Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Key Takeaways; Cannabis Sector

• Marijuana multistate operator Jushi to acquire Nevada’s NuLeaf in a deal worth $62.5 million.
• Village Farms buys Quebec cannabis producer for CA$46.7 million.
• Schwazze acquires a Colorado marijuana store for $4 million and stock; and spends $29 million to acquire two more Colorado cannabis retailers.
• WM Technology to acquire marijuana marketing platform Sprout.

Key Takeaways; Psychedelic Sector

• Awakn Life Sciences in talks with an NHS Trust and the University of Exeter.
• MindMed to study effects of Microdosing LSD on Sleep and Cognition.

According to marijuana research company BDSA, the global cannabis and psychedelic market will be worth more than $100 billion by 2026, growing at a compounded annual growth rate (CAGR) of over 15%. But those numbers could go even higher as more states pass legislation that permits marijuana and psychedelics for medical or recreational use.

Top Cannabis Stocks to Keep a Close Eye On

#1: Jushi Holdings

Jushi Holdings Inc. (OTCMKTS: JUSHF) is a vertically integrated cannabis company that engages in the cultivation, processing, retail, and distribution of medical and adult-use products. It focuses on building a portfolio of cannabis assets in various jurisdictions in Pennsylvania, Virginia, Ohio, Illinois, California, Nevada, and Massachusetts.

The Florida-based multistate marijuana operator announced a deal to acquire NuLeaf, a vertically integrated cannabis company in Nevada. The acquisition is worth up to $62.5 million and is expected to close in the first half of 2022, according to a Wednesday, November 17 news release.

The price tag features a $52.5 million upfront payment that includes: $15.75 million in cash, an unsecured promissory note for the same amount, and $21 million in Jushi subordinate voting shares. Another $10 million – “in an identical percentage combination” of cash, a promissory note, and shares – will be issued “upon the occurrence or non-occurrence” of an upcoming NuLeaf dispensary on the Las Vegas strip receiving regulatory approvals to open for business.

The NuLeaf acquisition comes on the heels of Jushi’s deal to buy Las Vegas retailer The Apothecarium and its acquisition of Nevada cannabis cultivator, processor, and distributor Franklin Bioscience NV.

#2: Village Farms

Village Farms International, Inc. (NASDAQ: VFF), together with its subsidiaries, produces, markets, and distributes greenhouse-grown tomatoes, bell peppers, and cucumbers in North America. It operates through three segments: Produce Business, Energy Business, and Cannabis and Hemp Business.

On September 15, 2021, Village Farms bought a majority stake in Quebec-based licensed cannabis producer and distributor Rose LifeScience, fulfilling the Florida-headquartered company’s pledge to gain a foothold in Canada’s second-biggest marijuana market by population.

Village Farms, the parent company of British Columbia cannabis producer Pure Sunfarms, bought 70% ownership of the privately held business for up to 46.7 million Canadian dollars ($37 million), consisting of CA$19.9 million in cash and CA$26.8 million in shares.

In a September interview, Village Farms CEO Michael DeGiglio said the company was focused on entering the promising Quebec market. In a note to investors, Doug Cooper, a Toronto-based analyst for Beacon Securities, said the acquisition likely would enable the company to sell Pure Sunfarms products in Quebec.

“With Quebec as the final piece of the Canadian puzzle, Pure Sunfarms will now be selling to more than 90% of the Canadian population,” the analyst wrote, adding that likely secures the market the company needs to bring the second half of its 1.1 million-square-foot BC facility into production.

In Quebec, Rose distributes its own brand of cannabis products. It is also the distribution entity for cannabis producers Entourage Health, Sundial, Tilray, The Flowr Corp, and 10 micro and craft growers.

The deal includes Rose’s 55,000-square-foot cultivation and processing facility in Quebec. Under the agreement terms, Rose CEO Davide Zaffino and Chief Operations Officer Brian Stevenson will remain in their current roles after the acquisition. They will also retain a 30% interest in the company they co-founded.

Village said the deal gives it a pathway to acquire the remainder of Rose if certain milestones are met before March 31, 2025. Shares of Village Farms International are traded as VFF on the Nasdaq and Toronto Stock Exchange, respectively.

#3: Schwazze

Schwazze (OTCQX: SHWZ) is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale. The company is building the premier vertically integrated cannabis company in Colorado and plans to take its operating system to other states to develop a differentiated leadership position. Medicine Man Technologies, Inc. was Schwazze’s former operating trade name. And the corporate entity continues to be named Medicine Man Technologies, Inc.

On November 16, 2021, the Colorado-based retail chain said it acquired the cannabis shop Smokin’ Gun Apothecary in the Denver suburb of Glendale for $4 million and 100,000 shares of stock.

The vertically integrated Schwazze has been on an acquisition spree, having gobbled up indoor cultivator Brow 2 in August for $6.7 million, Southern Colorado Growers in July for $11.3 million, and retail chain competitor Star Buds in March for $72.3 million. The addition of Smokin’ Gun brings its retail store footprint to 20.

The transaction, expected to close in the fourth quarter of 2021, includes the retail store and Smoking Gun Land Co.

On Wednesday, November 17, 2021, the quickly growing Colorado retail chain said it had acquired two more cannabis shops in its home state, bringing the company’s store count to 22. According to a news release issued Tuesday, Schwazze agreed to pay $29 million for MCG, which does business as Emerald Fields and has shops in Glendale, a Denver suburb, and Manitou Springs.

The deal is expected to close within 75 days and will be paid 60% in cash and 40% in Schwazze stock. The deal was the second acquisition in a week for Schwazze, which has been on an acquisition tear through much of 2021.

#4: WM Technology

WM Technology, Inc. (NASDAQ: MAPS) provides SaaS subscription offerings to retailers and brands in the United States and Canadian cannabis markets.

The Irvine, California-based WM Technology, a cannabis special purpose acquisition company (SPAC), said it acquired Sprout, a cloud-based customer relationship management and marketing platform for the marijuana space. However, the terms of the deal were not disclosed.

WM Technology is the parent company of Weedmaps, a digital marijuana retail directory that offers such features as menus and online ordering. The company went public in June after merging with SPAC Silver Spike Acquisition Corp.

According to Chris Beals, CEO and chair of WM Technology, the acquisition is expected to help clients target, reach, acquire, and retain customers at scale. Sprout is used by cannabis dispensaries and brands in the U.S., Canada, and Puerto Rico.

“With the addition of Sprout, we are one step closer to realizing this vision of providing an all-in-one seamless and integrated solution to run, manage and grow one’s cannabis business,” Beals said in the release.

Top Psychedelic Stocks to Keep a Close Eye On

#1: Awakn

Awakn Life Sciences Corp. (NEO: AWKN) (OTCQB: AWKNF) is a biotechnology company that engages in researching, developing, and delivering psychedelic therapeutics to treat addiction other mental health conditions in the United Kingdom and Europe. The company is headquartered in Vancouver, Canada.

This week Awakn announced that it had signed a Memorandum of Understanding (MOU) with Devon Partnership NHS Trust (a provider of mental health services to <1 million people living in Devon, south-West England) and the University of Exeter.

The proposed partnership intends to enhance the evidence base for ketamine-assisted psychotherapy as an alternative treatment for Alcohol Use Disorder and treatment-resistant depression within the NHS. At present, Brits looking to access these therapies must do so by paying out-of-pocket: a practice that is much rarer in the UK vs. the US, for example.

#2: MindMed

Mind Medicine (MindMed) Inc. (NASDAQ: MNMD) is a psychedelic medicine biotech company that discovers, develops, and deploys psychedelic inspired medicines and therapies to address addiction and mental illness.

The Nasdaq-listed company announced that it had begun recruitment for a randomized placebo-controlled study evaluating the effects of daytime and evening administration of repeated low doses of LSD.

MindMed will measure the effects of LSD microdoses on neuroplasticity markers such as BDNF plasma levels, as well as measures of sleep, mood, cognitive performance, and more. Dr. Kim Kuypers at Maastricht University will lead the study.