Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Key Takeaways; Cannabis Sector

  • Ascend Wellness openly called out MedMen for abruptly canceling their binding agreement to acquire MedMen’s New York operations.
  • ScottsMiracle-Gro expands Hawthorne Gardening portfolio with acquisitions of Luxx Lighting and True Liberty Bags.
  • MariMed announced agreement to acquire Kind Therapeutics; a Maryland licensed vertically integrated cannabis business.
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Key Takeaways; Psychedelic Sector

  • New bill introduced in Washington State would legalize Psilocybin, Magic Mushrooms.
  • Awakn expanded world’s first Ketamine study beyond gambling disorder to include additional behavioral addictions including; binge eating disorder, compulsive sexual behavior, and internet gaming disorder.
  • COMPASS Pathways psilocybin study of 89 healthy participants published in Journal of Psychopharmacology.

Thanks to the dual headwinds of sky-high inflation and the threat of rising interest rates, stocks appear poised for a turbulent 2022. Despite the early signs of a bear market, the cannabis sector is expected to flourish, with more states legalizing as well as more mergers & acquisitions expected to happen this year.

Here are the companies that topped the headlines this week in the cannabis sector.

Top Marijuana Companies for Week

#1: Ascend Wellness

According to Ascend Wellness Holdings, Inc. (OTC: AAWH), MedMen Enterprises Inc. “materially breached” the terms of a transaction in which Ascend would buy the majority of MedMen’s New York marijuana operations.

Under the deal, which was announced in February, Ascend would buy an 86.7 percent stake in MedMen’s New York cannabis firm in a transaction worth at least $63 million. The deal also had an option for Ascend to buy the remaining stake after the state’s adult-use marijuana market opens.

Ascend reported on December 30, 2021, that the merger had gained final regulatory approval and that the transactions would be completed “immediately.” However, in a news release on Monday, January 3, 2022, Ascend alleged that MedMen had “attempted to unilaterally terminate the investment arrangement.”

In a brief news release issued later on Monday, MedMen, based in California, said the investment deal was being terminated but didn’t disclose any other specifics.

Initially, Ascend had noted in its Monday release that MedMen had initially requested the New York State regulators to approve the transaction in March 2021. Ascend further said that the regulators have since complied with their request. But now, MedMen is disputing the (New York) Office of Cannabis Management’s explicit regulatory approval and is refusing to close the deal and further attempting to terminate the transaction.

In the news release, Ascend urged MedMen to complete the deal and promised to continue to explore all steps to persuade MedMen to honor the investment agreement and finalize the transaction.

In an effort to hold MedMen accountable, Ascend filed a letter with the US Securities and Exchange Commission and made it public in another press release on Thursday, January 6.

According to the letter sent to SEC, Ascend is worried that MedMen has failed to maintain compliance with their regulatory obligations under applicable New York laws and regulations. Ascend further claimed that MedMen and company parties failed to acquire approvals for changes in control of the company or send notices of changes in corporate officials to regulators.

As of early Saturday afternoon, MedMen had not published another statement in response to Ascend.

#2: ScottsMiracle-Gro

On Tuesday, January 4, The Scotts Miracle-Gro Company (NYSE: SMG) announced the purchase of two California-based companies, Luxx Lighting for $215 million and True Liberty Bags for $10 million. The deal is aimed at enhancing its private cannabis-related company, Hawthorne Gardening Co.

Because of a slowdown in the cannabis market and supply-chain interruptions, Scotts Miracle-Gro expects its New York-based Hawthorne Gardening hydroponic division to see a 40% drop in first-quarter revenues. This was why the company opted to boost the Hawthorne’s growth with these two acquisitions.

Luxx, situated in Los Angeles, is a leading manufacturer of lighting systems for growers, while True Liberty, based in Sonoma County, provides liners and other storage solutions for dry and cure cannabis plants.

Scotts Miracle-Gro, based in Ohio, cited the slow growth they have experienced to supply challenges that businesses in a range of industries have faced as a result of the coronavirus epidemic and extreme weather occurrences. However, the company did not go into detail about the problems, but it stated that these problems have affected sales of particular product lines they deal with.

“We are optimistic the supply chain disruptions we’ve experienced will be corrected by the end of January and we’ll be able to meet the continued demand we’re seeing for our industry-leading signature products,” Cory Miller, chief financial officer, said in the news release.

On the other hand; Chris Hagedorn, Hawthorne division president, said the acquisitions will reinforce their commitment to supply new goods and solutions to cannabis cultivators in state-legal markets.

According to Scotts Miracle-Gro, which wants to sell and distribute Luxx in burgeoning cannabis markets such as the East Coast, the brand alone is estimated to bring $100 million in annual sales.

“While the cannabis market continues to see near-term challenges from an over-production in recent months, we see the current reality as an opportunity to further distance ourselves from the competition and strengthen our business for long-term success,” Hagedorn said in the release.

#3: MariMed

Cannabis company MariMed Inc. (OTC: MRMD), agreed to buy Kind Therapeutics, a vertically integrated medical marijuana company in Maryland, in a deal worth $20 million.

According to a news release issued Wednesday, January 5, the acquisition will expand MariMed’s footprint beyond Massachusetts and Illinois into a third state. The acquisition price of $20 million will be paid in cash and promissory notes.

Under the deal, MariMed will also acquire the minority interests of one of Kind’s present owners in two of the company’s subsidiaries that own cannabis facilities in Maryland and Delaware for a total of $2 million.

In 2016, MariMed and Kind agreed to form a partnership and joint venture. But the arrangement fell apart in 2019 when Kind filed a lawsuit against MariMed and MariMed filed counterclaims against Kind.

In addition, MariMed stated that once the deal is closed, all litigation relating to Kind will be dismissed. However, the deal is still subject to a number of conditions, including regulatory approvals.

Kind got its medical marijuana processing and growing permits from Maryland regulators in 2017 and leases a facility from Mari Holdings, a MariMed subsidiary. Kind also has a “provisional license for a dispensary,” according to MariMed.

According to the MariMed statement, Mari Holdings also owns and is developing a dispensary facility for Kind in Annapolis, which is slated to open in early 2022.

Since the Maryland legalized medical cannabis and markets opened at the end of 2017, medical marijuana sales in the state have now reached $1 billion as of April 2021.

Top Psychedelic Companies for Week

#1: Washington Psilocybin Bill

SB 5660, which is a bill to legalize the supported adult use of psilocybin by people aged 21 years and above, was filed by Washington State legislators on Tuesday, January 4.

The Washington Psilocybin Wellness and Opportunity Act, which is being sponsored by Senators Jesse Salomon and Liz Lovelett, includes a Social Opportunity Program to help address the harms caused by the war on drugs, a provision to support small businesses, and accommodations for people with certain medical conditions to receive the psychedelic substance at home.

The Washington Department of Health would be empowered to give licenses to psilocybin producing facilities, testing labs, service centers, and facilitators if the Act passes. It would also establish the Washington Psilocybin Advisory Board, which will advise the Department on developing guidelines to administer the Act.

Although psilocybin is non-addictive, the bill’s sponsors recognize the advantages of its adult-supervised use. In this approach of regulation, facilitators are trained and certified professionals who give psilocybin in a safe and supportive environment at licensed service facilities.

If the deal passes, psilocybin services will be made available to people aged 21 and older for nearly any purpose. Under the supported adult use program; the Act specifies that clients do not need to have a medical condition to participate, and psilocybin services in Washington will not be considered medical diagnoses or treatment. Some clients may seek psilocybin treatments to feel more connected to nature or to perceive their interpersonal connections in a new way, as psilocybin is known to boost emotions of closeness. Others may want to improve their overall health, have a religious experience, or increase their creativity.

The Washington Psilocybin Services Wellness and Opportunity bill has only a few advances. However, this is an innovative approach to the safe and legal use of psilocybin in adults. It will allow clients to obtain safe psilocybin products from licensed specialists, as well as provide economic opportunities for residents around the state.

#2: Awakn

Awakn Life Sciences Corp. (NEO: AWKN) (OTC: AWKNF), a biotechnology company focused on developing and delivering psychedelic medicines to treat addiction, announced on Wednesday, January 5, that it had received ethical committee approval to expand its existing ketamine study beyond Gambling Disorder to include three additional behavioral addictions: Binge Eating Disorder, Compulsive Sexual Behavior, and Internet Gaming Disorder.

Prof. Celia Morgan, Awakn’s Head of Ketamine-Assisted Therapy for Addiction, Professor of Psychopharmacology at the University of Exeter in the United Kingdom, and an internationally known expert in the therapeutic use of ketamine, is leading the basket study, which will be another world first.

Professor Morgan’s research will look into a new treatment approach for behavioral addictions, attempting to tap into a window in which the brain can form new connections. Using EEG, the researchers will investigate and evaluate whether ketamine can promote neuroplasticity (Electroencephalogram).

Professor Morgan expressed her thoughts by saying that they are ecstatic to broaden this research and make more breakthroughs into a field of medicine that has seen no significant pharmacological advances in far too long, despite the fact that the number of people suffering has constantly increased. She also added that she believes that the study will provide Awakn with useful information so that they can move forward with their ketamine program and help the behavioral addicts as soon as possible.

There are currently no FDA-approved pharmaceutical treatments for behavioral addictions or disorders, and the demand for novel and effective treatments has never been greater. Individuals and their families suffer from behavioural addictions, which damage physical and mental health as well as increase the risk of suicide. Binge Eating Disorder affects up to 110 million people worldwide, whereas Internet Gaming Disorder affects 238 million, Sexual Compulsive Behaviour affects up to 350 million, and Gambling Disorder affects up to 450 million.

#3: COMPASS Pathways

COMPASS Pathways plc. (NASDAQ: CMPS), a mental health care company dedicated to accelerating patient access to evidence-based innovation in mental health, announced on 4 January 2022, the findings of a phase I study that demonstrated the feasibility of giving COMP360 psilocybin to up to six healthy participants at the same time with 1:1 support.

The Institute of Psychiatry, Psychology & Neuroscience (IoPPN) at King’s College London conducted the study, which was peer-reviewed and published in The Journal of Psychopharmacology as “The effects of psilocybin on cognitive and emotional functions in healthy participants: results from a phase I, randomized, placebo-controlled trial involving simultaneous psilocybin administration and preparation1.” The findings also revealed that there were no negative effects on thinking processes or emotional processing in the short or long term.

In 89 healthy male and female adult volunteers, the effects of two dosages of COMP360 psilocybin (10mg and 25mg) were compared to placebo. The participants were given 10mg COMP360 (n=30), 25mg COMP360 (n=30), or placebo (n=29) in a 1:1:1 ratio.

The investigational medicine was given to up to six volunteers at the same time, and they all got one-on-one psychological assistance from qualified therapists for the duration of the six-hour session. A 12-week follow-up period was included in the study. There were no significant side effects, and COMP360 psilocybin was well tolerated, with no clinically meaningful negative effects on cognitive function.

“This trial was an early component of our clinical development program for COMP360 psilocybin therapy,” said Dr. Guy Goodwin, Chief Medical Officer of COMPASS Pathways.

He also said that the study looked at the safety and feasibility of giving healthy people psilocybin at the same time with 1:1 support. In addition, he said that the study laid a solid foundation on which they have now added positive results from their phase IIb trial in 233 TRD patients and their open-label study of patients taking SSRI antidepressants and psilocybin.

He concluded by saying that they are excited to meet with the FDA early this year to finalize plans for their phase III study, which they hope to start in the third quarter of 2022.

 

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