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

Quebec-based HEXO (NYSE:HEXO,TSX:HEXO) confirmed it has refiled its audited annual consolidated financial statements for its fiscal 2019 year and those for the quarter ended on October 31, 2019.

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.

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