The Daily Hit is a recap of the top financial news stories for Sept. 18, 2023.
On the Site
Workers Strike at Curaleaf Arizona Dispensary
Some workers at a Curaleaf Holdings Inc. (CSE: CURA) (OTCQX: CURLF) dispensary in Phoenix have gone on strike as of Friday, in an attempt they say to force company executives to the bargaining table. Read more here.
Mydecine Attempts to Raise Money With New Prospectus
Psychedelics firm Mydecine Innovations Group Inc. (NEO:MYCO) (OTC:MYCOF) (FSE:0NFA), which is still in the pre-revenue stage, announced a plan to offer 18.75 million additional shares for distribution at 20 cents apiece, in an attempt to raise $3.75 million. Read more here.
Cannabis Regulators Ask Congress to Close Hemp Loopholes in 2023 Farm Bill
The Cannabis Regulators Association (CANNRA), a nonpartisan association representing cannabis and hemp regulatory agencies from 45 member states and U.S. territories, sent a letter on Friday urging Congress to consider changes to the 2023 Farm Bill. The three-page letter was penned in order to close loopholes created by the 2018 Farm Bill. Read more here.
Institutional Investors Open Wallets for Columbia Care, Canopy Growth
It seems investor interest in the cannabis sector is returning. Cannabis heavyweights Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) and Columbia Care Inc. (NEO: CCHW) (OTCQX: CCHWF) both inked large private placements with institutional investors. Read more here.
New York Battling Judge Over Exemptions to Cannabis Retail Licensing Pause
New York marijuana regulators have spent nearly the past month trying to convince a state judge to allow a handful of conditional adult use retail dispensary (CAURD) licensees to open for business, but as of Friday, nothing the state tried had yet worked, which leaves the Empire State with just 23 operational legal cannabis shops for the foreseeable future. Read more here.
In Other News
Warning that action is “desperately needed” to address upheaval at the Cannabis Control Commission, the Massachusetts Senate’s top Republican and several other lawmakers urged their colleagues Monday to subject the state’s marijuana regulatory agency to new scrutiny. Read more here.
Cannabis in Oregon can no longer be recalled over a pathogenic mold, until a court decides if the state’s zero-tolerance policy went too far. Read more here.
The agency regulating the sale of medical cannabis in Maine is proposing a new set of rules as providers leave the market in record numbers, despite totaling over $300 million in sales last year. The proposed rules are primarily driven by legislative changes, including the adoption of a two-tiered fine system for violations that, depending on the severity of an infraction, could cost up to $7,500. Read more here.
Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) is selling its Hershey Drive facility in Smiths Falls, Ontario, as part of its move to become a simplified, asset-light operating model. Canopy Growth said it will retain its Smiths Falls-based post-harvest manufacturing facility. The facility will be sold to Hershey Canada, Inc. for cash consideration of approximately C$53 million.
So far, Canopy Growth has sold a total of seven properties for an aggregate gross amount of approximately C$155 million since April 1, 2023. The company said that net proceeds from the sale of the facility will be used primarily to pay down its senior secured credit facility.
“We are pleased to have reached an agreement with Hershey on this important sale. This is the latest milestone in our focused effort to reduce costs and further enhance our balance sheet,” said David Klein, Chief Executive Officer of Canopy Growth. “Each of the steps we have taken as part of our transformation to a simplified, asset-light operating model supports our ability to deliver in-demand products from brands our customers love, with greater agility and less execution risk. ”
Canopy Growth announced in February that it was closing the facility. The company swelled as it built massive cultivation operations and loaded up on debt, only to decide to dump all the growing facilities it spent millions creating. Canopy decided to exit cannabis flower cultivation in its Smiths Falls, Ontario, facility, ceasing the sourcing of cannabis flower from the Mirabel, Quebec, facility, and moving to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts.
The changes were in addition to multiple cost reduction activities planned for the year, including the divestiture of Canopy Growth’s Canadian retail operations, the organizational restructuring of certain corporate functions, and the closure of the Scarborough, Ontario, research facility.
The sale of the facility follows the centralization of post-harvest manufacturing at the company’s former beverage facility in Smiths Falls and the consolidation of all flower cultivation in the company’s purpose-built sites in Kincardine, Ontario, and Kelowna, British Columbia.
“Our intent to purchase the Hershey Drive property in Smiths Falls is another example of the strategic investments we’re making in our supply chain network and our Canadian operations to support growth,” said Jason Reiman, Chief Supply Chain Officer, The Hershey Company.
In 2017, Canopy Growth closed on the acquisition of the property at 1 Hershey Drive that housed Canopy Growth’s headquarters and the Tweed Inc. (Tweed) production facilities. The building, property, and chattels were acquired for C$6.6 million.
At the time, CEO Bruce Linton said, “The future looks bright for Tweed and Canopy Growth’s operations in this facility. It might even be time to reopen the famous Visitor Centre and start training tour guides.”
The Daily Hit is a recap of the top financial news stories for Aug. 9, 2023.
On the Site
ScanSource Claims Dutchie Owes $24.7 Million
Cannabis software company Dutchie is being sued by technology company ScanSource for not paying a bill valued at $24.7 million. ScanSource said in its lawsuit that the order included customizations, such as the Dutchie name etched into the devices, which made the products nonrefundable and not cancelable. Read more here.
Acreage Shrinks Board of Directors Further, Chairman Resigns
Acreage Holdings Inc. (CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) last week trimmed its board of directors in further preparation for a megamerger with Canada-based Canopy Growth Corp. The latest move included the resignation of Acreage Chairman and founder Kevin Murphy and the departure of board member Brian Mulroney. Read more here.
Northern Michigan University Applies to Use Real Cannabis Plants in Program
Northern Michigan University is the first in the state to apply for a marijuana educational research license, which would allow it to bring cannabis plants into the classroom. The school in Marquette in the Upper Peninsula applied for the license in May and is awaiting approval from the Cannabis Regulatory Agency. Read more here.
BZAM Ltd. completed the sale of the majority of its assets in both its Midway properties in British Columbia, including all associated lands, support buildings, related equipment and on-site biomass, for $3,228,000, with 50% of the total net proceeds from the transaction, after commission and costs, being applied against the company’s term portion of its credit facility. Read more here.
Hydrofarm Holdings Group
Hydrofarm Holdings Group Inc. (Nasdaq: HYFM), an independent manufacturer and distributor of branded hydroponics equipment and supplies for controlled environment agriculture, reported net sales decreased to $63.1 million in its second quarter ended June 30. Read more here.
Halo Collective Inc. (NEO: HALO) (OTC Pink: HCANF) (FSE: A9K0) reported revenue of $4.6 million for the quarter, reflecting a 38.9% decrease compared to the same period last year. Read more here.
Acreage Holdings, Inc.(CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) trims leadership as the company gets ready for its deal with Canopy Growth Corporation and Canopy USA. Acreage’s Board of Directors streamlined its governance structure by shrinking the company’s board.
Katie J. Bayne, Patricia Lopez, Douglas L. Maine, and Steven Strom have all resigned from the Board, effective immediately. Acreage’s Board is now only Founder and Chair Kevin P. Murphy; Bill Van Faasen, who will now chair the Audit Committee; John A. Boehner, who will now chair the Compensation and Corporate Governance Committee.
A couple of weeks ago, Peter Caldini announced he would step down from the role of Chief Executive Officer on June 30 will also resign from the Board on the same date. Dennis Curran, current Chief Operating Officer of Acreage, will assume the roles of Chief Executive Officer and Board member on July 1, 2023.
“I am pleased with Acreage’s momentum as it approaches its next chapter as part of Canopy USA,” said Dennis Curran, newly appointed Chief Executive Officer of Acreage. “Our streamlined Board, robust leadership, and continued operational enhancements will enable Acreage to play an integral part in the cannabis powerhouse that Canopy USA is poised to become. On behalf of the leadership team, I thank the Board for both their support and strategic guidance that has brought Acreage to this exciting moment, and I wish each of them the best in their future endeavors.”
David Klein, Chief Executive Officer of Canopy, added, “We applaud Acreage for taking these proactive steps as we work toward completing our transaction. We look forward to bringing Acreage, Wana, and Jetty together under Canopy USA to begin capitalizing on a once-in-a-generation U.S. market opportunity and position Canopy for a fast start upon U.S. federal permissibility.”
Investors are waiting on Canopy’s updated financial statements. The company recently told the market that it will need to restate its audited consolidated financial statements for the fiscal year ended March 31, 2022. This includes the company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 and unaudited consolidated financial statements for the quarterly periods ended June 30, 2022, September 30, 2022 and December 31, 2022, included in the Corporation’s Quarterly Reports on Form 10-Q for such quarterly periods.
Acreage Holdings, Inc. (OTCQX: ACRHF, ACRDF) announced that Peter Caldini has elected to resign from his position as Chief Executive Officer, effective June 30, 2023. Chief Operating Officer Dennis Curran has been appointed Chief Executive Officer and will assume the role on July 1, 2023.
The move comes during an overhaul of the company’s C-suite. Just a few weeks ago Acreage announced that Chief Financial Officer Steve Goertz had resigned effective June 15, 2023. At the time, the company said it had begin a search process to fill the role. All of these changes comes as Acreage works toward completing its previously announced arrangement involving Canopy Growth Corporation (NASDAQ: CGC) and Canopy USA, LLC. Goertz will complete the preparation and filing of the company’s financial statements for the first quarter of 2023 and assist in the transition.
Caldini was named CEO in December 2020 following the departure of Acreage Founder Kevin Murphy. Murphy had led the company in its unusual and generously termed deal with Canopy to buy Acreage once cannabis was declared federally legal in the U.S. Since that deal was agreed upon, valuations for American cannabis companies have tumbled and legalization at the Federal level still hasn’t happened. In addition, Acreage found itself struggling with declining sales and massive losses under Murphy’s leadership. Acreage was also taking on short term loans with excessive interest rates in order to keep the company operating. The avalanche of problems saw the departure of Murphy as CEO.
Caldini managed to get the company on better footing as it abandoned its original strategy to be the largest cannabis company in the most states and cut spending. Caldini said, “I am incredibly proud of the team and the foundation we built together at Acreage. Since I joined, we have undergone numerous changes and put in significant work to establish a robust platform for sustained growth alongside the evolution of the industry. I want to sincerely thank the entire Company, as well as the Board, for their support over the years and I look forward to watching Acreage continue its momentum as a key component of Canopy USA.”
Curran joined Acreage in March 2022, bringing over 35 years of leadership expertise in sales, distribution, and marketing, having previously held executive-level positions with GSK Consumer Health and Procter & Gamble (P&G). Curran said, “I am honored and thrilled to be guiding the incredible Acreage team on our journey to be a critical part of Canopy USA. It could not be a more exciting time to be taking on a new position with the Company. Finally, I want to thank Peter for all he has done to set us up to succeed.”
Kevin P. Murphy, Chairman and Founder of Acreage, said, “During his tenure, Peter surpassed our objectives and led Acreage through many formative events, including its recent dramatic transformation. He brought the strategic guidance required to expand our footprint at the onset of adult-use sales in multiple core states while delivering on our plan to significantly improve our profitability. Peter restored Acreage’s position at the forefront of the industry and equipped the business to accelerate our growth trajectory as a part of Canopy USA.”
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