News - Page 2 of 507

Adam JacksonAugust 11, 2022
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6min3410

Goodness Growth Holdings, Inc. (CSE: GDNS) (OTCQX: GDNSF) posted positive results on Thursday — driven by new retail store sales and new regulatory changes in nascent state markets.

The multi-state cannabis company reported financial results for its second quarter ended June 30, 2022.

Goodness Growth delivered approximately $21.1 million in total revenue during the period, a gain of 48.2% versus the same period last year — beating the Yahoo Finance Average analyst estimate for revenues of $19.62 million.

The net loss in the quarter was $6.2 million versus a net loss of $7 million in the same period last year. The company said that the change versus the prior year was driven by the improvement in operating income, offset by increased interest expenses. Operating income in the second quarter was $300,000, a gain of $3.5 million versus an operating loss of $3.2 million in the same period last year. The improvement in operating performance was driven by increased revenue and gross profit dollars, as well as a slight reduction in total operating expenses, the company said.

“Our second quarter results reflect improved margin performance driven by continued growth in our MinnesotaNew Mexico, and Maryland markets, as well as benefits from the recent wind down of operations in Arizona which we discussed last quarter,” said chairman and CEO Kyle Kingsley.

Gross profit was $10.4 million, or 49.2% of revenue, versus a gross profit of $6.9 million or 48.6% of revenue in the same quarter last year. The company said that the improvement in gross profit dollars was driven by higher production volume and increased sales, with relatively stable margin performance.

The company said it saw $10.1 million worth of total operating expenses in the second quarter, a reduction of $100,000 versus $10.2 million in the same period last year.

Goodness Growth said that total other expenses were $5.4 million during the second quarter, versus $2.9 million in the same period last year. It said that the variance in other expenses is primarily attributable to increased interest expenses related to the company’s credit facility.

EBITDA was $1.1 million during the second quarter, versus a loss of $2.4 million in the same period last year.

For adjusted EBITDA, the company posted $2.3 million in the quarter, versus a loss of $1.0 million in the prior year. Diluted loss per share in the second quarter was five cents versus diluted earnings per share of six cents in the same period last year.

“GAAP gross margin performance includes activities related to our Arizona operations, which were wound down prior to the end of the second quarter,” Kingsley added. “Excluding Arizona operations, we estimate that second-quarter pro forma gross margins would have been approximately 55.0 percent.”

The company said it had 128,111,328 equity shares issued and outstanding on an as-converted basis, and 159,619,637 shares outstanding on an as-converted, fully diluted basis.

Total current assets for Goodness Growth were $46.4 million. The company said it had $17 million worth of cash on hand, which included net proceeds received from an increase on its delayed draw loan of $13.5 million during the second quarter. The company’s current liabilities were $18.5 million.

“Strong sales growth catalysts resulting from the recent regulatory changes in Minnesota and New Mexico are expected to persist into next year, and we’re also looking forward to contributions from the launch of edibles products which occurred in Minnesota earlier this month, Kingsley said. “Finally, our expansion project in New York is progressing ahead of the launch of adult-use sales in that important market, and we continue to expect our pending transaction to be acquired by Verano Holdings Corp. will close sometime during the fourth quarter of this year.”


Adam JacksonAugust 11, 2022
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3min3800

Akerna Corp. (Nasdaq: KERN) posted less than positive results as it missed expectations — showing that mixed demand and weaker sales are rippling through the sector. The cannabis tech firm released its second-quarter financial report card ending June 30, 2022.

Akerna missed expectations with total revenues of approximately $6.1 million during the period, a 24% gain from $4.9 million for the same quarter last year — missing Yahoo Finance Average analyst estimate for revenues of $7.1 million.

“We have continued to take important steps to grow revenue, reduce costs, and position ourselves for growth in the future,” said CEO Jessica Billingsley. “While client demand has been mixed thus far in 2022, and with softer sales and bookings in particular during the second quarter throughout the sector, we believe we are on pace for a year of solid growth in 2022, compared with last year.”

Software revenue was $5.9 million, up 33% from $4.5 million in the same time last year — with $600,000 worth of software bookings this quarter.

The company saw a gross profit of $4.2 million, or 69.8% of total revenues — up 42% versus $3.0 million in the prior year.

The company also reported a second-quarter 2022 GAAP net loss of $29.6 million — including a $24.1 million impairment of certain long-lived assets — versus a net loss of $22 million sequentially and a loss of $6.1 million last year. However, the company noted that reductions announced in June are expected to generate material cost savings in the second half of 2022.

Diluted loss per share in the fourth quarter was $0.83 cents versus diluted earnings per share of $0.12 cents in the same period last year.

“On the cost side, we’re pleased with our gross margin improvement over last year at 69%, and the expense reduction program across the board that we announced in Q2 should enable more material improvements going forward, beginning with our Q3 results,” Billingsley said.

Despite taking cost-reduction steps, the company said average new business deals decreased by 9% year-over-year.

Adjusted EBITDA was a loss of $2.1 million in the second quarter — down 22% from a loss of $2.3 in the previous quarter — versus a loss of $1.6 in the same period last year.

The company said it had $14.1 million in cash and restricted cash as of July 5, 2022 — following the closing of a $10 million financing via S-1 filed/effective on June 29, 2022. It said it would continue to “pursue strategic alternatives to optimize the capital structure and strengthen the balance sheet.”


Adam JacksonAugust 11, 2022
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12min28810

As talks revolving around the federal legalization of cannabis splinter in Congress, the question of whether the nascent industry can eat beverage alcohol’s margins remains a growing one.

In a report, titled, “Is Cannabis a Threat to Alcohol Sales?” BDSA Consumer Insights contends that while the crop is as popular as ever, any real breakthrough of consumer participation in adult-use and medical markets remains stymied in D.C. – casualties of political animosity and procedural acrobatics aimed at slowing progress.

Consumption Is High

“In just a few short years, attitudes towards cannabis across the country have shifted rapidly, with the share of those who have “bought-in” to cannabis consumption skyrocketing while fewer and fewer report not being open to consuming cannabis,” the report said.

BDS Analytics data showed that this past Spring, 51% of Americans in adult-use states claim to have consumed cannabis in the past six months, up 15% from Spring 2020. At the same time, the share who claim to be rejecters (non-consumers who are not open to consuming in the future) fell from 31% in Spring 2020 to just 23% in Spring 2022.

Overall consumer participation is lower in medical markets, yet BDS Analytics data suggest that consumer participation is growing at a similar rate.

The share of those who report past six-month consumption ballooned from just 26% to 41% between Spring 2020 and Spring 2022 – as the share of rejecters fell from 34% to 28% over that same period.

These realities have left many companies considering what they can learn from the alcohol industry — or how they can partner — as it continues to languish within its own prohibition.

“When we look deeper into the data, we see a cannabis consumer base that is knowledgeable, open to trying new product formats, and willing to experiment with incorporating cannabis consumption into more occasions throughout their lives,” the report said.

Stacking up to Big Alc

While consumer usage rates are starting to near beverage alcohol levels, experts generally agree that significant cannibalization of alcohol by cannabis would likely only occur over the course of at least another generation.

“While the trend toward alcohol’s displacement by cannabis is a durable one, especially among young adults, it is likely going to be a generational one, rather than one manifested in the next few years,” BDS Analytics Andy Seeger said. “Furthermore, it is expected that growing social acceptance will both increase substitutability and strengthen public preferences for cannabis over alcohol, though not completely dissuade cannabis consumers from drinking.”

Together, U.S. legal and illicit sales have been estimated to be $97 billion in 2021 – edging out against $87 million in spirit sales. Demand for cannabis in the U.S. now exceeds what the nation annually spends on spirits – and roughly matching what it spends on beer – according to a report by New Frontier Data.

Two-thirds of cannabis consumers surveyed by New Frontier said that they drink alcohol at least once per month, but 61% say that given a choice, they prefer cannabis.

Additionally, one-third of respondents said that they would like to quit drinking alcohol altogether, “though it is likely that the significant difference in social acceptability between alcohol and cannabis makes it more difficult to stop drinking entirely,” New Frontier wrote.

In another study, Colorado households – compared to all other states that did not legalize recreational cannabis – showed a 13% average monthly decrease in purchases of all alcoholic products combined and a 6% decrease in wine, according to a July 2021 report published in the Journal of Cannabis Research.

However, complicating the idea that cannabis will hurt alcohol sales, researchers’ findings showed that Washington saw an increase in spirits purchased while Oregon showed a significant decrease in monthly spirits purchased when compared to all other states without legalized recreational cannabis.

The conclusion was that the results “suggest that alcohol and cannabis are not clearly substituted nor complements to one another.”

“Future studies should examine additional states as more time passes and more post-legalization data becomes available, use cannabis purchase data and consider additional methods for control selection in quasi-experimental studies,” it said.

Shifting the culture (through regulatory action)

While the nature of cannabis consumption typically resides within the home, finding margins outside of those living spaces has been an ongoing challenge that has frustrated entrepreneurs in the space.

Those who consume are consuming more often as consumers are pairing cannabis with alcohol and a variety of activities, BDS Analytics said in its report – though the lack of a three-tier system and on-premise regulation prevents cannabis companies from creating social hubs with experiences tied to their product.

“There is very, very little on-premise spending right now, which does add the margin,” Seeger said. “And that’s one of the things that the market, in general, is fighting right now – is a way to find margin. Those kinds of occasions would do that. That’s certainly what we see in beverage alcohol.”

According to BDS Analytics, the share of consumers in adult-use markets who report pairing cannabis with spirits or liquor rose from 12% in Spring 2018 to 22% in Spring 2022, while the share who report cannabis with cocktails doubled to a total of 20% in Spring 2022.

Pairing Up

Additionally, BDS Analytics found that consumers are increasingly pairing cannabis with activities not typically associated with cannabis.

The share of consumers in adult-use markets claiming that they pair cannabis with fine dining rose from 14% in Spring 2020 to 25% in Spring 2022, while the share of those who report using cannabis while exercising rose from 18% in Spring 2020 to 26% in Spring 2022.

“While these increases may not seem shocking to savvy industry insiders, they demonstrate that the use occasions for cannabis are incredibly varied,” the report said. “They also show opportunity for brands that can produce product with form factors and targeted formulations that speak to these varied need states and use occasions.”

Innovations in rapid-onset technology help push cannabis-infused, non-alcoholic beverage products to create a standard beverage serving of Delta-9 THC, such as Keith Villa’s non-alcoholic, cannabis-infused, Belgian-style ale — Ceria Brewing Co. — which sold out in Colorado dispensaries four hours after it’s release; or corona importer Constellation Brands multi-billion dollar investments in Canopy Growth.

Alcohol Meets Cannabis

More recently, distributing partnerships between cannabis companies and the alcohol industry are sprouting.

Fresh Hemp Foods, a part of Tilray’s Wellness (NASDAQ: TLRY) division, signed a distribution agreement on Wednesday with Southern Glazer’s Wine & Spirits — one of the nation’s largest distributors of wine and spirits.

The pact will provide Tilray Wellness with direct access to the alcohol distributor’s network, “reaching consumers everywhere from local bars and restaurants to independent and national grocery chains and convenience stores.”

“This agreement helps Tilray uniquely position itself to enter the multi-billion-dollar adult beverage category with a non-alcoholic, CBD beverage alternative, for consumers who want to relax and unwind,” said Tilray Wellness and Fresh Hemp Foods president Jared Simon.

The agreement allows Tilray to develop a U.S. CBD beverage portfolio within retail channels, “which will transition the category out of the fringe and into the mainstream,” the company said.

“Cannatourism” and the brewery model

Currently, marketing cannabis products toward specific experiential outcomes are limited without a legal framework.

Despite that, the industry has found creative ways to circumvent some of these limitations — even finding parallels with the brewery model.

Operators can establish deeper relationships with customers as people travel to and within states where cannabis is legal to visit the farms where the product is grown, similar to visiting wineries — also known as “cannatourism”.

“It’s a really big opportunity for states that have legalized cannabis to capitalize on that, not just for their own residents but also for tourists that might travel particularly for that,” said Christina Sava, an attorney at Troutman Pepper.

Other services help people find “Bud and Breakfast” spots — onsite consumption lounges in adult-use states such as a 420-friendly bed and breakfast type hotel.

“We kind of take it for granted that you can consume alcohol in entertainment venues and at bars and at restaurants,” Sava said, “but there really aren’t that many sanctioned spaces outside the home to try cannabis and share cannabis with your friends. I think this is an area that is ripe for evolution and will continue to grow.”


Dave HodesAugust 11, 2022
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8min11451

The idea of a cannabis product creating a sort of psychedelic experience is not a new one. There was a prevailing, fictional description back in the early part of the last century—encouraged by the 1936 film “Reefer Madness”—where people feared that was what all cannabis did. It freaked you out. Caused you to do unspeakable things. Run amok. Destroy property.

While the reality of how cannabis affects humans is now backed by real science, there are real studies today linking cannabis use to psychotic episodes which sound like a classic bad trip on a psychedelic, including feelings of deep paranoia and visual hallucinations.

It almost seems like cannabis developers want to tap into a more mind-bending experience for their consumers.

Psychedelics + THC

A cannabis company, CaaMTech, Inc, is even looking to develop a psychedelics-plus-cannabis line of products. According to a press release announcing the patent on the product, CaaMTech has shown that cannabinoids work synergistically with psychedelic tryptamines to produce their effects.

Researchers are warning that stronger strains of cannabis available at dispensaries now can create more head-buzzing psychedelic-like experiences that may be overwhelming for consumers. And there are new trendy cannabinoid concentrate products such as sugars and diamonds on the market that are some of the strongest “designer” cannabis products ever made. A sugar product can have 60-90 percent pure THC.

THC-O

Now comes THC-O, or THC-O acetate, an unregulated hemp derivative synthesized from Delta 8 THC extractions, that is finding its way into CBD shops that also sell quasi-legal Delta 8 THC products. Researchers are saying that THC-O is three times more potent than Delta 8 THC, offering a trippy experience that is every bit as powerful as the experience offered by a magic mushroom.

THC-O is reportedly chemically almost identical to Delta 9 THC, which is the intoxicating compound of the cannabis plant. And its effects are very similar to Delta 9. But because it binds more tightly to the body’s cannabinoid receptors than the other THC forms, THC-O is more intoxicating than both Delta 8 and Delta 9 THC. 

Many users describe THC-O as producing an almost psychedelic high, with borderline hallucinogenic effects. 

The effects of THC-O are always delayed. It’s a so-called “prodrug,” which means that the THC-O you swallow or inhale isn’t pre-activated by heat like most THC (the process called decarboxylation). Instead, the effects of THC-O aren’t felt until it’s been fully processed through the body—just like THC edibles—which could lead to accidental higher dosing and thus, more psychedelic-like effects.

For now, merchants are enjoying a surge in sales of THC O products, available in many CBD stores selling Delta 8 THC products, but also online. 

For example, some cannabis businesses calling themselves dispensaries in the Chicago area are now selling THC-O in pre-rolled joints, vape cartridges, edibles, and other forms.

Sales copy on one online store reported that, once THC-O kicks in after about an hour, “the effects are long-lasting, intensely immersive, and cerebral. Users have shared that it stimulates pleasant spiritual-type sensations.”

There has been little actual lab research on THC-O, and there are other concerns cropping up as its popularity grows. ACS Laboratory, a DEA-licensed laboratory that can test for a 22 different cannabinoids, has created a test for THC-O to help determine the level of chemicals in the product, especially the effects of acetic anhydride—a highly corrosive chemical which can burn skin and cause possible lung and eye damage—which is used to synthesize THC-O from THC Delta 8 (and Delta 9) extracts.

As the popularity of THC-O grows, lawmakers are taking notice. For example, South Dakota legislators just passed a bill regulating THC-O (HB 1292). But for the most part, THC-O is riding under the law enforcement radar.

Science is working to catch up on what THC-O really is, and what it really does. But for now, it looks like you can legally trip your way through the shadows of your mind with a cannabis-based product you get at your local CBD store. Enjoy? Or.. beware.


StaffAugust 10, 2022
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7min6530

The Daily Hit is a recap of cannabis business news for August 10, 2022.

ON THE SITE

Trulieve Reports Rising Revenue, But Gives Cautious Outlook

Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) delivered its results for the quarter ending June 30, 2022, with revenue increasing 49% year over year to $320.3 million from $215.1 million and 1% sequentially. This was in line with the Yahoo Finance average analyst estimates for revenues of $320 million. Read more here.

New Lake Capital Meets Expectations, Looks for ‘Quality Over Quantity’

Cannabis REIT NewLake Capital Partners, Inc. (OCTQX: NLCP) posted positive results on Wednesday as it continues to inject capital into the cannabis real estate landscape. The real estate trust released results for the second quarter ending June 30, 2022. Read more here.

Zynerba Nets Positive Second-Quarter Results, Fortifies Research Goal

Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE) posted positive results as the company continues to further its research and development goals — with signs of a FDA approval looming in the distance. The cannabis biotech company reported financial results for the second quarter ending June 30, 2021. Read more here.

Lowell Farms Misses on Revenue, as it Moves Into Eastern Markets

Lowell Farms Inc. (CSE: LOWL; OTCQX: LOWLF) second-quarter results missed expectations — showing how producers have been eating their own margins by lowering prices, as many have pivoted toward crisis mode amid a lack of regulatory action and a tightening economic landscape. The company released its financial results for the second quarter ending June 30, 2022. Read more here.

Parallel’s Investors Argue Wrigley Doesn’t Have Get Out of Jail Card

Parallel Cannabis, also known as Surterra Wellness, had hoped to get its investor lawsuit dismissed, but the investors say not so fast. The latest chapter in the ongoing case has the defendants TradeInvest Asset Management Company (BVI) Ltd., First Ocean Enterprises SA, and Techview Investments Ltd. understandably opposing the request to dismiss the case. Read more here.

IN OTHER NEWS

Akerna

Akerna (Nasdaq: KERN), an enterprise software company and developer of technology infrastructures, ecosystems, and compliance engines powering the global cannabis industry, today reported its unaudited financial results for the quarter ended June 30, 2022. Read more here.

WM Technology, Inc.

WM Technology, Inc. (Nasdaq: MAPS), a marketplace and technology solutions provider to the cannabis industry, today announced the launch of Weedmaps for Business. Formerly WM Business, the company’s reconfiguration and renaming of its SaaS offerings better reflects the comprehensive B2B and B2C suite of products that affords cannabis retailers and brands of all sizes with fully integrated tools to run their businesses. Read more here.

Auxly Cannabis Group Inc.

Auxly Cannabis Group Inc. (TSX: XLY), a consumer packaged goods company in the cannabis products market, announced today that the company has closed the sale of its Auxly Annapolis OG Inc. outdoor cultivation facility located in Hortonville, Nova Scotia to a private purchaser for total proceeds to the company of $4.1 million. As previously announced by the company, Auxly closed both its cultivation facilities located in Nova Scotia in February 2022 and sold its Auxly Annapolis indoor cultivation facility in July 2022 for total proceeds to the company of $6 million. The company intends to apply the proceeds from both sales to support Auxly’s ongoing operations. Read more here.

Puration, Inc.

Puration, Inc. (OTC Pink: PURA) today announced a new development that creates new opportunity for the company and could alter the course of the company in a new direction. The new development announced today is a provisional cannabis cultivation license in the State of New York announced yesterday by PURA’s sister company, North American Cannabis Holdings, Inc. (OTC Pink: USMJ). Read more here.

Optimi Health Corp.

Optimi Health Corp. (CSE: OPTI) (OTCQX: OPTHF) (FRA: 8BN), a Canadian-based company licensed by Health Canada to produce natural, scalable, and accessible psychedelic and functional mushrooms, as well as synthetic formulations, for transformational human experiences, announced the launch of Blue Serenity, Canada’s first natural therapeutic psilocybin product, in collaboration with psilocybin patient advocate Thomas Hartle. Read more here.

Toronto’s Center for Addiction and Mental Health

Toronto’s Center for Addiction and Mental Health (CAMH) just received the first-ever federal grant to study whether the active component of “magic” mushrooms can be used to treat depression. Researchers will explore whether the psychoactive effects are necessary to relieve treatment-resistant depression in adults. According to CAMH’s lead investigator, clinical trials suggest that psilocybin, combined with psychotherapy, can produce “sustained antidepressant effects” in individuals living with severe depression. Read more here.


Debra BorchardtAugust 10, 2022
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6min4850

Parallel Cannabis, also known as Surterra Wellness, had hoped to get its investor lawsuit dismissed, but the investors say not so fast. The latest chapter in the ongoing case has the defendants TradeInvest Asset Management Company (BVI) Ltd., First Ocean Enterprises SA, and Techview Investments Ltd. understandably opposing the request to dismiss the case. 

Surterra Holdings which is also known as Parallel Cannabis filed a motion to dismiss and the hearing for this is scheduled on September 9, 2022. It wasn’t until August 5, that the TradeInvest group pushed back on the request to dismiss. In their response, they wrote, “Defendants claim they have a “get out of jail free” card. The excerpts from the documents they cite, according to Defendants, actually allowed them to make multiple, material misrepresentations to the SAFE Plaintiffs—which were critical to their decision to invest—with no liability for lying.” The investors also claim in their court filing that Surterra can’t fall back on the disclaimer of forward-looking statements language. The investors wrote,  “They argue that certain representations are protected, forward-looking statements—but concede that protection does not apply where the speaker knows the statement is false (and/or is using it to aid in fraud).”

Original Complaint

Green Market Report has covered this case extensively. In March, GMR wrote that the investors alleged that chewing gum heir Beau Wrigley (the former Surterra CEO) convinced the plaintiffs to invest in a Simple Agreement for Future Equity or SAFE. A SAFE is a relatively new type of security in which an investor’s cash investment generally converts to equity in the issuing company under conditions specified in the SAFE. They are often issued to provide a company with bridge financing until it can complete an additional capital raise or a sale of the company, and will often convert to equity upon the occurrence of that future, specified event.  They say they sent the money to the company on September 27, 2021. Although much is redacted, it does allege that the investors were misled and had they been told the truth would likely not have made the SAFE investment. 

They say they weren’t aware that the company was in financial trouble, having defaulted on some debt already. They also claim that their investment money wouldn’t be tapped until Wrigley matched the investment with his own money. Instead, they allege their investment money was used to pay off other debts causing them to claim it was a Ponzi scheme

Lawyers Leaving

Also happening in the background of this case, the lawyers for the investors are apparently trying to get off of the case. They wrote to the judge on August 2, “Mr. and Mrs. Morgan are partners in a large law firm. Given the substantial costs and time associated with prosecuting this action, and the fact that only a subset of holders of Senior Notes had joined and agreed to bear such expenses, on July 7, 2022, Mr. Morgan notified Quinn Emanuel that they no longer wish to be represented by us and that they were accordingly releasing the firm.” The legal firm went on to say in a letter to the judge, “We had understood that the Morgans would either be representing themselves or continue appearing through their law firm, which Mr. Morgan advised me has over 800 lawyers.”

John and Ultima Morgan are part of the TradeInvest group. However, the firm Quinn Emanuel also stated they hadn’t been given any instructions for new counsel and they remain on the case for now. Indeed, the latest court filing arguing against dismissing the case was filed by Quinn Emanuel’s lawyers.

Parallel Moves Forward

Despite the financial troubles with its debt, Parallel continues to operate and move forward. In June, the company announced opening its third dispensary in Miami Florida. “As Surterra continues to expand its dispensary locations across Florida, we’re excited to increase our presence in the sunny home to hundreds of thousands of Miami residents who seek high-quality medical marijuana products, which we’re proud to provide,” said Parallel CEO James Whitcomb. Whitcomb replaced Wrigley as the lawsuit laid bare issues with repayment of the company’s debt.  The company said it has 45 Medical Marijuana Treatment Centers in the state of Florida, with more planned to open in 2022.

 


Adam JacksonAugust 10, 2022
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7min4040

Zynerba Pharmaceuticals, Inc. (Nasdaq: ZYNE) posted positive results as the company continues to further its research and development goals — with signs of a FDA approval looming in the distance. The cannabis biotech company reported financial results for the second quarter ending June 30, 2021,

Research and development expenses were $5.4 million for the second quarter of 2022, the company said, including stock-based compensation of $0.5 million. General and administrative expenses were $3.7 million in the second quarter this year, including stock-based compensation expense of $0.6 million. As an emerging biotech company, Zynerba does not have revenue at this time as it develops drugs.

The company said that it has continued to focus resources toward developing treatment for two orphan neuropsychiatric disorders, Fragile X syndrome and 22q Deletion Syndrome.

“During the second quarter, we were pleased to announce positive top-line results from our Phase 2 trial of Zygel in patients with 22q,” said CEO Armando Anido. “In addition to further progressing 22q, we are focused on completing the Phase 3 RECONNECT trial for children and adolescents with Fragile X syndrome, with top-line results expected in the second half of 2023.”

With a cash runway extending past expected availability of top-line results from our RECONNECT trial, we remain well-positioned on achieving our goal of bringing the first pharmaceutical product indicated for the treatment of behavioral symptoms of Fragile X syndrome to market.”

This echoes Zynerba’s belief that the results from RECONNECT, if positive, will be sufficient to support the submission of a New Drug Application (NDA) for Zygel in patients with Fragile X syndrome.

The company also said it plans to meet with the U.S. Food and Drug Administration (FDA) to discuss the data and the regulatory path forward for its open label Phase 2 INSPIRE trial of Zygel in children and adolescents with 22q Deletion Syndrome — also called DiGeorge syndrome, a chromosomal disorder with no known cure that results in poor development of several body systems.

The company said it plans to move forward in 22q as an orphan indication and has previously received orphan drug designation from the FDA for cannabidiol, the active ingredient in Zygel, for the treatment of 22q.

While data from the company’s ASD clinical development program to date are compelling, given the difficult financing market, the company has deferred the start of the Phase 3 development program in ASD as it has prioritized its resources on FXS and 22q in the near term.

Net loss for the second quarter of 2022 was $9.9 million, with basic and diluted loss per share of $0.24 cents. Cash and cash equivalents were $62.5 million, versus $67.8 million as of December 31, 2021.

In May, the company entered into a Controlled Equity Offering Sales Agreement — with Cantor Fitzgerald & Co., Canaccord Genuity, LLC, H.C. Wainwright & Co. LLC and Ladenburg Thalmann & Co. Inc. as sales agents — in which the company may sell, from time to time, up to $75 million of its common stock.

Zynerba then sold and issued 488,892 shares of its common stock in the second quarter under the agreement in the open market — resulting in gross proceeds of $0.9 million and net proceeds of $0.8 million, after deducting commissions and offering expenses.

After that, from July 1, 2022 through August 8, 2022, the company sold and issued 1,469,714 shares of its common stock under the agreement in the open market resulting in gross proceeds of $1.8 million, and net proceeds of $1.6 after deducting commissions and offering expenses.

Zynerba also struck an equity purchase deal last month for up to $20 million with Chicago-based firm Lincoln Park Capital Fund (LPC).

Lincoln Park Capital is expected to provide financial flexibility and is aligned with Zynerba’s long-term strategy for value creation, the company said.

Zynerba said it plans to use any net proceeds from the sale of its common stock to LPC for working capital and general corporate purposes, including research and development expenses and capital expenditures.

Management believes that the Company’s cash and cash equivalents are sufficient to fund operations and capital requirements through the end of 2023 or into early 2024, after the expected availability of top-line results from its confirmatory pivotal Phase 3 RECONNECT trial of Zygel in patients with FXS.


Adam JacksonAugust 10, 2022
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5min3860

Cannabis REIT NewLake Capital Partners, Inc. (OCTQX: NLCP) posted positive results on Wednesday as it continues to inject capital into the cannabis real estate landscape. The real estate trust released results for the second quarter ending June 30, 2022.

NewLake met expectations as it delivered total revenues of approximately $10.5 million during the period, a 59% gain from $6.7 million for the same quarter last year — eking out past Yahoo Finance Average analyst estimate for revenues of $10.2 million.

“We continue to be pleased with our AFFO growth, which has allowed us to increase our dividend for the fifth consecutive quarter,” newly-minted CEO Anthony Coniglio said. “While our pipeline is as robust as we have seen in our company history, we remain disciplined in our underwriting approach and focus on quality over quantity.”

NewLake posted net income of $3.8 million for the quarter at $0.18 per diluted share, versus $2.7 million in the previous year’s second quarter. The company also posted an AFFO of $8.7 million, or $0.41 cents a share, versus $4.8 million in the same quarter last year.

The company said that net income and FFO were impacted by one-time severance costs of $1.6 million in connection with certain executive separation agreements. Such agreements were contemplated as part of the succession plan at the time of the company merger in March last year, it said.

NewLake posted a FFO of $6.5 million or $0.31 per basic and $0.30 per diluted share. The company said it had cash and cash equivalents of $49.6 million. Around $12.2 million was committed to funding tenant improvements.

The company also paid a quarterly dividend of $0.35 per common share on July 15 to stockholders — versus two cents per common share in the prior quarter — equal to an annualized dividend of $1.40 per share.

Rental income for the second quarter increased by $2.9 million from the prior year to total $9.6 million. The increase in rental revenue was due to the acquisition of several properties — around 23 — over the past two years, in addition to $20,000 from raising rent.

In April, NewLake said it signed a $34 million aggregate three-part commitment for a cultivation property in Missouri consisting of $7.3 million to purchase a 40,000 square foot cultivation facility, a commitment to fund additional $5.2 million to finish construction, $16.5 million to expand the facility by purchasing an adjacent parcel of land and fund construction and an interest-only four-year $5 million loan that can be drawn over the next year.

Once fully built, the combined property will be a state-of-the-art 105,000 square foot cultivation facility.

NewLake also entered into a revolving credit facility in May with a $30.0 million initial commitment, which was expanded to $90.0 million in July, maturing in May, 2027 with a fixed interest rate of 5.65% for the first three years and a floating rate thereafter.

“Subsequent to the quarter, we successfully increased our credit facility from $30 million to $90 million, which will allow us to continue investing in high quality assets,” said Coniglio. “We believe our ability to consistently evaluate high quality transactions with the best operators in the space and have access to capital from banking partners that believe in our ability to execute is a testament to our team, model and disciplined approach.”

Last month, NewLake said it had acquired two properties from a leading publicly-traded U.S. multi-state cannabis operator (MSO) for $28 million and amended its existing lease with another leading publicly-traded U.S. MSO to fund an already completed expansion.

The two properties NewLake acquired include an approximately 38,000 square-foot operational cultivation facility in Pennsylvania for $14.5 million and an approximately 56,500 square-foot operational cultivation facility in Nevada, a new market for NewLake, for $13.6 million.

NewLake’s stock was trading at $17.48 in pre-trading Thursday morning, a slight uptick from $16.75 in the previous day.


Debra BorchardtAugust 10, 2022
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Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) delivered its results for the quarter ending June 30, 2022, with revenue increasing 49% year over year to $320.3 million from $215.1 million and 1% sequentially. This was in line with the Yahoo Finance average analyst estimates for revenues of $320 million.

Trulieve also reported a net loss of $22.5 million, a sequential improvement of 30%. The company said that the adjusted net loss of $1.1 million excludes $11.8 million of transaction, acquisition, integration, and other non-recurring charges primarily associated with the Harvest acquisition, a $5.2 million earnout payment for acquired cultivation in Arizona$4.3 million in asset impairments associated with the closing of redundant cultivation facilities in Florida and a loss of $0.7 million due to the repurposing of a development stage production site in Arizona.

Lowering Guidance

Disappointing investors, Trulieve decided to err on the cautious side when it came to its forecast. The company decided to cut its revenue guidance by 5% citing strategic changes across its businesses, the impact of inflation on consumer spending, softness in wholesale markets, and the lack of visibility in the current macroeconomic environment. The revenue is now expected to come in at the low end of its prior outlook from $1.25 billion to $1.3 billion. Trulieve also said it expects adjusted EBITDA will be in the range of $415 million to $450 million.

“Our team delivered strong second-quarter results with topline growth and margin improvement by staying focused on our plan,” said Kim Rivers, Trulieve CEO. “During our mid-year strategic review, we identified proactive measures to address the rapidly evolving economic landscape.”

Rivers continued, “We are committed to meeting customer needs, improving performance in core markets, managing cash wisely, and streamlining operations across the company. We strongly believe that taking firm and decisive action now will better position the organization to capitalize on numerous catalysts in the years ahead. Trulieve has the capital, discipline, and experience to navigate short-term headwinds and emerge as a stronger company.”

Changing Focus

Part of the moves that Trulieve is making within its huge portfolio of stores, is the exit from Nevada. The company is leaving the wholesale market there and said it is exploring a total escape from the state. The company said it has opened seven new dispensaries in Phoenix, ArizonaApopkaCoral SpringsHollywood, and Kissimmee, Florida; and Hurricane and Morgantown, West Virginia. The new Phoenix dispensary is the first branded Trulieve store in Arizona, kicking off statewide rebranding efforts to continue over the next year.

While the company did open one location during the quarter in Massachusetts and Pennsylvania, it has mostly been absent from the emerging Northeast market.


Adam JacksonAugust 10, 2022
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Lowell Farms Inc. (CSE: LOWL; OTCQX: LOWLF) second-quarter results missed expectations — showing how producers have been eating their own margins by lowering prices, as many have pivoted toward crisis mode amid a lack of regulatory action and a tightening economic landscape. The company released its financial results for the second quarter ending June 30, 2022.

The company missed total revenue expectations as it delivered approximately $13.2 million during the period — missing the Yahoo Finance Average analyst estimate for revenues of $19.98 million.

Lowell Farms reported revenues of $13.2 million for the second quarter of 2022, an increase of 6% sequentially and down 13% from the same quarter last year — reflecting a 51% reduction in bulk flower pricing year over year. Bulk flower revenue increased 94% sequentially while declining 37% from second-quarter levels last year due to lower pricing.

“California cannabis is in the middle of a fight for survival,” said board chairman George Allen. “There are fewer chairs at the table than there are attendees. We will prevail through innovation and branding, and not by lowering our prices.”

The company reported gross margin of 11.3% in the second quarter versus 12.7% sequentially and 37.9% year over year, reflecting strong bulk pricing in the prior year.

Operating expenses were $4.5 million or 34% of sales for the quarter, versus $4.0 million or 33% of sales in the previous quarter and $6.2 million or 41% of sales in the first quarter last year, reflecting cost reductions realized in the current year.

The company also reported a second-quarter 2022 GAAP net loss of $4.6 million versus a net loss of $4.1 million last quarter, and a net income of $700,000 in the same period last year. Diluted loss per share in the fourth quarter was $2.24 versus diluted earnings per share of $0.11 in the same period last year.

Non-GAAP income before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) was a loss of $1.1 million in the second quarter — down 22% from a loss of $900,000 in the previous quarter — versus earnings of $700,000 in the same period last year.

The company said it is focused on refining its cultivation processes, genetics, and facilities continue to improve the yield, potencies, and increase margins quarter over quarter.

“To compete with the illicit market, we have to do it with quality and value,” said CEO Mark Ainsworth. “Our whole plan is built on three pillars: exceptionally good cannabis, a brand that people trust, and automation. We are closer than ever to having all three.”

The legal industry will continue to languish behind an expansive illicit market that has always been able to offer more competitive pricing and bypass state taxes, rules and regulations that have burdened operators struggling make it in the world’s oldest legal marijuana market.

California’s Democratic Gov. Gavin Newsom signed into law last month solutions meant to remedy the tax burden for many businesses in the state – eliminating a weight-based tax for cannabis growers but leaving the 15% tax on retail sales. The bill also allows the state to eventually raise retail taxes to make up for the lost cultivation revenue.

Decelerating consumer growth in Western states such as California and Colorado “suggests that the most established markets are nearing saturation of consumer participation, which stands in sharp contrast to the rapid growth happening in new and emerging markets,” according to a report by Colorado-based cannabis data firm BDSA Analytics.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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