Key Takeaways; Cannabis Sector
- Riv Capital acquired New York-based Etain for $247 million.
- Verano delivered solid fourth quarter results as revenue increased to $211 million.
- Canadian cannabis producer HEXO appointed new CEO and CFO.
Key Takeaways; Psychedelic Sector
- Awakn announced results for the fourth quarter and fiscal year ending January 31, 2022.
The cannabis sector has continued to evolve through several ups and downs over the past few months. With the Fed hiking interest rates and the ongoing geopolitical economic worries, the global economy is in a state of flux. Below is a roundup of the top cannabis and psychedelics companies that dominated the business headlines during the last week of April.
Top Marijuana Companies for Week
#1: RIV Capital
On March 30, 2022, RIV Capital, Inc. (CSE: RIV) (OTC: CNPOF) announced a definitive agreement to acquire Etain LLC and Etain IP LLC for $247 million. Etain is the only woman-owned and operated cannabis business in New York, and one of the state’s original five medical cannabis license holders. 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 the Etain companies. A restriction that a minority-owned cannabis company could only sell to another minority-owned cannabis company existed in New York at one point, although it is unclear whether this will be enforced.
RIV Capital is being funded by The Scotts Miracle-Gro Company (NYSE: SMG), which essentially means that it’s Scotts buying the cannabis company. According to the agreement, RIV will make a cash payment of $212 million and a stock payment of $35 million.
In the state of New York, Etain is one of only 10 approved vertically integrated cannabis operators. It was also the only operator in New York with a female CEO, but that has also come to an end. This is because, RIV Capital has recruited Mark Sims as President and CEO to oversee the company’s formal entry into the US market and expansion into licensed adult-use operations in New York.
Mr. Sims is a current director of RIV Capital, a role he will retain. In addition, he was the Senior Vice President of Strategy and M&A for The Scotts Miracle-Gro, where he also previously served as its CIO and head of the business transformation. He replaces Narbé Alexandrian, who departed RIV Capital to pursue other opportunities.
RIV Capital said it will invest more money and resources into four new dispensaries, as well as assist the construction of a new state-of-the-art flagship indoor cultivation facility suited to the high-end New York market.
#2: Verano
Verano Holdings Corp. (OTC: VRNOF) reported fourth-quarter revenue of $211 million and a net income of $27 million, or 19% of revenue, for fiscal year 2021. This was also Verano’s first quarter using GAAP accounting standards and being audited by the PCAOB in the United States.
In comparison to 2020, revenue for the whole year of 2021 increased by 223% to $738 million. Moreover, the company stated that revenue grew by 233% to $760 million on a pro forma basis, compared to 2020. The company also said that depreciation and amortization of acquisitions, as well as expansion capex, contributed to the $15 million net loss for the year, compared to $38 million in 2020.
Verano presently has active operations in 13 states, with 96 dispensaries and 13 cultivation and processing facilities with a total cultivation capacity of over one million square feet. Additionally, after closing the proposed transaction, the company has also agreed to buy Goodness Growth Holdings, Inc. (OTC: GDNSF) in order to build a strong foundation in the lucrative markets of New York, Minnesota, and New Mexico.
In addition, Verano also reported that the company’s current assets were $274 million as of December 31, 2021, comprising $99 million in cash and cash equivalents. The company also had a working capital of $196 million and a total debt of $290 million, excluding lease liabilities and issuance charges.
#3: HEXO
HEXO Corp. (NASDAQ: HEXO), a major Canadian cannabis company, named its third CEO in less than a year, as well as its sixth chief financial officer since 2019. Hexo announced on Friday, April 29, 2022, that Charlie Bowman will serve as acting president and CEO until he receives a security clearance from Health Canada. Bowman previously served as Hexo’s acting chief operating officer and Hexo USA’s general manager. He succeeds former CEO Scott Cooper, who took over as CEO of Hexo in October 2021 after Hexo founder and CEO Sébastien St. Louis was ousted.
The company said in a news release that Bowman is well positioned to guide Hexo towards having a positive cash flow. In a statement, Bowman highlighted Hexo’s goal for creating positive cash flow by gaining market share for their leading brands across Canada’s recreational sector, while also expanding their global enterprise and developing new medicinal cannabis products.
In addition, the company also stated that acting Hexo CFO Curtis Solsvig is also leaving the company and will be replaced on an interim basis by Julius Ivancsits once his security clearance is granted. Ivancsits was previously the CFO of Goba Capital in Miami.
Top Psychedelic Company for Week
#1: Awakn
On Thursday, April 28, 2022, Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF), a biotechnology company that researches, develops, and delivers combined therapeutics to treat addiction, released its financial results and business highlights for the three and twelve months ended January 31, 2022.
Awakn reported $236,037 in 12-month revenue from its clinics for the fiscal year ended January 31, 2022, compared to nil returns in the previous year. Moreover, revenue was $204,300 in the fourth quarter, 2021, compared to $31,737 in the fourth quarter, 2020, which was a 544% increase quarter over quarter. According to the company, the provision of Ketamine aided therapy at the Oslo clinic in Norway and the Bristol clinic in the United Kingdom generated the majority of revenue during the 12-month period.
In addition, the company stated that it had roughly $1.6 million in cash as of January 31, 2022. Furthermore, the company reported that following the conclusion of the year, they completed a $3.25 million private placement.
Following the announcement of the financial results, Anthony Tennyson, Awakn Life Sciences’ Chief Executive Officer, noted that the Company’s fiscal year 2021 was a foundational year. Where they built their business model around researching, producing, and providing integrated medicines to treat addiction, with a near-term focus on Alcohol Use Disorder (AUD), which affects 400 million people worldwide. He also mentioned that this business model allows them to create novel and potentially more effective combined medicines for treating addiction, as well as collect real-world data to support interactions with regulatory bodies before commercializing their combined therapeutics at a big scale.