Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Key Takeaways; Cannabis Sector

  • High Tide reported record sales, as the company eyes expansion to Germany.
  • Cannara Biotech achieved record cannabis sales in first quarter.
  • Tilt Holdings aims to enhance the vape supply chain through debt restructuring with Smoore.
  • Aurora Cannabis is planning to consolidation its shares to regain Nasdaq compliance.
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Key Takeaways; Psychedelic Sector

  • Numinus Wellness successfully raised $6 million in bought deal public offering.
  • Awakn successfully completed an investigative study that focused on advanced treatment for alcohol use disorder.

Below is a weekly roundup on the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: High Tide

High Tide Inc. (NASDAQ: HITI), a cannabis retailer and e-commerce platform operator based in Alberta, Canada, announced impressive financial performance for the 2023 fiscal year, ending in October. The company reported record sales of 487.7 million Canadian dollars ($362 million), marking a significant milestone in its growth trajectory. Despite this achievement, High Tide also disclosed a net loss of CA$41 million for the year, a substantial improvement from the previous year’s net loss of CA$71 million.

The company remains a dominant force in the Canadian cannabis market, boasting 163 store locations and serving 4.9 million customers across Canada, the United States, and Europe. High Tide’s CEO, Raj Grover, emphasized the company’s commitment to expanding its footprint both domestically and internationally. Grover highlighted the potential for international expansion, particularly in Germany, where the legalization of “cannabis clubs” and adult-use pilot projects could present lucrative opportunities for the company.

High Tide’s financial report also highlighted positive trends in free cash flow throughout the year, indicating improved operational efficiency and financial stability. The company reported a shift from negative cash flow in the first quarter to positive cash flow of CA$5.7 million in the final quarter.

Additionally, as of October 31, 2023, High Tide reported cash reserves of CA$30.1 million and gross debt of CA$28.8 million as of late January 2024, indicating a healthy financial position despite ongoing investment and expansion efforts.

With a positive outlook for the cannabis industry, fueled by regulatory advancements and growing consumer demand, High Tide remains optimistic about its prospects for continued growth and success in the global cannabis market.

#2: Cannara Biotech

Cannara Biotech Inc. (OTC: LOVFF), a leading cannabis producer headquartered in Montreal, announced record-breaking sales figures for the first quarter of fiscal year 2024. The company reported revenues of 19.5 million Canadian dollars ($14.6 million) for the three-month period ending on November 30.

This impressive figure represented an 89% surge compared to the CA$10.3 million recorded during the same period the previous year. Notably, Cannara Biotech’s net income for the September-November quarter amounted to CA$2.1 million, a significant leap from almost CA$3,000 in the first quarter of 2023.

Moreover, the company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), a key profitability metric, soared to CA$5.2 million, marking a remarkable 206% year-over-year increase. Additionally, free cash flow for the quarter surged to CA$4.9 million, reflecting a substantial 145% rise compared to the previous year.

Additionally, Cannara Biotech disclosed a cash reserve of CA$2.6 million at the end of the quarter, emphasizing the company’s financial stability and liquidity.

The company’s robust infrastructure includes two expansive facilities in Quebec, spanning over 1.65 million square feet, with the capacity to yield approximately 100,000 kilograms (100 metric tons) of cannabis annually.

CEO Zohar Krivorot expressed excitement about the company’s upward trajectory, stating, “As we build on this momentum in 2024, our roadmap is clear, continued execution with excellence, cost efficiencies, and product innovation.”

#3: Tilt Holdings

Arizona-based marijuana vaporizer company TILT Holdings Inc. (OTC: TLLTF) recently restructured its debt with Smoore Technology Limited, aiming to bolster its vape supply chain and meet growing customer demands.

Under the agreement, which came into effect on January 28, Tilt’s subsidiary, Jupiter Research, received extended credit from Smoore, allowing Tilt to procure more CCell vape hardware products. Additionally, Smoore will maintain a first lien security interest in Tilt’s assets, therefore securing the credit line.

The restructuring involved Tilt guaranteeing the repayment of debts to Smoore, particularly for invoices overdue by more than 120 days. Sinosure, a Chinese export and credit insurance corporation, is expected to provide insurance coverage for the unpaid invoices beyond the 120-day mark.

Moreover, as part of the agreement, Tilt commited to reducing its outstanding balance with Smoore to $25 million by the end of 2024. According to the company, the repayment plan will prioritize settling invoices older than 150 days initially, and gradually address those over 120 days.

The restructuring with Smoore marks a strategic move for Tilt Holdings, ensuring a more robust vape supply chain amidst increasing market demands. Through collaborative efforts with Smoore and supportive noteholders, Tilt aims to enhance operational efficiency and sustain growth in the burgeoning marijuana vaporizer market.

#4: Aurora Cannabis

Canadian cannabis producer Aurora Cannabis Inc. (NASDAQ: ACB) announced plans to consolidate its shares in a bid to regain compliance with the Nasdaq’s minimum bid-price requirement. According to the company, this move is aimed at maintaining access to institutional investors and ensuring financial stability for the company.

The decision, which was approved by Aurora’s board of directors, will involve consolidating outstanding common shares at a ratio of one share for every 10 currently outstanding shares, subject to regulatory and stock exchange approvals. This action will significantly reduce the company’s outstanding shares from 475,903,822 to 47,590,382.

Aurora Cannabis anticipates the share consolidation to take effect around February 20th.

The Nasdaq requires listed equities to maintain a minimum bid price of $1. Falling below this threshold for 30 consecutive trading days renders a company deficient with the bid-price rule. Currently, Aurora’s shares are trading at $0.39 on the Nasdaq, necessitating prompt action to meet compliance standards.

Aurora joins several other cannabis companies on the Nasdaq’s list of noncompliant entities. These include Agrify Corporation (NASDAQ: AGFY), BYND Cannasoft Enterprises Inc. (NASDAQ: BCAN), Greenlane Holdings, Inc. (NASDAQ: GNLN), Hempacco Co., Inc. (NASDAQ: HPCO), IM Cannabis Corp. (NASDAQ: IMCC), and InMed Pharmaceuticals Inc. (NASDAQ: INM), each facing a compliance challenge from bid-price deficiency.

Top Psychedelic Companies for Week

#1: Numinus Wellness

Numinus Wellness Inc. (OTC: NUMIF), a mental health care company specializing in psychedelic-assisted therapies, successfully completed a bought deal public offering, raising $6 million. The company entered into an agreement with Eight Capital, representing a syndicate of underwriters, including co-lead underwriter and joint bookrunner Stifel GMP, to purchase 50,000,000 units at a price of $0.12 per unit.

The offering, which was conducted through a prospectus supplement to the company’s short-form base shelf prospectus, received lead orders from Integrated V.C., a venture fund committed to transforming global health and well-being, and the Multidisciplinary Association for Psychedelic Studies (MAPS), a non-profit organization specializing in psychedelic research and education.

Each unit comprises one common share and one common share purchase warrant, with the warrant exercisable at $0.18 per share for a 24-month period from the closing date of the offering. Additionally, Eight Capital holds an over-allotment option, allowing the purchase of up to 15% in additional units, potentially generating an additional $900,000 in proceeds.

The offering is expected to close on or about February 7, 2024, and is subject to regulatory and stock exchange approvals, including approval from the Toronto Stock Exchange. Numinus stated that it intends to utilize the proceeds for working capital and general corporate purposes as it continues to advance its mental health care initiatives.

#2: Awakn

Awakn Life Sciences Corp. (OTC: AWKNF) achieved a significant milestone in its quest to address Alcohol Use Disorder (AUD). In a recent announcement, the clinical-stage biotechnology company revealed the successful completion of an investigative study evaluating the dissociative effects of a proprietary S-ketamine oral thin film (OTF) formulation.

The study, which involved 28 participants classified as harmful drinkers, demonstrated the potential of Awakn’s S-ketamine OTF to induce dissociative effects, crucial for addiction treatment. The formulation proved well-tolerated with no serious adverse effects reported. Importantly, participants experienced a notable reduction in alcohol cravings compared to the placebo group.

This achievement followed Awakn’s strategic partnership with LTS Lohmann Therapie-Systeme AG, which granted Awakn global exclusivity for the use of its S-ketamine OTF in addiction, anxiety disorders, and eating disorders treatment.

Awakn designates this program as AWKN-002. And the company stated that this program, which combines the S-ketamine OTF with manualized relapse prevention cognitive-behavioral therapy (CBT) will target the US market for AUD treatment. This will complement the existing AWKN-001 program, which focuses on Severe AUD treatment in the UK market using intravenous racemic ketamine and manualized relapse prevention CBT.

Prof. Celia Morgan, the principal Investigator on the study, remarked on this significant milestone, “The rapid onset and offset of action of AWKN-002 and the ease of clinical use observed in our investigative study compared to IV ketamine has galvanized our view that this represents a way to dramatically widen access to ketamine treatment. AWKN-002 means that we may reach more of the patients that desperately need this life-saving addiction treatment”.

Looking ahead, Awakn plans to engage with the US Food and Drug Administration for a pre-IND meeting, marking a pivotal step towards advancing AWKN-002 through late-stage clinical trials.

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