It’s time for your Daily Hit of cannabis financial news for February 24, 2020.
On The Site
Green Growth Brands
Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) announced that The BRN Group Inc. has agreed to acquire the company’s cannabidiol business. The company and an affiliate of BRN have executed a “stalking horse” asset purchase agreement in respect of the CBD Transaction pursuant to which the Purchaser will acquire all of the assets and assume the current liabilities and certain other obligations of the CBD Business.
The company said in a statement that at least two-thirds of the independent members of the Board have determined that Green Growth Brands is in serious financial difficulty with limited alternatives.
Trump Makes Negative News
The Trump Administration has proposed the removal of a rider provision protecting state-legal cannabis businesses from the federal government’s interference. This comes with the release of his fiscal year 2021 budget plan. The rider in question specifically states the Justice Department can’t use federal funding to prohibit states or territories “from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Removing this provision would leave a lot of room for government interference, potentially destroying many state-legal businesses.
Glass House Interview
Green Market Report Editor-in-Chief Debra Borchardt:
Tell us about Glass House Group and what’s in your portfolio
Glass House Group President Graham Farrar:
Glass House Group is one of the largest vertically integrated cannabis companies in the state of California, which is the fifth-largest economy, so it’s more like being one of the largest vertically integrated cannabis companies in the country. California is a lot more like a country than it is like a state. We have half a million square feet of licensed, operational and producing greenhouse cultivation. We’ve got four open and operational licensed adult-use, 21 plus dispensaries, one in Santa Ana, one in Los Angeles, the first adult-use dispensary ever in the city of Santa Barbara, and most recently the pharmacy, which is the pharmacy Santa Barbara, and then most recently the pharmacy Berkeley up in the Bay Area.
Cronos Group’s (NASDAQ: CRON) (TSX: CRON) decision to delay its earnings release makes it the latest cannabis company to unsettle the market just as it is trying to crawl out of a bear market. On Monday the company stated it would delay its 2019 fourth quarter and full-year earnings release and conference call, previously scheduled for Thursday, February 27, 2020. According to the company statement, Cronos “has had a delay in the completion of its financial statements and will make a further announcement in a subsequent press release to schedule the date and time of the earnings conference call.”
Hemp in Space
Front Range Biosciences is sending hemp tissue cultures to space. CEO Dr. Jonathan Vaught met with Green Market Report during the Northeast Cannabis Business Conference in Boston to explain why the company was involved with the studies on hemp in space.
In Other News
Valens GroWorks Corp. (TSXV: VLNS) (OTCQX: VLNCF) reported its financial results for its fourth quarter and fiscal year ended November 30, 2019. Revenue increased to $58.1 million for the fiscal year 2019. For the fourth quarter of 2019 revenue increased to $30.6 million, an 86.0% increase over the third quarter and above the high-end of the guidance range announced on December 16, 2019. The net income was $4.4 million, an increase of 14.6%. The company delivered earnings per share of $0.04.
“In Fiscal 2019 we added significant scale to our operations and became the largest white label product development, manufacturing and third-party extraction company in Canada,” said Tyler Robson, CEO of Valens. “Our multi-year extraction contracts with industry leading players positioned us as the partner of choice in the industry and drove significant revenue, gross profit and adjusted EBITDA growth. In the second half of 2019, we broadened our offering to include white label product development and we now produce a broad portfolio of safe, consistent and innovative products to help our partners build brands and differentiate themselves in the market. These white label product development initiatives contributed to record revenues in the fourth quarter of 2019 as new and existing customers pushed to roll out Cannabis 2.0 oil-based products into the market.