Key Takeaways; Cannabis Sector
- The Cannabist Co. exits Florida market in $16.4 million sale.
- TerrAscend launched a $10 million share buyback program to enhance shareholder value.
- AFC Gamma provided over $18 million in credit to 3 cannabis operators.
- Cansortium reported its first profit of 2024, as the company plans expansion and RIV Capital acquisition.
Key Takeaways; Psychedelic Sector
- Clearmind secured key patent for binge behavior treatment amidst financial updates.
- Awakn initiated phase 3 trial of AWKN-001 for severe alcohol use disorder.
Below is a weekly roundup of what happened this week in 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: The Cannabist
The Cannabist Company Holdings Inc. (OTC: CBSTF), a New York-based cannabis operator, announced that it is selling all 14 of its Florida medical marijuana dispensaries and three cultivation facilities for a total of $16.4 million as part of its strategy to reduce its operational footprint. The sale is split into two separate deals involving multiple multistate operators (MSOs).
In the first deal, an undisclosed MSO is purchasing the company’s 40,000-square-foot cultivation facility in Lakeland for $11.4 million. This payment will be made in cash, with $2 million already held in escrow.
The second deal involves a joint venture between Arizona-based Mint Cannabis and California-headquartered Shango, which will acquire The Cannabist’s 14 dispensaries, two cultivation and manufacturing facilities in Alachua and Arcadia, and its Medical Marijuana Treatment Center (MMTC) licenses for $5 million. This payment includes $3 million in cash and a $2 million promissory note, with $750,000 already in escrow. Following this transaction, the dispensaries are expected to be rebranded under the Mint Cannabis name.
David Hart, CEO of The Cannabist Co., emphasized that this strategic move allows the company to eliminate loss-making operations; “As previously disclosed, our Florida assets are better suited for other operators’ portfolios, allowing us to eliminate loss-making operations that represent less than 5% of revenue, while bringing in non-dilutive capital to further bolster the balance sheet,” David Hart said in a statement.
Recently, The Cannabist has been focusing on growth markets and optimizing profitability as part of its broader corporate restructuring efforts. With the exit from Florida, The Cannabist will continue to operate in 13 markets, although it plans to reduce its operations to 12 states. The company has been selling off assets as part of this restructuring, including recent sales of subsidiaries in Arizona and Virginia.
The Cannabist Co., formerly known as Columbia Care, operates 95 facilities across the U.S., including 73 stores and 22 manufacturing plants. The company’s shares trade on the Cboe Canada exchange and over-the-counter markets under the ticker CBSTF.
#2: TerrAscend
TerrAscend Corp. (TSX: TSND) (OTC: TSNDF), a Canadian-headquartered cannabis company with significant U.S. assets, announced its first-ever share buyback program, demonstrating its confidence in the company’s future and commitment to enhancing shareholder value.
The program, which was approved by the company’s board, authorized the repurchase of up to $10 million worth of common shares over the next 12 months, starting August 22, 2024. This move allows TerrAscend to buy back up to 10 million shares, representing 5% of its 291.5 million outstanding shares, with a daily repurchase limit of 65,361 shares on the Toronto Stock Exchange (TSX).
TerrAscend Executive Chairman, Jason Wild, emphasized that the buyback reflects the company’s confidence in its business strength, growth prospects, and strong cash flow. “We are confident in the strength of our business, growth prospects operational excellence and strong cash flow,’” Wild said in a statement. “We believe our equity has compelling value and will be opportunistic with our share repurchases.
Under this program, TerrAscend is not obligated to purchase the shares and can suspend the program if better uses for its cash reserves arise.
Additionally, the company recently secured a $140 million senior secured term loan with a 12.75% interest rate, maturing in August 2028, which according to the company will support its financial strategies without incurring additional debt for the buyback.
This move follows the company’s recent financial performance, where it reported a net loss of $6.2 million for the second quarter of 2024 but generated $11.7 million in free cash flow and increased its revenue to $77.5 million.
This buyback by TerrAscend aligns with trends among other public cannabis companies like Verano Holdings Corp. (OTC: VRNOF), which recently announced such a move, and Green Thumb Industries Inc. (CSE: GTII) (OTC: GTBIF), which also implemented a $50 million repurchase program last year to bolster shareholder value.
#3: AFC Gamma
AFC Gamma, Inc. (NASDAQ: AFCG), a real estate investment trust (REIT) based in West Palm, Florida, that provides institutional loans to state law compliant cannabis operators in the U.S, established and expanded credit facilities totaling over $18 million for three cannabis companies located in Georgia, Missouri, and Florida. These credit facilities consist of first-lien term loans secured by the borrowers’ assets.
In Georgia, AFC Gamma committed $11 million to Private Company Q, which holds a Class 2 medical cannabis license. The funds will be used to build a cultivation and processing facility and to establish two new dispensaries.
In Missouri, AFC Gamma extended an additional $5.5 million to BeLeaf Medical, a vertically integrated cannabis company, bringing its total funding to $26.1 million. BeLeaf will use the funds to acquire two stores in the state.
Finally, in Florida, AFC Gamma provided an additional $1.8 million to Sunburn Cannabis, increasing its credit facility to $36.5 million. The funds will support the build-out of two new dispensaries and additional cultivation capacity.
Commenting on these deals AFC’s CEO, Daniel Neville, said; “At AFC, we are dedicated to fostering strong, lasting relationships by working together with our borrowers as they grow their businesses. We are excited to initiate a new relationship with Private Company Q, helping them establish a strong foothold in Georgia. Additionally, we are pleased to strengthen our support for BeLeaf and Sunburn, providing additional capital as they expand their operations in key markets. These investments align with our strategy to deploy capital in restricted license states with attractive supply-demand dynamics.”
#4: Cansortium
Cansortium Inc. (OTC: CNTMF), a Florida-based cannabis operator, which operates under the brand name Fluent, reported a significant milestone in the second quarter of 2024, achieving a net income of $947,000; its first profitable quarter this year.
This positive outcome showed a 12% year-over-year revenue increase, reaching $27.3 million, up from $25.2 million in the previous quarter when the company experienced a $4.2 million loss. Despite the profit, cash flow from operations dropped to $2.8 million due to the settlement of carried-over tax payments.
CEO Robert Beasley emphasized the company’s continued growth and highlighted the upcoming acquisition of RIV Capital Inc. (CSE: RIV) (OTC: CNPOF), which is expected to close by the year’s end. “We are excited about our upcoming business combination with RIV Capital and have already begun key integration steps,” Beasley said. “We continue to lay the foundation for growth and scalability while remaining excited about the opportunities ahead.”
Looking ahead, Cansortium plans to expand its footprint by opening four new dispensaries in Florida and a new medical dispensary in Pennsylvania by mid-2025. As of June 30, the company reported total assets of $184.6 million, including $8.4 million in cash, against $178.8 million in liabilities.
Top Psychedelic Companies for Week
#1: Clearmind
Clearmind Medicine Inc. (NASDAQ: CMND) secured a new patent from the United States Patent and Trademark Office (USPTO) for its MEAI (5-methoxy-2-aminoindane)-based treatment program, which is designed to regulate binge behavior and alcohol consumption. This patent strengthens Clearmind’s intellectual property portfolio, which now includes 29 granted patents across 19 patent families, covering key regions such as the U.S., Europe, China, and India.
The company’s flagship treatment leverages MEAI, a novel psychoactive compound that reduces the desire for alcohol while providing a mild euphoric effect, targeting conditions like Alcohol Use Disorder (AUD) and binge drinking.
Financially, Clearmind reported its earnings in June for the quarter ending April 30, 2024, during the quarter the company reported having $8.3 million in cash as of April 30, 2024, with operating expenses of $1.3 million for the quarter. Despite a net loss of $908,217 and no generated revenues for the first six months of 2024, the company assured investors that it has sufficient cash to fund operations for the next 12 months, although it remains a going concern due to an accumulated deficit of $21,044,080.
#2: Awakn
Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) announced on Friday that it had screened the first patient for its Phase 3 trial of AWKN-001, a novel treatment for severe Alcohol Use Disorder (AUD). The trial, which is known as MORE-KARE, is a significant study aimed at evaluating AWKN-001’s effectiveness.
AWKN-001 is a novel medication-assisted treatment that combines intravenous ketamine, an N-methyl-D-aspartate receptor modulator, with structured psycho-social support. This approach is designed to address severe AUD by reducing heavy drinking days and improving overall outcomes.
The MORE-KARE study, which is co-funded by the UK’s Medical Research Council (MRC) and the National Institute for Health and Care Research (NIHR), along with Awakn Life Sciences, will be conducted at eight NHS sites across the UK. The trial will assess the impact of AWKN-001 through various endpoints, including reductions in heavy drinking days and continuous abstinence over a six-month period.
Professor Celia Morgan, who is the trial’s lead from the University of Exeter, highlighted the urgent need for effective treatments for AUD, noting that current options have low success rates. She expressed enthusiasm for this groundbreaking study, which aims to address the significant gap in treatment options.
Additionally, Awakn’s Chief Scientific Officer, Professor David Nutt, also emphasized the potential of this trial to transform the treatment landscape for severe AUD, offering new hope to those with limited options.
This Phase 3 trial follows a successful Phase 2 study, which demonstrated promising results with high abstinence rates and a significant reduction in heavy drinking days.
