During the past trading week (December 16 to 20), short sellers invaded the marijuana space again, this time with an attack on a Florida operator.
The sector witnessed another disappointing quarterly report from a publicly traded Canadian producer, while consolidation struck in the space with a new deal regarding technology for the cannabis industry.
Here’s a closer look at some of the biggest cannabis news over the week.
Short sellers come back with a new report
The marijuana industry was targeted by shorts yet again when a new report went public this past week, ambushing Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF) by questioning the methods through which it obtained financing and suggesting the company may have committed fraud.
The report, which was prepared by a short group identified as Grizzly Research, went public on Tuesday (December 17). Later that day, Trulieve issued a response to the report, claiming it will pursue legal action against the makers of the research. The cannabis company claims these players are making a run at a “disingenuous attempt to manipulate Trulieve’s stock price.”
Over the past week, shares of Trulieve have struggled following the report’s publication. As of 11:21 a.m. EST on Friday (December 20), shares of the company were down in value by 14.8 percent, a loss of C$2.37, over the past five trading days.
HEXO’s struggles continue, analyst puts firm on notice
Sebastien St-Louis, CEO of HEXO, explained the company has continued to face complications due to the slow ramp up of cannabis shops in Canada, particularly in markets such as Ontario.
The company has been forced to cut down in many aspects in an attempt to reach its target of being earnings before interest, taxes, depreciation and amortization (EBITDA) positive in 2020.
“We’ve taken a hard look at our forecasts, demand-based planning needs and current inventory levels. In light of the changes in demand and downward pressure on the price of dried flower and the wholesale market, we’ve impaired our inventory this quarter by C$25.5 million,” St-Louis told investors. “By addressing these issues now, we’re looking to provide greater transparency to our investors and more accurate financial statements.”
But the reviews on the company don’t paint as rosy a picture. In a research note, John Zamparo, equity research analyst with CIBC Capital Markets, said he remains concerned for the output of the company. The researcher slashed his price target for HEXO from C$2.50 to C$2 in the Canadian market.
“With management not expecting to become EBITDA positive until late 2020, it is challenging to suggest HEXO will not need to raise materially more funds,” Zamparo said in his note.
Jessica Billingsley, CEO of Akerna, told the Investing News Network (INN) the company was able to raise its profile as a target thanks to a critical and unique partnership with St. Vincent and The Grenadines for its AmpleCentral program.
This past week, ICC International Cannabis (CSE:WRLD.U,OTC Pink:WLDCF) announced it will be delisting from the Canadian Securities Exchange (CSE) as a way to explore alternatives on its business operations.
“In the course of its review process, the company has determined that certain funding opportunities at valuations that better reflect the underlying asset value of the company are only available should the company become a non-listed reporting issuer,” ICC said in a statement.
Barrington Miller, director of listed company services at the CSE, told INN it’s rare to see a company delist to go private. The CSE will now review the case and make its ruling on the delisting request.
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.