Key Takeaways; Cannabis Sector

• Curaleaf reported strong growth in 2023, amidst global expansion plans.
• MariMed reported revenue growth and net loss in 2023; alongside 2024 growth forecast.
• Cronos Group reported improved financial performance in 2023.
• Planet 13 announced a public offering to raise $11.3 million.
• AFC Gamma’s Q4 report revealed challenges and optimism in cannabis lending.

Key Takeaways; Psychedelic Sector

• Awakn announced listing on the Canadian Securities Exchange.
• FDA granted breakthrough therapy designation to MindMed’s LSD candidate for generalised anxiety disorder.

In a rollercoaster week for MSOs, the cannabis industry faced both triumphs and challenges. Despite many positive Q4 reports in late February, this week witnessed an unusual trend as only a few large MSO reported their financials. Surprisingly, the market responded with increased selling even after companies displayed strong financial performances, highlighting the ongoing turbulence in the sector.

However, amid all the ups and downs, there’s a beacon of hope shining through. The cannabis landscape is brimming with potential, especially with the exciting possibility of federal legalization on the horizon. As the industry eagerly anticipates this transformative step, the future looks bright, even though it’s still uncertain.

In this weekly roundup, we delve into the latest developments and initiatives across the cannabis and psychedelic sectors. From groundbreaking medical research to emerging therapeutic applications and shifts in legal frameworks.

Top Marijuana Companies for Week

#1: Curaleaf

Curaleaf Holdings, Inc. (OTC: CURLF), a major player in the cannabis industry, recently reported significant revenue growth for the fourth quarter of 2023, reaching $345.3 million, representing a 1.5% increase over the previous year and a 3.6% increase over the third quarter.

Despite a net loss of $57.7 million from continuing operations during this period, Curaleaf’s full-year revenue for 2023 soared to $1.35 billion, marking a 6% year-over-year increase. This growth signals Curaleaf’s enduring presence as the largest publicly traded marijuana operator by market capitalization.

Despite reporting a net loss for the year, the company remains financially robust, with $91.8 million in cash and total debt of $587.8 million at the end of 2023. The company said that it is exploring strategies to optimize its financial performance, including potential legal challenges related to tax regulations under Section 280E of the Internal Revenue Code.

Looking ahead, Curaleaf stated that it is focused on expanding its footprint in both domestic and international markets. The company aims to capitalize on new opportunities in states such as New York, Ohio, Florida, and Pennsylvania, as well as key European countries like Germany, the U.K., and Poland. It also plans to leverage the recent legalization of cannabis in Germany to further its European presence.

Curaleaf’s financial performance in 2023 reflects both the opportunities and challenges facing the cannabis industry. Despite posting losses, the company’s revenue growth and strategic initiatives highlight its resilience and long-term vision for success.

As Curaleaf continues to explore new markets and expand its product offerings, it remains at the forefront of the evolving cannabis landscape, poised to capitalize on emerging opportunities and drive sustainable growth in the years to come.

#2: MariMed

MariMed Inc. (OTC: MRMD), a Massachusetts-based marijuana multistate operator, reported its financial performance for the full-year and fourth quarter of 2023. The company experienced substantial revenue growth but also reported a net loss during the period.

In 2023, MariMed’s revenue surged to $148.6 million, marking nearly an 11% increase from the previous year’s $134 million. The boost in revenue was primarily attributed to wholesale expansion and new asset openings. Despite the revenue growth, the company reported a net loss of $16 million for 2023, a significant contrast compared to the $13.6 million profit in 2022.

For the fourth quarter ending Dec. 31, 2023, MariMed reported a net loss of $10.1 million and revenue of $38.9 million. This represents an increase in losses compared to the same period in the previous year.

Increased competition in Illinois and construction delays at its processing facility in Norwood, Massachusetts, were cited as contributing factors to MariMed’s financial performance challenges. Additionally, regulatory issues in the company’s home state further complicated matters.

The company’s CEO, Jon Levine, expressed frustration over unexpected delays, such as prolonged wait times for an electrical panel; “Who would have thought that an electrical panel would take six months to get?” Levine said during the call. These circumstances influenced MariMed’s cautious approach to projecting growth for 2024.

MariMed outlined a conservative growth forecast for 2024, projecting revenue growth of 5%-7% and capital expenditures of $10 million. The company emphasized its focus on key operating milestones, including the commencement of wholesale operations in Illinois, to position itself for long-term growth.

Furthermore, to fuel future growth, MariMed secured financing without diluting shareholder equity. In November 2023, the company refinanced $58.7 million in debt, ensuring favorable terms for a 10-year period.

Looking ahead, MariMed anticipates operational expansions, including the transition to a permanent facility in Illinois and the acquisition of operating assets in Maryland.

#3: Cronos Group

Canadian cannabis producer Cronos Group Inc. (NASDAQ: CRON) made significant strides in reducing its losses in the fiscal year 2023, narrowing down to $74.5 million (101 million Canadian dollars).

The company’s consolidated net revenue saw a slight uptick, reaching $87.2 million from $86.7 million in the previous year. Cronos attributed this increase primarily to higher sales of cannabis flower and extracts in Canada, as well as the commencement of sales in Germany and Australia.

However, the company faced challenges in Israel, experiencing a decline in cannabis flower sales due to pricing pressure amidst a competitive market and currency fluctuations against the U.S. dollar.

In terms of product categories, cannabis flower sales slightly decreased to $62.1 million, while cannabis extracts witnessed a 9% increase to $24.6 million. Revenue from other sources saw a small decline. Geographically, sales in Canada surged by 15%, reaching $64.7 million, whereas sales in Israel dropped by 30.1% to $21.1 million. Sales from other countries doubled from the previous year.

Moreover, Cronos achieved cost savings of $30 million in 2023, surpassing its initial target, with further savings anticipated in general and administrative as well as research and development expenses. Additionally, As of December 31, 2023, Cronos held cash and cash equivalents amounting to $669.3 million positioning it in a strong financial position for expansion.

Looking ahead, the company stated that it remains vigilant regarding potential impacts from geopolitical conflicts, particularly the Israel-Hamas war, on its operations and personnel in Israel.

#4: Planet 13

In a strategic move aimed at bolstering its financial position, Planet 13 Holdings Inc. (OTC: PLNH), a prominent marijuana multistate operator, announced the pricing of a public offering to generate gross proceeds totaling at least $11.3 million.

The Las Vegas-based company announced plans to sell 18.75 million units at a rate of 60 cents per unit through an underwritten public offering. Each unit encompasses one common share with no par value alongside one warrant, which enables the acquisition of an additional share at 77 cents within a five-year timeframe, subject to certain adjustments.

Planet 13 further disclosed that the underwriters, spearheaded by Beacon Securities, retain a 30-day over-allotment option to procure “up to an additional 2,812,500 shares and/or warrants.” Should this option be exercised in its entirety, it would furnish the company with $12.9 million in gross proceeds.

In a statement, Planet 13 outlined its intentions regarding the utilization of the raised funds. The company aims to allocate the proceeds towards working capital and general corporate endeavors, including but not limited to acquiring additional retail cannabis licenses within Nevada, expanding its retail footprint in Florida and Illinois, and implementing various capital enhancements.

The offering closed on March 7, marking a significant development in the trajectory of Planet 13, which operated across multiple states including California, Florida, Illinois, and its home base of Nevada.

#5: AFC Gamma

AFC Gamma, Inc. (NASDAQ: AFCG), a publicly traded cannabis industry lender, reported its financial performance for the fourth quarter and full fiscal year 2023. The company reported nearly $16 million in net interest income for Q4, marking an 18.9% decline from the same period in 2022. The full-year net interest income for 2023 was $64.2 million, reflecting a 14% decrease from 2022.

Despite these figures, AFC Gamma faced challenges, posting a quarterly net loss of $9.2 million compared to a net income of $2.9 million in the same quarter of the previous year. The full-year net income for 2023 was nearly $21 million, down from $35.9 million in 2022. CFO, Brandon Hetzel, attributed the difference between distributable earnings and net loss to increased unrealized losses on loans held at fair value and a rise in current expected credit losses reserve.

CEO Daniel Neville discussed the company’s positive outlook, noting an expanding pipeline driven by what they term “cannabis 3.0 players.” “Many of these companies are building through a combination of organic growth and opportunistically acquiring distressed assets,” Neville stated. “We are excited to finance many of these operators that have clean capital stacks and are unburdened with debt, sale-leasebacks or legacy tax liabilities.”

As per the recent financial result, AFC Gamma is actively reducing exposure to underperforming assets, with two borrowers currently in receivership. The company’s year-end financials revealed cash and cash equivalents of $121.6 million, total assets of $466.6 million, and total liabilities of $146.5 million.

Additionally, AFC Gamma recently announced a strategic move to split into two entities, separating its non-cannabis commercial real estate assets to create Sunrise Realty Trust. This restructuring underscores AFC Gamma’s commitment to refining its focus and optimizing its lending activities within the evolving cannabis industry landscape.

Top Psychedelic Companies for Week

#1: MindMed

In a significant development for the field of psychedelic medicine, Mind Medicine (MindMed) Inc. (NASDAQ: MNMD) received breakthrough therapy designation from the FDA for its LSD candidate, MM120, aimed at treating generalised anxiety disorder (GAD). Alongside this milestone, MindMed unveiled pivotal 12-week data from its Phase 2b study and provided insights into its Phase 3 program plans.

MindMed’s Phase 2b study yielded promising results, showcasing the sustained efficacy of MM120 over a 12-week period. Administered as a single oral dose, MM120 demonstrated substantial improvements in the Hamilton Anxiety rating scale (HAM-A) compared to placebo. Notably, the 100-µg dosage exhibited a 65% clinical response rate and a 48% clinical remission rate, indicating its potential as a viable treatment option for individuals grappling with GAD.

The FDA’s recognition of MM120 marks a significant advancement in the therapeutic application of psychedelics. MindMed’s MM120 joins the ranks of breakthrough therapies, underscoring the growing acceptance of psychedelic compounds as potential treatments for mental health disorders.

With the breakthrough therapy designation secured, MindMed plans to proceed with an End-of-Phase 2 meeting with the FDA in the first half of 2024. Following this, the company aims to initiate its Phase 3 clinical program in the second half of the year, further advancing MM120 towards potential regulatory approval.

#2: 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.