the financial year end.

As a result, Awakn Life Sciences Corp. was notified by the Ontario Securities Commission of its late filing and the potential issuance of a cease-trade order if the financial statements were not filed by 3:00 p.m. (EST) on May 7, 2024.

The company is undergoing an audit conducted by its auditor MNP LLP, expecting completion and filing of the financial statements by May 30, 2024. In anticipation of potential regulatory actions, Awakn has applied for a management cease trade order under National Policy 12-203 – Cease Trade Orders for Continuous Disclosure Defaults (“NP 12-203”). This measure, if approved, would allow individuals who are not directors, officers, or insiders of the company to continue trading in their securities.

Should the application for a management cease trade order be rejected, the company expects a full cease trade order to be issued shortly after May 7, 2024. In the meantime, Awakn announced its commitment to providing bi-weekly default status reports through news releases, complying with alternative information guidelines under NP 12-2023 until the filing requirements are met. The company assured stakeholders that there is no undisclosed material information concerning its affairs.

Key Takeaways; Cannabis Sector

• Village Farms regained Nasdaq compliance; Weedmaps is facing a compliance issue.
• MariMed expanded Maryland presence with a $5.3 million acquisition.
• Tilray adjusted expectations for 2024 amid financial challenges, as they eye Canadian tax relief.

Key Takeaways; Psychedelic Sector

• Optimi Health partnered with a New Zealand institute to supply psilocybin for indigenous healing research. 
• Awakn expanded into U.S. Southern States with groundbreaking addiction treatment partnership.

This week, a glimmer of hope emerged in the cannabis sector as the head of the Food and Drug Administration (FDA) addressed a House committee, stating that there’s “no reason” for the U.S. Drug Enforcement Administration (DEA) to delay its awaited decision on reclassifying marijuana from Schedule 1 to Schedule 3 of the Controlled Substances Act. It has been over seven and a half months since the Department of Health and Human Services forwarded their rescheduling recommendation to the DEA. However, a delay in action has left many stakeholders in the cannabis sector on edge, eagerly awaiting clarity on the regulatory front. The prospect of rescheduling holds significant implications, promising to alleviate tax burdens and pave the way for eventual federal legalization, which is long overdue in the eyes of many.

Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Village Farms

Vancouver-based Village Farms International, Inc. (NASDAQ: VFF) successfully regained compliance with Nasdaq listing rules, marking a positive turn for the marijuana producer and supplier company. The Nasdaq requires listed companies to maintain a minimum bid price of $1 per share, a threshold that Village Farms surpassed in March. The company had previously received a warning from Nasdaq in April 2023 due to low share prices but was granted an extension until October to rectify the situation.

 Meanwhile, WM Technology, Inc. (NASDAQ: MAPS), the parent company of Weedmaps, is the latest to face the non-compliance challenge. On Tuesday, WM Technology disclosed that it had received a notice of non-compliance from Nasdaq. This announcement came following the company’s failure to submit its annual 10-K report on time.

WM Technology attributed the delay in filing to recent changes in its executive finance leadership and the necessity to conclude additional financial-closing procedures associated with internal control weaknesses. Nevertheless, the company reassured stakeholders that it would submit the Form 10-K promptly. With the non-compliance notice, WM Technology now has 60 days to present a compliance plan to Nasdaq. The stock exchange may grant an extension until the end of September for the company to rectify its status.

These developments highlight the regulatory challenges faced by companies operating in the cannabis-related industry; particularly the Nasdaq’s minimum bid-price requirement, which has prompted various adjustments among listed marijuana and ancillary companies, including share consolidations. Aurora Cannabis Inc. (NASDAQ: ACB), a Canadian producer, notably consolidated its shares on a 10-to-one basis in February in response to Nasdaq regulations. Conversely, SpringBig Holdings, Inc. (OTC: SBIG), a cannabis marketing and loyalty company, opted to delist from Nasdaq in September 2023 after failing to meet the compliance the requirements.

#2: MariMed

MariMed Inc. (OTC: MRMD), a Massachusetts-based marijuana multistate operator (MSO), solidified its foothold in the Maryland cannabis market with a second significant acquisition.

The acquisition involved the closure of a $5.3 million deal for Community Wellness and Compassionate Care Center, which was finalized on April 5. This transaction added to MariMed’s existing presence in Maryland, giving them a second retail store in the state.

Following the closure of the deal, MariMed is poised to reopen the Upper Marlboro outlet, which closed in July 2023, pending regulatory approvals. The company also paid the state’s adult-use conversion fee, indicating its intention to sell recreational cannabis at the newly acquired store. With existing operations in Annapolis and a cultivation and processing facility in Hagerstown, MariMed is strategically positioned to capitalize on Maryland’s growing cannabis market.

Despite these expansions, MariMed has faced challenges, including supply chain disruptions and regulatory setbacks, impacting its financial performance. The company reported a net loss of $16 million in 2023, attributing some of these losses to delays in expansion projects across multiple states. CEO Jon Levine cited difficulties in securing basic construction materials, such as electrical panels, which have led to significant delays in the completion of expansion projects, including the Hagerstown cultivation facility.

However, MariMed remains optimistic about its future prospects in Maryland’s cannabis market. The company plans to continue pursuing additional dispensary acquisitions, with the aim of reaching the state-allowed maximum of four stores. And by strategically expanding its footprint in Maryland, the company will be able to capitalize on the state’s growing demand for adult-use cannabis products and position itself as a key player in the region’s cannabis industry.

#3: Tilray

Canadian cannabis and beverage company Tilray Brands, Inc. (NASDAQ: TLRY) revised its financial outlook for fiscal year 2024 during its third-quarter earnings call. The company’s Chief Financial Officer, Carl Merton, lowered the 2024 guidance, citing challenges in meeting previously announced projections, notably in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted free cash flow. 

Tilray CFO disclosed during the earnings call that the earlier forecast of $68 million-$78 million in adjusted EBITDA for 2024 was no longer attainable. Consequently, the company revised its adjusted EBITDA range to $60 million-$63 million. Additionally, Tilray no longer anticipates achieving positive adjusted free cash flow for the entirety of the fiscal year.

As for the third-quarter results, the company posted a net loss of $105 million for the quarter ended Feb. 29, with net revenue totaling $188.3 million. While revenue increased by approximately 30% compared to the previous year, it declined from the second quarter of 2024. The revenue mix comprised $54.7 million from beverage alcohol, $63.4 million from cannabis, $56.8 million from distribution, and $13.4 million from wellness.

Considering Canada’s intricate cannabis excise tax structure, Tilray executives voiced anticipation ahead of the federal budget release, particularly regarding a parliamentary finance committee proposal to cap excise taxes on marijuana products at 10% of their value. Tilray CEO, Irwin Simon, estimated potential annual savings of $80 million if the proposal were implemented, highlighting the impact of such a change on the company’s finances.

Looking ahead, Tilray eyes the prospect of selling pharmaceutical-grade medical cannabis in the U.S. following potential rescheduling from Schedule 1 to Schedule 3, potentially diverging from current strategies pursued by American multistate operators. 

Additionally, Tilray operates a medical marijuana distribution business in Germany, where recent legislative shifts may open new avenues for growth. With the removal of medical cannabis from the Narcotics Act, the company anticipates an expansion in the German medical cannabis market, facilitating easier prescription access for patients and potentially broader health insurance coverage.

Top Psychedelic Companies for Week

#1: Optimi Health

Canadian psychedelics company Optimi Health Corp. (OTC: OPTHF) solidified its international presence by striking a deal to supply psilocybin to a research institute in New Zealand. The agreement, which was made with the Mātai Medical Research Institute on behalf of the Tū Wairua Project, marked Optimi’s first venture into the New Zealand market.

Under this partnership, Optimi will provide its British Columbia-made psilocybin extracts for a clinical study focused on addressing methamphetamine use disorder among native Maori tribal members. The initiative aims to revive ancient healing practices using natural medicines within the indigenous Māori community.

Optimi’s CEO, Bill Ciprick, expressed the significance of this collaboration in honoring the cultural heritage of the Māori people; “This agreement marks our entry into a new market and underscores the historical and cultural importance of the work being undertaken by our colleagues in New Zealand to honour and respect the indigenous heritage of the Māori people,” Bill Ciprick said in the press release.

The study aligns with the indigenous tribe’s mission to reconnect with traditional healing methods utilizing natural flora and fauna. Jody Toroa, trustee of Rangiwaho Marae, emphasized the importance of utilizing Optimi’s natural fungi, which closely resembles local indigenous species, over synthetic alternatives. According to her, this approach ensures the integrity of the project and facilitates the reclaiming of cultural knowledge and customary practices. “Alongside many First Nations peoples, we have a relationship with native flora and fauna as a source of healing and reconnection to our respective indigenous cultural practices,” Toroa said. 

#2: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) expanded its presence in U.S. southern states through a licensing partnership with Rivus Wellness and Research Institute in Oklahoma City. This marked Awakn’s debut in the U.S. southern states, bringing its innovative treatment for Alcohol Use Disorder (AUD), Awakn Kare, to a new region. 

Awakn Kare has shown remarkable efficacy in trials, with an 86% abstinence rate six months post-treatment, far surpassing the current standard of care. The partnership grants Rivus access to Awakn’s therapies and training for practitioners, while Awakn receives fees and revenue shares.

CEOs of both companies expressed excitement about the collaboration, emphasizing a shared commitment to providing superior addiction treatments. Anthony Tennyson, CEO of Awakn, said “We are excited to partner with Rivus and their excellent team, there is shared ethos and vision between the two organizations which is important. Being able to provide a whole new cohort of people in Oklahoma with a new more effective treatment option whilst they are in desperate need, is what drives us.” While Dr. Lane Peyton of Rivus also echoed this sentiment saying, “The Rivus Wellness and Research Institute has consistently served the Oklahoma City mental health community with innovative treatments, interventions, and preventions, and we feel that this partnership with Awakn Kare will benefit our patients tremendously.”

This partnership reflects a significant advancement in addressing the need for more effective AUD treatments in the United States, offering hope for improved outcomes and transformed lives. 

Key Takeaways; Cannabis Sector

• Canopy Growth received ISS recommendation for creation of exchangeable shares.
• Trulieve to hold first quarter 2024 results conference call at the beginning of May.
• Goodness Growth announced sale of Vireo Health of New York in effort to address financial constraints.
• Avant Brands entered German market through IM Cannabis deal.

Key Takeaways; Psychedelic Sector

• Awakn partnered with Oklahoma clinic for addiction treatment.

Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Canopy Growth

Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) recently received a favorable recommendation from Institutional Shareholder Services (“ISS”) regarding its proposal for the creation of exchangeable shares. This recommendation came ahead of the special meeting of shareholders scheduled for April 12, 2024.

The proposed amendment to Canopy Growth’s articles of incorporation aims to establish a new class of non-voting and non-participating exchangeable shares, alongside restating the rights of common shares. According to the company, the objective behind this move is to facilitate the Company’s entry into the U.S. cannabis market, particularly through its U.S.-domiciled holding company, Canopy USA, LLC.

Canopy USA holds various U.S. cannabis investments, and with the approval of the proposed amendment, it will have the ability to acquire additional assets, including Acreage Holdings, Inc. (OTC: ACRHF), Mountain High Products LLC, Wana Wellness LLC, The Cima Group LLC, and Lemurian Inc. According to Canopy, these potential strategic acquisitions are designed to unlock value for Canopy Growth and its shareholders, positioning the company for growth and profitability in anticipation of federal legalization of cannabis in the United States.

ISS, a renowned independent proxy advisory firm with a significant client base, recommended that Canopy Growth shareholders vote in favor of the proposed amendment. In its report, ISS highlighted the importance of this proposal in ensuring compliance with applicable U.S. federal law.

Canopy Shareholders are encouraged to participate in the upcoming special meeting and cast their votes. The meeting, scheduled for April 12, 2024, will be conducted virtually, and shareholders can access the proceedings through a live audio webcast. The deadline for submitting proxies or voting instruction forms is April 10, 2024.

#2: Trulieve

Trulieve Cannabis Corp. (OTC: TCNNF), one of the leading marijuana multistate operators in the U.S., announced that it will conduct its conference call on Thursday, May 9, 2024, at 8:30 AM Eastern Time, after the release of its first-quarter 2024 financial results. Chairman, Founder, and Chief Executive Officer Kim Rivers and Chief Financial Officer Wes Getman are expected to participate in the call, where they will offer insights into Trulieve’s financial and operating performance.

The call will attract significant interest from stakeholders, with analysts eagerly awaiting Trulieve’s financial updates. Analysts have predicted revenue estimates of $286.36 million and average earnings estimate of -0.11. The company’s performance against these estimates will be closely scrutinized during the call.

Additionally, Trulieve had previously announced its participation in several events during April 2024, showcasing its commitment to industry engagement and advocacy. According to the company, Founder and CEO Kim Rivers will participate in a panel discussion at the Benzinga Cannabis Capital Conference in Miami, Florida, on April 17th. The panel, which will include the Bellamy Brothers, campaign spokesmen for the Smart & Safe Florida initiative, will address crucial topics pertinent to the cannabis industry.

#3: Goodness Growth

In a strategic move aimed at addressing financial challenges, cannabis multistate operator Goodness Growth Holdings, Inc. (OTC: GDNSF) unveiled plans to sell its subsidiary, Vireo Health of New York (VireoNY), to Ace Venture Enterprises for a sum ranging between $3 million to $5 million. The sale comes as Goodness Growth endeavors to amend a credit agreement with its secured lender, Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI), a cannabis real estate investment trust (REIT) based in Illinois.

Under the terms of the deal, Ace Venture Enterprises, a minority-owned business in New York founded by TV and film producer Steven Acevedo, will acquire VireoNY’s licenses, inventory, and assets. Additionally, Ace Venture Enterprises will take over VireoNY’s lease agreement with Innovative Industrial Properties, Inc. (NYSE: IIPR) for a marijuana cultivation and manufacturing facility located in Johnstown, New York. 

To facilitate the transition, Goodness Growth will provide a $2.5 million unsecured loan to VireoNY, while Ace Venture Enterprises pledged a $20 million investment for the development of licenses and to support the transfer of the IIP lease. Furthermore, Ace intends to acquire the Johnstown cannabis cultivation and manufacturing campus from IIP through a two-year purchase option.

Despite the impending sale, Goodness Growth will maintain a collaborative advisory agreement with Ace, retaining management and compliance oversight in exchange for approximately 15% of net profits. The deal is contingent upon regulatory approval and secured capital commitments and is anticipated to close by June 30

#4: Avant Brands

Canadian producer Avant Brands Inc. (OTC: AVTBF) inked a deal with IM Cannabis Corp. (NASDAQ: IMCC), a medical cannabis company based in Israel and Germany. This is a strategic move aimed to tap into the expanding German medical cannabis market. The agreement grants IMC’s German subsidiary, Adjupharm GmbH, exclusive rights to launch Avant’s flagship BLK MKT brand in Germany.

Under this international trademark licensing agreement, Avant will license its BLK MKT brand to Adjupharm. The products will exclusively feature cannabis cultivated by Avant in Canada and then exported to Germany. 

The timing of this collaboration coincides with Germany’s recent relaxation of medical cannabis restrictions, whereby the country approved partial legalization of cannabis from April, signaling a significant opportunity for market growth as discussions about recreational cannabis continue.

Norton Singhavon, Founder and CEO of Avant Brands, expressed enthusiasm about the partnership, highlighting its importance in expanding Avant’s global presence and positioning the BLK MKT brand on an international platform. “Partnering with IMC is a strategic move; it not only bolsters our position as a global leader in the ultra-premium cannabis sector but also amplifies the reach of our flagship brand, BLK MKT, on the global stage,” Norton said in a statement.

Top Psychedelic Company for Week

#1: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) a pioneering biotechnology company focused on developing medication-assisted treatments for addiction, announced a significant expansion in North America through a Licensing Partnership agreement with Rivus Wellness and Research Institute, based in Oklahoma City. 

This marked Awakn’s first foray into the U.S. southern states, enhancing access to its groundbreaking treatment protocol, Awakn Kare, for individuals struggling with Alcohol Use Disorder (AUD). 

Awakn Kare represents a proprietary treatment regimen validated in a phase II a/b trial, demonstrating remarkable efficacy with an 86% abstinence rate over six months post-treatment, a stark improvement compared to the mere 2% seen pre-trial. This efficacy surpasses the current standard of care for AUD, which typically yields only a 25% abstinence rate over a similar timeframe.

The partnership agreement, effective since May 18, 2023, and launched in April 2024, grants Rivus Wellness and Research Institute access to Awakn’s advanced therapeutics and comprehensive training for its practitioners. In return, Rivus will pay Awakn an annual fee alongside a revenue share per treatment administered.

Anthony Tennyson, CEO of Awakn, expressed enthusiasm about the partnership, emphasizing the shared ethos and vision between the two organizations. He also highlighted the significance of providing a novel and superior treatment option to individuals in Oklahoma facing addiction challenges. “We are excited to partner with Rivus and their excellent team, there is shared ethos and vision between the two organizations which is important. Being able to provide a whole new cohort of people in Oklahoma with a new more effective treatment option whilst they are in desperate need, is what drives us,” Anthony Tennyson said in a statement.

Moreover, Dr. Lane Peyton of Rivus Wellness and Research Institute echoed this sentiment, emphasizing their commitment to delivering innovative treatments and interventions to the Oklahoma City mental health community. “The Rivus Wellness and Research Institute has consistently served the Oklahoma City mental health community with innovative treatments, interventions, and preventions, and we feel that this partnership with Awakn Kare will benefit our patients tremendously,” Dr. Lane Peyton commented.

The collaboration between Awakn Life Sciences and Rivus Wellness and Research Institute signifies a significant step forward in addressing the pressing need for more effective addiction treatments in the United States. With Awakn Kare’s proven efficacy and Rivus’s dedication to patient care, this partnership holds promise for improving outcomes and transforming lives affected by AUD.