Despite a slowdown of activity over the holidays, some players in the marijuana market elected to drop crucial news items during the off time.
Two cannabis companies welcomed the new year with critical announcements for their investors.
One US-based distributor confirmed that a planned multimillion dollar acquisition deal with a multi-state operator (MSO) is closer to closing, while an embattled Canadian cannabis grower filed an update to its audited financial statements for the fiscal 2019 year in the midst of market struggles.
Origin House confirms investor approval for takeover
Months after the acquisition was first announced, Origin House (CSE:OH,OTCQX:ORHOF) was finally able to inform the market on Tuesday (December 31) that it has obtained an overwhelming majority of shareholder support for its deal with Illinois-based MSO Cresco Labs (CSE:CL,OTCQX:CRLBF).
“Today, our shareholders have demonstrated that they are solidly behind our proposed arrangement with Cresco Labs,” said CEO Marc Lustig in a statement. He added that the combined company will be one of the largest cannabis brand players in the sector, sporting a sizable North American footprint.
Origin House was up 7.6 percent on Thursday (January 2), while Cresco Labs had jumped 6.7 percent from market open on Tuesday until the beginning of trading on Thursday.
The company said approximately 99.66 percent of the votes cast were in favor of the takeover.
The deal is still subject to customary closing conditions, and it’s expected that Origin House will apply for a final order approving the transaction with the Ontario Superior Court of Justice on January 6. The deal should be finalized shortly after the firms receive approval from the court, Origin House said. As part of the takeover, Origin House will delist from the Canadian Securities Exchange and the OTCQX.
News of the deal dates back to April, when Cresco Labs called it the “largest-ever public company acquisition” with a price tag of C$1.1 billion. Following a rocky summer for the industry overall and a lengthy federal review process, Cresco Labs confirmed in November that the deal would be moving forward on reduced terms with a non-brokered financing on the part of Origin House.
This adjustment in the conditions of the deal reflects the changing landscape for the value of companies in the marijuana space in 2019, as well as shifting investor sentiment.
HEXO files updated financial statements
This Thursday update was done in order to correct errors that were made, including an overstated deferred tax liability of C$14.3 million.
HEXO said the error occurred because the firm’s original numbers were based on the presence of a tax asset from one of its subsidiaries, which wasn’t considered against a deferred tax liability created in a separate subsidiary.
“Due to the two tax positions existing in two separate entities, the company’s original position was that they could not be offset or reduce one another,” HEXO said in a statement.
The deferred tax liability was originally reported as being C$20.4 million, an amount that dropped to C$6 million after the refiling.
The mistake also affected the firm’s net loss for its fiscal 2019 year, which was first reported at C$81.6 million. With the update, HEXO’s loss stands at C$69.6 million for 2019.
According to HEXO, its impairment on inventory increased by C$2.4 million, leading to a rise in its impairment loss to C$19.3 million; that is up from the C$16.9 million that was first reported.
Over the past few quarters, HEXO has faced its share of setbacks amid the market anxiety facing the entire industry, including some drastic losses for its first fiscal quarter of 2020 and licensing issues that led to illegal growing at its cultivation facility in Niagara, Ontario.
In the past year the company has lost over half of its value — 56.9 percent — in New York. Its share price sat at US$1.66 as of 2:56 p.m. EST on Thursday.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.
American cannabis sales hit US$17.5 billion in 2020, a research group’s new study shows.
Meanwhile, a Canadian cannabis producer began offering CBD beverages in the US, another move that shows how interested Canadians are in the overall US cannabis market at the moment.
Some pretty important news out of health and wellness; beverage and natural products company BevCanna Enterprises Inc. (CSE:BEV, Q:BVNNF, FSE:7BC) this week. For those of you following the Company with us, stay tuned.
As investors continue to prioritize cannabis opportunities in the US, market watchers expect mergers and acquisitions (M&A) to play a role in the future for Canadian companies.
A consolidation trend has been expected in the Canadian cannabis space for some time now based on the size of the market compared to the number of operations in the country.
BioHarvest Sciences Inc. Unveils the Unique Polyphenolic Content of Its Upcoming Olive-Based Nutraceutical
The product will include polyphenols known to have significant health benefits.
BioHarvest Sciences Inc. (CSE: BHSC) (“BioHarvest” or the “Company”) has reached an important milestone in its development program of additional Nutraceuticals. The olive-based Nutraceutical product scheduled for market availability in the second half of 2022 will contain the following unique matrix of polyphenols: hydroxytyrosol, trosol, and verbascoside. These compounds are the major polyphenols in naturally grown olives and are responsible for the high antioxidant activity of olives and olive oil. Importantly, the BioHarvest olive-based Nutraceutical product will provide all the benefits of olives and olive oil with a low calorie count per serving.
Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco” or the “Company”), one of the largest vertically integrated multistate cannabis operators in the United States, announced today that it will report financial results for the fourth quarter and full year ended December 31 st , 2020 on Thursday March 25 th , 2021 before the market opens.
The Company will host a conference call and webcast to discuss its financial results and provide investors with key business highlights on Thursday March 25 th , 2021 at 8:30am Eastern Time (7:30am Central Time).