It’s time for your Daily Hit of cannabis financial news for June 20, 2018.
On The Site
Canadian cannabis company Tilray Inc. has filed for an initial public offering to list its shares on NASDAQ using the symbol TLRY. Privateer Holdings will continue to own a majority of the voting power of all outstanding shares of Tilray’s capital stock and as such will be considered a “controlled company.” Privateer will own 75 million shares and have the majority of the voting power.
In the company filing, Tilray reported that revenue rose 62% from 2016’s C$12.6 million to 2017’s C$20.5 million. Revenue for the first quarter ending March 2018 saw an increase of 55% from C$5.0 million to C$7.8 million. The net loss for 2017 was C$7.80 million, a slight improvement over the net loss in 2016 of C$7.88 million.
Canadian Cannabis Act
Canadian lawmakers passed the Cannabis Act, also known as C-45 which will legalize and regulate cannabis for adult use. It will now move on to the governor for royal assent. Prime Minister Trudeau has been very supportive of the legalization effort and has stated that October 17 is the planned date for the first legal recreational sales.
Canada will be the first G7 nation to legalize marijuana for adults at the national level. Uruguay was the first country that legalized recreational marijuana after signing the legislation into law in December 2013. The Cannabis Act will create an overarching national regulatory framework and enables each province to establish its own system of licensing and regulating marijuana businesses.
In Other News
WeedMD Inc. (WDDMF) entered into an agreement to become a medical cannabis supplier to Shoppers Drug Mart. Under the terms of the agreement, the company will supply Shoppers Drug Mart with WeedMD and affiliate branded medical cannabis products. It is expected the products will be sold online, as Canadian regulations currently restrict the sale of medical cannabis in retail pharmacies.
Scotts Miracle-Gro Co.
Scotts Miracle-Gro (SMG) was downgraded to underperform from market perform at Raymond James on concerns that expectations are too high to overcome near-term challenges. Raymond James analysts identify four headwinds: the elimination of a $20 million annual payment from Monsanto/Bayer AG after a revised marketing agreement; $20 million higher commodity and transportation costs; $20 million more in incentive compensation; and $20 million more in wage and benefit inflation. Pricing, volumes and other factors are not expected to offset those headwinds. “[W]e should note that all of the year-over-year improvement relates to Scotts Miracle-Gro’s recent acquisition of the Sunlight Supply hydroponics business, which is expected to be dilutive this year and accretive next,” wrote Joseph Altobello
Aurora Cannabis Inc.
Aurora Cannabis Inc. (ACB.TO) (ACBFF) announced that it intends to distribute units consisting of shares and warrants of its subsidiary, Australis Capital Inc. to shareholders of the company by way of a return of capital. The spin-out of Australis will happen in the form of a distribution of units in Australis Capital to resident holders of Aurora shares.
Emblem Corp. (EMMBF) announced that its Board of Directors has approved the Company’s formation of a joint venture under the name “Emblem Germany” with German pharmaceutical wholesaler Acnos Pharma GmbH (“Acnos”) for the purpose of exporting Emblem branded cannabis products from Canada and importing them into Germany. Subject to completion of definitive agreements with respect to the JV, the JV will be 60% owned by Emblem and 40% owned by Acnos.
CannaRoyalty Corp. (CNNRF) announced the terms of its previously-announced, fully marketed private placement. A syndicate of investment dealers, led by Canaccord Genuity Corp., has been engaged by CannaRoyalty to sell up to 30,000 unsecured convertible debentures of the Company at a price of $1,000 per Convertible Debenture for aggregate gross proceeds of up to $30.0 million.
The Convertible Debentures will have a maturity date of three years from the closing date of the Offering and will bear interest from the date of closing at 8.0% per annum, payable semi-annually on June 30 and December 31 of each year. The Convertible Debentures will be convertible, at the option of the holder, into common shares of the Company at any time prior to the close of business on the last business day immediately preceding the Maturity Date at a conversion price of $6.25 per Common Share.