The Week In Cannabis: PA, MD, Big Tobacco, GTI, Sundial, MedMen, Earnings, Financings And More
Cannabis stocks traded mostly in the green this week, as we got into earnings season.
“While there were a lot of companies reporting earnings, like Turning Point Brands who gave guidance of $422 million for 2021, I thought the biggest piece of data came from Pennsylvania,” Debra Borchardt, editor-in-chief of Green Market Report, told Benzinga. “The state reported that in one year it had sold over $900 million in medical marijuana. This demonstrates the demand for cannabis in this state and bodes well for any future adult-use legalization. This is also a big number when one considers that the program has only just gotten underway.”
And, while Pennsylvania sales surpassed $900 million in one year, Maryland sales finally hit $1 billion, more than three years after the medical cannabis program launched in December of 2017.
Meanwhile, the Swiss-American multinational Philip Morris International Inc. (NYSE: PM), maker of Marlboro cigarettes, said it’s considering getting into the cannabis industry. The company is currently analyzing key components of the industry, such as the “toxicity of cannabis, efficacy and differences between pharmaceutical and consumer options.”
CEO Andre Calantzopoulos reportedly said, “We are doing all this work and will determine one day what avenues to pursue… But our priority is what we’re doing with our smoke-free products, and that’s where I would stay on cannabis.”
Benzinga Cannabis’ content is now available in Spanish on El Planteo.
This is not the first foray of big tobacco into the cannabis industry. In 2018, Altria Group, Inc. (NYSE: MO) invested CA$2.4 billion ($1.8 billion) in Cronos Group, Inc. (NASDAQ: CRON), and only last month, British American Tobacco PLC (NYSE: BTI) confirmed a CA$221-million investment in OrganiGram Holdings, Inc. (NASDAQ: OGI)
ETFs posted mostly positive performances. Over the five trading days of this week:
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The ETFMG Alternative Harvest ETF (NYSE: MJ): gained 1%.
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The AdvisorShares Pure Cannabis ETF (NYSE: YOLO): advanced 2.8%.
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The AdvisorShares Pure US Cannabis ETF (NYSE: MSOS): rose 6.7%.
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The Cannabis ETF (NYSE: THCX): was up 1.8%.
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The Amplify Seymour Cannabis ETF (NYSE: CNBS): was down 0.37%.
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The SPDR S&P 500 ETF Trust (NYSE: SPY) closed the week almost flat.
On the policy front, U.S. lawmakers introduced a bipartisan, bicameral bill to study the various impacts of state-legalized cannabis programs. The bill would assess both medical and recreational cannabis programs and their economic, public health, criminal justice and workplace effects.
The study would also look at revenue streams generated by legal marijuana markets, how the revenue is used and how it impacts state budgets.
Aside from financial metrics, the study would look at consumption among population groups, medicinal usage and the impact of cannabis on the opioid crisis.
Policy, Science And Data
According to a recent report from the Brightfield Group, the U.S. cannabis market is set to reach $30.6 billion by 2025.
In Florida, two businesses looking to open medical cannabis dispensaries in downtown Miami have filed lawsuits against the city, which has refused to authorize dispensary openings, despite the fact that the state legalized medical cannabis in 2016 by way of a constitutional amendment that was passed with a 71% approval rate.
Texas continues to ease restrictions for its medical cannabis program. This week, several cannabis-related measures were approved in the House, including a proposal to research the potential of psychedelics such as psilocybin and MDMA and to expand the state’s medical cannabis program by adding more qualifying conditions to the list.
Under this bill, the Department of State Health Services would add cancer, chronic pain and post-traumatic stress disorder (PTSD) to its list of qualifying conditions. It could also raise the THC cap for medical cannabis products from 0.5% to 5%.
Financings And M&A
Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) raised $217 million to retire its existing $105-million senior secured debt due May 2023, finalizing a senior non-brokered private placement financing via the issuance of senior secured notes.
Sundial Growers Inc. (NASDAQ: SNDL) upped its financial commitment to SunStream Bancorp Inc. to $188 million – from the previously announced $100 million.
Back in March, the company first announced it has agreed to establish a 50/50 joint venture with the SAF Opportunities LP (a member of the SAF group) via a new corporation, SunStream Bancorp. The joint venture was created with a goal to produce investment opportunities in the cannabis sphere, by offering exposure to attractive debt, equity, and hybrid investments.
MedMen Enterprises Inc. (CSE: MMEN) (OTCQX: MMNFF) canceled warrants to acquire 97,785,140 Class B Subordinate Voting Shares of the company. The move comes after two consecutive quarters of positive retail cash flow.
Ascend Wellness Holdings, Inc. is poised to go public through an initial public offering of some 10 million shares of its Class A common stock at $8 per share, for total gross proceeds of $80 million.
The company expects to close the offering and then debut on the Canadian Securities Exchange on Tuesday, May 4 under the ticker symbol “AAWH.” An OTCQX Best Market listing is also anticipated.
Also this week, Ascend opened a new store in downtown Boston.
Acreage Holdings, Inc. (OTCQX: ACRGF) sold its Florida operations to Red White & Bloom Brands, Inc. (CSE: RWB) (OTCQX: RWBYF) for $60 million in cash, stock and vendor take-back promissory notes.
Columbia Care, Inc. (NEO: CCHW) (CSE: CCHW) (OTCQX: CCHWF) (FSE: 3LP) acquired a 34-acre cultivation facility in Long Island, New York in a $42.5-million stock-and-cash deal.
The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) is poised to take over Green Roads in a cash-and-stock transaction valued at $40 million.
Headset raised $1.825 million in a round led by Silverleaf Venture Partners. WGD Capital, L.P. and Poseidon also participated in the financing.
IM Cannabis Corp. (CSE: IMCC) (NASDAQ: IMCC)’s Israeli subsidiary, IMC Holdings Ltd., will acquire a trading house and in-house pharmacy activities from the Panaxia Labs Israel, Ltd. group of companies for $7.2 million.
Acquired Sales Corp. (OTCQX: AQSP) subsidiary Lifted Made and Savage Enterprises partnered to create an equally-owned new entity called LftdXSvg LLC to make and sell products containing hemp-derived THCV (tetrahydrocannabivarin).
Halo Collective Inc. (NEO: HALO) (OTCQB: HCANF) (FSE: A9KN) and Red Light Holland Corp. (CSE: TRIP) (FSE:4YX) (OTC: TRUFF) are forming a 50/50 joint venture.
Red Light Oregon, Inc. is poised to keep track of regulatory updates related to Oregon’s Measure 109, as well as form a management team and develop a commercialization strategy. It will be funded with $50,000 from each party.
Medical cannabis tech accelerator TechforCann Europe raised 2.5 million euros ($3 million) from Malta Enterprise, the island’s governmental innovation agency.
Earnings Reports
Harborside Inc (CSE: HBOR) (OTCQX: HBORF) reported that gross revenue grew by 29.4% year-over-year to roughly $63.4 million in fiscal 2020. Adjusted EBITDA came in positive, at $7.4 million for the same period, compared to an $8.9 million loss in 2019.
Fire & Flower Holdings Corp. (TSX: FAF) (OTCQX: FFLWF) reported it has generated CA$128.1 million (CA$103.2 million) in revenue at a gross profit of 35.5% in fiscal 2020. This represents 150% year-over-year growth.
Adjusted EBITDA came in positive, at CA$20,000 for the same period, compared to a CA$16.3 million loss in the fiscal year ended February 1, 2020.
Namaste Technologies Inc. (TSXV: N) (OTCQB: NXTTF) said that its gross revenue grew by 13% year-over-year to CA$6.15 million ($4.96 million) in the first quarter of 2021.
Net revenue for the first three months of the fiscal year amounted to CA$5.5 million, compared to CA$5.3 million in the same quarter of 2020, and CA$7.2 million in the prior quarter.
Growth Corp. (CSE: GAGE) generated $39.9 million in revenue at a gross margin of 30.8% in fiscal 2020, representing a 1,972% year-over-year increase.
The Ferndale, Michigan-based company, led by veteran cannabis industry executive Bruce Linton, also disclosed that its fourth-quarter revenue spiked 615% over the same period to $10.5 million.
Turning Point Brands, Inc. (NYSE: TPB), maker of Zig-Zag papers, said fourth quarter net sales grew by 31.2% to $105.3 million. Net income rose from $25.0 million to $12.7 million.
Guidance was also strong. The company said it expects net sales of $412 to $432 million for 2021.
Find all the details on these and other earnings reports on Benzinga Cannabis’ Earnings Center.
Other News
The U.S. Department of Agriculture (USDA) entered into a new agreement with a chemical manufacturing company, Midwest Bioprocessing Center (MBC) to help expand the hemp seed oil-based cosmetic market.
TIME revealed its first-ever “TIME100 Most Influential Companies” list that highlights businesses making an extraordinary impact around the world. Included in the list was none other than Tilray Inc (NASDAQ: TLRY).
“Irwin Simon was best known for creating a health-food giant before signing on to head Aphria, a cannabis company based in Canada, where recreational marijuana is legal. Separately, Brendan Kennedy went to Nanaimo, British Columbia, to launch Tilray after co-founding a private-equity firm to buy cannabis startups. Now they’re merging the two to form the world’s largest cannabis company by annual revenue—more than $685 million,” said the magazine.
CBDistillery and Releaf app announced a strategic partnership for 2021. Together, the companies will analyze the efficacy of CBDistillery’s product catalog in addressing symptoms of stress, sleep, physical pain/discomfort, and anxiety. The first two studies focused on stress and sleep are accepting 1,000 volunteers for enrollment. Participants will receive products for free.
Tony Schwartz, director of strategic partnerships at CBDistillery, told Benzinga, “The alignment between Releaf app and CBDistillery is ideal in that we both are vested in providing consumers with trustworthy, objective, and reliable information on their journeys with CBD, CBG, and CBN.”
CanaQuest Medical Corp’s (OTC: CANQF) Mentanine demonstrated at least 10-times (10X) the efficacy compared to “Pharma Grade CBD” in preclinical trials undertaken by CanaQuest’s research partner in Ontario, Canada, Western University. Neuroscientist Dr. Steven Laviolette and his 13-member university research team managed the preclinical trials, which proved to be statistically significant.
“Our CBD-based Mentanine discovery works synergistically and has multiple times the efficacy compared to pure CBD products on the market. Evidence found that this formulation targeted a specific nuclear cellular receptor involved in anti-inflammatory mechanisms indicating that this formula may also treat inflammatory disorders,“ Western University neuroscientist Dr. Steven Laviolette told Benzinga.
Abaca announced a partnership with Staley Technologies and CIMA with the goal of digitizing cash management. The partnership delivers an integrated solution to cannabis operators, financial controllers, and CFOs with secure cash custody processes and real-time visibility on company cash across the organization.
“Abaca’s proud to offer a tech-forward solution to one of the last remaining analog aspects of the industry. Whether you are a multistate operator or a single dispensary, our partnership with Staley and CIMA brings our clients a seamless solution,” Abaca chief strategy officer Brian Bauer told Benzinga. “Authorized employees across the organization can log into Abaca Online Banking and see a real-time cash position and transaction log, in addition to being able to manage financial operations and send money.”
GCorp, a management and consulting services company founded by New York’s philanthropic Gilder Family, and Grow Industries Inc. (formerly ClimaGrow) entered into a definitive agreement, pursuant to which the Grow Industries brand will join GCorp’s portfolio of services.
Grow Industries founder Jesse Elkins told Benzinga, “Our industry is rapidly expanding, which means that operators need to overcome unique barriers, such as limited resources, finite bandwidth capacity and a lack of topic experts across the value chain. Our services at Grow Industries give MSOs, licensed producers and cannabis brand specialists the financial and technical solutions needed to thrive in both the short and the long term. The glaring marketplace gap between supply and demand for true, quality cultivation and manufacturing facilities is where we come in, allowing our clients to get that leg up they are looking for and take things to new heights.”
C3 Industries announced its High Profile Grand Rapids location has converted from medical to adult-use. CEO Ankur Rungta explained, “With the Michigan adult-use market hitting record sales in March, we’re thrilled to now offer our curated selection of premium cannabis products at High Profile to recreational consumers in Grand Rapids, Kentwood and Wyoming. Whether long-time cannabis connoisseurs or new to the plant, our experienced budtenders can help consumers find the best products to fit their needs and desires. As Michigan is our home, we look forward to bringing six more High Profile locations to the state throughout 2021, expanding convenient access to quality flower and products as demand continues to surge.”
Executive Moves
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Lead image by Ilona Szentivanyi. Copyright: Benzinga.
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