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StaffJune 29, 2022
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The Daily Hit is a recap of the top cannabis business stories for June 29, 2022.

ON THE SITE

CannaRegs Lawsuit Comes to a Quiet End

The cannabis tech firm CannaRegs announced that a lawsuit that was filed against it has been dismissed. CannaRegs is a  technology platform that provides users enhanced access to all state and municipal cannabis rules and regulations. It was acquired by Fyllo in January 2020. Fyllo is another cannabis tech firm whose CannaBrain marketing technology ingests and interrogates billions of data points, allowing brands to safely build and execute advertising campaigns while also enabling publishers to create and monetize compliant ad inventory. At the time of the acquisition, Amanda Ostrowitz, CannaRegs’ founder and CEO,  joined Fyllo as its Chief Strategy Officer reporting to CEO Chad Bronstein. Read more here.

Law Could Allow Cannabis Ads on Local TV, Radio

Broadcasters have been notorious for their refusal to air cannabis ads. Even in states where the product is legal, advertisers found themselves being turned down as the Federal Communication Commission (FCC) took the stance that a federally illegal product could not be advertised. Read more here.

Summer Trends See Sales Spike on Long Weekends, Holidays

If predicted trends prove to be true, this Thursday, June 30, may be the busiest cannabis retail sales day for summer 2022, as Americans in legal states get ready to celebrate the long 4th of July weekend. Cannabis consumers are likely to celebrate independence by indulging in their favorite flower and other products that enhance a day at the beach, backyard BBQ with friends, or summer vacation in some legal destination. Read more here.

IN OTHER NEWS

Red White & Bloom Brands Inc.

Red White & Bloom Brands Inc., (CSE: RWB) (OTCQX: RWBYF) provided this update on the status of a management cease trade order granted on May 3, 2022 by the British Columbia Securities Commission under National Policy 12-203 – Management Cease Trade Order. On May 3, 2022, the Company announced that, for reasons disclosed in the news release, there would be a delay in the filing of its financial statements and accompanying management’s discussion and analysis for the fiscal year ended December 31, 2021, beyond the period prescribed under applicable Canadian securities laws. Read more here.

Tilray Brands, Inc.

Tilray Brands, Inc. (Nasdaq: TLRY; TSX: TLRY), a global cannabis-lifestyle and consumer packaged goods company, announced that its medical cannabis division, Tilray Medical, has expanded its medical cannabis offerings in the United Kingdom. Tilray Medical now offers the broadest portfolio of cannabis flower in the UK market today, including a differentiated range of high THC products, cultivated at its EU-GMP-certified facility in Portugal. Read more here.

Decibel Cannabis Company Inc.

Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF), a cannabis producer, announced that is has received its certification to export its cannabis products internationally. “This is a very important milestone for the outlook of the Company as this certification unlocks untapped markets for Decibel. The opportunity allows the Company to provide its high-quality craft cannabis products internationally, while also setting the stage for the Decibel brands to develop international recognition and additional consumer exposure,” said Paul Wilson, Chief Executive Officer. Read more here.

Sugarbud Craft Growers Corp.

Sugarbud Craft Growers Corp. (TSXV: SUGR, SUGR.WT, SUGR.WS, SUGR.WR, SUGR.DB) (OTCQB: SBUDF) announces that it has entered into shares for services agreements with certain arm’s length service providers, pursuant to which Sugarbud will issue a total of 665,020 Shares at a deemed price of $0.35 per Share in satisfaction of amounts owing to such persons in the aggregate amount of $232,757. The Shares to be issued in connection with the Transaction will represent approximately 10.2% of the issued and outstanding shares of Sugarbud on a post-transaction basis. Read more here.

CEA Industries Inc., Merida Capital Holdings

CEA Industries Inc. (NASDAQ: CEAD, CEADW), a controlled environment agriculture (CEA) systems engineering and technologies company, announced it has entered into an agreement with Merida Capital Holdings in which Merida agrees to use the company as its sole provider of certain products and services for Merida’s indoor cultivation facilities. Read more here.

Allied Corp.

Allied Corp. (OTCQB: ALID) announced that it has completed the first shipment of commercial dried cannabis from Colombia to an international market. On April 01, 2022, Colombia enacted the new legislation allowing for the legal export of dried cannabis produced in Colombia. In April 2022, Allied submitted several applications for export approvals. After many levels of regulatory inspections, analyses, discussions and questions, Allied’s first export approval came in June 2022. Read more here.


Debra BorchardtJune 29, 2022
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Broadcasters have been notorious for their refusal to air cannabis ads. Even in states where the product is legal, advertisers found themselves being turned down as the Federal Communication Commission (FCC) took the stance that a federally illegal product could not be advertised.

Law360 reported that “House lawmakers tacked language onto a Federal Communication Commission spending bill for next year to block the FCC from trying to prevent broadcasters from running ads for cannabis products in states with legalized marijuana.” Editor & Publisher Magazine reported, “Under the language, the FCC could not use any of the funds appropriated to the agency for the fiscal year that starts Oct. 1 to deny broadcasters a license renewal or station sale application, or require an early license renewal application to be filed, in reaction to a station’s taking cannabis ads in legal jurisdictions.”

According to the National Association of Broadcasters, the House Appropriations Committee advanced the FY 2023 Financial Services and General Government appropriations bill which included language that would prevent the FCC from taking administrative action against broadcasters that accept cannabis advertisements consistent with the law of the state or jurisdiction in which the station is licensed.

NAB spokesman Alex Siciliano said, “We are pleased to see that this bipartisan language has advanced in the House today. As the vast majority of states have legalized cannabis in some form, today marks a long overdue step toward finally allowing broadcasters to receive equal treatment regarding cannabis advertising that other forms of media have had for years. While we welcome today’s progress, local broadcasters will continue to work with all policymakers towards a broader resolution of this competitive disparity and in support of our unique service to local communities.”

2023 House Bill

The 2023 House bill that covers financial services and general government spending cleared the full Appropriations Committee last Friday. Law360 wrote, “Appropriators in the House hope to see the mandate on the FCC attached as a policy rider to a $390 million operating budget for the fiscal year starting in October, which would also raise the agency’s budget by $8 million over this year. The FCC has asked for a $16 million boost.”

Cannabis companies typically advertise on billboards, print media, some social media (depending on the company and platform) and cable or internet streaming channels. However local television and radio companies have been prevented from running these ads. Cannabis advertising is projected to total $18.5 billion in the U.S. this year.

The New York State Broadcasters Association President David Donovan said, “We are grateful to House Appropriations Committee Chairwoman Rosa DeLauro, Subcommittee Chairman Mike Quigley and members of the Committee for recognizing the unfairness of the present situation with respect to cannabis advertising. The provision in this House appropriations bill is a major step forward for leveling the playing field for local broadcasters. We believe the law of the state in which a station is licensed should determine whether a station can accept cannabis advertising if they so choose. We look forward to working with members of Congress and the Administration to help restore parity between local broadcasters and other media outlets.”

He added, “We believe the law of the state in which a station is licensed should determine whether a station can accept cannabis advertising if they so choose. We look forward to working with members of Congress and the Administration to help restore parity between local broadcasters and other media outlets.”

Just the First Step

While the move is seen as a positive one, it must still pass through the U.S. House of Representatives. The bill will then move to the House floor for consideration in July and then goes on to the Senate. The NYSBA said that the Senate poses additional problems, not just for its language but the entire appropriations process. “The appropriations process is notoriously complex, which means the bill may get stalled. Congress is likely to adopt an interim budget through a continuing resolution. At some point, perhaps after the mid-term elections, there will be a final vote. Even if it passes, the legislation is not a “silver bullet.” This is because appropriations bills apply for a one-year period and would only last for FY 2023, which is scheduled to begin on October 1, 2022, and run through September 30, 2023. It would have to be renewed next year for FY 2024 and every year thereafter. As a practical matter, once it is included, it is like to be renewed every year.”


Debra BorchardtJune 29, 2022
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The cannabis tech firm CannaRegs announced that a lawsuit that was filed against it has been dismissed. CannaRegs is a  technology platform that provides users enhanced access to all state and municipal cannabis rules and regulations. It was acquired by Fyllo in January 2020. Fyllo is another cannabis tech firm whose CannaBrain marketing technology ingests and interrogates billions of data points, allowing brands to safely build and execute advertising campaigns while also enabling publishers to create and monetize compliant ad inventory. At the time of the acquisition, Amanda Ostrowitz, CannaRegs’ founder and CEO,  joined Fyllo as its Chief Strategy Officer reporting to CEO Chad Bronstein.

The case was voluntarily dismissed this week after the executives were unable to provide proof of their claims. The parties stated,

Lester Firstenberger and Sathya Rajavelu (“Plaintiffs”) have decided to voluntarily dismiss their lawsuit against Regs Technology, Inc. and Amanda Ostrowitz (“Defendants”) relating to the sale Plaintiffs’ ownership in Regs Technology.  When they filed the lawsuit, Plaintiffs believed that at the time of their divestment, Ostrowitz and the other defendants named in the original complaint had been negotiating the sale of Regs Technology and had concealed this negotiation from Plaintiffs.  Since the filing of this lawsuit, discovery has revealed that Plaintiffs were mistaken in their belief that discussions pertaining to the sale of Regs Technology had preceded their divestment in Regs Technology.  In light of this, Plaintiffs have in good faith decided to dismiss the lawsuit.”

Ostrowitz said, “I’m grateful to have this litigation behind me and move onward to the next chapter. Also if it can serve as a cautionary tale, I would tell other entrepreneurs that in this litigious society this can happen to anyone, even if you play by all the rules. If I could go back in time and give my young entrepreneur self any advice, it would be to create a “litigation” savings account and put aside at least 5% of each paycheck, and hope you never have to use it.”

Lawsuit

Months after the acquisition, former CannaRegs executives Lester Firstenberger and Sathya Rajavelu filed a lawsuit claiming they sold their 11.8% interest in the company for $178,942, based on a $1.5 million valuation of the company. They claimed that Ostrowitz stayed quiet about her potential acquisition which they say valued the company at $10 million. Their lawsuit accused Casters Holdings, Inc. d/b/a Fyllo (“Fyllo”), Regs Technology, Inc. f/k/a CannaRegs, Ltd., Amanda Ostrowitz, Phyto II, LP, Panther Opportunity Fund, LLC, Larry Schnurmacher, David Friedman, Ramie A. Tritt and Jordan Tritt. They claimed they would not have sold their interest had they known it would be valued much higher only four months later.

No Evidence

According to a letter filed in the case on May 19, 2022, “Plaintiffs, however, have not come forward with a single iota of evidence showing that there were communications between Defendants and Fyllo prior to September 16, 2019. What is more, in order to prevail on their claim that Defendants breached their fiduciary duty to them, Plaintiffs would need to show far more than just preliminary communications. They would need to show that a firm offer was made prior to September 16, 2019.”

The letter went on to say, “Without the evidence needed to make this showing, Plaintiffs have resorted to scorched earth discovery in the hopes of possibly discovering a new claim or theory or leveraging a settlement through discovery costs. Plaintiffs’ efforts include 174 separate document requests, 41 interrogatories, a 32-page discovery letter, a 17-page single-spaced letter motion, multiple motions to compel, multiple requests for hearings before this Court, and multiple iterative requests to the Court to follow up on issues that counsel forgot to raise during lengthy hearings.”

Continued Expansion

Despite the lawsuit, Fyllo has continued to build up the company. A couple of weeks ago, Fyllo said it was buying NineSixteen, an interactive retail display network that delivers high-impact digital experiences in physical retail locations. NineSixteen will bolster Fyllo’s widely-used retail offering, which was created to build stronger connections with today’s most progressive consumers. The company has also expanded into the cryptocurrency vertical.

“Since launching in 2019, Fyllo has rapidly expanded to address the cannabis industry’s need for compliant marketing solutions and jurisdiction-level regulatory solutions. With similar challenges and high-growth opportunities present in the cryptocurrency vertical, expanding our Regulatory Database to serve them is a natural evolution of the business,” said Chad Bronstein, CEO and Founder of Fyllo.

The Fyllo Regulatory Database for cryptocurrency addresses the needs of organizations with this unique challenge, allowing them to scale rapidly with access to information they need to prepare themselves for disruptive compliance infringements. Automated alerts can be set up through the database, notifying users if something changes, enabling them to spot trends and filter through information faster. The platform will be available through a SaaS self-service model, providing instant access to the latest regulations.

 


Joanne CachaperoJune 29, 2022
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If predicted trends prove to be true, this Thursday, June 30, may be the busiest cannabis retail sales day for summer 2022, as Americans in legal states get ready to celebrate the long 4th of July weekend. Cannabis consumers are likely to celebrate independence by indulging in their favorite flower and other products that enhance a day at the beach, backyard BBQ with friends, or summer vacation in some legal destination.

Canna-tech company Surfside Solutions’ recently released its first-ever Summer 2022 Ad Planner for cannabis retailers. According to Surfside’s data analysis, several important factors are aligning that may result in a busy July 4th weekend for dispensaries and retail shops. The report “analyzed millions of cannabis transactions across dispensaries and websites from May 2021 to September 2021 to help understand future trends.”

4th of July

July is the busiest summer month for cannabis retailers, Surfside said. The Thursday before the 4th of July was the single strongest retail cannabis sales day of the summer, and the Friday before 4th of July showed 57 percent greater sales than an average day in July. This year, with July 4th falling on a Monday, there seems little doubt that locals and travelers alike will take advantage of the long weekend. 

Fridays, from June through August, possess a power of their own with an average of 41 percent higher sales than Fridays during other times of the year. At either end of the summer season, the Friday before the long Memorial Day weekend averaged a 69 percent increase in retail sales, while Labor Day Friday showed a 65 percent more sales. 

Though time is short for advertising aimed at 4th of July customers, July 10th – also known as cannabis holiday Dab Day for concentrate enthusiasts – is on the following Sunday. For the uninitiated – when viewed upside down and backward, the date 7/10 spells “oil,” the most common form of concentrate. Though nowhere near the popularity of the 4/20 holiday in April, Surfside suggested that retailers send Dab Day advertising starting on July 5, with special offers on concentrate products. 

Cannabis data company Headset in early June released an analysis of concentrate sales data from California, Colorado, Washington, Nevada, Oregon and Michigan in the U.S., and the provinces of Alberta, Ontario, British Colombia, and Saskatchewan in Canada.

“Since our last [October 2021] report on concentrates, market share to this category has increased in Canada (up from 2.9%) and decreased in the U.S. (down from 9.5%). In Canada, concentrates are the third best-selling ‘Cannabis 2.0’ category behind vapor pens and edibles. In both countries they are the fifth highest revenue product format behind flower, pre-rolls, vapor pens, and edibles,” Headset said. The report also noted that Boomer consumers were least likely to purchase concentrates; various forms of concentrate were most popular with male Gen Z consumers.  

In Pennsylvania, patients will be able to purchase cannabis vape products after a mid-June ruling overturned a February recall and sales ban on more than 670 cannabis vape products, mandated by the state’s Department of Health. Health officials had cited the use of terpenes (botanical compounds that can be derived from cannabis and other plants, commonly used for flavorings or adaptogenic effects) in concentrate formulations as the cause for the ban. The injunction handed down by the Commonwealth Court allowed vape products back on shelves in Pennsylvania’s medical dispensaries; the state has not yet approved recreational sales. 

Beverages

A cannabis product category that has seen steadily increasing consumer interest – maybe, especially on long, lazy, hot summer days – are THC-infused adult beverages.

“Since the launch of beverages in Canada around January 2020, market share of this category has seen significant growth until reaching a peak of 2.1 percent of the total Canadian market in December of 2021. With a long history of beverages in the U.S., market share has experienced slower, more consistent growth in the U.S. over the same time period,” said Headset’s Cannabis Beverages: A look at Category Trends & Performance report.

Headset’s data indicated also that California leads the infused beverage market, and “by the end of 2021, California had doubled their product offerings to just over 530 distinct cannabis beverage products.” Canadian consumers purchased more carbonated beverages, though, while “drops, mixes, elixirs, and syrups,” made up more than 27 percent of American beverage category sales. 

Just in time for summer, artisan soda company Jones Soda recently released an infused offering, Mary Jones sodas formulated with 10mg of THC per bottle, in Berry Lemonade, Orange and Cream, Green Apple and Root Beer flavors. A 100mg THC-infused canned soda is coming soon, according to a company announcement, as well as a 1000mg “syrup” tincture that can be added to beverages. 

“Jones Soda is a legendary brand built from bold flavors and doing bold things,” said Bohb Blair, a chief brand officer at Mary Jones Cannabis Co. and chief marketing officer for Jones Soda Co. “Whether you’re a canna-newbie or a cannaseur, our sodas are the most exciting flavors in cannabis today, and our product roadmap will keep our fans delighted by what’s to come.” 

Award-winning, California-based Good Stuff Beverage Company has brought energy drink vibes to cannabis beverages with two-ounce, 100mg THC infused shots in sativa and indica strains. Twelve-ounce infused drinks come in sativa, indica and hybrid options, for energizing, calming, or euphoric effects. The line’s summery flavor blends include Honey Lemonade, Raspberry Lemonade, Key Limeade, and Strawberry Hibiscus. 

THC-infused beverage manufacturers may be on to something, as warm summer temperatures drive consumers to keep chill and hydrated. Wellness drinks infused with non-psychoactive ingredients derived from hemp, like CBD and terpenes, are already readily available from mainstream vendors including grocery chains and convenience stores and appeal to adults who want more options than plain water or soda, to avoid an alcohol hangover. 

Beverage alcohol research company IWSR released a report in January that indicated low- and no-alcohol beverage options are increasing in popularity with consumers. The report analyzed data on beverages infused with CBD and non-psychoactive plant compounds, but not THC-infused formulations. 

“The alcohol-adjacent category is emerging rapidly as more people become interested in moderation and avoiding the effects of alcohol,” IWSR researchers said. “Alcohol adjacencies offer mood-enhancing or functional benefits, many employing ingredients such as CBD, nootropics and adaptogens. These products focus on how their ingredients will make consumers feel, and are seen as an alternative way to enjoy traditional alcohol occasions – thereby appealing to health-conscious (and stressed-out) consumers.” 

Merchants should make note: Labor Day is not far off, on Monday, September 5, which will mark a long weekend and the unofficial end of summer. According to Surfside, it could also be the second strongest weekend for summer sales. 

By then, days will be getting shorter, and it’ll be time to start planning for winter holiday promotions and advertising campaigns.


StaffJune 28, 2022
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The Daily Hit is a recap of the top cannabis business stories for June 28, 2022.

ON THE SITE

Safe Harbor Financial SPAC Postponed Again

The Northern Lights Acquisition Corp. (NASDAQ: NLIT), a special purpose acquisition corporation, has rescheduled its special meeting of stockholders once again to Tuesday, June 28, 2022 at 4:00 pm ET. The vote was originally planned for June 24 in order to approve Safe Harbor Financial as the qualifying transaction for the SPAC. Read more here.

Aleafia Health Reaffirms Guidance for 2023

Aleafia Health Inc. (OTCQX: ALEAF) reported its financial results for the quarter ended March 31, 2022, with total revenue of $10.7 million versus last year’s $7.5 million for the same time period. The net loss was trimmed to $4.1 million from last year’s $11.2 million for the same time period. Aleafia also reaffirmed guidance of delivering between $53 and $63 million in total net revenue in the fiscal year 2023. Read more here.

Jazz Pharmaceuticals MS Study Misses its Mark

Jazz Pharmaceuticals plc (Nasdaq: JAZZ) announced top-line results from the Phase 3 RELEASE MSS1 trial (NCT04657666) evaluating nabiximols oromucosal spray (JZP378, or Sativex , ex-U.S.) on clinical measures of spasticity in individuals with multiple sclerosis (MS). The RELEASE MSS1 trial did not meet the primary endpoint of change in Lower Limb Muscle Tone-6 (LLMT-6) between baseline and Day 21, as measured by the Modified Ashworth Scale (MAS). Read more here.

Analysts are Warming Up to Aurora Cannabis

Two analysts have begun warming up to Aurora Cannabis (NASDAQ: ACB) but for two entirely different reasons. Stifel analyst W. Andrew Carter upgraded his rating on Aurora from Sell to Hold and lowered his target price from C$2.50 to C$2.15. Cantor Fitzgerald analyst Pablo Zuanic upgraded his rating from Neutral to Overweight and increased his price target from C$3.90 to C$4.05. The stock is currently trading around C$2.00 ($1.55). Read more here.

IN OTHER NEWS

New Leaf Ventures Inc.

New Leaf Ventures Inc. (CSE: NLV) (OTC: NLVVF, a management and investment organization dedicated to evaluating, investing, and accelerating advanced stage operations in the North American Cannabis sector, wishes to advise that an assessment of the region’s oversaturated cannabis production conditions has led to the strategic divestiture of equipment, downsizing of related personnel, and an infusion of capital through the sale of cultivation related assets. The company and the license holder remain committed to the development, production, distribution and sale of cannabis retail brands and products. Read more here.

Pervasip Corp., KRTL International Corp.

Pervasip Corp. (OTC: PVSP), a developer of companies and technologies in high value emerging markets, and Artizen Corp. today announced that it and Dr. Kyeung-Il Park, the Head of Department of Horticulture & Life Science in Yeungnam University, in partnership with KRTL International Corp., a wholly owned subsidiary of KRTL Holding Group Inc. (OTC: QENC), have received approval to be acting as the exclusive expert groups providing services and support for the development of  the indoor smart growing section of the Korean Hemp development project. Read more here.

Bright Green Corporation

Bright Green Corporation (Nasdaq: BGXX), a company selected by the U.S. government to grow, manufacture, and sell, under federal and state laws, cannabis and cannabis-related products for research, pharmaceutical applications and affiliated export, today provided an update on the progress made on its world-class agricultural complex in Grants, New Mexico. Read more here.

Aleafia Health Inc.

Aleafia Health Inc. (TSX: AH, OTCQX: ALEAF) announced that it has closed its previously announced amendment of its unsecured convertible debentures. “We are delighted we have now completed this transaction,” said Tricia Symmes, Aleafia Health’s CEO. “We want to thank all those who participated for demonstrating their confidence in the Company’s future. Coupled with the closing of the $5.6 million private placement announced last week, the Company is now much better positioned to execute on its ambitious growth plans in all key segments of its business: adult-use, medical and international.” Read more here.

Turning Point Brands, Inc., Petalfast Inc.

Petalfast Inc., a full-spectrum marketing and sales agency for the cannabis industry, announced a partnership with Turning Point Brands, Inc. (NYSE: TPB), to drive distribution expansion of their iconic rolling paper brand, Zig-Zag. Turning Point is a manufacturer and distributor of national branded consumer products, including alternative smoking accessories and consumables. Read more here.

Khiron Life Sciences Corp.

Khiron Life Sciences Corp., (TSXV: KHRN) (OTCQX: KHRNF) (Frankfurt: A2JMZC) a global medical cannabis company, continues expansion of the Khiron end-to-end solution throughout Latin America and Europe. Khiron is serving a record number of patients who are being treated with Khiron products globally. The company has recently reached a cumulative stock of more than 100.000 bottles of medical cannabis sold. Read more here.

DC Cannabis Trade Association

Today, in a major win for cannabis patients, the DC Council voted unanimously to pass the “Medical Marijuana Self-Certification Emergency Amendment Act of 2022.” This bill allows individuals 21 years of age and older to self-certify their eligibility for medical cannabis without needing a healthcare practitioner’s recommendation. Read more here.

 

 

 


StaffJune 28, 2022
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Jazz Pharmaceuticals plc (Nasdaq: JAZZ) announced top-line results from the Phase 3 RELEASE MSS1 trial (NCT04657666) evaluating nabiximols oromucosal spray (JZP378, or Sativex , ex-U.S.) on clinical measures of spasticity in individuals with multiple sclerosis (MS). The RELEASE MSS1 trial did not meet the primary endpoint of change in Lower Limb Muscle Tone-6 (LLMT-6) between baseline and Day 21, as measured by the Modified Ashworth Scale (MAS).

“We remain committed to the nabiximols program and are actively assessing the RELEASE MSS1 trial results, which will be presented at a future medical meeting. We look forward to additional data from two other ongoing trials that have the potential to support a U.S. FDA New Drug Application submission,” said Rob Iannone, M.D., M.S.C.E., executive vice president, global head of research and development at Jazz Pharmaceuticals. “I would like to extend a heartfelt thank you to all those who supported and made this study possible, including the patients who were enrolled, their families, our investigators, staff, and all of the dedicated Jazz employees.”

The Sativex or nabiximols oromucosal spray is a complex botanical mixture formulated from extracts of the cannabis sativa plant and contains the cannabinoids delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD), as well as other cannabinoid and non-cannabinoid components. Nabiximols oromucosal spray (known as Sativex ex-U.S. and first approved in the U.K. in 2010) has been approved in 29 countries for the treatment of adult patients with moderate to severe spasticity due to MS who have not responded adequately to other anti-spasticity medication based on previously completed clinical trials.

Multiple sclerosis (MS) spasticity is one of the most common motor symptoms associated with MS. MS spasticity often manifests as involuntary muscle stiffness and/or spasms, occurring in up to 84% of individuals with MS, and approximately one-third of individuals with MS still live with uncontrolled spasticity symptoms. However, MS spasticity can also lead to pain, sexual dysfunction, dysarthria, fatigue, depression and anxiety, mobility impairment, bladder and bowel dysfunction, and sleep disturbances. Less than half of individuals with MS receiving treatment for spasticity are satisfied with the current treatment regimens and 41% of physicians are dissatisfied with current treatment regimens.

Despite the disappointment of this study, there are two additional, ongoing Phase 3 trials for the treatment of MS:

  • RELEASE MSS3: A Phase 3 multicenter, double-blind, placebo-controlled trial evaluating the efficacy of nabiximols oromucosal spray, compared to placebo, when added to standard of care, for the improvement of muscle spasms associated with MS over a 12-week treatment period. The estimated enrollment is 446 participants.
  • RELEASE MSS5: A Phase 3 multicenter, randomized, double-blind, placebo-controlled, 2-treatment, 2-period, crossover trial evaluating the effect of multiple doses of nabiximols oromucosal spray compared to placebo on a clinical measure of velocity-dependent muscle tone in the lower limbs (Lower Limb Muscle Tone-6 [LLMT-6]) in participants with MS over a 3-week treatment period. The estimated enrollment is 190 participants.

 


Debra BorchardtJune 28, 2022
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Two analysts have begun warming up to Aurora Cannabis (NASDAQ: ACB) but for two entirely different reasons. Stifel analyst W. Andrew Carter upgraded his rating on Aurora from Sell to Hold and lowered his target price from C$2.50 to C$2.15. Cantor Fitzgerald analyst Pablo Zuanic upgraded his rating from Neutral to Overweight and increased his price target from C$3.90 to C$4.05. The stock is currently trading around C$2.00 ($1.55). 

Stifel Upgrade

The Stifel report focuses mostly on Aurora’s recent bought deal offering. The original announcement of the offering and attached warrants caused the stock to sell off by 40%. The analyst believes the stock’s valuation properly reflects the 31% dilution caused by the offering that will bring Aurora’s share count to 297 million. However, the plus side to the offering is that it brings in an estimated C$240 million. Carter wrote, “We estimate Aurora will have just over C$500 million of cash at the end of 4Q22 with C$450 million of available cash.” Stifel also pointed out that the company could have as much as C$90 in cost savings as it right sizes its expenses to recognize the limitations of Canada’s adult-use market.  Carter’s report says Aurora will generate positive EBITDA in the first half of 2023. 

Cantor Upgrade

While the Cantor Fitzgerald analyst Pablo Zuanic touched on Aurora’s offering, his analysis zeroed in on the company’s potential in the German market. He wrote, “We expect Europe and more specifically Germany, to be a relevant potential catalyst and sentiment driver for cannabis stocks over the next 12-18 months.” Only Aurora and Tilray have licenses to produce in Germany and it is questionable whether the country will allow imports and may limit country licenses. “We believe that Germany is likely to legalize rec sometime in 2023 and sales could begin in 2024,” wrote Zuanic. Meaning this theme could take some time to play out. 

The current medical market in Germany is about 30 tons or 480 million euros. Cantor thinks that the German adult-use market could reach $4 billion in the first year. The report points out that Germany has a population of 83 million versus New York’s population of 20 million, suggesting a bigger market than what is expected to be the largest state market in the U.S. However, the cultural comparison isn’t addressed, i.e. the overall liberal nature of New Yorkers versus the relatively conservative nature of Germans. The analyst acknowledged the uncertainty of the situation but still believes the potential for the German market is not reflected in Aurora’s valuation. Cantor thinks the German market could double Aurora’s sales. 

Cantor’s take on the offering was that it was just “poorly timed.” Zuanic thinks the 40% selloff for just 20% dilution signaled a buying opportunity. Plus, even though the company did dilute shares through the offering, it also bought back $20 million of its outstanding convertible debt. The analyst wrote, “We expect the company to continue to buy back debt. Also, as fundamentals improve, we assume the company will be able to refinance part or all of the convertible debt.” 

The price target is also worth addressing since it is much more generous than Stifel’s. Cantor wrote, “To set the price target for ACB, we use ‘normalized EBITDA margins’ by division and assign different multiples to the various units using a sum-of-the-parts approach for our FY24 estimates….Our method yields a June 2023 price target of C$4.05 taking those FY24 (June) numbers.”

In Closing

Cantor doesn’t think cannabis stocks will move very much without some sort of legislative reform in the U.S. Whether it’s banking legislation or something else, they see that as the catalyst to move the group. They don’t think the addition of new market states like New Jersey and New York will actually move the needle for the overall group.


Debra BorchardtJune 28, 2022
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Aleafia Health Inc. (OTCQX: ALEAF) reported its financial results for the quarter ended March 31, 2022, with total revenue of $10.7 million versus last year’s $7.5 million for the same time period. The net loss was trimmed to $4.1 million from last year’s $11.2 million for the same time period. Aleafia also reaffirmed guidance of delivering between $53 and $63 million in total net revenue in the fiscal year 2023.

Aleafia noted that due to it changing its year end to March 31, its fiscal year 2022 audited, consolidated financial statements, and management discussion and analysis for the fifth quarter and 15-month periods will be available in the Investors section of the company’s website.

Full-Year Revenue

Digging into the revenue figures, Aleafia Health’s branded cannabis net revenue increased 151% to $36.8 million in the fiscal year 2022, from $14.6 million in the prior year. Total branded cannabis revenue for the period was $47.5 million. Branded cannabis net revenue rose 55% to $8.0 million in the three months ended March 31, 2022, compared to $5.2 million in the three months ended March 31, 2021. Aleafia said it completed a dramatic shift to become a branded cannabis producer in the fiscal year 2022, from a largely wholesale business-to-business supplier in fiscal year 2020. The move resulted in an increase in the average net realized price per gram and an improvement in the branded cannabis gross profit margin.

Branded cannabis represented 85% of total net revenue in the fiscal year ending March 31, 2022, compared to only 40% in the prior fiscal year. The quality of the company’s revenue base increased significantly driven by the growth in sticky, highly recurring medical sales, adult-use market share capture which drives continued end-user demand for the company’s branded consumer products, and the continued build-out of its international sales platform.

“For the fiscal year ended March 31, 2022, the Aleafia Health team once again demonstrated its relentless drive toward steadily increasing market share in branded adult-use and medical cannabis along with strong international sales growth,” said Aleafia Health CEO Tricia Symmes. “We continued our decisive quarter over quarter upward sales trajectory from Q4 to Q5 with adult-use market share rankings rising an additional two positions from 15th to 13th. The company is now positioned to become a Top 10 Licensed Producer. Aleafia Health had exceptionally strong growth year over year in retail adult-use market share, as part of a successful end to a transformative fiscal year. The company delivered a top 3 market share rank increase among the 20 largest Canadian Licensed Producers, from 28th in Q1 2021 when the company launched the Sunday Market House of Brands, to 13th in the most recently completed quarter.”

Cutting Costs

“The Company underwent a complete top-to-bottom organizational realignment which saw a 30% reduction in the workforce, integrated the medical business to deliver a cohesive and consistent patient experience, turned around its Grimsby greenhouse to focus on high-potency usable flower, and wound down many of the legacy consultants, contracts and non-recurring costs related to the Sunday Market House of Brand build-out,” said Aleafia Health CFO, Matt Sale. “With significant cost rationalizations enacted over the fiscal year, and continued cost containment initiatives underway, the Company is on track towards Adjusted EBITDA profitability in the second half of fiscal year 2023.”

The company said it has aggressively contained and rationalized its Adjusted SG&A cost profile, resulting in a 26% decline to $7.3 million in the three months ended March 31, 2022, compared to $9.8 million in the prior year.

“Our current annual run-rate net revenue of approximately $43 million is primarily underpinned by $28 million in adult-use branded cannabis and $11 million in medical and international revenue. In the current quarter, I am pleased to announce that we have significantly increased our sales generation sequentially, as the company has $11.0 million in purchase orders from its four provincial authorities to which it supplies cannabis products, an increase of 22% or $2.0 million over the quarter ended March 31, 2022. In the year ahead one of our goals is to add to our provincial supply relationships and deepen our product lines within our existing store partners which are expected to increase overall net revenue and total gross profits. With our strategic growth projects underway we remain confident we can deliver on our previously issued guidance of between $53 and $63 million in total net revenue in fiscal year 2023.”

StaffJune 28, 2022
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6min8411

The Northern Lights Acquisition Corp. (NASDAQ: NLIT), a special purpose acquisition corporation, has rescheduled its special meeting of stockholders once again to Tuesday, June 28, 2022 at 4:00 pm ET. The vote was originally planned for June 24 in order to approve Safe Harbor Financial as the qualifying transaction for the SPAC. In addition to moving the vote again, Northern Lights also said that it has deposited an aggregate of $1,150,000 (representing $0.10 per public unit sold in the company’s initial public offering) into the company’s trust account to extend the period of time it has to consummate the Business Combination by three months from June 28, 2022 to September 28, 2022, although the company currently anticipates that the Business Combination will close by June 30, 2022 subject to satisfaction or waiver of the closing conditions. 5AK, LLC, the Company’s sponsor, funded the deposit in exchange for a non-interest bearing, unsecured promissory note.

According to Northern Lights, the deal is valued at $185 million or 9.1x 2023 EV/EBITDA vs. 9.7x peer group average according to Northern Lights. The enterprise value of the IPO is 2.0x versus the cannabis SPAC average of 3.0x. These figures were determined by GreenWave Advisors. Once complete, the company will begin trading on the Nasdaq stock exchange under the ticker “SHFS”.

Protecting the SPAC

Last week, Northern Lights said that it had entered into a redemption backstop arrangement in the form of an OTC Equity Prepaid Forward Transaction agreement for up to $50 million with Midtown East Management NL LLC. Midtown East has agreed not to sell any public shares it purchases in connection with the planned business combination. Northern Lights anticipates that the shares purchased in connection with the agreement will help ensure the maximum redemption threshold condition in the business combination agreement will be met. The redemption backstop arrangement is in addition to the $60 million PIPE commitment from certain accredited investors previously announced on February 14, 2022.

According to Crunchbase, Safe Harbor was founded in 2015 and provides banking services to companies in the cannabis industry. It offers financing solutions that complies and follows regulations of the industry. Since legislation protecting cannabis companies’ access to standard banking actions hasn’t been enacted, companies like Safe Harbor continue to fill a need in the industry. Safe Harbor says on its website that it presently processes funds from 20 different states nationally.

Loan Provider

Recently Safe Harbor Financial closed on a $5 million senior secured loan to Solar Cannabis Co., an established vertically-integrated cannabis operator headquartered in Somerset, Massachusetts. Solar Cannabis said it would use the funds to further accelerate its growth. The transaction marked the evolution of Safe Harbor’s senior secured lending program, which was established to provide loans to cannabis operators in states in which cannabis is legal. Solar Cannabis’ loan is the first extended by Safe Harbor outside of its home state of Colorado.

Safe Harbor, through its predecessor entity, began offering loan services in 2020 with the buildout of its commercial lending program in late 2021 to help cannabis operators overcome their historic reliance on expensive, non-traditional forms of capital. Since initiating the program, the company has developed an actionable pipeline of approximately $500 million across nine states from both new as well as existing clients.

 


StaffJune 27, 2022
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7min5850

The Daily Hit is a recap of the top cannabis business stories for June 27, 2022.

ON THE SITE

Safe Harbor Financial SPAC Deal Could Close Today

The Northern Lights Acquisition Corp. (NASDAQ: NLIT), a special purpose acquisition corporation, rescheduled its special meeting of stockholders to Monday, June 27, 2022 at 4:00 pm ET. The vote was originally planned for June 24 in order to approve Safe Harbor Financial as the qualifying transaction for the SPAC. The deal is valued at $185 million or 9.1x 2023 EV/EBITDA vs. 9.7x peer group average according to Northern Lights. The enterprise value of the IPO is 2.0x versus the cannabis SPAC average of 3.0x. Once complete, the company will begin trading on the Nasdaq stock exchange under the ticker “SHFS.” Read more here.

ManifestSeven Implodes Despite Raising Millions

How does a company raise millions, make millions, but then basically go out of business in just a few years? It seems to happen more and more in the cannabis industry. ManifestSeven is one such company. Too much debt and bloated salaries conspired to bring the company down. Read more here.

Medical Mushrooms Leave no Room for the Magic

In Oregon, when voters approved Ballot Measure 109 calling for the legalization of psilocybin in November 2020, there was a silent hurrah throughout the state among people who took magic mushrooms for fun that went something like this: “Now we can go into a psilocybin store and get a few grams of ‘shrooms—or maybe a handful—for the next concert.” But that wasn’t the case. The measure was created to provide psilocybin for mental health therapy. It was strictly medicine. Wasn’t it? Read more here.

Medical Mushrooms Showing Potential for Treating COVID Symptoms

Revive Therapeutics Ltd. (OTCQB: RVVTF) (CSE: RVV) gave an update last week on the company’s U.S. Food & Drug Administration (FDA) Phase 3 clinical trial  (NCT04504734) to evaluate the safety and efficacy of Bucillamine, an oral drug with anti-inflammatory and antiviral properties, in patients with mild to moderate COVID-19. Read more here.

IN OTHER NEWS

Curaleaf Holdings, Inc., B Noble Inc., and Fab 5 Freddy

B Noble Inc. and Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF), an international provider of consumer products in cannabis, today announced the expansion of its B NOBLE product partnership in New Jersey. Founded in collaboration with Fab 5 Freddy, legendary Hip-Hop pioneer, filmmaker, visual artist and cannabis advocate, and Bernard Noble, B NOBLE is a for-profit, cause-based cannabis brand. Read more here.

Cronos Group Inc.

Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) announced that at its Annual Meeting of Shareholders held on June 23, 2022, shareholders voting in person or by proxy held in total 265,763,587 common shares of the company, representing 70.76% of the total number of common shares of the company outstanding. Read more here.

Agrify™ Corporation, Ora Pharm

Agrify™ Corporation (Nasdaq: AGFY), a provider of advanced cultivation and extraction solutions for the cannabis industry, announced it has signed a definitive agreement to supply Ora Pharm, a Waikato, New Zealand-based health and wellness company developing high-quality, sustainably-produced medicinal cannabis, with a full suite of end-to-end hardware and software products to be utilized at a 5,000-square-foot facility in Auckland, New Zealand. Read more here.

Chemesis International Inc.

Chemesis International Inc. (CSE: CSI) (OTC: CADMF) (FRA: CWAA), announced that it will complete a consolidation of its issued and outstanding common shares on the basis of one post-consolidation common share for each two pre-consolidation common shares. Any fraction of a common share will be rounded down to the nearest whole number. As a result of the consolidation, the outstanding common shares of the company will be reduced to ‎33,588,039‎. Read more here.

Agra Ventures Ltd.

Agra Ventures Ltd. (CSE: AGRA) (OTC: AGFAF) (FRA: PU31), a diversified company focused on the international cannabis industry, is pleased to provide the voting results from its Annual General & Special Meeting that was held today in Vancouver, British Columbia. A total of 947,584 common shares of the Company were voted, representing 3.81% of Agra’s outstanding shares. Shareholders voted in favor of all applicable items of business set before the meeting. Read more here.

INDIVA Limited 

INDIVA Limited  (TSXV: NDVA) (OTCQX: NDVAF) announced the results of its annual general meeting of shareholders. At the meeting, Indiva shareholders approved: the re-election of the seven nominated directors, being Niel Marotta, Andre Lafleche, Hugh Hamish Sutherland, John Marotta, James Yersh, Russell Wilson and Rachel Goldman; the appointment of Ernst & Young LLP as the company’s auditors; and the adoption of the company’s amended and restated omnibus incentive plan. Read more here.


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