Key Takeaways; Cannabis Sector
- Bright Green shares were suspended from Nasdaq trading.
- Ayr Wellness CEO resigned amid surprising leadership changes.
- Green Thumb announced $50 million share buyback program.
- Flora Growth partnered with Blossom Genetics to supply medical marijuana to Germany.
- High Tide reported strong Q3 results, with revenue exceeding C$131 million.
Key Takeaways; Psychedelic Sector
- Psyence Biomed announced the acquisition of Clairvoyant Therapeutics to enhance psilocybin development.
- Awakn upsized its private placement financing to $2 million and closed the fourth tranche.
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: Bright Green
Bright Green Corporation (NASDAQ: BGXX), a New Mexico-based cannabis cultivator and the first plant-touching marijuana company to trade on a major U.S. stock exchange, recently announced that its shares had been suspended from trading on the Nasdaq. This decision followed the cancellation of the company’s Sept. 26 appeal hearing regarding its potential delisting.
Despite this setback, Bright Green said in a press release that it remains determined to continue its strategic pursuits. The company announced that it will still hold its annual shareholder meeting as scheduled on November 15, during which it plans to discuss key issue, including the possibility of a reverse stock split to enhance shareholder value, and hopefully regain compliance with the Nasdaq listing requirements.
Commenting on the suspension’s news, Bright Green CEO, Groovy Singh, said, “We are evaluating all options available to us, including strategic partnerships and acquisitions as we continue to build on our foundation and explore opportunities for sustainable financing and growth.”
Additionally, Bright Green also reported in the press release that it had secured a $2.5 million line of credit, which Chairwoman Lynn Stockwell said will provide the company with the flexibility needed to navigate current challenges while investing in opportunities for long-term growth.
Since being listed on Nasdaq on May 17, 2022, Bright Green’s stock initially surged, climbing from $8 to $58 per share, resulting in a market value exceeding $9 billion. However, the stock has since plummeted, hitting a 52-week low of $0.15, and has declined by nearly 60% over the past year.
Despite the challenges, Bright Green reaffirmed that it remains committed to its growth trajectory, exploring strategic options and focusing on sustainable financing to support future expansion.
#2: Ayr Wellness
In a sudden announcement that caught investors off guard, AYR Wellness Inc. (CSE: AYR-A) (OTC: AYRWF) announced that CEO David Goubert had stepped down from his role. Goubert, who became President in October 2022 and CEO in February 2023, stepped down just months into his role.
As a result, Ayr announced that the company’s Board of Directors had appointed Steven M. Cohen as Interim CEO while they search for a permanent replacement. Cohen, who’s a founding member of Blue Raven LLP, has an extensive legal background providing strategic legal advice to businesses and corporate boards, but lacks experience in the cannabis industry.
The unexpected leadership change raised eyebrows, with many speculating about the reasons behind Goubert’s abrupt departure. Goubert was perceived as having implemented positive changes within the company in a short time frame. The late-night press release, coupled with the absence of a clear succession plan, further fueled speculation.
His departure followed that of Jonathan Sandelman, Ayr’s founder, who resigned as executive chair in July.
The company recently reported slight revenue declines, with second-quarter earnings falling 0.6% to $117.3 million, while net losses grew to $38 million, up from $29 million the previous year. Despite reducing expenses, the company cited higher taxes and interest costs as reasons for the increased losses. Goubert had remained optimistic about the company’s future, highlighting opportunities in Ohio and potential growth in states like Florida and Pennsylvania.
Ayr Wellness now faces the challenge of finding a permanent CEO while navigating recent financial setbacks. The company’s board stated that they will conduct a search for a suitable successor in the near future.
#3: Green Thumb
Green Thumb Industries Inc. (CSE: GTII) (OTC: GTBIF), a Chicago-based cannabis multistate operator, recently announced plans to launch a $50 million share buyback program. The program allows the company to repurchase up to 10,573,860 shares between September 23, 2024, and September 22, 2025.
This announcement followed a successful previous buyback in which the company repurchased 6.5 million shares for $73.3 million, as reported in its second-quarter 2024 financial results.
According to Green Thumb’s founder, Chairman, and CEO Ben Kovler, the buyback program provides greater flexibility to utilize cash reserves for share repurchases when favorable opportunities arise; “This buyback program provides greater flexibility to use our cash reserves to repurchase more shares should the opportunity present itself,” Kovler said.
The announcement came just days after Green Thumb announced the closing of a $150 million, five-year syndicated credit facility led by Valley National Bank. This “first-of-its-kind” refinancing for the U.S. cannabis industry provided the company with a strong balance sheet. Kovler noted that the company remains open to strategic mergers and acquisitions, “In light of recent refinancing, (we) remain open to strategic M&A, capital expenditures into the business and unique investment opportunities,” he said.
While the company is authorized to repurchase shares, it is under no obligation to do so and can suspend the program at any time. Additionally, Green Thumb stated that it does not anticipate incurring debt to fund the buyback. The number of shares repurchased will depend on market conditions and regulatory requirements, and any repurchased shares will be returned to the treasury and cancelled.
#4: Flora Growth
On September 18, 2024, Flora Growth Corp. (NASDAQ: FLGC) announced a partnership with London-based Blossom Genetics to supply Colombian medical marijuana to the German market.
The collaboration will introduce two cannabis strains, Chemmy Jones and Northern Lights, thereby enhancing Flora’s mission to meet the country’s growing demand for high-quality medical cannabis, following Germany’s recent legalization of recreational cannabis, which took effect on April 1, 2024.
Flora Growth’s CEO, Clifford Starke, emphasized the agreement as a significant move to expand the company’s global footprint and meet the rising demand for medical cannabis in Germany. “The demand for medical cannabis has surged since legalization, and we are confident that the strains we will bring to the market will resonate with patients and healthcare providers alike,” Starke said in a statement.
With a history of operations in Germany since 2017 and holding the country’s first medical cannabis license, Flora has established a robust distribution network, supplying over 1,200 pharmacies.
Under the terms of the agreement, product deliveries are set to commence in the fourth quarter of 2024. However, despite this strategic partnership, Flora Growth’s shares fell 4.1% on the Nasdaq following the announcement, closing at $1.10.
#5: High Tide
Canadian marijuana retailer and e-commerce platform High Tide Inc. (NASDAQ: HITI) (TSXV: HITI) announced impressive third-quarter financial results for the period ending July 31, surpassing analysts’ expectations. The company achieved record revenue of C$131.7 million (approximately US$96.9 million), exceeding the Yahoo Finance average estimate of US$94.35 million. This marked a 6% increase compared to both the previous year and the prior quarter. Additionally, High Tide reported a net income of C$800,000, a significant turnaround from a C$3.6 million loss in the same period last year.
Same-store sales showed positive trends, rising 1% year-over-year and 5% sequentially, with a 3% daily increase from the previous quarter. Notably, from October 2021 to June 2024, same-store sales at Canna Cabana increased by 118%, while the average operator in the five provinces where High Tide operates experienced a 21% decline.
High Tide’s CEO, Raj Grover, highlighted the company’s responsible growth and its commitment to adding shareholder value. “Our numbers continue to drive home the fact that we are a well-managed, innovative company that has grown responsibly while continuing to build value for shareholders,” Raj Grover said in a statement.
Additionally, the company secured a new C$15 million line of credit in August to support its expansion efforts, with plans to open 20-30 new dispensaries by the end of 2024, maintaining a strategy of prudent acquisitions.
Canna Cabana currently operates 183 locations across Canada, contributing to a 12% market share growth in its provinces. The Cabana Club loyalty program has grown to over 1.55 million members, while the ELITE paid membership program surged 203% year-over-year to 57,000 members, marking its fastest growth since inception.
High Tide also reported a strong cash position with C$35.3 million in cash and equivalents, a 37% increase over the year. The company has generated approximately C$26 million in free cash flow over the past five quarters.
Looking ahead, High Tide aims to expand to 300 Canna Cabana locations nationwide and capture 15% market share in its operating provinces. The company is also exploring international opportunities, particularly in Germany, as it tracks legislative and regulatory developments.
Top Psychedelic Companies for Week
#1: Psyence Biomedical
Psyence Biomedical Ltd. (NASDAQ: PBM) signed a conditional binding term sheet to acquire privately-held Clairvoyant Therapeutics Inc, a Canadian developer focused on psilocybin-based therapies, for a total consideration of up to $1.5 million.
The deal includes an immediate issuance of $500,000 in shares, with two additional milestone payments of $250,000 each contingent upon achieving specific targets by December 2026. Psyence will also provide up to $1.8 million to cover Clairvoyant’s clinical trial liabilities. This strategic move aims to bolster Psyence’s efforts in addressing Alcohol Use Disorder (AUD) through psilocybin therapy.
Clairvoyant is currently conducting a Phase IIb clinical trial evaluating a synthetic psilocybin candidate for AUD, with topline results expected in early 2025. The trial, which includes 154 participants, seeks to demonstrate the effectiveness of psilocybin combined with psychotherapy in reducing alcohol consumption.
Dr. Neil Maresky, CEO of Psyence, highlighted the complementary nature of Clairvoyant’s synthetic therapy with Psyence’s existing nature-derived psilocybin programs, particularly those targeting adjustment disorders in palliative care. He emphasized that the acquisition could position Psyence as a leader in the psychedelic therapeutic space, addressing significant gaps in mental health treatment options.
On the other hand, Damian Kettlewell, CEO of Clairvoyant, expressed enthusiasm for the partnership, noting the pressing need for effective AUD treatments, given the low percentage of patients currently seeking drug therapy despite high prevalence rates.
The acquisition is contingent upon a definitive share purchase agreement and other customary closing conditions, including board and regulatory approvals. If successful, this partnership is poised to accelerate the development of innovative treatments for AUD and other mental health disorders.
#2: Awakn
Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF), a clinical-stage biotech company focusing on therapies for substance use and mental health disorders, particularly alcohol use disorder, announced on Wednesday September 18, that it had upsized its private placement financing. The company said that it had raised its previously announced non-brokered private placement financing, from $1 million to $2 million.
As a result of this upsizing, Awakn closed the fourth tranche of the offering, issuing 857,143 units at $0.46 per unit, resulting in additional gross proceeds of $394,286. This brought the total amount raised through this non-brokered private placement to $1,117,142.
Each unit consisted of one common share and 0.75 of a warrant, with each whole warrant allowing the purchase of one additional common share at $0.63 for up to five years. Moreover, all securities issued under this offering are subject to a four-month hold period and applicable resale rules under securities legislation.
According to the company, the gross proceeds from the offering will be used to fund the company’s general working capital.
