Key Takeaways; Cannabis Sector
- Agrify secured $25.9 million through non-brokered private placement
- Cannabis giant StateHouse Holdings’ assets up for sale in record receivership deal
- Simply Solventless surpassed guidance and reported robust financial growth in Q3 2024
- Decibel reported mixed Q3 financial results amid market adjustments
Key Takeaways; Psychedelic Sector
- Psyence Biomedical announced 1-for-75 share consolidation to maintain Nasdaq listing requirements
- Awakn is pioneering therapeutics for trauma and addiction
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 the Week
#1: Agrify
Agrify Corporation (NASDAQ: AGFY), a leading provider of solutions for the cannabis and hemp industries, successfully raised $25.9 million through a non-brokered private placement. The placement was priced at $22.30 per share and involved institutional and accredited investors.
Agrify chairman and interim CEO, Benjamin Kovler, highlighted the significance of the funding, stating, “This funding is a strong move for Agrify and our shareholders as we were able to raise approximately $26 million in a non-brokered deal (gross equals net). We plan to allocate this capital into opportunities within our circle of competence to benefit stockholders.”
Kovler also demonstrated his confidence in the company by purchasing 10,000 shares of common stock at $38.76 per share during the private placement.
As part of the transaction, investors will receive pre-funded warrants to ensure compliance with ownership limits, specifically preventing any investor from exceeding 4.99% beneficial ownership of Agrify’s common stock. These securities are not registered under the Securities Act of 1933 and may not be publicly traded without proper registration or an applicable exemption. Agrify stated that it plans to file a resale registration statement within 45 days if requested by investors.
According to the company, the proceeds from the placement will support general corporate purposes, including working capital and business development. This influx of capital strengthens Agrify’s ability to seize market opportunities in the evolving cannabis and hemp industries.
The company also provided an update on its pending Señorita brand acquisition, affirming that the deal remains on track to close by the end of the year. Kovler expressed enthusiasm about the opportunities ahead, stating, “The team continues to work hard to close the previously announced Señorita transaction. We are excited about the opportunity set and current consumer trends in cannabis and hemp.”
#2: StateHouse Holdings
The assets of California-based cannabis operator StateHouse Holdings Inc. (CSE: STHZ) (OTC: STHZF), formerly known as Harborside, are now on the market in what could be the U.S. cannabis industry’s largest receivership deal to date. San Diego brokerage Green Life Business Group is overseeing the sale on behalf of Receivership Specialists. This move comes just a few months after StateHouse’s bankruptcy filing in October.
StateHouse’s portfolio includes 11 retail stores operating under the Harborside and Urbn Leaf brands, cultivation properties, nurseries, and processing and distribution facilities. Ten of these stores are operational, generating nearly $78 million in sales this year. Additionally, the company’s iconic brands, such as Dime Bag, Fuzzies, Harborside Farms, Kingpen, and Loudpack, are carried in over 900 retail outlets across California.
Green Life CEO, Drew Mathews, expressed the sale’s significance in a phone interview with MJBizDaily, stating, “To my knowledge, it’s the largest receivership deal in U.S. (cannabis) history.” He added that the portfolio’s combined sales exceed $120 million and noted the preference for a global offer encompassing all assets. The San Diego brokerage expects the bidding process to conclude on January 15, 2024.
StateHouse’s financial troubles began when its primary lender, Pelorus Fund REIT, filed for receivership after the company defaulted on four loans, with debts exceeding $140 million. This prompted the halting of StateHouse’s stock trading on both the Canadian Securities Exchange (STHZ) and U.S. over-the-counter markets (STHZF).
This sale marks a significant chapter for StateHouse, which was once a pioneering cannabis operator in California under its Harborside branding. The receivership is managed by Kevin Singer, who has overseen similar high-profile cannabis dissolutions, including the collapse of California distribution giant Herbl and the receivership auction of High Times.
#3: Simply Solventless
Simply Solventless Concentrates Ltd. (TSXV: HASH) (“SSC”), a leader in the cannabis concentrates market, announced record-breaking Q3 2024 financial results, significantly exceeding prior guidance. Gross revenue soared to $7.2 million, up 70% from Q2 2024, while adjusted EBITDA climbed 5% to $1.0 million. Normalized net income (NNI) reached $0.9 million, marking an annualized NNI of $0.06 per share.
A significant contributor to SSC’s success was the integration of CannMart Inc., which was acquired in September 2024. During the quarter, the company also finalized its acquisition of ANC Inc. in October, with its financial impact anticipated in Q4 2024 results. President and CEO of SSC, Jeff Swainson, emphasized the significance of these milestones, stating, “Q3 2024 was another transformational quarter for SSC. We’ve profitably grown annualized revenue by 309% in just three quarters, and we’re poised for even greater success with the integration of both CannMart and ANC.”
Additionally, in a bold move, SSC exercised its right to accelerate the expiry of 8 million common share purchase warrants, which were priced at $0.40 each. According to the company, this decision is expected to generate $3.2 million in proceeds, which will support working capital needs and fund outstanding payments related to the ANC acquisition. These warrants, which were originally set to expire on July 17, 2026, will now expire on December 21, 2024, if unexercised.
With a strong foundation laid in Q3, SSC is optimistic about its Q4 performance. Swainson concluded, “We will soon issue guidance for Q4 2024, where we expect to deliver another exceptional quarter. Our growth strategy is proving successful, and we remain committed to driving shareholder value”.
#4: Decibel
Decibel Cannabis Company Inc. (TSXV: DB) (OTC: DBCCF), a leading producer of premium cannabis products, released its unaudited financial results for Q3 2024, highlighting both challenges and progress. The company reported a 9% sequential increase in net revenue for Q3 2024, reaching $24.1 million. However, year-over-year revenue decreased by 12%, a decrease that was attributed mainly to heightened competition in the infused pre-roll segment, a shift in consumer preferences toward larger vape cartridges, and the suspension of exports to Israel as the company transitioned to a new distribution partner.
Decibel CEO, Benjamin Sze, expressed optimism, stating, “We’ve reduced liabilities by approximately $5 million this quarter, strengthening our balance sheet. While domestic Canadian recreational sales remain our focus, the integration of AgMedica and international demand for Decibel flower signal growth opportunities.”
The third quarter also saw a significant improvement in the gross margin, which increased to 53%, up from 44% in the same period last year. Adjusted EBITDA stood at $5.1 million, showing a 31% sequential growth from Q2 2024, although it experienced a 21% year-over-year decline. Despite this, Decibel posted positive free cash flow of $1.8 million, a 75% increase over the previous year, and an adjusted net income of $2.1 million, marking a 294% improvement.
While Decibel’s net Canadian recreational sales dropped to $23.8 million in Q3 2024, compared to $27 million in Q3 2023, the company remains optimistic about its future prospects. The company stated that it is focusing on new product launches, including large format 510 cartridges and disposables, to regain market share. On a global scale, international sales totaled $309,000 for the quarter, a decline from $500,000 in Q3 2023.
Despite these challenges, Decibel reaffirmed that it continues to operate within its financial covenants and expects to maintain compliance throughout its 12-month forecast period. The company also appointed a new corporate secretary to strengthen its executive team.
Top Psychedelic Company for Week
#1: Psyence Biomedical
Psyence Biomedical Ltd. (NASDAQ: PBM) this week announced the effective date for its previously approved 1-for-75 share consolidation, a strategic move aimed at meeting Nasdaq’s minimum bid price requirement for continued listing. The consolidation, which is set to take effect on November 26, 2024, follows shareholder approval at the company’s Annual General and Special Meeting on November 12.
The share consolidation will reduce the number of outstanding shares, with every 75 existing shares combined into a single share. This move is critical for Psyence to comply with Nasdaq Listing Rule 5450(a)(1), which mandates a minimum bid price of $1 for continued trading on The Nasdaq Global Market. The company’s shares will continue to trade under the ticker ‘PBM’, and the new CUSIP number will be 74449F209.
“As part of our ongoing efforts to maintain our listing status on Nasdaq, we are implementing this consolidation,” said Psyence Biomedical. The consolidation will also adjust the exercise price of outstanding warrants, while fractional shares will be rounded to the nearest whole share.
#2: Awakn
Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF), a clinical-stage biotechnology company, is making strides in addressing unmet needs in mental health and addiction treatment. Through the development of novel therapies and medications, Awakn aims to redefine the standard of care for conditions like Alcohol Use Disorder (AUD) and trauma-related mental health disorders.
Awakn’s latest advancements focus on aminoindanes, a class of molecules with pharmacological properties similar to MDMA. These compounds stimulate serotonin, dopamine, and noradrenaline release while blocking reuptake, creating empathogenic effects essential for trauma therapy. But unlike MDMA, aminoindanes offer a patentable, targeted approach to treating trauma-related mental health disorders.
Additionally, Awakn is developing Medication-Assisted Treatments (MATs) targeting the brain circuits that drive addiction. By disrupting the neural pathways that fuel addictive behaviors, these therapies enable patients to break free from destructive cycles and engage in psychotherapy for lasting recovery.
Moreover, Awakn is also currently conducting trials for its widely known AUD-focused therapies, including a key Phase 3 study for AWKN-001. This trial, which is supported by the UK’s Medical Research Council (MRC) and other leading institutions, combines ketamine-based medication with manualized psycho-social support. The trial spans across multiple NHS sites, reflecting the scalability and the potential impact of Awakn’s approach.
Awakn CEO Anthony Tennyson and Chief Research Officer Prof. David Nutt lead the charge with a commitment to transforming care standards. Through strategic partnerships and clinical advancements, Awakn aims to deliver life-changing solutions to millions in desperate need.