Key Takeaways; Cannabis Sector

• Scotts Miracle-Gro will finally separate its cannabis arm, Hawthorne, into a stand-alone cannabis business
• High Tide narrowed losses in 2024 amid record revenue and expansion plans

Key Takeaways; Psychedelic Sector

• Awakn announced advances in novel therapies for alcohol use disorder and PTSD
• atai reported promising results from BPL-003 study for alcohol use disorder
• Optimi Health expanded global psychedelic reach with a record MDMA batch; the company also secured new funding
• Enveric Biosciences raised $5 million in a public offering, triggering a market slide

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: Scotts Miracle-Gro

The Scotts Miracle-Gro Company (NYSE: SMG) announced that it had officially decided to separate its marijuana unit, Hawthorne Gardening Co., into an independent business. The move, which was announced during the company’s recent earnings call, marked a shift in strategy for Scotts Miracle-Gro CEO, Jim Hagedorn, who has previously defended keeping the volatile division within the parent company.

“This is not like we’re looking to get rid of it,” Hagedorn assured analysts. “We’re looking to focus our investments in the best configuration possible for our shareholders.”

The decision comes as Hawthorne struggles with declining revenue, reporting a 35% drop to $52 million in the first fiscal quarter. Despite the downturn, executives believe the separation will provide tax advantages and better credit access for Hawthorne while shielding Scotts from the volatility of the cannabis industry.

Chris Hagedorn, who leads Hawthorne and recently became Scotts’ executive vice president and chief of staff, will continue managing the unit post-separation. “Moving Hawthorne out of Scotts Miracle-Gro is better for everyone,” he said, adding that the move could enhance the company’s price-to-earnings multiple.

The company’s board must approve the decision, and initial asset transfers could happen within the next two months. Despite the transition, Scotts executives assured investors that their fiscal 2025 targets would remain unaffected.

The decision will conclude a complex chapter in Scotts’ involvement with cannabis. Since acquiring Hawthorne in 2014, the company built it into North America’s largest hydroponics supplier. However, as state-licensed markets matured and wholesale prices declined, Hawthorne struggled to maintain its momentum.

By spinning off Hawthorne, Scotts aims to create a clearer investment structure and unlock greater value for shareholders in both businesses.

#2: High Tide

Canadian cannabis company High Tide Inc. (NASDAQ: HITI) (TSXV: HITI) reported a C$3.8 million net loss for its fiscal year ending October 31, 2024, a significant improvement from the C$40.9 million loss recorded in 2023. The company credited this turnaround to record-breaking revenue of C$522.3 million, a 7% increase from the previous year.

During the fiscal year, High Tide continued its growth trajectory and aggressive expansion, opening 30 new dispensaries across Canada, bringing its total footprint to 191 stores. The company also expanded its Cabana Club loyalty program, which now boasts 5.3 million members, including 76,000 elite members.

The company’s CEO, Raj Grover, highlighted the company’s diversification and international expansion strategy stating, “We are diversifying our revenue streams to fuel future growth,” he said. As part of this strategy, High Tide recently acquired a majority stake in Germany’s Purecan GmbH, marking its entry into the European market.

High Tide maintains an 11% market share in the five Canadian provinces where it operates, this is despite owning only 5% of the country’s licensed dispensaries. The company also reported six consecutive quarters of positive free cash flow, generating C$21.9 million in 2024, a 217% increase from the previous year.

However, same-store sales remained stagnant, growing by just 0.4% year-over-year. High Tide noted that without non-cash impairment charges, it would have reported a C$1.2 million net profit for the fiscal year.

Looking ahead, the company aims for more growth and expansion. And to support further growth, High Tide secured a C$15 million line of credit in August 2024. The company plans to open 20-30 new stores in 2025, with a long-term vision of reaching 300 retail locations across Canada.

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF), a clinical-stage biotechnology company developing therapeutics for substance use and mental health disorders, announced significant progress in its research and development (R&D) programs. The company is focusing on novel treatments for Alcohol Use Disorder (AUD) and Post-Traumatic Stress Disorder (PTSD), with three main therapies: AWKN-001, AWKN-002, and AWKN-SND-14.

Awakn’s AWKN-001, which is a combination therapy utilizing IV-administered ketamine with relapse-prevention cognitive behavioral therapy, is in Phase 3 trials in the UK. The study, which is co-funded by the UK’s Medical Research Council and the National Institute for Health and Care Research, is managed by the University of Exeter Clinical Trials Unit. If approved under the UK’s Regulation 52b hybrid application, AWKN-001 could receive up to 10 years of market exclusivity.

Meanwhile, AWKN-002, which is an oral thin film formulation of esketamine for sublingual and buccal administration, recently received a positive response from the U.S. Food and Drug Administration (FDA) during a Pre-Investigational New Drug (Pre-IND) meeting. The FDA confirmed that no additional clinical data are needed before progressing to a Phase 2b trial for moderate to severe AUD patients. Awakn plans to file an Investigational New Drug (IND) application in the second half of 2025, with the Phase 2b trial expected to commence in early 2026.

Awakn CEO, Anthony Tennyson, remarked on this significant news, “The FDA’s support for our development strategy marks a significant milestone. This feedback provides us with a clear and efficient path forward for AWKN-002, addressing a substantial unmet medical need.”

In the area of trauma-related disorders, Awakn is developing AWKN-SND-14, a series of serotonin, dopamine, and noradrenaline modulators aimed at treating PTSD and related conditions. AWKN-SND-14, which is designed to promote pro-social behavior and improve trust, empathy, and social bonding, aims to enhance therapy outcomes and help individuals overcome social isolation.

“Our ongoing work with AWKN-SND-14 is especially promising,” Awakn’s Chief Research Officer, Prof. David Nutt, noted. “By targeting the underlying mechanisms of PTSD, we hope to develop a safer, more effective treatment for individuals suffering from trauma-related disorders.”

With these promising developments, Awakn is advancing its three major programs toward clinical approval. And as the company continues its clinical efforts, its innovative treatments for AUD and PTSD could offer hope to millions struggling with these conditions.

#2: atai

Atai Life Sciences N.V. (NASDAQ: ATAI) recently announced positive topline results from Beckley Psytech’s Phase 2a open-label study of BPL-003, an intranasal formulation of 5-MeO-DMT benzoate, for alcohol use disorder (AUD). The study involved 12 patients with moderate to severe AUD, and the findings suggest that a single dose of BPL-003, combined with relapse prevention therapy, can significantly reduce alcohol consumption and promote sustained abstinence.

According to the findings, alcohol consumption dropped from an average of 9.3 units per day to just 2.2 units in 12 weeks. The percentage of heavy drinking days (HDDs) plummeted from 56% to 13%, while abstinent days rose from 33% to 81%. Notably, half of the participants maintained complete abstinence throughout the 12-week period.

Dr. Srinivas Rao, CEO and Co-founder of atai, expressed optimism about the study’s outcome, stating, “We are encouraged by these exploratory results, which demonstrate the potential of short in-clinic psychedelic therapies to transform the treatment of substance use disorders. The high rates of sustained abstinence in this study are particularly promising given the significant challenges AUD patients face in maintaining sobriety”.

Atai also reported that the drug was well-tolerated, with no severe or serious adverse events. According to the report, most patients were deemed ready for discharge within two hours of administration. Beckley Psytech is now exploring further development of BPL-003 for substance use disorders and plans to present additional clinical data throughout 2025.

These promising results add to growing evidence supporting psychedelic therapies in mental health treatment.

#3: Optimi Health

Optimi Health Corp. (CSE: OPTI) (OTCQX: OPTHF) bolstered its position in the psychedelic pharmaceutical space with a major MDMA production milestone and a fresh capital injection of nearly C$1 million. The Canadian drugmaker, which is licensed by Health Canada, completed its largest production batch of MDMA to date; over 4,000 GMP capsules, which is sufficient to treat more than 1,000 patients worldwide.

In a press release, the company’s CEO, Dane Stevens, highlighted the company’s market edge, emphasizing the cost-effectiveness and stability of Optimi, stating, “Our customer feedback is that our MDMA is often more affordable than other limited options in the market. We are excited to be producing stable inventory in-house under our Drug Establishment Licence.”

The company’s latest production run supports global treatment initiatives, including Australia’s Authorized Prescriber Scheme for PTSD, a Phase 2 clinical trial in Israel, and Special Access Program (SAP) requests in Canada. Optimi is also extending its stability testing program to validate a two-year shelf life for its MDMA capsules.

In addition to its production expansion, Optimi recently raised C$934,000 through a private placement, with insider participation, and settled C$98,500 in marketing-related debt via equity issuance. The financing, which was structured at C$0.30 per unit, included half-warrants that have an exercise price of $0.40 until January 2027.

#4: Enveric Biosciences

Enveric Biosciences, Inc. (NASDAQ: ENVB) executed a strategic financial maneuver that resulted in mixed market reactions. Just days after the company announced 1-for-16 reverse stock split on Tuesday, January 28, 2025, which was aimed at maintaining its Nasdaq listing requirements, the company raised $5 million through a public offering on Thursday. However, the move caused its newly consolidated shares to plummet by over 40% in pre-market trading on Friday, January 31, 2025.

The public offering involved the issuance of 1.67 million shares priced at $3 each, significantly lower than the previous day’s split-adjusted closing price of $3.90. Additionally, investors received Series A and B warrants, which will expire in five years and 18 months, respectively.

Despite the stock market woes, Enveric recently secured a Notice of Allowance from the U.S. Patent and Trademark Office for its lead neuroplastogenic compound, EB-003. The drug is being developed to treat treatment-resistant depression and anxiety while eliminating hallucinogenic effects, which has been an innovation in psychedelic-inspired therapeutics.

The company’s CEO, Joseph Tucker, emphasized the significance of this development, stating: “EB-003 potentially offers the opportunity to administer treatment without requiring a healthcare professional to be present during treatment, which would be a paradigm shift compared to first-generation psychedelics.”

While the stock decline raises concerns, Enveric reaffirmed that it remains focused on leveraging its recent patent milestone and financial infusion to push forward in the mental health treatment space.