Key Takeaways; Cannabis Sector
- Aurora invested C$45 million to take control of a profitable agriculture grower.
- TerrAscend added to its purchase binge in Michigan by purchasing a $28.5 million cannabis dispensary.
- Statehouse’s mergers and acquisitions strategy is paying off as the company doubled second quarter revenue.
Key Takeaways; Psychedelic Sector
- Awakn announced expansion of commercial operations into Canada by signing a licensing partnership.
Below is a weekly recap on the top companies that dominated the headlines in the cannabis and psychedelic sectors.
Top Marijuana Companies for Week
#1: Aurora Cannabis
Amid a significant marijuana oversupply in Canada, Aurora Cannabis Inc. (NASDAQ: ACB) is expanding into the attractive flower and vegetable propagation industries by acquiring a controlling stake in Bevo Agtech, which is one of the biggest suppliers of flowers and vegetable seedlings in North America.
According to a press statement, the Edmonton, Alberta-based Aurora paid 45 million Canadian dollars ($35 million) in cash for 50.1% of Bevo. Furthermore, if Bevo meets specific financial targets, an additional $12 million in Aurora shares will be paid.
Carey Squires, Aurora’s head of corporate development and strategy, said Bevo’s expanding business and profitability was key to getting the deal done. The executive said Aurora plans to accelerate the plant propagation and ornamental business.
Bevo Agtech is an agricultural producer, which is based in Langley, British Columbia. The company operates 63 acres of greenhouses in B.C., where it propagates vegetable plants including tomatoes, peppers, and cucumbers as well as other plants such as flowers and grasses.
In addition, Bevo also agreed to pay up to CA$25 million for Aurora’s enormous greenhouse complex at Edmonton International Airport. Both parties agreed that the closing price will be based on Bevo successfully reaching financial milestones at the Sky facility. Additionally, Aurora said in its release that Bevo will continue to be run by the existing management team. And the company will take a controlling position on Bevo’s board.
#2: TerrAscend
TerrAscend Corp. (OTC: TRSSF) (CSE: TER), a multistate cannabis operator, is expanding its presence in Michigan by spending $28.5 million to buy a six-store chain, boosting the number of medicinal and adult-use marijuana shops it operates in the state to 17.
According to a news release, TerrAscend, which has offices in New York and Toronto, will purchase KISA Enterprises MI, LLC and KISA Holdings, LLC under a cash-and-stock transaction. Depending on the locale, TerrAscend will rebrand its stores as either Gage or Cookies companies.
TerrAscend entered the Michigan market for the first-time last year when it paid $545 million in shares to buy Gage Cannabis. According to TerrAscend Executive Chair Jason Wild, the acquisitions put the company in the driver’s seat in one of the most promising U.S. marketplaces. “Michigan is a key market for us,” he said in a statement. “This acquisition exemplifies our strategy of building depth to solidify our retail leadership while expanding profitability and scale in the state.”
Analyst estimates that Michigan’s recreational marijuana sales this year could total between $1.4 billion and $1.7 billion. This is means that with its recent acquisition spree in the state, TerrAscend is well poised to capitalize on this growing market.
#3: StateHouse Holdings
StateHouse Holdings Inc. (OTC: STHZF) (CSE: STHZ) share price plummeted in premarket trading on Friday, this was despite the company posting positive earnings results.
The West Coast vertically integrated holdings company, which is formerly known as Harborside, announced its financial results for the second quarter ending June 30, 2022, on August 25, 2022. As per the result, StateHouse totaled $34.6 million revenue in the second quarter, up 125% from $15.4 million in the same period last year.
StateHouse said that the increase reflected the acquisitions of Urbn Leaf and Loudpack, which were completed in March and April of 2022, respectively.
Commenting on the positive results, Ed Schmults, the company’s CEO said, “The second quarter was a landmark period for StateHouse, as we completed the acquisition of Loudpack to create a leading, fully integrated California cannabis company. We then launched the first phase of a major integration initiative, which was completed before the end of the quarter and resulted in significant annual cost savings.”
StateHouse stated that it aims to operate as a consumer-packaged products company with production, processing, brands, and retail stores in order to reduce its exposure to the volatile bulk cannabis market. The company also stated that in addition to continuing to reduce expenses, it also wants to become a scalable, controllable, profitable, and more predictable cannabis company.
In July, StateHouse disclosed that it had reached an agreement on a payment schedule with the Internal Revenue Service to settle and decrease federal tax liabilities, leading to a one-time non-cash gain of about $16.1 million. The company reported that it is still negotiating with the IRS on further outstanding taxes.
Top Psychedelic Company for Week
#1: Awakn
On August 18, 2022, Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF) announced that it had entered into its first licensing partnership agreement in Canada with Wellbeings® Pain Management and Dependency Clinic, which is a company with roots in Ontario that focuses on multidisciplinary, evidence-based, best-practice and patient-centered care. The partnership will make it possible for Wellbeings to administer Awakn’s specialized ketamine-assisted therapy to patients who have AUD as a co-morbidity for pain.
As per the terms of the license agreement, Awakn will grant access to its proprietary therapeutics for AUD and provide training to Wellbeings practitioners, and in exchange, Wellbeings will pay Awakn an annual subscription and a revenue share for each treatment.
This was the second Licensing Partnership agreement that Awakn has signed in North America, and it came a week after the announcement of an agreement with Revitalist Lifestyle and Wellness Ltd. (OTC: RVLWF), which is one of the largest publicly listed U.S. based ketamine wellness-clinic chains.
Through these agreements, Awakn is now able to generate revenue from its proprietary therapies in several countries, including the United Kingdom, United States, Norway, and Canada.
Awakn’s introduction into the Canadian market is a game-changer because the most recent comprehensive cost assessment pegged the entire cost of alcohol-related harm to Canadians at $14.6 billion. The Canadian government also estimated that, prior to the pandemic, more over 19% of the population qualified as heavy drinkers. Therefore, by giving clinic owners access to a licensed, effective treatment option, Awakn seeks to assist those who are struggling with alcoholism.
Anthony Tennyson, Awakn CEO commented, “We are delighted to sign another Licensing Partnership agreement in quick succession. Expanding our revenue generation into Canada is another significant milestone for Awakn. Wellbeings share our vision and goal of making new more effective treatment options available to so many people who are suffering and will make another excellent partner as we start to disrupt the incumbent addiction treatment industry in North America.”