Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Key Takeaways; Cannabis Sector

  • iPower reported fiscal second quarter 2022 results.
  • Ayr Wellness closed $20 million acquisition of Levia cannabis infused seltzer.
  • Trulieve bought Arizona cultivation facility for $13.75 million.
  • InterCure to acquire Israeli Cannabis Company Better for $35 million.

Key Takeaways; Psychedelic Sector

  • Awakn’s Prof. Celia Morgan named ‘one of the most influential women’ in psychedelics; the company also filed a patent for a new chemical series of entactogen-like molecules.

People were bemoaning the poor start to 2022 for cannabis stocks only a few weeks ago. Since then, the cannabis stocks have rebounded, resulting in some significant gains. The increase, which has been aided by increased trading volumes, has outperformed the larger stock market and other high-risk sectors, and cannabis stocks are now the strongest performers’ year-to-date. Below is a weekly roundup for the companies that made the headlines this week in the cannabis and psychedelics sectors.

Top Marijuana Companies for Week

#1: iPower

iPower Inc. (NASDAQ: IPW), a leading online hydroponic equipment supplier and reseller, released financial results for the fiscal second quarter ending December 31, 2021 on February 14, 2022.

From the results that were announced, total revenue increased 52 percent to $17.1 million in the fiscal second quarter of 2022, compared to $11.3 million in the same time of fiscal 2021. Greater in-house product sales and increased demand for ventilation products drove the growth.

Additionally, in the fiscal second quarter of 2022, gross profit climbed by 53% to $7.6 million, up from $4.9 million in the same quarter of fiscal 2021. Gross margin was 44.1 percent as a proportion of revenue, up from 44.0 percent the previous quarter. A larger percentage of in-house product sales offset higher freight and input expenses, resulting in a slight gain in gross profit.

The company also reported that, in the second quarter of fiscal 2022, net income increased by 39% to $0.8 million, or $0.03 per diluted share, compared to $0.6 million, or $0.03 per diluted share, in the same period of fiscal 2021.

In addition, at December 31, 2021, cash and cash equivalents totaled $1.0 million, compared to $6.7 million at June 30, 2021. The drop was due to the timing of accounts receivables with the Company’s major channel partner, and it is not indicative of any other business or operating trend. Total long-term debt was $7.4 million as of December 31, 2021, up from $0.5 million as of June 30, 2021. Increased working capital expenses were to blame for the rise.

On Monday, February 14, 2022, at 4:30 p.m. Eastern time, the Company held a conference call to discuss the results of its fiscal second quarter ended December 31, 2021.

#2: Ayr Wellness

On February 15, 2022, Ayr Wellness Inc. (OTC: AYRWF), a leading vertically integrated multi-state cannabis operator (MSO) in the United States, announced the completion of its acquisition of Cultivauna, LLC, the owner of Levia branded cannabis infused seltzers and water-soluble tinctures.

Levia makes use of a proprietary technology that allows for a faster onset of THC effects, typically 15-20 minutes, with effects lasting up to 3 hours, providing for a more consistent consuming experience than many edible products.

The Massachusetts Cannabis Control Commission (“CCC”) approved the ownership shift on Thursday, February 10, 2022. Ayr Wellness announced this deal on September 7, 2021, and the company management must be very happy to see the deal through.

Ayr is a rapidly growing, vertically integrated, multi-state cannabis company in the United States, committed to providing the greatest quality cannabis products and customer service across its entire territory. The Company is focused on superior cultivation to create superior branded cannabis products, based on the concept that everything starts with the quality of the plant. In addition, Ayr aims to improve people’ lives every day by introducing them to the benefits and wonders of cannabis.

#3: Trulieve

Trulieve Cannabis Corp. (OTC: TCNNF), a prominent and top-performing cannabis company in the United States, said on February 15, 2022 that it had finalized the acquisition of a 64,000-square-foot cultivation facility in Phoenix, Arizona. Trulieve will pay $13.75 million in cash, with potential milestone payments contingent on earn-out and escrow conditions.

The new cultivation facility boosts the company’s supply chain capacity and becomes Trulieve’s fifth in Arizona. It will also help in providing flower for medical patients and adult-use clients at the company’s 17 dispensaries across the state. Avondale, Casa Grande, Chandler, Cottonwood, Glendale, Guadalupe, Lake Havasu, Mesa, Peoria, Phoenix, Scottsdale, Tempe, and Tucson are among the Arizona Trulieve locations.

Trulieve is a vertically integrated cannabis company and multi-state operator in the United States, operating in 11 states and with market positions in Arizona, Florida, and Pennsylvania. Trulieve is positioned for rapid development and expansion, leveraging its hub model to gain scale in retail and distribution in new and existing countries. The company’s shares are traded on the OTC market under the symbol TCNNF and they are listed on the Canadian Securities Exchange (CSE) under the symbol TRUL.

#4: InterCure

Israeli-based cannabis producer InterCure Ltd. (NASDAQ: INCR) also known as Canndoc is buying medical cannabis company Cann Pharmaceutical Ltd. also known as Better in a deal valued at $35 million. It is expected to close at the beginning of the third quarter of 2022.

InterCure is Israel’s largest licensed cannabis producer and one of the first to offer Good Manufacturing Practices (GMP) certified and pharmaceutical-grade medical cannabis products. InterCure leverages its market-leading distribution network, international partnerships, and a high-margin vertically integrated “seed-to-sale” model to lead the fastest growing cannabis global market outside of North America. Better is a pharmaceutical-grade medical cannabis company, with leading expertise in cannabis cultivation, marketing, commercialization, and research of medical cannabis products for a variety of medical indications.

InterCure said that the acquisition of Better is expected to further strengthen InterCure’s leadership position in the pharmaceutical-grade medical cannabis market. In addition, the acquisition is expected to create an immediate value creation opportunity with revenue synergies estimated at NIS 50 million for the upcoming year.

Better’s leading brand, Better is driven by a unique genetic portfolio that is consistently in high demand among medical cannabis patients both in Israel and internationally. Better also has advanced pesticide-free cultivation methods with both patient health and environmental advantages.

Better are pioneers in formulating cannabis into a medical product in Israel and the rest of the world. In clinical research regarding the treatment for refractory epilepsy in children and adolescents who have not responded to pharmacological treatment, patients supplied with Better’s lead therapy strain EP1 had greater efficacy of reducing seizures and less adverse effects as compared to other medical cannabis-based products including Epidiolex.

Amos Cohen, InterCure CFO said: “InterCure is continuing its growth momentum while leading the consolidation of the medical cannabis market. This acquisition is a first of its kind and is another step in the implementation of our strategy and strengthens InterCure’s position.”

InterCure shares are traded on the NASDAQ (INCR), Toronto Stock Exchange (INCR.U) and Tel Aviv Stock Exchange (INCR).

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (NEO: AWKN) (OTCQB: AWKNF), a biotechnology company that researches, develops, manufactures, and distributes psychedelic medications to treat addictions, announced on 15 February, 2022, that Professor Celia Morgan, Head of Ketamine-Assisted Therapy for Addiction at the company, was named one of Insider’s 16 most prominent women driving the future of psychedelics.

Professor Morgan recently published data from a Phase II A/B trial in the American Journal of Psychiatry, demonstrating the efficacy of ketamine-assisted therapy for the treatment of alcoholism. The results showed that Ketamine-assisted therapy resulted in total abstinence in 162 of 180 days during the next six months, an increase in abstinence from roughly 2% prior to the experiment to 86 percent six months afterwards.

Professor Morgan is also the principal investigator for the world’s first ketamine therapy research for gambling addiction, which was announced in August 2021. This is the first study of its kind to look into psychedelics as a therapy for a behavioral addiction. The study’s expansion to other behavioural addictions, such as Binge Eating Disorder, Compulsive Sexual Behavior, and Internet Gaming Disorder, was approved last month. Morgan’s work has received approximately $8 million in grant funding from the UK government and other sources.

In addition, Awakn announced on February 17, 2022 that the company aims to strengthen its intellectual property portfolio and pipeline for the treatment of addictions with the filing of a patent application for a new chemical series of entactogen-like molecules. Entactogen-like molecules are a class of psychoactive substances that produce distinctive emotional and social effects that Awakn believes has great potential to treat both substance and behavioural addictions.

This Awakn’s recent patent application, which covers the new chemical series, marks yet another important step forward in the creation of next-generation entactogens and marks a significant milestone in the company’s therapeutic research program. The application adds to Awakn’s pipeline and position as a global leader in the field of psychedelic biotechnology.