Canopy Growth Archives - Green Market Report

Debra BorchardtApril 8, 2021
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Canopy Growth Corporation (NASDAQ: CGC) is buying The Supreme Cannabis Company, Inc. (OTCQX: SPRWF) in a deal valued at approximately $435 million on a fully diluted basis. Supreme Cannabis shareholders will receive 0.01165872 of a Canopy common share and $0.0001 in cash in exchange for each Supreme Cannabis Share held. There is a $12.5 million termination fee. Supreme Cannabis’s portfolio of brands includes 7ACRES7ACRES Craft CollectiveBlisscosugarleaf, and Hiway. Supreme Cannabis addresses national and international medical cannabis opportunities through its premium Truverra brand.

“As we continue to expand our leading brand portfolio, we’re excited to reach more consumers through Supreme’s premium brands and high-quality products, further solidifying Canopy’s market leadership,” said David Klein, Chief Executive Officer of Canopy. “Supreme’s deep commitment to superior genetics, top-tier cultivation, and strict quality control, paired with Canopy’s leading consumer insights, advanced R&D, and innovation capabilities, is expected to create a powerful combination that aligns with our strategic focus to generate growth with premium quality products across key categories.”

The combination of market leader Canopy Growth with Supreme Cannabis’ top position in Canada will lead to a pro forma Canadian recreational market share of 13.6% according to a company statement based on Headset data. This includes 7ACRES which is Canada’s number one premium flower brand, number one in PAX vapes, and Top-5 in pre-rolled joints. The company said that the combined pro forma market share is estimated to be 23.3% of the premium flower segment in Ontario and 21.4% in British Columbia. However, Canopy Growth noted that cost synergies will not be felt for another two years and those are expected to be in the $30 million range. 

“This transaction is a testament to the value created by all the teams at Supreme and will be beneficial to all of our stakeholders,” added Beena Goldenberg, President, and CEO of Supreme Cannabis. “We have been successful at delivering great products that achieved strong customer loyalty and operating at levels of efficiency that are industry-leading. We have also built a highly sought-after premium brand in 7ACRES. Combining Supreme Cannabis with Canopy – a Canadian market leader with exposure to the United States – presents a significant value creation opportunity for both companies. We look forward to working with Canopy to complete this transaction.”

The deal is said to provide Supreme Cannabis shareholders with a premium per share of approximately 66% based on the closing prices of the Supreme Cannabis Shares and Canopy common shares on the TSX as of April 7, 2021.

Supreme felt the challenges of Covid in 2020 causing the company to focus on cost-cutting measures and strengthening the balance sheet. Canopy also spent a year addressing huge net losses while also looking to shore up its finances.

 


Debra BorchardtMarch 18, 2021
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Canopy Growth Corporation (NASDAQ: CGC) announced that it has entered into a credit agreement with Funds advised by King Street Capital Management, L.P. Under the Credit Agreement, the company has raised a $750 million in a senior secured term loan. Canopy also said it has the ability to obtain up to an additional $500 million of incremental senior secured debt pursuant to the Credit Agreement.

“We are delighted to welcome King Street as our anchor debt investor and look forward to building value for both our credit and equity investors over time,” said Mike Lee, EVP, and CFO of Canopy Growth. “This transaction further strengthens Canopy’s balance sheet, provides additional capital to invest in high-return growth opportunities, and marks a key milestone for us as we work towards achieving a more efficient capital structure”.

In February, Canaccord Genuity downgraded Canopy Growth to a Sell rating. Cormark Securities also downgraded the stock from Market Perform to Reduce. Benchmark also downgraded the stock from Buy to Hold. The stock was lately trading at $34. down from the company’s 52-week high of $56.

“We have been impressed with the growth of Canopy as a leader in the Canadian market and look forward to providing this strategic capital as Canopy further expands its business,” said Noah Charney, Managing Director at King Street.

Last month, Canopy recorded an eye-popping net loss of $829 million. Canopy said that this was a $720 million wider loss than the previous quarter and blamed the loss on impairment and restructuring charges and other related charges of $416 million. $382 million of those related charges were as a result of the announcement on December 9, 2020. Canopy shocked investors at the time when it announced it would cease operations at several sites, plus its outdoor cannabis grow operations in Saskatchewan. The company said those decisions were the partial outcome of an ongoing end-to-end review designed to improve its margins. At the time, Canopy said it expected to record estimated total pre-tax charges of approximately $350 -400 million in the third and fourth quarters of Fiscal 2021.

Loan Terms

The Term Loan Facility has no amortization payments and matures on March 18, 2026. The gross proceeds, net of fees and expenses, will be used by Canopy Growth for working capital and general corporate purposes, including without limitation, growth investments, acquisitions, capital expenditures, and strategic initiatives. The Term Loan Facility has a coupon of LIBOR plus 8.50% and is subject to a LIBOR floor of 1.00%. Giving effect to the net proceeds from the Term Loan Facility, the company’s estimated pro forma cash, cash equivalents, and short-term investments position as of December 31, 2020, would have been approximately CAD$2.5 billion.


Kaitlin DomangueMarch 2, 2021
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It’s time for your Daily Hit of cannabis financial news for March 2nd, 2021. 

On the Site

Collecting and Storing Cannabis Pollen

Most growers these days are only interested in female plants, but if you want to cross different strains and breed new combinations, you’ll need the pollen. And in fact, few companies sell pollen so it’s actually much more practical to just collect your own. For indoor growers, collecting it is the only option, since nature’s elements are not present to spread the pollen for them.

Pro tip: If you are storing seeds for later pollen collection, best to occasionally pull one out and give it a germination test to make sure the little babies are still active and viable.

 

The Massachusetts Cannabis Industry is a Billion Dollar Marketplace

Cannabis business consulting firm Nucleus One recently released the findings of their February 2021 Massachusetts Adult-Use Marijuana Market Report. Nucleus-One tracks and analyzes data from the Cannabis Control Commission of Massachusetts. February’s report heralded good news for the Commonwealth’s cannabis industry after a short-lived decline in sales in 2020. Since the decline, December and January 2021 saw unprecedented sales, with over 98 active retailers in the state. This growth is due to higher sales in product categories other than flower shares, which hit an all-time low in December. 

 

CBN Market Targets Sleep

The demand for sleep aids and medications has seen a similar surge, and with it the debut of products containing Cannabinol (CBN), a minor cannabinoid with what some claim is a uniquely sedative effect.

Unlike CBD, CBN is not present in significant quantities in fresh marijuana, but when unheated marijuana ages or is exposed to air and light, the THC in it turns to CBN.

 

Circle K Ramps Up Cannabis Ownership

Alimentation Couche-Tard Inc. or ACT, the owners of Circle K have increased its equity stake in Canadian cannabis company Fire & Flower Holdings Corp.  (OTCQX: FFLWF). ACT announced that it plans to convert all of its approximately $28.5 million outstanding principal amount of 8.0% secured convertible debentures issued in April 2020 as well as the conversion of approximately $23.6 million principal amount of 8.0% unsecured convertible debentures issued to 2707031 Ontario Inc. Following the conversion, ACT will have converted a total of approximately $52 million principal amount of debt to equity and ACT will hold 19.9% of the issued and outstanding shares of Fire & Flower.

 

High Tide Crushes Fourth Quarter, 166% Increase in Revenue

Canadian cannabis retailer, High Tide Inc., (TSXV: HITI) (OTCQB: HITIF), announced their Q4 earnings yesterday for 2020. Despite the curveballs 2020 threw, High Tide landed on top, and reported a 118% increase in revenue bringing the total to $24.9 million for the fourth quarter. The revenue increase accounted for a 166% year-over-year growth, and brought the year’s total earnings to $83.3 million. 

In Other News

NeonMind Biosciences Inc. Files for Four Additional Provisional Patents

NeonMind Biosciences Inc. (CSE: NEON) (OTC:NMBDF) (FRA: 6UF) announced that they have filed four additional provisional patents on psilocybin preclinical data. NeonMind has a consumer products division focusing on medicinal mushroom infused products, as well as a pharmaceutical division focused on drug development of psychedelic compounds. 

The provisional patent features data derived from the company’s initial preclinical trial that began in November 2020. This trial examined the potential use of psilocybin as a treatment for weight loss. NeonMind’s proprietary preclinical data shows promise that both low and high dose psilocybin may reduce weight gain and that the reduction in weight gain can occur in a short period of time. 

“We are encouraged with the preliminary results obtained from our preclinical trial,” says NeonMind President & CEO Robert Tessarolo. “Through an expanded portfolio of patent applications, NeonMind is uniquely positioned to pursue exciting drug development opportunities in the enormously underserved weight management market. There have been so many solutions developed in the past that have disappointed; a new approach is desperately needed. We are actively building out our capabilities to execute the critical phases of drug development needed to support new drug applications to the FDA.” 

 

TILT Holdings Inc. Approved for Cultivation Expansion at Massachusetts Facility 

TILT Holdings Inc. (CSE: TILT) (OTCQX: TLLTF), announced its approval for expanding cultivation at their Massachusetts cultivation and manufacturing facility. The request was approved by Massachusetts Cannabis Control Commission and set for eight additional grow rooms at its subsidiary, Commonwealth Alternative Care, Inc. The new operations are set to begin later this month. 

“We are pleased to announce the regulatory approval of the second phase of the planned expansion of our 117,000 sq ft cultivation and manufacturing facility in Taunton, Massachusetts,” said Gary Santo, president of TILT. “We now have more than 56,000 sq. ft. of cultivation space with the ability to add a second grow tier to each of the eight new rooms, pending regulatory approval. Once planted, these additional rooms will fortify the supply of premium flower for our Taunton dispensary, and together with our award-winning kitchen and state-of-the art extraction and processing lab, will support the production and distribution of high-quality, consistent products for our brand partners. As we continue to solidify CAC’s presence in the state, we remain committed to working with the CCC to achieve final state licenses permitting medical dispensary operations at our Brockton and Cambridge locations, as well as adult-use operations at both our Brockton and Taunton locations.”

 

Canopy Growth Launches CBD Beverage Brand

Canopy Growth Corporation has launched a CBD beverage brand. The drink is already a top seller in the category after a successful Canadian launch. The brand is called Quatreau, and it contains 20 milligrams of U.S. grown hemp-derived CBD. Quaetreau comes in four refreshing flavors:

  • Quatreau CBD-infused Sparkling Water in Cucumber + Mint
  • Quatreau CBD-infused Sparkling Water in Passionfruit + Guava
  • Quatreau CBD-infused Sparkling Water in Ginger + Lime
  • Quatreau CBD-infused Sparkling Water in Blueberry + Acai

“We have proven our beverage strategy in Canada, where we are currently the market share leader in CBD-infused ready-to-drink beverages,” said Canopy Growth President and Chief Product Officer Rade Kovacevic. “Beverages are fueling growth in the CBD category and we believe this product will resonate with U.S. consumers looking for a naturally flavored, zero sugar option.”


Debra BorchardtFebruary 9, 2021
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Canopy Growth Corporation (NASDAQ: CGC) announced its financial results for the third quarter fiscal 2021 ending December 31, 2020, with net revenue of $153 million in Q3 2021, an increase of 23% versus Q3 2020. Canopy Growth said that $99 million of that revenue was driven by an increase in Canadian recreational and International medical cannabis revenue. Despite the increase in revenue, the company also recorded an eye-popping net loss of $829 million.

Canopy said that this was a $720 million wider loss than the previous quarter and blamed the loss on impairment and restructuring charges and other related charges of $416 million. $382 million of those related charges were as a result of the announcement on December 9, 2020. Canopy shocked investors at the time when it announced it would cease operations at several sites, plus its outdoor cannabis grow operations in Saskatchewan. The company said those decisions were the partial outcome of an ongoing end-to-end review designed to improve its margins. At the time, Canopy said it expected to record estimated total pre-tax charges of approximately $350 -400 million in the third and fourth quarters of Fiscal 2021.

“We delivered another quarter of record net revenue, with growth across all our businesses, led by improved commercial and supply chain execution,” said David Klein , CEO. “We are building a track record of winning in our core markets, while also accelerating our U.S. growth strategy with the momentum building behind the promising cannabis reform in the U.S.”

“We are executing against our cost savings program, with several initiatives already completed and more underway to build a leaner and more agile business,” added Mike Lee , CFO. “These cost savings, along with our top-line growth and continued cost discipline, puts Canopy firmly on a path to achieve profitability during Fiscal 2022, with further improvement anticipated beyond.” The company divested its shares in Canopy Rivers and increased its ownership in TerrAscend.

Of the total impairment and restructuring charges recorded during the third quarter, approximately 15% was a cash charge. Canopy said other expenses totaled $291 million during the quarter stemming from non-cash fair value changes, mostly driven by the company’s higher stock price.

While the losses are staggering,  Canopy is resting comfortably on cash and short-term investments that amounted to $1.59 billion on December 31, 2020. Still, this represented a decrease of $0.39 billion from $1.98 billion on March 31, 2020, reflecting the EBITDA loss and capital investments. The adjusted EBITDA loss was $68 million in the 2021 third quarter versus a loss of $97 million in the 2020 third quarter driven by net revenue growth and a decline in operating expenses.

Lowered Expenses

Canopy reported that total SG&A expenses declined by 15% versus the 2020 third quarter, driven by year-over-year reductions in Sales & Marketing, General & Administrative and Research and Development expenses. Sales & Marketing expenses declined by 15% reflecting lower advertising and marketing expenses versus last year’s spending attributable to product marketing and brand awareness campaigns in support of its Cannabis 2.0 products, partially offset by higher sponsorship fees for BioSteel and increased brand spending in support of the U.S. CBD business. G&A expenses declined by 23% and were due primarily to a reduction in costs attributable to corporate restructuring actions taken earlier in the year. R&D expenses decreased by 33% also driven by lower compensation expenses resulting from corporate restructuring actions taken earlier in the year.  Share-based compensation expenses decreased 68% over last year’s third quarter.

Positive Events

While the pain of making these huge changes has sucked the oxygen out of the room, the company has actually managed to make progress on other fronts. The Canadian recreational market share increased to 15.7% during the third quarter. “Our market share grew by 60 bps in Alberta and 120 bps in British Columbia, while it declined by 80 bps in Ontario in Q3 2021 vs Q2 2021. Our market share in Ontario improved by 150 bps during the latest 4-weeks ended January 17, 2021, vs Q3 2021,” said the company in its statement. Canopy said that its market share in the flower category grew by 180 bps sequentially and that it continued to drive market share gains in the growing value flower segment.

Beverages captured 34% market share in the quarter, even as new beverage brands have entered the marketplace. Canopy beverages retained the top 3 brands and our beverage brands are commanding higher velocity versus competitive set on a per SKU basis.

Martha Stewart’s health and wellness CBD products are seeing strong consumer demand, with the brand already outselling over 94% of all CBD brands in the U.S. in just 4 months since launch. Canopy has secured distribution of Martha Stewart CBD collection in 580+ Vitamin Shoppe and Super Supplements retail locations nationwide. Subsequent to quarter-end, Canopy launched CBD pet products under the Martha Stewart CBD and SurityPro CBD brands.

Outlook

The company said that as a result of its organizational changes and cost savings plan it is now projecting a net revenue CAGR of 40%-50% from FY 2022 to FY 2024. The company said it expects positive adjusted EBITDA during the second half of FY 2022 and 20% Adjusted EBITDA margin for the full year FY 2024 and positive operating cash flow for the full year FY 2023 and positive free cash flow for the full year FY 2024.

 

 


Debra BorchardtJanuary 26, 2021
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The doyen of lifestyle branding Martha Stewart has launched her line of hemp CBD products for dogs. Martha Stewart CBD for Pet was created in collaboration with Canopy Animal Health, a division of Canopy Growth Corporation (NASDAQ: CGC) which is focused on improving pet health through evidence-based CBD therapies.
“My dogs are not only my companions, but they are part of my family, and I prioritize their emotional and physical well-being as I do my own,” said Martha Stewart. “Just as CBD can support human wellness, it’s been shown to improve the quality of life for pets as well. With the help of the scientists and veterinarians at Canopy Animal Health, I’ve created CBD oil drops and savory soft-baked chews designed to support the health of dogs of all ages, sizes, and breeds in delicious gourmet flavors that your canines won’t be able to resist.”
Stewart had initially begun using CBD for personal use and launched her CBD gummy line in September 2020. This is her entry into the pet side of the business. She partnered with the veterinarians and researchers at Canopy Animal Health to formulate an irresistible, easy to administer product to support dogs’ emotional and physical wellbeing. These premium gourmet-flavored CBD wellness solutions for dogs were developed by Stewart and inspired by her beloved Chow Chows and French Bulldogs.
The portfolio of wellness supplements is specially formulated to deliver functional products with carefully controlled CBD content for customized daily use in dogs of all sizes and ages. All Martha Stewart CBD for Pet products carries the NASC quality seal, denoting strict adherence to manufacturing, labeling, testing, and marketing guidelines – ensuring the best quality product for your pet. All products are corn, soy and wheat-free, and contain no artificial flavors, colors or preservatives.
Launching online today, Martha Stewart CBD for Pet features savory soft-baked chews for Wellness, Calm, and Mobility and gourmet oil drops in canine-approved flavors such as chicken, blueberry, and cranberry, tailored for both large and small breeds and accessibly priced from $19.99 to $39.99.
  • Soft-Baked Chews for Wellness (Chicken, Blueberry + Anise flavor, 30 ct)
  • Small dogs (5-35 lbs), 7 mg/chew for $19.99
  • Large dogs (36-110 lbs), 19 mg/chew for $22.99
  • Soft-Baked Chews for Calm (Chicken + Cranberry flavor, 30 ct)
  • Small dogs (5-35 lbs), 9 mg/chew for $22.99
  • Large dogs (36-110 lbs), 26 mg/chew for $24.99
  • Soft-Baked Chews for Mobility (Chicken + Blueberry flavor, 30 ct)
  • Small dogs (5-35 lbs), 11 mg/chew for $22.99
  • Large dogs (36-110 lbs), 32 mg/chew for $24.99
  • Wellness Drops (Chicken flavor, 600 mg CBD/bottle) for $39.99

“Canopy Growth is committed to upholding only the highest standards for animal health, with products backed by a wealth of comprehensive CBD research, and the confidence of our dedicated team of cannabidiol scientists and researchers,” said Dr. Bob Menardi, DVM, Director of Veterinary Technical and Educational Services at Canopy Animal Health. “Martha Stewart CBD for Pet is the happy marriage of Canopy’s science-first approach to animal well-being and Martha Stewart’s passion for providing animal lovers with the tools to enrich their pets’ lives. Together, we’re bringing consumers an accessible and effective way to live better.”

Martha’s Cannabis History

Stewart is known for her home show and lifestyle empire that includes a magazine, television shows and numerous products. One of her shows was a cooking program with cannabis king Snoop Dogg called “Martha and Snoop’s Potluck Dinner Party.” While Snoop frequently brought up cannabis in the show and episodes featured cannabis-friendly guests like Whiz Kalifa and Seth Rogen, Stewart always remained coy on the subject. Although she has said that the second-hand smoke on the set probably led to a contact high for her. Conversely, Snoop is not much of an alcohol drinker, but Stewart would often get him to share a drink with her on the set.

All products from the Martha Stewart CBD for Pet collection are available beginning January 26, 2021, on Canopy Growth’s one-stop e-commerce destination, www.shopcanopy.com,www.marthastewartcbd.com, www.directcbdonline.com and www.vitaminshoppe.com.

Debra BorchardtDecember 21, 2020
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Canopy Rivers Inc. (TSX: RIV) (OTC: CNPOF) has entered into an agreement with Canopy Growth Corporation (NASDAQ: CGC) in which Rivers will transfer three portfolio assets to Canopy Growth in exchange for $115 million in cash and 3,750,000 common shares of Canopy Growth and the cancellation of all 36,468,318 Multiple Voting Shares and the 15,223,938 Subordinate Voting Shares of Rivers held by Canopy Growth.

“This is a transformative transaction for our Company that we believe provides substantial value to our shareholders through an enhanced cash position and strategic flexibility, and the collapse of our dual-class share structure,” said Narbé Alexandrian, President, and CEO, Rivers. “Following the closing of the Transaction, we intend to shift our focus to pursuing other opportunities in the global cannabis market, where we believe that our new strategic focus and substantial balance sheet will allow us to successfully execute our revamped strategic plan.”

In doing so, Rivers will receive significant additional cash resources, which the company said would enable it to pursue opportunities in the global cannabis market, including the United States. With this money added to its coffers, Canopy Rivers will have $243 million on hand. The company said it believes that its significant cash position and single-class share structure will make it an attractive transaction partner for cannabis operators, including those in the U.S., looking for access to capital and a path to liquidity.

Transaction Details

The company outlined the following details of the deal in a statement:

  • Rivers will terminate the royalty agreement between its wholly-owned subsidiary Canopy Rivers Corporation (“CRC”) and The Tweed Tree Lot Inc., and will sell the following assets, all owned by CRC, to Canopy Growth (collectively, the “Transferred Assets”):
    • 19,445,285 exchangeable shares in the capital of TerrAscend Corp. (“TerrAscend”);
    • a loan in the principal amount of approximately $13.2 million owed by TerrAscend Canada Inc. (“TerrAscend Canada”) to CRC;
    • warrants to purchase 2,225,714 common shares in the capital of TerrAscend at an exercise price of $5.95 per share, exercisable upon the federal legalization of cannabis in the U.S.;
    • warrants to purchase 333,723 common shares in the capital of TerrAscend at an exercise price of $6.49 per share, exercisable upon the federal legalization of cannabis in the U.S.;
    • its 26% common share interest in Les Serres Vert Cannabis Inc. (“Vert Mirabel”), subject to certain rights of first refusal; and
    • its 15,000,000 Class A preference shares in the capital of Vert Mirabel.
  • The consideration to be received by Rivers in connection with the Transaction will be satisfied by:
    • payment by Canopy Growth of $115 million in cash;
    • issuance of 3,750,000 common shares of Canopy Growth, which will be freely tradeable on the TSX and Nasdaq as of the closing of the Transaction; and
    • cancellation of all of the 36,468,318 MVS and 15,223,938 SVS held by Canopy Growth.
  • Rivers and Canopy Growth will also terminate the agreements that govern their relationship, including the Investor Rights Agreement, Memorandum of Understanding, and Trademark License Agreement.
  • Rivers and CRC will also change their corporate names to reflect the new direction of the Company.

“As a long-time shareholder of Rivers, I am pleased to support this transaction”, said Jason Wild, chairman of JW Asset Management which, on closing, will own 23.9% of the common equity of the Company. “As an active investor in the U.S. cannabis market, JW Asset Management recognizes the generational opportunity for value creation in the world’s largest and most attractive cannabis market. With a significant infusion of cash and liquid securities, and a new strategic focus, we believe that Rivers will be well-positioned to further explore and potentially capitalize on this vast opportunity.”

“The financial and strategic merits of the Transaction to the Company and our minority shareholders are clear,” said Joseph Mimran, Chair of the special committee of independent directors that Rivers’ board of directors established in connection with the Transaction. “On behalf of the Board, we look forward to writing the next chapter in Rivers’ history.”


StaffDecember 15, 2020
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While some companies like Canopy Growth (NASDAQ: CGC) are laying off employees by the hundreds, Slang Worldwide (OTC: SLGWF) is doing the opposite. This quietly growing cannabis brand company is adding jobs and the state of Colorado couldn’t be happier because the company decided to move its headquarters there.

“Colorado continues to be the epicenter of the growing cannabis industry, so we’re excited by the company’s smart decision to relocate and create jobs in our beautiful state,” said Governor Jared Polis. “Colorado’s cannabis industry offers strong growth potential and this move speaks volumes about our state’s cannabis industry and community as a whole.” The state competed against California and Oregon for the jobs. Slang already has 75 people on the payroll in their existing offices in Denver, which serves as their U.S. home base, and Boulder which will now be expanded. The move will create 43 new jobs with an average annual wage of $75,000 and are expected to include positions like lab technicians, project management, and other production-related positions.

“We applaud Governor Polis and the Office of Economic Development and International Trade for once again being leaders in cannabis policy,” said Chris Driessen, President, and CEO of Slang Worldwide. “Colorado was already a core market for us, so with these incentives from the state it only made sense for us to double down on our commitment to the place that so many of us, including myself, call home.”

The Economic Development Commission voted at its September 17, 2020 meeting to approve up to $584,399 in job-growth incentive tax credits over the next eight years. This is the first time Colorado has offered performance-based incentives to a cannabis company.

“Slang Worldwide’s selection of Colorado marks the next step of responsible growth within Colorado’s cannabis industry, a priority area for our office and this administration,” said Betsy Markey, executive director of Colorado’s Office of Economic Development and International Trade. “We are encouraged by the growth potential of this vertical. Slang provides additional linkages between Colorado suppliers and broader consumer markets while growing our production and R&D profile.”

Canopy Growth Tax Incentives

For the past year and a half, Canopy has been laying off employees by the hundreds and scaling back much of its business. The company received a property tax credit from the state of New York in 2019 for its industrial hemp processing plant located in upstate Kirkwood. The company was given a standard 15-year payment-in-lieu-of-taxes agreement that will trim the property tax bill by more than $1.7 million over the life of the agreement. Under the terms of the proposed deal, Canadian-based Canopy is set to get a 39% reduction in property taxes over the first five years of the 15-year term of the agreement. Canopy said it would hire 75 workers at the facility with salaries between $30,000-$50,000. While Canopy exited its Springfield NY location, as of November, Kirkwood is still under construction. According to WNBF, the project is actually nearing completion.

 

 


StaffDecember 11, 2020
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Ayr Strategies

Ayr Strategies Inc. (OTCQX: AYRWF) closed on its previously announced offering of 12.5% Senior Secured Notes that will raise $110 million for the company. Ayr said it plans to use the proceeds from the issuance of the Notes, in addition to cash from the proceeds of in-the-money warrant exercise and cash from operations, to fund capital expenditures and the cash portion of pending and potential future acquisitions. Aur upsized the offering from the originally planned $75 million.

“This is an unprecedented time for Ayr. We are in the excellent position of being one of the few MSOs for whom capital is readily available, which is a major strategic advantage for us as we expand and grow. We were very pleased with the reception in the market for our corporate credit. Our premier debt offering, which was upsized nearly 50% from our initial size of $75 million due to substantial demand, combined with the proceeds from our in-the-money warrants and the cash we generate every day from operations, give us a war chest of over US$150 million in cash on our balance sheet. Our announced M&A pipeline is fully financed and we are in a great position to continue to invest in our current operations while we explore other opportunities for expansion,” said Jonathan Sandelman, Ayr’s CEO.

Canopy Growth

Canopy Growth Corporation  (NASDAQ: CGC) and Arise Bioscience Inc., a wholly-owned subsidiary of TerrAscend Corp. (OTCQX: TRSSF) engaged only in the legal sale of CBD products,  announced they have entered into a loan financing arrangement in the amount of $20 million pursuant to a secured debenture. In connection with the Loan, TerrAscend has issued 2,105,718 common share purchase warrants to the company. TerrAscend and Canopy Growth have had a long relationship with each other. Canopy Growth initially co-invested in TerrAscend in November 2017. On November 30, 2018, Canopy Growth announced the completion of a restructuring transaction with TerrAscend pursuant to which TerrAscend restructured its share capital by way of a plan of arrangement under the Business Corporations Act (Ontario). Subsequently, in March 2020, Canopy Growth loaned C$80.5 million to TerrAscend Canada Inc.

TerrAscend’s management continues to perform very well in high-growth, competitive markets. With this additional loan into TerrAscend’s Arise business unit, we are confident the team will continue to execute at a high level and that they are well-positioned to drive strong value creation for Canopy shareholders,” said David Klein, CEO, Canopy Growth.

Jason Ackerman, Chief Executive Officer and Executive Chairman of TerrAscend added, “I’d like to thank the Canopy Growth team for their ongoing support and investment as we scale our operations. I’m proud to consider them partners and look forward to continuing to execute on the opportunity ahead.”


StaffDecember 9, 2020
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Employees of Canopy Growth (TSX: WEED) (NASDAQ: CGC) got a call from the Grinch today as 200 employees learned they would no longer have a job. Canopy Growth said it would cease operations at the following sites: St. John’s, Newfoundland and LabradorFredericton, New BrunswickEdmonton, AlbertaBowmanville, Ontario; as well as its outdoor cannabis grow operations in Saskatchewan. The company noted that approximately 220 employees have been impacted as a result of these closures. The stock price fell over 5% on the news and closed at $27.20.

“As part of the end-to-end review of our operations that we outlined during our second-quarter earnings call, we have made the decision to close a number of our production facilities. These actions will be an important step towards achieving our targeted $150 -$200MM of cost savings and accelerating our path to profitability. We are confident that our remaining sites will be able to produce the quantity and quality of cannabis required to meet current and future demand,” said David Klein , CEO, Canopy Growth. “This was a difficult decision but I believe it is the right one. I want to thank all of the employees impacted by this decision for their efforts in helping build Canopy Growth.”

The company said the decisions are the partial outcome of an ongoing end-to-end review designed to improve its margins. The end-to-end review was announced during the company’s second-quarter earnings call and looks at people, process, technology, and infrastructure. The company also said it expects to record estimated total pre-tax charges of approximately $350 -400MM in the third and fourth quarters of Fiscal 2021. The production sites impacted represent approximately 17% of the Company’s enclosed Canadian footprint and 100% of its Canadian outdoor production footprint.

This comes on the news that The Vitamin Shoppe agreed to stock its Martha Stewart CBD products in its stores and make them available through its web site. All told, The Vitamin Shoppe has over 780 stores throughout the U.S.; Martha Stewart CBD goods are available in more than 580.


StaffNovember 9, 2020
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It’s time for your Daily Hit of cannabis news for November 9, 2020

On the Site

Canopy Growth

Canopy Growth Corporation (NYSE: CGC) reported net revenue of $135.3 million for the second quarter fiscal 2021 ended September 30, 2020, causing the stock to jump in early trading. This was a 77% increase over last year’s fiscal second-quarter revenue of $76.6 million. Still, Canopy delivered a net loss of $96.6 million versus last year’s net income of $242 million for the same time period.

The company also reported a loss per share of ($0.09) which beat the MarketWatch estimate for a loss of ($0.28). The stock was lately trading at $26, an increase of 13%. The company attributed the revenue growth to an increase in Canadian recreational revenue, continued strength in Storz & Bickel vaporizer sales and ThisWorks, and contribution from BioSteel, which was acquired in October 2019 . The net loss was driven by lower other income. Canopy also said that the increase versus the prior year period also benefited from favorable comparison, as Q2 2020 results included a $32.7 million charge for returns, return provisions, and pricing allowances primarily related to restructuring the company’s recreational softgel & oil portfolio.

Tilray

Tilray, Inc. (Nasdaq: TLRY) reported that its total revenue for the third quarter was flat at $51.4 million and up 2.0% sequentially. Net losses fell to  $(2.3) million versus last year’s net loss of $(36.4) million and fell sequentially from $(81.7) million in the second quarter. The most significant driver of the change in net loss during the period was the revaluation of the outstanding warrants associated with the equity offering completed in March. Tilray stock was slightly higher in after-hours trading.

The company attributed the disappointing results on the discontinuation of bulk sales and a slight decrease in Canada medical sales which caused cannabis segment revenue to fall by 11% to $31.4 million. Total cannabis kilogram equivalents sold decreased 53% to 5,107 kilograms from 10,848 kilograms in the prior year’s third quarter. Adult-Use and International Medical sales grew 26% and 42%, respectively. Excluding the year-over-year impact related to bulk sales, total cannabis revenue increased by 24%. Hemp segment revenue increased 28% to $20.0 million (C$26.5 million).

Aurora Cannabis

Canadian-based cannabis company, Aurora Cannabis (NYSE: ACB) reported their Q1 earnings this morning. The results were mixed at best, with shares rising 21% on the potential for cannabis legalization under a Biden administration. Unless otherwise stated, these figures are in Canadian dollars. 

The company’s adjusted gross margin before fair value adjustments on total cannabis net revenue didn’t waver much quarter to quarter, with Aurora Cannabis reporting a 48% adjusted gross margin compared to 50% in Q4 2020. Before fair value adjustments, the company’s adjusted gross margin on cannabis net revenue was 52%. 

Canopy Rivers

Canopy Rivers Inc. (OTC: CNPOF) today released its unaudited condensed interim consolidated financial statements in Canadian dollars and acknowledged taking a $112 million hit for its PharmHouse investment.  The total comprehensive loss for the quarter was $87.0 million. On a positive note, its investment into TerrAscend has appreciated implying an investment value of $214 million.

The company reported that its royalty, interest, and lease income (before provisions for credit losses) was $4.1 million for the quarter. It included income from its various royalty, convertible debenture, and loan agreements, among other items. Other comprehensive income was $23.4 million, net of tax, for the quarter, which included a net increase in the fair value of financial assets of $27.4 million attributed to the positive change in the fair value of the investment in TerrAscend. TerrAscend’s share value increase from $2.87 on June 30, 2020, to $9.75 as of the close of markets on November 6, 2020.

Zynerba

Zynerba Pharmaceuticals, Inc. (NASDAQ:ZYNE) reported a net loss of $9 million for the third quarter ending September 30, 2020, with a basic and diluted net loss per share of $(0.31). This beat the Yahoo Finance average analyst estimate for a loss of ($0.43). Six analysts have a Hold rating on the company, while two give it a Buy rating. The company still does not have a revenue-producing drug, but Zynerba said it has enough money until that time comes.

Planet 13

Planet 13 (CSE:PLTH) (OTCQX:PLNHF) is potentially one of the most well-known dispensaries around. They are incredibly innovative, massive in size, and just all around at the top of the dispensary game. Planet 13 is even more special because currently, they’re only located in Las Vegas, Nevada. For having operations in only one state, they sure do gain a ton of attention!

The cannabis megastore just announced their third consecutive month of generating over $7.5 million in revenue. The company’s October revenue clocked out at $7.6 million, with gross margins above 50%. Planet 13’s figures include sales for the SuperStore, as well as Nevada wholesale. 

In Other News

Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA, SAMAW, and SAMAU) and Clever Leaves International Inc. announced today that they have amended their definitive agreement, which was entered into on July 25, 2020 and is anticipated to become a NASDAQ-listed public company trading under the ticker symbol “CLVR”.

 Under the amended terms, the initial expected enterprise value has been reduced to $206 million from $255 million and the minimum cash condition for SAMA has been reduced to $26 million from $60 million. Additionally, the cash consideration payable to certain Clever Leaves’ shareholders at closing has been amended, thereby increasing the equity rollover consideration of the transaction to approximately 97% while Schultze Special Purpose Acquisition Sponsor, LLC agreed to restructure its’ equity ownership to better align with the capital retained at closing. In connection with these revised terms, institutional investors have committed over $10 million through a private placement to be funded at closing of the Business Combination. Additionally, select SAMA stockholders have agreed not to redeem their shares held thereby providing a path to over $16 million of additional committed capital and thus having adequate capital to consummate the transaction. When including SAMA’s cash in trust, the parties expect to have over $80 million of cash on its balance sheet following closing.

 


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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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