Key Takeaways; Cannabis Sector

• Canadian marijuana company Tilray acquires a Colorado distillery for $102.9M.
• Canadian marijuana firm Fire & Flower to buy Pineapple Express Delivery.
• Marijuana product maker Valens uplists to NASDAQ.
• Illinois adult-use cannabis sales exceed $1.2 billion through November.
• Marijuana banking access remains steady, even with the demise of the SAFE Banking Act.
• Cannabis REIT Chicago Atlantic Raises $100 Million in NASDAQ IPO.

Key Takeaways; Psychedelic Sector

• Numinus Shares Q4 and Year-End 2021 Results.
• Mydecine Secures C$5.5m in Financing.
• Awakn is conducting the first-ever study of ketamine in gambling addiction to provide a new treatment.

Top Marijuana Stocks for Week

#1:  Tilray

Canadian marijuana producer Tilray, Inc. (NASDAQ: TLRY) has taken another step into the U.S. alcohol industry by acquiring Colorado-based Breckenridge Distillery, with plans to launch cannabis-infused whiskey.

The deal is worth $102.9 million, paid for by issuing 11,245,511 Tilray shares, according to a regulatory filing. The acquisition follows Aphria’s 2020 acquisition of U.S. craft brewer SweetWater Brewing Co. before Aphria and Tilray announced their merger later that year.

“We see tremendous potential for Breckenridge and our existing SweetWater brand to complement each other, expanding their respective reach and driving further profitable growth in our beverage alcohol segment,” Tilray CEO Irwin Simon said in a Wednesday, December 8, news release.

Simon added that the acquisition of the Breckenridge-based distillery “is consistent with Tilray’s strategy of leveraging our growing portfolio of U.S. CPG brands to launch THC-based product adjacencies upon federal legalization in the U.S.”

Specifically, Tilray believes the acquisition will lead to the commercialization of “new and innovative products through the development of non-alcoholic distilled spirits, including bourbon whisky, that is infused with cannabis,” according to the release.

More than 85% of Breckenridge’s revenue comes from Colorado, Tilray said. The company said it plans “to leverage SweetWater’s existing nationwide infrastructure to create new, greatly-expanded consumer awareness and product adoption.” Beverage alcohol revenue comprised $15.5 million of Tilray’s revenue in the company’s most recent quarter or about 9% of total revenue.

Tilray shares trade as TLRY on the Nasdaq and the Toronto Stock Exchange. The company operates through five segments: Cannabis Business, Distribution Business, Beverage Alcohol Business, Wellness Business, and Business Under Development. It provides medical and adult-use cannabis products, pharmaceutical and wellness products, beverage alcohol products, and hemp-based food and other wellness products. It has operations in Canada, the United States, Europe, Australia, New Zealand, Latin America, and internationally. The company was formerly known as Aphria Inc., Tilray, Inc. was incorporated in 2018 and is based in New York, New York.

#2: Fire & Flower

Major Canadian marijuana retail chain Fire & Flower Holdings Corp. (FAF.TO) announced a deal to acquire cannabis delivery service Pineapple Express Delivery on Thursday, December 9.

Toronto-based Fire & Flower will pay for the acquisition by assuming and repaying roughly 5.3 million Canadian dollars (about $4.2 million) of Pineapple Express’ debt and issuing approximately 1,126,761 common shares, subject to the latter reaching unspecified performance milestones in the fiscal year 2022.

Based on Fire & Flower’s opening share price on Thursday morning, those shares would be worth roughly CA$7.2 million. Pineapple Express, based in Burlington, Ontario, performs more than 40,000 cannabis deliveries per month in Canada, according to Fire & Flower’s news release. The acquisition is expected to close in the first quarter of 2022.

In a statement, Fire & Flower CEO Trevor Fencott said the Pineapple Express delivery platform would complement the retailer’s existing technology, including cannabis websites PotGuide and Wikileaf, as well as its Hifyre retail data platform and its Spark Perks loyalty program.

“We see this as an example of the advantages of building, testing, and hardening technology and systems in the federally legal Canadian market before deploying them to the U.S. and other emerging markets,” Fencott said.

Fire & Flower operates as an independent retailer that offers cannabis products and accessories through its retail locations located in the provinces of Alberta, Saskatchewan, Manitoba, Ontario, and Yukon. It also engages in wholesale of regulated cannabis products and accessories in Saskatchewan and operates Hifyre digital retail and analytics of the regulated cannabis e-commerce platform. Fire & Flower has licensed its brand and technology in the U.S. and is working toward a listing on the NASDAQ exchange. Currently, shares of the retailer trade on the Toronto Stock Exchange as FAF.

#3: Valens

Shares of The Valens Company Inc. (NASDAQ: VLNS) commenced trading on the NASDAQ Capital Market on Thursday, December 9, the Kelowna, British Columbia-based business announced in a news release.

“We believe this listing will enable Valens and its greater access to liquidity, increased corporate visibility, and a broader shareholder base, in an effort to create long-term shareholder value,” CEO Tyler Robson said in a statement.

The manufacturer of cannabis products joins Canadian licensed producers on the exchange, including: Cronos Group, based in Toronto; Hexo Corp., which has its head office in Gatineau, Quebec; Canopy Growth of Smiths Falls, Ontario; Aurora Cannabis, based in Edmonton, Alberta, and Organigram Holdings, headquartered in Moncton, New Brunswick.

Shares of companies traded on higher-volume stock exchanges such as the Toronto Stock Exchange (TSX) and NASDAQ generally see increased access to more institutional investors and liquidity. While shares of a number of other Canadian cannabis companies are also traded on the NASDAQ, U.S. “plant-touching” operators have access only to lower-volume exchanges such as the Canadian Securities Exchange and the over-the-counter markets. This is because the NASDAQ and TSX don’t allow plant-touching companies, as it breaks U.S. federal law.

Shares of Valens trade on the TSX and NASDAQ under the ticker symbol VLNS. Valens operates as a cannabis consumer products company. It engages in manufacturing cannabinoid-based products. The company provides proprietary cannabis processing services and is involved in product development, manufacturing, and commercialization of cannabis consumer packaged goods. Its products are formulated for the recreational, health and wellness, and medical consumer segments and offer various cannabis product categories.

#4: Chicago Atlantic

Cannabis-focused commercial real estate finance company Chicago Atlantic Real Estate Finance, Inc. (NASDAQ: REFI) raised $100 million through an initial public offering of 6.25 million shares of its common stock at $16 per share on Wednesday December 8.

The company’s common stock began trading on the NASDAQ Global Market on Wednesday, December 8, under the symbol “REFI.” Chicago Atlantic anticipated closing the offering on or about December 10, 2021. The company also granted the underwriters a 30-day option to purchase up to an additional 937,500 shares of common stock at the IPO price.

In addition, the company plans to use the total gross proceeds of roughly $100 million before deducting underwriting discounts and commissions and other offering expenses and excluding any exercise of the underwriters’ option to purchase additional shares to make investments in accordance with its investment objective and strategies and for general corporate purposes.

JMP Securities LLC, Compass Point Research & Trading, LLC, and Oppenheimer & Co. Inc. will serve as joint book-running managers for the transaction, while Lake Street Capital Markets LLC and East West Markets, LLC act as co-managers.

Chicago Atlantic, managed by Chicago Atlantic REIT Manager, LLC., is looking to provide attractive, risk-adjusted returns for stockholders primarily through consistent current income dividends and other distributions and secondarily through capital appreciation.

Chicago Atlantic operates as a real estate finance company in the United States. The company originates, structures, and invests in first mortgage loans and alternative structured financings secured by commercial real estate properties. It offers senior loans to state-licensed operators and property owners in the cannabis industry. The company has elected to be taxed as a real estate investment trust (REIT), and it would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.

Top Psychedelic Stocks for Week

#1: Numinus

Numinus Wellness Inc. (TSXV: NUMI, OTC: NUMIF) closed out its fiscal fourth quarter with a strong $59.2 million cash balance and improved revenue following its acquisition of Canadian healthcare start-up Mindspace Wellbeing in February.

For the period ended August 31, 2021, the Vancouver, British Columbia-based mental health care company advancing psychedelic-assisted therapies saw revenue of $0.5 million, up 81.1% from the same quarter of 2020. Gross profit improved to $31,818, compared to a gross loss of $158,222 in 4Q 2020.

“During the fourth quarter, we were focused on building the team, infrastructure, technologies, and protocols that will allow us to scale our business over the next several years,” founder and CEO Payton Nyquvest said in a statement.

“We welcomed several new key executives, began our laboratory expansion, and filed a patent for a proprietary rapid production process for psilocybe.”

For fiscal 2021 as a whole, revenues grew 71.8% year-over-year to $1.5 million, due primarily to the acquisition of Mindspace. It reported a loss of $18.8 million for the year, including a $1.6 million non-cash goodwill impairment charge related to the acquisition of Mindspace, compared to a loss of $9.6 million in fiscal 2020.

#2: Awakn

Awakn Life Sciences Corp (NEO: AWKN, OTCMKTS: AWKNF) is a biotechnology company developing new psychedelic therapeutics to treat addiction better. Awakn also operates clinics delivering treatments in the U.K. and Europe, which provides free cash flow to reinvest back into the biotech side of the business.

Awakn is currently utilizing ketamine, MDMA, and novel chemical entities to allow people suffering from addiction to finally escape from their repetitive, addictive behaviors and thoughts. Specifically, Awakn has acquired the exclusive rights to the world’s only phase IIb clinical trial for Ketamine-Assisted Psychotherapy and the world’s only phase IIa clinical trial for MDMA-Assisted Psychotherapy to treat Alcohol Use Disorder.

Awakn clinics will deliver ketamine-assisted psychotherapy in the near term and will utilize MDMA when Awakn secures marketing authorization. Some Awakn clinics will also be sites for Awakn research’s clinical trials.

On average, each clinic will generate GBP£4 million in revenue per year. Awakn is targeting to have 20 clinics operational by the end of 2023. That would provide the company with a GBP£80 million run rate. This free cash flow will allow for reinvestment back into the biotech side of the business in a non-dilutive manner to shareholders.

#3: Mydecine

Mydecine Innovations Group Inc. (OTC: MYCOF, NEO: MYCO) announced an agreement with an investor to complete a non-brokered private placement of a convertible secured subordinated debenture in the principal amount of C$5.5 million.

The company said the financing, which was expected to close on December 10, 2021, will allow it to continue to make progress on its research and development (R&D), clinical trials, and technology initiatives.

“This financing will give Mydecine the runway needed to continue meeting important milestones like launching our smoking cessation study in partnership with Johns Hopkins University and PTSD (Post Traumatic Stress Disorder) studies with various global military-focused organizations, furthering our drug development initiatives and growing paid subscribers on our telehealth platform Mindleap,” Mydecine Innovations Group CEO Josh Bartch said in a statement.

As part of the financing, the investor was also issued warrants to acquire up to 32,352,941 company common shares, at a price of $0.17 per share, at any time up to 36 months following the closing of the financing.

As well, Mydecine said it has been in communication with the U.S. Food and Drug Administration (FDA) and plans to hold a Pre-IND meeting in February for its seamless Phase 2/3 smoking cessation clinical trial assessing MYCO-001, 99% pure psilocybin, to treat nicotine dependence.