It’s time for your Daily Hit of cannabis financial news for November 26, 2018.
On The Site
Cannex Capital Holdings Inc. (CSE: CNNX) (OTCQX: CNXXF) and 4Front Holdings signed a binding letter agreement to combine in an all-stock deal. The combined company will continue to trade on the CSE under Cannex’s existing name and the ticker symbol CNNX. The stock fell over 10% on the news to lately trade at C$0.98.
According to the company statement, the new combined company will own, operate or manage six existing cultivation and production facilities in Washington, Illinois and Massachusetts and five retail operations in Illinois, Massachusetts, Maryland, and Pennsylvania. 4Front also has licenses or licensing agreements in place that will enable it to open and operate several more dispensaries in Massachusetts, Maryland, and Pennsylvania under the Mission brand, which should bring the total number of related operations to 20 by year-end 2019 within the combined company’s existing asset base.
Grown Rogue International Inc. began trading today on the Canadian Securities
Exchange (CSE) under the ticker symbol “GRIN”. The listing follows the company’s previously announced reverse takeover (RTO) of a Canadian public company Novicius Corp.
The company raised approximately CAD $6.5 million through brokered and non-brokered private placements. Grown Rogue is only located in Oregon at this time. The company says it expects to enter the California market by the end of the year, but that doesn’t include cultivation or production of any sort.
Grown Rogue has signed an LOI for a joint venture in northern California. The company said its focus in California is to start with distribution, move into extraction (manufacturing), and ultimately retail.
Before Tilray (TLRY) and Canopy Growth (CGC) took over cannabis stock portfolios, GW Pharmaceuticals plc (Nasdaq: GWPH) was the darling of the group. However, the recent positive news from this cannabis biotech company’s epilepsy study serves to remind investors that great good comes from cannabis research.
On Monday, GW Pharma announced positive top-line results of the second randomized, double-blind, placebo-controlled Phase 3 clinical trial of Epidiolex in the treatment of seizures associated with Dravet syndrome, a rare and severe form of childhood-onset epilepsy. The biotech company reported that in this trial, Epidiolex, when added to the patient’s current treatment, achieved the primary endpoint of reduction in convulsive seizures for both dose levels (10 mg/kg per day and 20 mg/kg per day) with high statistical significance compared to placebo. The company said that both doses also demonstrated statistically significant improvements on all key secondary endpoints.
KushCo Holdings, Inc. (OTCQB: KSHB) reported that its revenue was up 177% to $52.1 million for its fiscal year 2018 ending August 31, 2018. The net loss, including $1.0 million in depreciation expense, was $23.9 million in SG&A, and $1.6 million in provisions for income tax, was approximately $10.2 million compared to net income of $69,000 in fiscal 2017.
Gross margins were 24.2% versus 35.2% for fiscal 2017, the company attributed it to the year-end inventory adjustments of $2.8 million. Kushco said that excluding this year-end adjustment, gross margins for the year would have been 30%.
Curaleaf Holdings, Inc. (CURA.CN) delivered total revenue of $21.4 million, an increase of 289% for the third quarter ending September 30, 2018, versus $5.5 million for the same time period in the previous quarter. Total revenue increased 47% sequentially, compared to $14.6 million in the second quarter of 2018.
The company recorded a gross profit of $13.8 million, excluding the impact of biological assets, an increase of 360%, compared to $3.0 million in Q3 2017. The net loss was $33.7 million for the 2018 third quarter, including a $25 million one-time, non-cash, accounting entry as part of the RTO transaction and investments in new store openings and facilities, compared to a net income of $0.5 million in Q3 2017. Gross profit margins, excluding the impact of biological assets, was 64%, compared to 55% in Q3 2017.
In Other News
Acreage Holdings, one of the largest, vertically-integrated cannabis companies in the US, has acquired Blue Tire Holdings LLC, to bring cannabis products to Michigan residents throughout the state. Blue Tire Holdings has spent the last few years acquiring assets in strategic locations within Michigan, including a 55,000 square foot facility in Flint. The acquisition ensures Michigan residents will receive safe, consistent doses of cannabis as the state enters the recreational market. Acreage is now licensed to provide Cannabis in 18 states with more than 40 dispensaries.
President George Allen said, “With a population of 10 million people and having just passed legislation to become the 10th state that allows adult-use of cannabis, Michigan is one of the most exciting markets in the U.S. This transaction is an important part of our plans to participate in the industry there, and do so with the incredibly resourceful and talented team at Blue Tire.”
CURE Pharmaceutical (OTC: CURR) has secured a new registration with the Drug Enforcement Administration (DEA) as a manufacturer authorized to handle Schedule 1 controlled substances. With this license, CURE will develop and manufacture cannabinoid-based pharmaceutical products using its CUREfilm™ technology at its facility in Oxnard, Calif.
CUREfilm technology is ideal for the delivery of cannabinoids as it offers increased bioavailability, ease, and precision of dosing and greater palatability. Cannabinoids are chemical compounds found in plants, such as cannabis (phytocannabinoids), synthesized by cells of the human body (endocannabinoids) or synthesized in a laboratory (biosynthetic cannabinoids) that interact with the body’s endocannabinoid system. The endocannabinoid system is recognized as an important modulatory system in the function of the brain, endocrine and immune tissues.
CannTrust Holdings Inc. (TSX: TRST) has shipped its standardized CBD oil capsules to Australia’s Gold Coast University Hospital. The capsules will be used in a study to determine the efficacy of CannTrust CBD oil capsules in slowing the disease progression in patients with Amyotrophic Lateral Sclerosis (ALS) and Motor Neuron Disease, which was first announced by the Company in July 2018. The capsules will be imported, stored and distributed by PharmaCann Pty Ltd. The shipment will include all investigational products that are required for the study.
This study exemplifies CannTrust’s focus on medical research and its dedication to uncovering the medicinal value of its proprietary cannabis products, and how they can improve health and well-being for all. In addition to assessing ALS disease progression, the study will also look at the effects of CannTrust CBD oil capsules on a variety of outcome measures related to ALS such as spasticity, pain, weight loss and quality of life. The CBD strain which will be used in the study was developed by CannTrust from its proprietary genetics, meaning that the research results will be specific to the Company’s CBD oil.
Canopy Rivers Inc. (TSXV: RIV) announced it has, through its wholly-owned subsidiary Canopy Rivers Corporation, entered into an incremental funding agreement with its joint venture partner PharmHouse Inc. and amended the terms of its global non-competition agreement with joint venture partner, 2615975 Ontario Limited, to include additional rights in favour of the company in the event the Joint Venture Partner commences operations in the U.S. cannabis market.
The company will provide up to C$40 million of secured debt financing with a three-year term and an annual interest rate of 12%, calculated monthly and payable quarterly after receipt of the sales license at PharmHouse’s initial production and processing facility.
Namaste Technologies Inc. signed a Subscription Agreement where the company has completed an investment of $250,000 to acquire 46,729 Class B common shares of Kief Cannabis Company Ltd. at a cost of $5.35 per share. Namaste’s investment represents approximately 3% of the issued and outstanding shares of Kief Cannabis, based on an $8.1 million valuation.
Aleafia reported total revenue for the three and nine months ending September 30, 2018, was $1.6 million and $3 million, respectively. Q3 2018 revenue was up 36 percent over Q2 2018. Gross profit for the three and nine months ending September 30, 2018, was $2.2 million and $3.1 million, respectively.
For the Health & Wellness division, Q3 2018 revenue and operating income before non-cash items were $1.06 million and $206,458, respectively. For the Farms & Products division, Q3 2018 revenue and operating income before non-cash items were $529,146 and $217,358, respectively. This included the sale of the company’s first harvest.
Canopy Growth Corporation (WEED.TO) (CGC) has closed the previously announced acquisition of the assets of ebbu, Inc.