Key Takeaways; Cannabis Sector
- TerrAscend entered Michigan cannabis market with the completion of Gage Growth acquisition.
- Acreage Holdings reported Q4 2021 results; revenue increased 21% to $58.1 million.
- Scotts Miracle-Gro expects Hawthorne sales to decrease 15-25% in fiscal 2022.
Key Takeaways; Psychedelic Sector
- Awakn announced that the company will participate at upcoming March 2022 conferences.
- Numinus added Ayahuasca & San Pedro to Federal license for psychedelic research.
Over the last few years, the cannabis sector has gone through various ups and downs. Recently the sector has seen some optimism as news emerged that the opening of adult-use sales in New Jersey could happen as early as May. This will no doubt be one of the big catalysts for the sector in 2022. Below is a roundup of the top business stories from the cannabis and psychedelics industry for this week.
Top Marijuana Companies for Week
#1: TerrAscend
TerrAscend Corp. (OTC: TRSSF) (CSE: TER) is now the official owner of Gage Growth Corp., which is based in Michigan. On March 10, 2022, shares of Gage ceased trading following the completion of the previously announced deal with TerrAscend. After the closing of this deal, TerrAscend now owns and manages operations in California, Michigan, Maryland, New Jersey, Pennsylvania, and Canada, as well as 7 cultivation and processing facilities and 25 functioning shops serving the medicinal and adult-use cannabis markets in the United States and Canada.
As a result of the deal, TerrAscend made Gage a wholly-owned subsidiary. And in conjunction with the transaction, Gage shares were delisted from the CSE at the close of trading day on March 10, 2022. Additionally, Gage filed an application with the applicable securities regulators to cease to be a reporting issuer and terminate Gage’s public reporting responsibilities.
This acquisition is no doubt a defining moment for TerrAscend. This is because Gage had swiftly positioned itself as a market leader in Michigan, which grew to become the third largest cannabis market in the United States as of December 2021, with recorded cannabis sales of $168 million, reflecting a yearly market size of more than $2.0 billion. In addition, Gage has exclusive licensing agreements with Cookies, Blue River, Pure Beauty, Khalifa Kush, and others in Michigan.
The acquisition is expected to provide financial flexibility to TerrAscend, which is predicted to result in above-average long-term margins and cash flow for the company.
#2: Scotts Miracle-Gro
Shares of Scotts Miracle-Gro Company (NYSE: SMG) were down 6% on Tuesday, March 08, 2022, after news emerged that the company had cut its full-year sales estimates for its hydroponic segment, Hawthorne. Furthermore, Scotts stated that the reduction would most certainly result in lower adjusted earnings per share than originally forecasted. Shares of the company are currently trading for $115.05, which is a significant decline from the year’s high of $254 that was set earlier this year.
Speaking at the Raymond James 43rd Annual Institutional Investors Conference, CFO of Scotts Miracle-Gro, Cory Miller, said that the company now anticipates Hawthorne sales to decrease 15% to 25%, including the benefits of acquisitions. Sales in the segment have been hampered for several months, according to the company, due to an oversupply of cannabis, which has caused a halt in both indoor and outdoor cultivation.
During the presentation, Miller stated that as a result of this decline, a large purchase to boost the company’s footprint in the live goods category is no longer expected in fiscal 2022. Scotts Miracle-Gro had been actively pursuing such a possibility, over the last year; however, those talks have come to a stop.
Because of the lowered Hawthorne sales expectation, Scotts Miracle-Gro’s guidance for non-GAAP adjusted earnings per share is unlikely to be met. However, Miller stated that management is confident about the U.S. Consumer segment’s sustained strength and is striving to close the profitability gap caused by the Hawthorne sales shortfall, with a goal of non-GAAP adjusted earnings per share of at least $8.00.
In addition, the company said it expects to provide a further update on May 3, 2022, when it releases its second-quarter results.
#3: Acreage Holdings
On March 10, 2022, Acreage Holdings, Inc. (OTC: ACRHF) released its financial results for the fourth quarter of 2021, and full year ended December 31, 2021. Total revenue for Q4 2021 was $58.1 million, an increase of $26.6 million or 84% compared to Q4 2020.
Acreage said that the acquisitions of Ohio, California, and Maine operations over the last 12 months, as well as extra revenue from the completion of expansions at several of their cultivation sites, along with increased demand and production across several states, was what drove the year-over-year rise for the company.
In addition, the company reported that the revenue growth was somewhat offset by revenue declines due to divestitures and declines within its operations that were being held for sale. Additionally, they said that total revenue for Q4 2021 improved sequentially by $9.9 million or 21% compared to the third quarter of 2021. The company also had total gross profit of $27.6 million, which is an increase of $13.1 million or 90% compared to Q4 2020.
In terms of balance sheet and liquidity, Acreage ended the year with $44.3 million in cash and cash equivalents and restricted cash. The Company also reported that they secured a $150 million Credit Facility with a syndicate of lenders. Under the terms of the Credit Facility, $100 million was available for immediate use and a further $50 million will be available in future periods under a committed accordion option once certain, predetermined milestones are achieved. Acreage said that it intends to use the proceeds of the Credit Facility to fund expansion initiatives, repay existing debt, and provide additional working capital.
Top Psychedelic Companies for Week
#1: Awakn
Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF), a biotechnology company, researching, developing, and delivering psychedelic therapeutics to treat addiction, announced on March 09, 2022, that Anthony Tennyson, Chief Executive Officer, is scheduled to present at some upcoming March 2022 investor conferences.
Some of these investor conferences include; 34th Annual ROTH Conference, which will happen on Sunday, March 13th to Tuesday, Match 15th, Oppenheimer’s 32nd Annual Healthcare Conference, which will be held on Wednesday, March 15th to Thursday, March 17th, and Maxim’s 2022 Virtual Growth Conference which will occur on Monday, March 28th to Wednesday, March 30th.
If you are interested in learn more about Awakn’s goals and progress of using psychedelic therapeutics to better treat addiction, you can register here, and you will get to learn more about the company and the progress they are making, from the CFO, Anthony Tennyson.
#2: Numinus Wellness
Numinus Wellness Inc. (TSX: NUMI) (OTC: NUMIF), a mental health company focused on developing innovative treatments and safe, evidence-based psychedelic-assisted therapies, announced on March 9, 2022 that it had received approval from Health Canada to conduct research on Ayahuasca and San Pedro at its licensed, state-of-the-art research facility, Numinus Bioscience.
This license expansion will help Numinus cement its reputation as a leading global research center for natural psychedelic medicines, and it will complement Numinus’ present work on Psilocybe species and intrinsic synergistic chemicals.
Numinus Bioscience has been granted permission to work with San Pedro cactus, the beta-carbolines harmaline and harmalol, and the botanical materials Banisteriopsis caapi, Psychotria viridis, Diplopterys cabrerana, and Mimosa tenuiflora, thanks to the renewal of its Dealers’ License.
The botanical ingredients are noteworthy for their use as admixtures in Ayahuasca, a hallucinogenic beverage prepared from a variety of plant components that is used in Amazonian Indigenous traditional practices for ceremonial, medical, and spiritual purposes.
Since 2020, Numinus Bioscience’s license has been significantly revised to broaden the scope of its research activities, with prior permissions permitting the study of DMT, Ketamine, LSD, MDMA, Mescaline, Psilocin, and Psilocybin. Approved activities for these include possession, analytical testing, production, assembly, sale, export and delivery.