Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Key Takeaways; Psychedelic Sector

  • Stifel analyst issued a speculative buy on Awakn with $8 price target.

Key Takeaways; Cannabis Sector

  • RIV Capital bought New York cannabis company Etain for $257 million.
  • Trulieve reported record Q4 and full year earnings results; revenue increased 36% sequentially to $305 million after acquisition of Harvest.
  • IM Cannabis reported record fourth quarter and fiscal year, 2021, financial results; the company also provided first quarter, 2022, outlook.
  • Cannabis manufacturer, Valens, raised $22.5 million in bought deal offerings.

Marijuana stocks have taken a beating in the past year, getting pummeled as hopes evaporated for federal marijuana legalization before inflation worries and the war in Ukraine tanked the broader market. However, the tide seems to be turning. This is because, The Marijuana Opportunity, Reinvestment and Expungement, ‘The MORE Act’, which was initiated by the House Judiciary Chairman, Jerrold Nadler, was passed through a House vote on Friday, April 1, 2022. There’s high hope that the passing of this bill will bring huge optimism in the cannabis sector, and even push us further to the federal legalization of marijuana.

Moreover, there was also another key development in the psychedelics sector, where Stifel Financial Corp., which is an American multinational independent investment bank and financial services provider company, initiated a speculative buy rating coverage on Awakn Life Sciences, with a target price of C$8.00.

Below is the full weekly roundup on the top business stories that dominated the psychedelics sector and the cannabis industry.

Top Psychedelic Company for Week

#1: Awakn

Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF) made the news headlines this week after a well-known analyst upgraded the buy ratings on the company’s shares. Awakn is expected to have an optimistic future, according to Stifel Financial Corp. analyst, Andrew Partheniou. The stock market analyst issued a Speculative Buy rating on the psychedelics stock, with a price target of $8 for the stock.

For various reasons, Partheniou believes Awakn is one of the top psychedelics stocks to invest in. The company’s prospects were underlined in his Initiation of Coverage analyst report, which described it as a “pure play” psychedelic company that is succeeding in creating addiction treatments. He also highlighted Awakn’s elite management team that includes Professor David Nutt. He believes that the elite management is giving Awakn an edge against its competitors. Partheniou has set an $8 price target for Awakn. The stock is currently trading at $1.26.

The psychedelics industry is slowly but steadily approaching a mainstream global legalization and adoption. In a few years, self-medicating using psychedelics like those developed by Awakn may be routine for persons suffering from post-traumatic stress disorder, depression, alcohol addiction, and anxiety.

Awakn, which was founded in Canada in 2020, is a biotechnology company focused on researching, developing, and delivering psychedelic therapeutics to treat behavioral addictions. Shares of Awakn trade as AWKN on the Canadian stock exchange NEO and also trade as AWKNF in the over the counter (OTC) markets in the USA. The company is currently based in Toronto, Canada.

Top Marijuana Companies for Week

#1: RIV Capital

On March 30, 2022, RIV Capital, Inc. (CSE: RIV) (OTC: CNPOF) announced a definitive agreement to purchase Etain LLC and Etain IP LLC, which are owners and operators of legally registered cannabis production and retail outlets in New York, the deal is worth $247 million.  Etain was the only woman-owned and operated cannabis company in New York. In addition, it was one of the state’s first five medical cannabis license holders.

According to the terms of the definitive agreement, after receiving regulatory clearances from the New York Cannabis Control Board and the New York State Office of Cannabis Management, RIV Capital will acquire full ownership and control of all Etain companies. The deal is subject to these approvals because a restriction that a minority-owned cannabis company could only sell to another minority-owned cannabis company existed in New York at one point; however, it is unclear whether this restriction will be enforced.

Scotts Miracle-Gro (NYSE: SMG) is funding RIV Capital in this acquisition deal. This means that Scotts is essentially the company buying Etain. As per the terms of agreements, RIV Capital will make a cash payment of $212 million and an additional stock payment of $35 million.

RIV Capital said it will put more money and resources into four new dispensaries, as well as assist the creation of a new state-of-the-art flagship indoor cultivation facility suited to the high-end New York market.

#2: Trulieve

Trulieve Cannabis Corp. (OTC: TCNNF), a leading and top-performing multi-state cannabis company in the United States, released its quarterly and full-year results on March 30, 2022.

Trulieve reported revenue of $305.3 million in the fourth quarter, which was up 81% from the fourth quarter of 2020 and a 36% increase from the third quarter. In addition, the company reported a net loss of $71.5 million and an adjusted net income of $1.8 million for the quarter, which excluded $73.3 million in non-recurring fair value of inventory step-up, transaction, acquisition, and integration losses that are principally related to the Harvest acquisition. The loss per share was $0.49, which missed the average analyst forecast of $0.18 cents per share on Yahoo Finance.

Trulieve announced that revenue for the full year of 2021 increased by 80% year over year to $938.4 million. The company also reported $18 million in net income and $123.4 million in adjusted net income, excluding $105.4 million in non-recurring compensation, the fair value of inventory step-up, and transaction, acquisition, and integration charges primarily related to the Harvest Health & Recreation Inc. (“Harvest”) acquisition.

In addition, the company said that it had rebranded and reopened fourteen legacy Harvest dispensaries in Florida in the month of October, following the Harvest acquisition.

#3: IM Cannabis

On March 31, 2022, IM Cannabis Corp. (NASDAQ: IMCC), a leading medicinal and adult-use recreational cannabis company with operations in Israel, Canada, and Germany, released its financial results for the quarter and fiscal year ended December 31, 2021.

Revenues in the fourth quarter were $20.0 million, up 309% from the fourth quarter of 2020 and up 35% sequentially. The fourth-quarter net loss was $12.5 million, compared to a net loss of $20.0 million in 2020. Additionally, the basic and diluted loss per share was $0.19 which was up compared to $0.13 in the fourth quarter of 2020.

Moreover, revenues in 2021 were $54.3 million, up 242% from the previous year. Furthermore, total dried flower sold for the year ended December 31, 2021 was 8,410kg at an average selling price of $4.90 per gram, compared to 2,586kg for the same period in 2020 at an average selling price of $5.75 per gram. Also, in 2021, the net loss was $18.5 million, which reduced significantly compared to $28.7 million net loss in 2020. In addition, the basic and diluted loss per share in 2021 was $0.31 and $0.66, respectively, compared to $0.74 for basic and diluted loss per share in 2020.

Additionally, the company said that cash and cash equivalents were $13.9 million on December 31, 2021, which was a huge increase compared to $8.9 million on December 31, 2020.

Looking forward IMC Cannabis forecasts sales and gross margin to rise sequentially in the first quarter of 2022. And the company said that they expect to reveal their first quarter financial results on or around May 16, 2022.

#4: The Valens Company

The Valens Company Inc. (NASDAQ: VLNS), a Canadian cannabis product maker, launched a $22.5 million (28.1 million Canadian dollar) purchase deal offering with an over-allotment option.

According to Valens, which is based in British Columbia, the net proceeds from the offering deal will be used to continue to pursue strategic expansion plans in North America, and also provide funding for working capital, and for general business reasons.

Under the bought deal offering, underwriters Stifel GMP and Alliance Global Partners will purchase 10,613,207 Valens units for CA$2.65 ($2.13) each. Each unit consists of one common share and half of a common share purchase warrant, which can be used to purchase another common share for CA$3.20 within 48 months of the closing price.

In addition, an over-allotment option will allow the underwriters to purchase an additional 15% of the units sold for 30 days after closing. The offering is expected to close in early April 2022, subject to approvals.

Moreover, Valens plans to list the new common shares and warrant shares (VLNS) on both the Toronto Stock Exchange and the NASDAQ exchange, where it has been listed since late 2021.