Key Takeaways; Cannabis Sector
- AFC Gamma announced a spinoff, creating two specialized companies in cannabis and commercial real estate.
- Aurora Cannabis welcomed a new CFO, as they completed share consolidation.
- Ascend Wellness expanded operations with a second acquisition in Massachusetts.
- Agrify reported strong Q4 results with lower losses, but investors await revenue clarity.
Key Takeaways; Psychedelic Sector
- Awakn announced listing on the Canadian Securities Exchange.
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: AFC Gamma
AFC Gamma, Inc. (NASDAQ: AFCG) recently revealed plans to undergo a strategic separation by spinning off its commercial real estate arm into a new independent entity named Sunrise Realty Trust, Inc. (SUNS). The move aims to establish two distinct publicly traded companies, each with a clear focus on their respective industry. The separation is expected to be completed by mid-2024, pending regulatory approvals.
The Florida-based marijuana-sector real estate lender is restructuring to enhance its appeal to investors and provide clearer investment propositions. The newly formed Sunrise Realty Trust intends to operate as a real estate investment trust (REIT) and will concentrate on commercial real estate ventures in the southern United States.
Sunrise Realty Trust, led by incoming CEO Brian Sedrish, aims to become a prominent player in commercial real estate debt markets. With around $115 million in assets and two commercial real estate loans already funded, SUNS will focus on various commercial real estate debt instruments, including senior mortgage loans and mezzanine loans, with an emphasis on opportunities for value creation and recapitalization in the Southern U.S.
“We believe that CRE [Commercial Real Estate] debt markets today present a significant opportunity to capitalize on market dislocations precipitated by the rise in interest rates, declining liquidity, and a retrenchment of banks from CRE lending,” said Brian Sedrish.
Upon completion of the separation, both AFC Gamma and SUNS will operate as independent entities with their own investment teams and boards of directors, mainly composed of independent members. While there will be some overlap in corporate management roles, each company is expected to benefit from a separate cost of capital and attract investors aligned with its growth opportunities.
CEO of AFC Gamma, Daniel Neville, expressed confidence in the strategic move, stating, “As separate companies, we believe each business will be better positioned to pursue tailored growth strategies.”
Shareholders of AFC Gamma will receive SUNS shares on a pro-rata basis as part of the spinoff, and a special cash dividend will be distributed. The successful execution of the spinoff remains contingent on regulatory approvals, and the process does not require shareholder approval.
#2: Aurora Cannabis
Aurora Cannabis Inc. (NASDAQ: ACB), a prominent player in the Canadian cannabis industry, made significant moves as it appointed Simona King, a seasoned executive from Bristol-Myers Squibb Company (NYSE: BMY), as its new chief financial officer. The announcement, which was made by the company on February 20, 2024, also included the completion of its share consolidation.
The appointment of Simona King marks a strategic transition for Aurora Cannabis, as she brings a wealth of experience from her tenure at Bristol Myers Squibb, a multinational pharmaceutical giant. King steps into the role previously held by Glen Ibbott, one of Aurora’s longest-serving executives. Ibbott, known for his dedication and contributions to the company since 2017, decided to step down to explore new opportunities. Despite his departure from the CFO position, Ibbott will continue to serve Aurora in an advisory capacity in the coming months.
Aurora’s CEO, Miguel Martin, acknowledged Ibbott’s substantial contributions, saying, “Since 2017, Glen has dedicated immeasurable time, energy, and passion to shaping Aurora into a leading medical cannabis company; and we have been fortunate to have his leadership over the years as we navigated this emerging industry. We wish him all the best for his future endeavors.”
Additionally, the company announced the completion of its share consolidation process. In late January, Aurora unveiled its plan to consolidate shares on a 10-to-1 basis, a move aimed at restoring compliance with Nasdaq’s minimum bid-price requirement and enhancing access to institutional investors. The consolidation plan effectively reduced Aurora’s outstanding shares from 475,903,822 to 47,590,382, streamlining the company’s capital structure and bolstering its financial stability.
The appointment of Simona King and the completion of the share consolidation reflect Aurora Cannabis’s proactive approach to adaptability and growth in a dynamic industry landscape. As the company continues its journey, these strategic initiatives position Aurora to capitalize on emerging opportunities and drive sustainable value for its stakeholders.
#3: Ascend Wellness
Ascend Wellness Holdings, Inc. (OTC: AAWH) announced its acquisition of a second cultivation license and associated operations in Massachusetts, further solidifying its presence in the state’s emerging cannabis market.
The company’s CEO, John Hartmann, expressed enthusiasm about the acquisition, emphasizing Ascend’s dedication to Massachusetts and its commitment to expanding cultivation and production capabilities within the state. He stated, “Densifying our key markets is a stated strategy for our business, and this reinforces that focus.”
Ascend’s decision to expand comes on the heels of significant growth in both wholesale and retail markets in Massachusetts. The company currently operates three retail stores in Boston, Newton, and New Bedford, which have experienced a surge in consumer demand. Hartmann attributed this demand to the success of the Simply Herb brand, introduced in the state less than two years ago. According to data from BDSA, Simply Herb has quickly risen to become the top-selling brand in Massachusetts, outpacing competitors in fourth-quarter sales.
The newly acquired facility, located in Amesbury, is pending regulatory approval, anticipated to be granted in the first half of 2024. Until approval is secured, Ascend will operate the facility under an interim consulting agreement. The Amesbury facility boasts a 54,000 sq. ft. area, with plans for significant investment to expand canopy space to 15,000 sq. ft. and establish a state-of-the-art kitchen.
When combined with Ascend’s existing cultivation and production facility in Athol, Massachusetts, the acquisition will increase the company’s total cultivation space in the state to an impressive 70,000 sq. ft. of canopy. This expansion positions Ascend Wellness Holdings as a key player in Massachusetts’ rapidly evolving cannabis industry.
#4: Agrify
Agrify Corporation (NASDAQ: AGFY) recently made headlines with its preliminary unaudited financial results for the fourth fiscal quarter of 2023. While Agrify showcased notable reductions in losses, it notably omitted any mention of revenue figures, leaving investors and analysts speculating about the company’s financial performance.
In the latest announcement, Agrify reported a significant decrease in its net loss for the fourth quarter, which is expected to stand at a historical low of $750,000. This marks a notable improvement compared to the $2.1 million net loss reported in the third quarter and the staggering $58 million loss in the fourth quarter of 2022. Additionally, the loss from operations is projected to decrease by 46% to a historical low of $2.5 million, down from $4.6 million in the third quarter.
Agrify’s optimism extends further as it anticipates achieving its lowest net cash burn in company history for the fourth quarter. Furthermore, it aims to approach cash flow break-even by the second half of 2024, indicating a promising trajectory towards financial sustainability.
Despite the positive projections, Agrify left stakeholders wanting more, as it refrained from disclosing revenue figures, a crucial metric that reflects the company’s ability to generate income and sustain growth. While reductions in losses are undoubtedly commendable, investors are keen to assess the company’s revenue streams and overall financial health.
Agrify assured stakeholders that official results will be released by the end of March, shedding light on its financial performance and the progress of its projects. Until then, investors will eagerly await further insights into Agrify’s revenue generation capabilities and its path towards profitability.
Top Psychedelic Company for Week
#1: Awakn
Awakn Life Sciences Corp. (OTC: AWKNF) a clinical-stage biotechnology firm dedicated to developing therapy-assisted treatments for addiction, particularly focusing on Alcohol Use Disorder (AUD), announced its approval to list the common shares of the company on the Canadian Securities Exchange (CSE) under the symbol “AWKN” effective February 13, 2024. This decision came as a significant strategic move, aligning with Awakn’s commitment to advancing its business operations and enhancing shareholder value.
Awakn ceased trading on Cboe Canada as of the close of trading on February 12, 2024. Shareholders did not need to take any action regarding this change of listing.
Awakn operates at the forefront of clinical-stage biotechnology, focusing on developing innovative medication-assisted treatments for addiction, with a primary emphasis on addressing AUD. AUD impacts approximately 51 million individuals in the US and key European markets, affecting a staggering 285 million people globally, for whom existing treatment modalities often fall short. Awakn’s mission is to deliver breakthrough therapeutics to individuals grappling with addiction, aiming to revolutionize the standard of care in this domain.
The company’s strategic roadmap is centered on commercializing its robust research and development pipeline across diverse channels, thereby ensuring broad accessibility to its groundbreaking treatments.
As Awakn embarked on this new chapter of growth and expansion with its listing on the CSE, it reaffirmed its dedication to advancing the frontiers of addiction therapy and creating sustainable value for its stakeholders.
