During the past trading week (October 21 to 25), a critical marijuana deal in the US that had been under federal review cleared its waiting period.
The Investing News Network (INN) also covered the poor performance seen by a Canadian marijuana producer, as well as a variety of critical opinions on the current state of the cannabis investment market.
Here’s a closer look at some of the biggest cannabis news over the last week.
Zenabis investors face a difficult trading week
Shareholders of Zenabis Global (TSX:ZENA) saw their investment drop throughout the week as the company made a variety of critical announcements to the market.
The company faced its biggest drop for the week after it confirmed a new rights offering for current shareholders. A spokesperson for the company told INN the move has already secured guarantees of participation from insiders representing 30 percent of the entire rights offering.
Despite the commitment, the market reacted negatively to the deal and shares of the company saw a sharp decline of 39.76 percent last Thursday (October 24).
“Zenabis believes this is the least dilutive manner to raise incremental capital given current market conditions,” the company said.
Earlier in the week, the firm indicated that its expansion plan for a facility in Langley, British Columbia, will be split into two phases, with the second phase getting delayed. This decision was made, according to the company, as a way to combat current market conditions and protect its cash flow.
“By early in the first quarter of 2020, we expect to have 111,200 kilograms of capacity licensed and operational with the approval of the Zenabis Langley — Part 2B amendment,” said CEO Andrew Grieve.
The company also announced a new supply deal partnership with privately held British Columbia producer Tantalus Labs.
Cresco Labs’ deal for Origin House clears waiting period
Last Tuesday (October 22), Cresco Labs (CSE:CL,OTCQX:CRLBF) and Origin House (CSE:OH,OTCQX:ORHOF) confirmed that their much-anticipated acquisition deal has completed its waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Marc Lustig, CEO of Ontario-based Origin House, called the expiration of the review period an important development for the deal itself and the cannabis industry at large.
The deal was under review as the US Department of Justice has taken an increased interest in recent marijuana deals. Cresco Labs said the two firms are now working on closing the deal with new terms they can both agree on. The deal now holds a deadline of November 15 to be completed.
Expert opinions on the changing landscape for cannabis
In an exclusive interview with INN, the executive team of Cannabis One Holdings (CSE:CBIS) explained the adjustments the firm has taken in order to meet increasing scrutiny from the investment market.
The company, a cannabis brand and asset aggregator, is pursuing more rigorous acquisitions and has seen its list of potential targets reduced due to enforcing stricter standards.
“We’re seeing a number of prior targets for acquisition (that are) no longer our target because the investor desire to invest in a company that is … basically operating (at a loss) is no longer the landscape we’re operating in,” Cannabis One CEO Jeff Mascio said.
Hadley Ford, CEO of iAnthus Capital Holdings (CSE:IAN,OTCQX:ITHUF), spoke with INN after his panel at a recent investor event in Toronto about the struggles for marijuana companies due to the current state of the investment market.
“The actual values that exist in the market today bear no resemblance to what the values of the actual companies are,” Ford said. In his opinion, there is a disconnect between the true values of companies compared to the current sentiment surrounding these stocks.
The executive also highlighted the change in capital-raising ability seen throughout the space. “We’re all getting painted with the same brush,” Ford told INN. “Six months ago, anyone who smoked a joint could raise US$100 million. Now? It’s tough.”
During a webinar event for investors, Charles Taerk, president and CEO of Faircourt Asset Management, said investors need to be aware of the difficult investment landscape facing the marijuana market.
The expert pointed to a growing trend he expects to see more cannabis players face: a lack of available financing, especially if a company has not yet diversified its approach.
“This is a situation that many Canadian companies that are either pre-revenue, or (have) very small revenue numbers, are going to be facing because the credit facilities and the equity markets have dried up,” said Taerk.
This past week, vape pen maker company PAX Labs announced a 25 percent reduction in its staff. The company said the cuts were due to a recent “significant revenue miss” for the firm. PAX Labs holds supply partnerships with five marijuana producers in Canada. The company declined to explain if this workforce reduction will affect its plans in the Canadian market.
If it does so, it would the third Canadian firm with a significant investment in the Australian cannabis market to have recently announced a shift in that investment. Previously, Canopy Growth (NYSE:CGC,TSX:WEED) and Cronos Group (NASDAQ:CRON,TSX:CRON) announced changes in their Australian investments.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
CanBud Distribution Corporation Closes 2M Second and Final Tranche of its Oversubscribed Private Placement Offering
CanBud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“CanBud” or the “Corporation”) is pleased to announce that it has closed the final tranche of its oversubscribed non-brokered private placement for aggregate gross proceeds of approximately $4,730,000 (the “Offering”).
The Corporation issued a combined total of 39,409,346 units (each a “Unit“) at price of $0.12 per Unit, with each Unit comprised of one common share in the capital of the Corporation (each a “Common Share“) and one common share purchase warrant (each a “Warrant“). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.22 within 24 months of the closing of the Offering (the “Warrant Term“), provided, however that if the closing price of the Common Shares on the Canadian Securities Exchange (the “CSE“) (or any such other stock exchange in Canada as the Common Shares may trade at the applicable time) is $0.25 or greater per Common Share for a period of five (5) consecutive trading days at any time after the closing date of the Offering, the Corporation may accelerate the Warrant Term such that the Warrants shall expire on the date which is 30 days following the date a press release is issued by the Corporation announcing the reduced warrant terms.
Thoughtful Brands Inc. (CSE:TBI)(FSE:1WZ1)(OTCQB:PEMTF) (the “Company” or “Thoughtful Brands) announces that the letter of intent with Franchise Cannabis Corp. (“FCC”), previously announced in January, has been terminated. The previously announced European joint venture with FCC will continue and allow the Company to launch and tailor its products to European consumer demands
In connection with termination of the merger transaction with FCC, the Company has agreed to pay FCC $100,000 in cash and to issue FCC 5,000,000 common shares of the Company at a deemed value of $0.05 per share. The common shares will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
Mergers and acquisitions (M&A) in cannabis space have helped boost the industry to new levels.
Strategic sale of non-core assets by Lobe adds non-dilutive capital and shareholder value
Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce, further to its press release dated February 23, 2021, that it has completed the sale to Ionic Brands Corp. (“Ionic Brands”) of Lobe’s non-core cannabis assets relating to Washington-based Cowlitz County Cannabis Cultivation Inc. (“Cowlitz”) held by Lobe’s subsidiary vendor, Green Star Biosciences Inc. (the “Transaction”).
Seattle Area Grocery Chain Metropolitan Market to Begin Carrying KOIOS and Fit Soda on March 22, 2021
Adding to its existing presence on the west coast of the United States, all five KOIOS™ flavours and all four Fit Soda™ flavours will be carried in Metropolitan Market stores beginning on Monday, March 22, 2021. Serving the Seattle-Tacoma area (population 3.87 million), Metropolitan Market is one of five chains under its parent firm Good Food Holdings, which has a total of 51 stores in California, Oregon, and Washington State.
Koios Beverage Corp. (CSE: KBEV; OTC: KBEVF) (the “Company” or “Koios”) is pleased to announce that beginning on Monday, March 22, 2021, Koios’ entire line of canned beverage products will be sold at all locations of Metropolitan Market, an urban format supermarket chain in the Seattle-Tacoma area of Washington State. In Q1 2021, the Company announced multiple placements of its beverage products with regional grocers in markets on the west coast of the United States including Market of Choice in Oregon Jensen’s in Southern California and major natural grocery chain Sprouts Farmers Market which has a substantial west coast presence with over one third of its locations (360+ stores across 23 states) in California as well as Washington State 1 . The Company has also recently announced other developments relating to its expansion efforts being undertaken in 2021 such as an in-house beverage canning facility and distribution agreements with regional and national wholesale partners.