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The Weekly Stash is a recap of the week’s top business headlines in the cannabis industry for the week ending February 10, 2023.

Canopy Growth Corp. (TSX: WEED) (Nasdaq: CGC) reported slumping revenues on Thursday and signaled a new cost-savings era that includes cutbacks on cultivation and 800 layoffs. Revenue fell by 28% to $101 million in the quarter. Canopy ‘s historical cash burn has swelled its net losses 131% over the year to $266.7 million. Cash and short-term investments fell by a whopping $583 million to $789 million at the end of December from $1,372 million at the end of March 2022.

The acquisition of New York medical cannabis operator Etain by Riv Capital is entering another messy chapter. Scotts Miracle-Gro (NYSE: SMG), owner of the hydroponic company Hawthorne, has filed a lawsuit against Jason Wild and TerrAscend (OTC: TRSSF) claiming they ruined its $175 million investment. Hawthorne is complaining that Wild fought Riv Capital’s plans to buy Etain asking the board to call off the deal and threatening to attain a hemp license in the state in a move to kill the deal. Wild’s position is that Riv Capital overpaid for the property. 

SNDL Inc. (Nasdaq: SNDL) finalized its purchase of Canadian dispensary chain Superette out of bankruptcy, with plans to support the brand and its stores.SNDL will license some of Superette’s IP to Spirit Leaf Ontario for their retail locations, the company said.

In state news,

Over the first three-day weekend of legal recreational marijuana sales in Missouri, medical and adult-use retail sales combined to hit $12.6 million in sales, the state announced. Many shops reported long lines this past Friday. According to the Missouri Department of Health & Senior Services’ Cannabis Division Regulation, the industry sold $8.5 million in recreational cannabis and another $4.1 million in medical marijuana for Feb.3-5, for a grand total of $12,689,965.

In a break from a national trend, a federal judge in Washington state upheld the state’s residency requirement for cannabis business ownership and ruled that the U.S. Constitution’s dormant commerce clause doesn’t apply because marijuana is still federally illegal. U.S. District Judge Benjamin Settle sided with the Washington Liquor and Cannabis Board and tossed a lawsuit filed in 2020 by marijuana investor Todd Brinkmeyer, who had asked the court to rule that Washington’s residency requirement is unconstitutional. 

The start date for Maryland’s upcoming adult-use cannabis market could be as soon as July 1, under the terms of a new legislative bill introduced this week by state lawmakers.

New York has said it will begin cracking down on illegal operators while the state’s Office of Cannabis Management recommended that medical licenses be expanded. The OCM also suggested that medical patients no longer have to register. 

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Earnings season is just beginning and it kicks off with Scott’s Miracle-Gro whose hydroponic brand Hawthorne saw its sales drop by 30%. Sales are forecast to continue falling by another 20-25%. CEO Jim Hagedorn described the cannabis market as a bloodbath and said the New York market had tripped over itself. Still, he insisted there was progress in the company’s investment into RIV Capital and Etain even though shareholders are suing RIV for the acquisition. Overall the company reported total sales fell by 7% to $526 million which beat expectations.

Canadian cannabis company High Tide (NASDAQ: HITI) (TSXV: HITI) saw both its revenues and its losses balloon in its final fiscal quarter of 2022, which ended on Halloween. revenues shot up for the year as a whole by 97% to C$356.9 million, but High Tide still lost $52.5 million in the fourth quarter alone, and posted a C$70.8 million loss for the fiscal year. 

LeafLink raised $100 million in Series D financing this week. The company also moved co-founders Ryan Smith and Zach Silverman to new roles. Smith is moving from CEO to Executive Chairman and Silverman from Chief Technology officer to Senior Advisor. The company has now raised more than $230 million. 

In Other fundraising news, Village Farms raised $25 million and 3D cannabis shopping app company Weedar raised $1.5 million. 

In legal news, a New York judge is still not allowing cannabis licenses in the five regions currently involved in a lawsuit regarding social equity applicants. It was a blow to the Office of Capital Management that has made social justice applicants a priority in the very slow opening of the adult-use program.

Two dozen people have been indicted for a national cannabis smuggling operation that shipped California cannabis to New York. The U.S. Attorney’s Office in the Northern District of New York, said the indictments cover an alleged six-year operation that “shipped thousands of kilograms of marijuana” and edibles from Fresno, California, to “locations throughout the United States, including the Capital Region of New York.”

Speaking of New York, cannabis regulators extended a deadline for marijuana farmers to choose their business model to the end of the month, instead of requiring them to make a choice by Feb 1. Brittany Carbone, a board member of the Cannabis Association of New York, said that the state OCM relented on Monday during negotiations with cannabis farmers and gave all 280 growers until Feb. 28 to make their business model selection.

And finally, one of the original cannabis tech firms is saying goodbye to the industry and hello to bitcoin. Akerna is selling its cannabis assets to PosAbit and what is left of the company will merge with Gryphon digital mining. Akerna has been struggling over the years with expensive acquisitions that it then sold for much less than what had been paid. Losses never seemed to decline by much and revenues never really took off. CEO Jessica Billingsley will be a part of the board of Gryphon as Akerna is no more.

That’s it for this week. Don’t forget to register for our Women’s Summit on March 23 in New York City.

It was a shortened trading week with markets closed on Monday for the Martin Luther King holiday.   

Innovative Industrial Properties (NYSE: IIPR) told shareholders that rent collection has dropped from 100% last year to just 92% in January. Some companies like Parallel and Green Peak Industries have stopped paying rent in some locations, while others have had to use their security deposits to make rent payments. Kings Garden wants out of two locations as it looks for a possible merger.

In an effort to cut costs and try to become profitable, Columbia Care Inc. (CSE: CCHW) (OTCQX: CCHWF) has closed four unprofitable dispensaries and cut its headcount by 25%. Col-Care said it closed one dispensary in California and three in Colorado. In addition, the company also consolidated cultivation operations in California, Colorado and Pennsylvania to improve their Adjusted EBITDA contribution.

Bespoke Financial is suing California cannabis company In Da Cut for not paying back money that it borrowed. In Da Cut owes roughly $400,000 for money that Bespoke gave it to pay bills and hasn’t paid back.

In state news, Michigan had a banner year in 2022, ending with $221.7 million in sales for the month of December alone and a full-year total of $2.3 billion, a new record for the state’s marijuana industry. That annual sales figure is a 28% increase from 2021 sales figures and establishes a new high-water mark for Michigan operators.

Missouri is launching its legal adult-use cannabis sales on February 6. Last month on December 8, 2022, consumers were allowed to legally possess up to 3 ounces of marijuana.  On December 8th, 2022 the Department of Health & Senior Services began accepting requests for existing medical facility licensees to convert to a fully legal facility. Once approved, it is up to each dispensary to decide when it will begin selling adult-use cannabis.

Texas is set to expand the size of its highly restrictive medical marijuana program, from just three dispensaries to a still-undetermined number, but the state is retaining its ban on full-fledged cannabis. There are just eight qualifying medical conditions that make patients eligible for medical cannabis in the state and only 8,000 registered patients.

And finally, Green Market Report has announced that our Women’s Summit will be on March 23 in New York City. You can register on the website under the Summits tab. We have also opened the application period for nominations for the Women’s Leadership Awards for 2023.

This is your weekly stash for the week ending January 13 – Yep it’s Friday the 13th.

This was a big week as the state of Connecticut launched legal adult-use sales. Privately owned Fine Fettle was able to open three stores on the first day. The Botanist owned by Acreage Holdings opened one recreational store in Montville, while Green Thumb Industries opened a Rise Dispensary recreational store in Branford. It was a successful launch with the state reporting that over $250,000 was sold on the first day.

Earnings are just beginning to trickle out. Tilray Brands, Inc.  (Nasdaq: TLRY) reported revenues fell 7% in the fiscal second quarter to $144 million from last year’s $155 million. Revenue also fell sequentially from the previous quarter’s net revenue of $153 million. Tilray also delivered a net loss of $67 million versus last year’s net income of $5.7 million.

Organigram Holdings Inc. (Nasdaq: OGI) (TSX: OGI) reported net revenue of $43.3 million for its first fiscal quarter, up 43% from $30.4 million in the same time period last year. This beat Yahoo Finance’s average analysts’ $30.37 million estimate by more than $10 million. Organigram posted a net income of $6.1 million in the first quarter, versus a net loss of $1.3 million in the same time frame last year. 

The Colorado-based food and cannabis grower urban-gro, Inc. (Nasdaq: UGRO) reported a record backlog entering its 2023 fiscal year and reaffirmed its financial guidance for the fourth quarter of 2022. The company expects to enter 2023 with a record consolidated backlog of around $87 million, a sequential increase of approximately $20 million from the third quarter of 2022’s announcement of $67 million in the backlog.

In state news, Maine’s adult-use marijuana sales almost doubled from 2021 to 2022, as the number of recreational retailers also shot up. The New England state sold $159 million in cannabis last year, up from $82 million in 2021 and the number of licensed retailers increased 20% to more than 110.

Recreational marijuana sales in Illinois finished 2022 with more than $1.5 billion, up 13% from 2021. Total sales in December were the highest of any month at $143.9 million, following a seasonal pattern seen in previous years. But the rate of sales growth, 4% over December 2021, was the slowest this year, reflecting continued pressure on discretionary consumer spending from inflation.

And finally, a new report from the U.S. Sentencing Commission found that Federal cannabis possession charges have fallen dramatically since 2014 from 2172 in 2014 to just 145 last year. Unfortunately, a prior cannabis possession conviction often leads to a longer sentence for other crimes. 

That’s it for this week’s Stash. Markets will be closed on Monday for the Martin Luther King holiday.