John SchroyerNovember 10, 2023
The company is facing several ongoing legal actions.
iAnthus Archives - Green Market Report
John SchroyerNovember 10, 2023
StaffJuly 17, 2023
The Daily Hit is a recap of the top financial news stories for July 17, 2023.
On The Site
Colorado Cannabis Sales Continue Falling
In May, Colorado marijuana sales continued to plummet as a statewide industry slump hammers businesses, with sales hovering near their lowest point in four years. Read more here.
Green Thumb Industries Worker Dies at Illinois Facility
An employee of Green Thumb Industries (CSE: GTII) (OTCQX: GTBIF) died recently while on the job at a grow operation in Rock Island, Illinois, raising additional questions about worker safety in the cannabis industry following another worker death last year in Massachusetts. Read more here.
New Study Says Patients May Stay on Depression Meds While Taking Psilocybin Therapy
Compass Pathways (Nasdaq: CMPS) has revealed positive results from a phase 2 clinical trial investigating the use of its synthetic psilocybin treatment, COMP360, alongside daily SSRI antidepressants in treating persistent depression, the company announced Monday. Read more here.
Former Curaleaf Exec to Head iAnthus Amid RICO Suit, Alleged Mismanagement
Amid a pending lawsuit and serious allegations of funds misappropriation, Canadian producer iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCPK: ITHUF) has appointed Richard Proud as its new chief executive officer and director on the board of directors. Read more here.
SEC Seeks Judgment in Former cbdMD CEO’s Fraud Case
Fund manager Martin Sumichrast looks like he admitted his guilt in a fraud case while simultaneously claiming through his lawyers that the claims were outrageous, according to a report in Law360. Read more here.
New Markets Within California Staggeringly Slow to Open
The California marijuana business landscape remains one of the toughest in the nation, and over the past three years one of the areas in which industry advocates had placed much of their hopes – repealing city-level bans on cannabis commerce – has made barely any gains, despite a flurry of victorious pro-marijuana ballot measures and ordinances. Read more here.
In Other News
Missouri
Less than a year after recreational marijuana first hit the shelves in Missouri, the state is cracking down on just how appealing marijuana product packaging can be. New rules, governing the number and types of colors, symbols and text that can be displayed on marijuana products, go into effect next year. Read more here.
Oregon
Many Oregon marijuana industry insiders say the entire business is a “wreck,” with most businesses losing money and wholesale prices in a tailspin. Read more here.
Congress
Democratic senators are seeking to pass a series of marijuana reform amendments, including a proposal to legalize medical cannabis for military veterans, through a must-pass defense bill that’s set to be considered this week. Read more here.
Adam JacksonJuly 17, 2023
The appointment comes as the company wades through corruption accusations.
StaffJune 22, 2023The Daily Hit is a recap of the top financial news stories for June 22, 2023.
On the Site
Canopy Growth Sees More Than $3 Billion in Losses
Canada-based cannabis industry leader Canopy Growth Corporation (TSX: WEED) (NASDAQ: CGC) has reported steep rising losses worth more than C$3 billion. Canopy posted revenue of C$87.54 million for the fourth quarter ending March 31, 2023 versus last year’s $101 million – a decline of 14%. Still, the revenue figure beat Yahoo Finance’s analyst average of $73.1 million for the year. Read more here.
SEC Fines Marcum $10 Million for Improper SPAC Audits
The Securities and Exchange Commission censured accounting firm Marcum LLP for engaging in unethical and improper professional conduct related to Special Purpose Acquisition Corporations (SPAC). The SEC also noted that Marcum offered $10 million to settle the case, which the commission said it will accept it. Marcum is major accounting partner in the cannabis industry. Read more here.
Colorado Cannabis Market Shows First Price Rise Since 2021, Ducking Deflation
After nearly a two-year stretch of deflation, marijuana prices in Colorado are showing the first signs of life since October 2021, according to the Colorado Department of Revenue. The retail price for a pound, which had plummeted from a peak of $1,731 in January 2021 to a historic low of $649 by April 2023, has risen to $703 in June 2023. The price hike is a break from the two-year trend of slumping cannabis prices, which hovered around half of the rates seen before 2022. Read more here.
iAnthus Gets Hit With a RICO
A Maryland-based cannabis dispensary, LMS Wellness Benefit LLC, has accused iAnthus Capital Holdings Inc. (CSE: IAN) (OTCPK: ITHUF) of a scheme to divert at least $4.5 million from its funds into iAnthus’ other business interests, according to a lawsuit filed in federal court this week. In the civil RICO suit, LMS claims that a management firm it had hired, S8 Management LLC, which shares several executives and directors with iAnthus, made unauthorized money transfers from LMS’s account to the failing subsidiaries of iAnthus, Law360 reported. Read more here.
Anti-Cannabis Group Sues New York Over Legalization
A group of anti-cannabis parties has banded together to sue the State of New York including Governor Kathy Hochul, the Cannabis Control Board and the Office of Cannabis Management. The case was filed on June 20, 2023. New York passed the Marijuana Regulations and Taxation Act (MRTA) on March 31, 2021 which legalized adult-use cannabis. Read more here.
Unlicensed Dispensary Landlords Face New Penalties Under Council Bill
In Other News
Fire & Flower On Sale
Fire & Flower Holdings Corp.(TSX: FAF) (OTCQX: FFLWF) has received approval from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act for the implementation of a sale and investment solicitation process to be conducted by FTI Consulting Canada Inc., and a stalking-horse agreement between the company and 2707031 Ontario Inc., an affiliate of Alimentation Couche-Tard Inc. Read more here.
Hexo, Tilray Deal Closes
HEXO Corp. (TSX: HEXO; NASDAQ: HEXO) announced today the closing of the second of two tranches of the non-brokered private placement of Series 1 Preferred Shares previously announced on June 1, 2023 and the subsequent completion of the transactions contemplated by the previously announced statutory plan of arrangement under section 182 of the Business Corporations Act (Ontario) involving the Company and Tilray Brands, Inc. (NASDAQ: TLRY) Read more here.
StaffMay 30, 2023The Daily Hit is a recap of the top financial news stories for May 30, 2023.
On The Site
Two Dozen Publicly Traded U.S. Cannabis Companies Lost $4 Billion Last Year
Two dozen of the top plant-touching publicly traded marijuana companies in the United States posted a cumulative financial loss of more than $4 billion in 2022 against nearly $9 billion in revenue, according to analysis of filings by Green Market Report. Read more here.
New York Cannabis Regulators Propose Settlement for Lawsuit Hindering Retail Licensing
New York marijuana industry regulators on Tuesday gave initial approval to a settlement deal that is intended to end a legal fight that has stalled retail cannabis permits in the Finger Lakes Region. Read more here.
Numinus Wellness Shares Soar as Landmark Clinical Study of Psilocybin Therapy Begins
Numinus Wellness Inc. (TSX: NUMI) announced on Tuesday that its subsidiary, Cedar Clinical Research, has begun studying a potential new therapy for treatment-resistant depression (TRD) using COMP360 psilocybin. As a result, shares of NUMI jumped more than 30% to lately sell at 19 cents on the news as of the Phase 3 trial was released on Tuesday morning. Read more here.
Entourage Health Revenue Rises on Pre-Rolls, Medical Marijuana
Entourage Health Corp. (TSX-V: ENTG) (OTCQX: ETRGF) announced Tuesday a 24% sequential increase in revenue for the first quarter of 2023 ending March 31, with a significant contribution from its medical cannabis stream and adult-use pre-roll sales. Read more here.
YourWay Cannabis Can’t Find An Auditor For Filings
YourWay Cannabis Brands Inc. (CSE: YOUR)(OTC: YOURF) has been delayed in issuing its financial reports because it can’t find an auditor. The company said that since the resignation of its previous auditor Macias Gini & O’Connell LLP in December 2022, it hasn’t been able to find a replacement. Read more here.
In Other News
Minnesota
Surrounded by dozens of cheering people in green clothes, Minnesota Democratic Gov. Tim Walz signed a bill Tuesday to legalize recreational marijuana for people over the age of 21, making Minnesota the 23rd state to legalize the substance for adults. Read more here.
Ohio
Ohioans 21 and older would be able to cultivate, purchase and possess marijuana if a bipartisan bill passes in the Ohio Statehouse, possibly circumventing a ballot measure campaign to force legalization through. Read more here.
North Carolina
A North Carolina state House of Representatives committee has taken up a medical marijuana legalization bill already approved by the state Senate, and activists are hopeful this year the state may embrace MMJ. Read more here.
John SchroyerMay 30, 2023
Many companies dealt with significant one-time writedowns in 2022.
Debra BorchardtMarch 30, 2023
Executives are handsomely paid despite company problems.
John SchroyerDecember 2, 2022
Draft regulations 'kicking them in the kneecaps.'
Debra BorchardtMay 13, 2022Despite the ongoing battle with the booted shareholders, iAnthus Capital Holdings, Inc. (CSE: IAN) (OTCPK: ITHUF) continues to operate and deliver earnings. The company had first-quarter revenue of $42.8 million, a sequential decrease of 10% from the fourth quarter and a decrease of 17% from the same period in the prior year. iAnthus reported a net loss of $10.1 million, or a loss of $0.06 per share, compared to a loss of $26.9 million or a loss of $0.16 per share in Q4 2021, and compared to a loss of $19.5 million, or a loss of $0.11 per share, in the same period in the prior year.
iAnthus said in a statement, “Due to liquidity constraints experienced by the Company, the Company did not make applicable interest payments due on its 13% senior secured convertible debentures (“Secured Notes”) and its 8% convertible unsecured debentures due during 2020. As previously disclosed by the Company, the non-payment of interest in March 2020 triggered an event of default with respect to these components of the Company’s long-term debt, which, as of March 31, 2022, consisted of principal amounts of $97.5 million and $60.0 million, and accrued interest of $34.8 million and $10.8 million, on the Secured Notes and Unsecured Debentures, respectively. In addition, as a result of the default, as of March 31, 2022, the Company has accrued additional fees and interest of $15.8 million (“Exit Fees”) in excess of the aforementioned amounts that are further detailed in the Company’s financial statements.”
As of March 31, 2022, iAnthus had unrestricted cash of $14.1 million (December 31, 2021—$13.2 million), an accumulated deficit of $811.7 million (December 31, 2021—$801.6 million), and a working capital deficit of $255.7 million (December 31, 2021—$231.7 million).
Co-founder Maslow is out
Last week, iAnthus announced the resignation of its Co-Founder and Interim Chief Executive Officer, Randy Maslow from his executive positions with the company, including all positions with the company’s subsidiaries and its affiliates, and from the company’s Board of Directors and committees, effective as of May 6, 2022. Maslow will continue to serve the company in a consulting role for a period of six months following the Resignation Date. Maslow will receive total cash compensation in the amount of $12.2 million, of which $5.1 million was paid out on May 6, 2022.
On May 6, 2022, the company announced the appointment of Robert Galvin as Interim Chief Executive Officer and member of the Board, effective May 6, 2022. Galvin served as the company’s Interim Chief Operating Officer and has held a number of executive positions with iAnthus and previously served as a member of the Board following the completion of the company’s transaction in February 2019 with MPX Bioceutical Corporation, where Mr. Galvin also served as a board member.
Shareholder Lawsuits
While some shareholders continue to file complaints about losing their shares to the lenders, the courts have continued to side with the lenders. It seems that some of the disgruntled common stock shareholders when they get cases dismissed, retool and come back. The shareholders continue to insist that the debt payments could have been made when the company instead chose to default and thus handing the company over to the lenders. The latest move was in March when the company and the lender Gotham Green both as a New York judge to toss the shareholder’s latest claims. they say the case should be in Canada, not New York. The investors say they bought their shares in New York and so the case should be there.
Debra BorchardtFebruary 3, 2022
iAnthus Capital Holdings, Inc. (CSE: IAN) (OTC: ITHUF) closed its acquisition of MPX New Jersey, LLC, a medical cannabis permit holder in New Jersey. The acquisition was originally announced in 2018 with a value of $835 million, but became a tangled mess with competing lawsuits.
On January 7, 2022, the New Jersey Cannabis Regulatory Commission approved iAnthus NJ’s acquisition of MPX NJ. As previously announced in the company’s February 2, 2021 news release, iAnthus NJ issued $11 million aggregate principal amount of senior secured bridge notes, the net proceeds of which are being used primarily for the construction and improvements of facilities leased by iAnthus NJ.
Since that time, iAnthus NJ has continued to make significant construction progress at its cultivation and manufacturing facility in Pleasantville, New Jersey and plans to start operations in the near term. Additionally, upon receipt of the necessary approvals from the CRC, MPX NJ expects to open its dispensary facility in Atlantic City, New Jersey in the next few months, and then two prospective satellite dispensaries in New Jersey upon approval of MPX NJ’s pending satellite applications filed with the New Jersey Department of Health in December, 2020.
Troubled Acquisition
In 2020, MPX NJ sued iAnthus Capital Management and its New Jersey subsidiary. MPX accused iAnthus of improperly going after the operation of the Pleasantville Alternative Treatment Center by trying to negotiate with regulators. A the time the judge ruled against iAnthus according to a story on NJ.com.
The story said that in a remote hearing, Judge Joseph Quinn issued an initial order that said iAnthus could not represent itself as MPX NJ without disclosing the pending agreement before the health department or enter into contracts that bind MPX. “iAnthus must also inform former shareholder Beth Stavola of all contracts and construction at the Pleasantville cultivation site, and avoid additional unauthorized construction in parts of the facility where marijuana is being grown.” Stavola sold her original cannabis assets to MPX Bioceuticals and then proceeded to build that company to become an attractive property, which iAnthus acquired. She was the founder and CEO of Stavola Medical Marijuana Holdings, Health for Life Inc, GreenMart of Nevada, and CBD For Life.
iAnthus has been mired in shareholder lawsuits since the company claimed it couldn’t make its debt payments and the lender Gotham Green essentially took the company. Shareholders have filed lawsuits claiming that iAnthus had the funds to make the debt payments and feel the company was stolen from them.
In December, Law360 reported that iAnthus Capital Holdings Inc. and Gotham Green Partners asked a New York federal court to toss a pair of shareholders’ securities fraud suits over purportedly misleading disclosures and allegedly self-interested financing deals. “The proposed class action asserts that iAnthus made false and misleading statements about its expanding business operations without disclosing to stockholders that it did not use escrowed funds to make necessary interest payments. On April 6, 2020, iAnthus announced it had defaulted on $4.4 million in interest payments to Gotham Green because of the coronavirus pandemic, as well as a decline in cannabis markets overall.”
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