Key Takeaways; Cannabis Sector
- Agrify announced $20 million financing and leadership changes in partnership with Green Thumb Industries
- TerrAscend reported revenue drop and expanded into Ohio with $10.3 million dispensary acquisition
- Curaleaf reported $44 million loss in Q3, despite securing a $40 million credit line to support growth
- Canopy Growth reported revenue drop and continued losses
- Cresco Labs delivered record cash flow despite missing revenue estimates.
Key Takeaways; Psychedelic Sector
- Relmada Therapeutics reported Q3 financial results and outlined key milestones by year-end
- Awakn expanded phase 3 trial sites for alcohol use disorder
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 Michigan-based leader in cannabis cultivation and extraction solutions, recently announced a $20 million financing agreement and significant changes in its leadership team. As part of the agreement, Green Thumb Industries Inc. (GTI) (CSE: GTII) (OTC: GTBIF), through a subsidiary, will provide $10 million-upfront as part of a convertible secured note totaling $20 million. This move supports Agrify’s ongoing financial stability as it navigates a new growth phase.
In addition to the financial boost, Agrify’s Chair and CEO Raymond Chang resigned, and board member I-Tseng Jenny Chan also stepped down. Green Thumb’s Founder, Chairman, and CEO, Benjamin Kovler, has taken on the role of interim CEO and Chair of Agrify. Kovler will continue leading Green Thumb while helping to guide Agrify through this transitional period.
Reflecting on the investment, Kovler stated, “Given Green Thumb’s thoughtful and prudent approach to capital allocation, we see significant opportunity ahead to assist in creating value for shareholders via Agrify’s non-plant-touching assets.” Joining him on the Agrify board are Green Thumb’s Armon Vakili, VP of Strategic Initiatives & Partnerships, and veteran corporate leader Richard Drexler, who brings over 40 years of experience to the role.
This transition came as GTI celebrated its own success this week, reporting $287 million in revenue and an adjusted EBITDA of $89 million in what was a strong Q3 financial results for the company. Kovler highlighted on the results, “This strong quarter reflects our commitment to building enduring brands that resonate with American consumers.”
#2: TerrAscend
TerrAscend Corp. (TSX: TSND) (OTC: TSNDF), a cannabis retailer and multistate operator, this week reported disappointing third-quarter financial results, along with plans to expand into Ohio through a $10.3 million acquisition of Ratio Cannabis LLC. The acquisition of Ratio Cannabis, a dispensary in Goshen Township, will add to TerrAscend’s retail footprint, bringing its U.S. dispensary count to 38 across six states. The transaction included $5 million in cash, $1.3 million in company shares, and a $3.9 million seller’s note with 6% interest.
Regarding financial results, TerrAscend reported a challenging third quarter, with revenue falling to $74.2 million, below analysts’ estimates of $76.66 million and down from $89.2 million in the same quarter last year. Net losses widened to $21.4 million, reflecting a 14.1% year-over-year revenue decline. Nevertheless, the company maintained positive cash flow for the ninth consecutive quarter, generating $1.8 million from operations.
Despite facing revenue pressures in the third-quarter, TerrAscend launched a $10 million share buyback program and secured $140 million in financing due in 2028, carrying a 12.75% interest rate. The company also reported gains in Maryland’s wholesale market, achieving a 26% growth over the previous quarter. As a result of these mixed financial results, TerrAscend’s stock dropped 21% following the earnings release, closing at $0.79 on OTCQX and C$1.10 in Toronto.
#3: Curaleaf
Curaleaf Holdings, Inc. (TSX: CURA) (OTC: CURLF), a leading multistate cannabis operator, reported it’s third-quarter financial result, recording a net loss of $44 million, bringing its total losses for the year to $144 million despite generating over $1 billion in revenue. The company’s Q3 revenue of $331 million showed a slight 1% decrease from the previous year, missing analyst expectations of $343 million. CEO Boris Jordan attributed the disappointing results to “the pressures of regulatory overhang, increased competition, unprecedented weather conditions, and irrational pricing strategies.”
Despite these challenges, Jordan remains optimistic about the company’s future. “We remain focused on sustainable, profitable organic growth by maintaining share in challenged markets and growing share where we see strategic opportunity,” he said. “Our global presence offers a diversification of revenue streams that mitigates concentration risk.”
In addition to its financial results, Curaleaf also announced this week that it had secured a $40 million revolving credit facility from Needham Bank in Massachusetts to support corporate operations and working capital. “This new revolving credit facility will provide us with the flexibility to support business needs across the globe,” Jordan said. The two-year credit facility, which matures in December 2026.
The company has also continued to expand its footprint, opening new dispensaries in states such as New York, Ohio, and Florida, and growing its international operations, which increased by 82% year-over-year. Curaleaf’s international division now contributes significantly to its diversified revenue stream, with Jordan highlighting that the company “opened new dispensaries in key markets and launched its first marijuana flower product in Germany.”
As for the future outlook, Curaleaf remains optimistic about its ability to weather challenges and expand in both domestic and international markets, aiming to position itself for growth as the cannabis industry evolves.
#4: Canopy Growth
Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) announced its fiscal Q2 2025 financial results, revealing a decline in revenue and continued losses. For the quarter ending September 30, 2024, total revenue dropped to C$73.9 million (~$53 million), down from C$82 million in the same period last year. However, the company noted a 3% revenue increase when excluding businesses divested in the prior fiscal year.
Despite the ongoing losses, Canopy reported a net loss of C$128 million, an improvement from last year’s C$324 million. CEO David Klein expressed confidence, saying, “We delivered a solid second quarter led by strong growth across our Storz & Bickel, Canadian medical, and European cannabis businesses… We remain highly optimistic about the momentum building within Canopy USA as this strategy was uniquely designed to succeed independent of the need for federal legalization.”
Operating losses from continuing operations were C$46 million, significantly higher than last year’s C$7 million. This increase was due in part to rising operating expenses, which reached C$67 million compared to C$30 million the previous year. However, the company remains optimistic about reaching positive Adjusted EBITDA in the coming quarters.
Despite operational challenges, CFO Judy Hond highlighted progress, stating, “We’ve demonstrated another quarter of progress towards profitability driven by improvement in gross margins and a reduction in SG&A expenses.”
#5: Cresco Labs
Cresco Labs Inc. (CSE: CL) (OTC: CRLBF), the Chicago-based owner of Sunnyside dispensaries, reported its highest-ever quarterly cash flow in Q3 2024 financial results, despite falling short of revenue expectations. For the quarter ending September 30, the company posted $180 million in revenue, down from $190.6 million in the same period last year, and below the $185.85 million analysts had predicted. However, Cresco’s operating cash flow hit a record $49 million, bolstered by its efforts to optimize operations and reduce costs.
CEO Charlie Bachtell remarked, “So far this year, we’ve generated $103 million in operating cash flow, enabling us to reinvest in our core, and to explore new markets and growth verticals, all while improving our balance sheet and paying down debt.”
Despite this positive cash flow, CFO Dennis Olis forecasted a mid-single-digit revenue drop in Q4, driven by market challenges in Illinois and slow adult-use conversion in Ohio. Olis pointed out that Illinois, despite increasing the number of dispensaries by 46% in the state, the company saw total state revenue decline. In Ohio, Bachtell noted that the adult-use market has yet to launch, stating, “Internally we stopped referring to Ohio’s adult-use launch because it really hasn’t launched yet.”
Despite these challenges, Cresco expanded its market presence, remaining a leader in Illinois, Pennsylvania, and Massachusetts, and climbing into the top three in Ohio. The company also reduced its loss to $8 million from a much steeper $113.4 million last year, while the adjusted EBITDA grew 5% to $51 million.
Moreover, Cresco’s strong cash position, which stood at $157 million at quarter’s end, enabled it to repurchase $40 million of senior loans without penalties in October. Bachtell also highlighted Cresco’s advantage in Florida’s vertically integrated medical market, despite setbacks in adult-use legalization in the state.
Looking ahead, Bachtell expressed optimism about federal cannabis reform, pointing to growing bipartisan support for policy changes: “We look forward to working with the incoming administration to follow through on its commitment to developing a commonsense approach to cannabis laws.”
Top Psychedelic Company for Week
#1: Relmada Therapeutics
Relmada Therapeutics, Inc. (NASDAQ: RLMD) recently provided a business update and announced its third-quarter financial results for 2024. Despite reporting a net loss of $21.7 million, slightly improving from the $22 million loss during the same period in 2023, the company remains optimistic about its near-term goals and the potential of its clinical programs.
“We believe that Relmada’s clinical programs are poised to achieve meaningful, near-term value inflection points,” said Sergio Traversa, CEO of Relmada. “Our lead product candidate, REL-1017, is in a registrational Phase 3 program as a potential adjunct treatment for major depressive disorder.”
The company’s Reliance II and Relight trials are designed to build on promising Phase 2 results, with enhanced site selection and more stringent patient enrollment. The interim analysis for Reliance II, which is expected by the end of 2024, is seen as a crucial de-risking event for both the REL-1017 program and the company.
In addition to REL-1017’s progress, Relmada reported that it is also moving forward with the development of REL-P11, a low-dose, modified-release psilocybin formulation aimed at treating metabolic diseases. “We expect to initiate a Phase 1 safety study for REL-P11 shortly,” Traversa said. “This study will define the pharmacokinetic, safety, and tolerability profile in obese subjects. A Phase 2a proof-of-concept study is expected to begin in the first half of 2025.”
For the third quarter of 2024, Relmada reported research and development expenses of $11.1 million, up from $10.4 million in the same period in 2023. This increase was largely due to the ramp-up of clinical studies, including the Reliance II/302 and Relight/304 trials. General and administrative expenses decreased slightly to $11.9 million, primarily driven by reduced stock-based compensation expenses. Additionally, the company posted a net loss of $21.7 million, or $0.72 per share, compared to a net loss of $22.0 million, or $0.73 per share, for the third quarter of 2023.
As of September 30, 2024, Relmada held $54.1 million in cash and short-term investments, a significant decrease from $96.3 million at the end of 2023. The company believes this cash position is sufficient to support its operations through key milestones in 2025.
“We are confident in our ability to reach critical milestones over the next year,” Traversa concluded, highlighting that the company’s focus remains on advancing its clinical programs and achieving regulatory success.
#2: Awakn
Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF), recently announced the opening of four additional clinical trial sites in the UK as part of its groundbreaking ‘MORE-KARE’ Phase 3 trial for AWKN-001, a novel treatment for severe alcohol use disorder (AUD). The newly added sites include University Hospitals Sussex NHS Foundation Trust, South London and Maudsley NHS Foundation Trust, Greater Manchester Mental Health NHS Foundation Trust, and University Hospitals Plymouth NHS Trust, increasing the total to seven active sites.
AWKN-001 combines an N-methyl-D-aspartate receptor-modulating drug (ketamine) administered intravenously with manualized psycho-social support to create a comprehensive treatment for severe AUD. This trial is co-funded by the UK’s Medical Research Council (MRC), the National Institute for Health and Care Research (NIHR), and Awakn Life Sciences, managed by the Exeter Clinical Trials Unit at the University of Exeter.
Commenting on this expansion, Awakn CEO Anthony Tennyson remarked, “The expansion of trial sites marks a significant milestone in our mission to address the pressing need for innovative treatments for AUD. We are confident that AWKN-001 has the potential to change the standard of care for individuals suffering from severe alcohol use disorder in the UK, offering them a novel, more effective treatment pathway.”
Furthermore, Awakn’s Chief Research Officer, Prof. David Nutt, added, “The opening of these additional sites accelerates our ability to gather robust clinical data, essential for bringing this groundbreaking treatment to more patients. With the support of the UK’s leading research institutions, we are well-positioned to demonstrate the effectiveness of AWKN-001.”
The MORE-KARE study represents the largest investigation into ketamine-assisted therapy for AUD, with an estimated total trial cost of £2.4 million (CAD 4.2 million). As part of the deal, Awakn is contributing £0.8 million (CAD 1.4 million) to this vital research effort across eight NHS sites.