During the past trading week (November 11 to 15), a steady release of quarterly updates from cannabis companies caused a spike in volatility in the sector.
Also during the period, a critical acquisition deal in the US market was revealed to be moving forward with new terms, while a marijuana producer passed the blame for its poor sales to the provincial rollout of cannabis stores in Ontario.
Here’s a closer look at some of the biggest cannabis news over the last week.
Earnings season hits the market
The cannabis stock market faced a week of volatility as companies in the space presented reports on their most recent quarterly data and performance.
Some highlights of this earnings season include the increasing tension producers are feeling about the rollout of retail stores in Ontario. Companies like Canopy Growth (NYSE:CGC,TSX:WEED) have said the process has stunted the growth of the industry following legalization in Canada.
“We do not believe at this time that there will be sufficient points of retail sales in the near term to unlock the necessary Q4 demand,” Canopy Growth CEO Mark Zekulin said.
While Cronos celebrated the launch of its hemp-derived product brand in the US, the firm missed analyst targets in its most recent quarter.
Aleafia Health achieved new low prices for per gram cultivation, yet the open market was not too impressed with the firm’s steady results.
Just before releasing its quarterly results, The Green Organic Dutchman Holdings (TSX:TGOD,OTCQX:TGODF) obtained C$103 million in funding by way of separate brand new transactions. Similarly, The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) announced alongside its quarterly results that it has secured a C$90 million senior secured credit facility, with the Bank of Montreal (NYSE:BMO,TSX:BMO) acting as lead arranger for a group of lenders.
These weren’t the only releases to come out over the past week. Investors were also treated to quarterly updates from Aurora Cannabis (NYSE:ACB,TSX:ACB), Halo Labs (NEO:HALO,OTCQX:AGEEF) and Jushi Holdings (NEO:JUSH.B,OTCQX:JUSHF).
Cresco and Origin House set new deal terms
As part of the new arrangement, which comes on the heels of the deal clearing its federal antitrust review period, Cresco will lower its offer to 0.7031 of its own shares for each Origin House share.
The California-based cannabis distributor is now being required to also complete a financing deal of over 9.7 million of its own common shares at C$4.08 per share, totaling C$39.6 million.
“The equity market environment has changed meaningfully since we first announced this proposed transaction. While this has presented challenges, it will also present opportunities for companies with quality assets and brands to quickly gain market share and build long-term shareholder value,” Marc Lustig, CEO of Origin House, said.
The deal was previously put on hold due to a federal antitrust review in the US, which Cresco CEO Charlie Bachtell referred to in August as a chance for the cannabis company to showcase the intricacy and maturity of the sector.
Similar to many struggling companies in the sector, Organigram blamed a large portion of its woes on the lack of retail stores in Ontario — a key marijuana market.
“The lack of a sufficient retail network and slower than expected store openings in Ontario continued to impact sales in Q4 2019 and were further exacerbated by increased industry supply,” Organigram said in its statement on Monday (November 11).
Meanwhile, the provincial government in British Columbia plans to introduce a 20 percent tax on all retail sales of vape cannabis products as part of the second stage of legalization in the country.
The actual items in question to be taxed will include vaping devices, vaping substances, cartridges, parts of the devices and accessories. The new tax will come into effect in British Columbia on January 1, 2020. These products won’t become available throughout Canada until mid-December.
“It is imperiling the success of legalization,” Cannabis Council Vice Chair Cameron Bishop told Marijuana Business Daily. The agency, which is tasked with representing the interests of licensed producers, expressed its disappointment with the new tax.
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.
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.