Here’s What You Missed in Cannabis, Psychedelics This Week

In this week’s “Rising High,” The Fly’s recurring series focused on cannabis and psychedelic stock news, The Fly looks back on earnings, a completed acquisition and a research collaboration.

NUMINUS REPORTS Q1 EARNINGS: On Monday, Numinus Wellness (NUMIF) reported first quarter revenue of C$5.9M, up 4.9% compared to the same quarter last year. “In the past quarter, we advanced our practitioner training program and built on our clinical expertise to ensure the infrastructure was in place to address the anticipated demand for novel treatments,” said Payton Nyquvest, CEO. “This infrastructure is built on Numinus’ synergistic combination of a clinic network that delivers high-quality patient care, clinical research support that works with leading psychedelic drug developers, and training programs that ensure effective and safe support is available for patients into the future. Also, our focus remained on cost containment efforts, and we continue to have a monthly cash burn rate of less than C$1M as previously achieved in October 2023. Compared to Q4 2023, we reduced our operating expenses by 19.9% and 30.6% compared to the first quarter of last year. Expense optimization across the Company, combined with prioritizing higher margin service lines at our wellness clinics, resulted in an increased gross margin of 36.1% compared to the previous quarter of 29.5%. In fiscal 2024, we will continue looking for opportunities to enhance our customer experience, increase profitable revenue, and optimize our operations to achieve profitability on a consolidated basis.” (read more)

RED WHITE & BLOOM COMPLETES ALEAFIA TRANSACTION: Red White & Bloom Brands (RWBYF) announced Monday that, in connection with the proceedings of Aleafia Health and certain of its subsidiaries under the Companies’ Creditors Arrangement Act, the parties have closed the previously announced sale transaction. “We are excited to announce the successful closing of our acquisition of the Aleafia group of companies,” stated Colby De Zen, President of RWB, adding, “This pivotal moment signifies a transformative phase for RWB’s future, strengthening our presence in legal markets across North America and positioning us for global expansion. The integration of Aleafia’s brand portfolio and assets, combined with our acclaimed Platinum Vape brand, generates a robust footprint across recreational, medical, and international sales channels. Furthermore, we anticipate achieving annual synergies exceeding C$12M between RWB and the Aleafia Purchased Entities while promoting revenue growth, margin contribution, and value for all shareholders.” As part of the transaction, RWB also acquired a 9.4% ownership interest in One Plant Corp., which operates a network of over 40 corporately owned and franchised cannabis retail locations in Ontario. RWB expects that the transaction will be accretive on an EBITDA basis in fiscal 2024. Material operational cost improvements that have already been realized in concert with the CCAA Proceedings include: Cash contributions of approximately $3.5M realized through material reductions in debt service obligationsl A $3M reduction to recurring operating costs realized primarily through the rationalization of operations including $1M in fixed overhead costs related to the exit of the Basaltic head office and warehouse facility formerly occupied by Aleafia Health and the sale of the dormant Grimsby greenhouse facility; Corporate cost savings of approximately $1M associated with Aleafia’s public company infrastructure. Total consideration for the Transaction was $31,667,700. (read more)

COMPASS, HMH ENTER RESEARCH COLLABORATION: Compass Pathways (CMPS) and Hackensack Meridian Health announced Tuesday that that they have entered into a research collaboration agreement to inform the delivery model design of investigational COMP360 psilocybin treatment, if FDA-approved.  The collaboration between Compass and HMH aims to improve health outcomes and improve patient and provider experiences for mental health conditions such as treatment-resistant depression. Together they will work to understand the real-world challenges and opportunities of delivering care to those living with depression, to inform how future clinical trials of COMP360 psilocybin treatment are designed, and to understand how it will be delivered to patients, if approved. COMP360 is Compass’s investigational proprietary formulation of synthetic psilocybin, administered in conjunction with psychological support. (read more)

LOWELL FARMS TERMINATES ZABALA ROAD LEASE: Lowell Farms (LOWLF) announced Wednesday that subsidiary Cypress Holding Company surrendered possession of approximately 10 acres of property at 139 Zabala Road, Salinas, California leased by Cypress pursuant to an agreement with Tinhouse as landlord. Prior to vacating the premises on January 12, the company had operated a cultivation facility, which included four greenhouses totaling approximately 255,000 square feet, on the Zabala Road property. As previously announced, in January, the company’s Board of Directors formed a strategic alternatives special committee to explore, review and evaluate strategic and financial alternatives. As part of these efforts, the company entered into negotiations with the landlord to restructure the terms of the Zabala Road lease, which provided for an expiry date of December 31, 2027, subject to five 5-year extension options exercisable by Cypress. In September, the company and the landlord reached a settlement amending the terms of the Zabala Road lease and reaching agreement on all rent-related issues. The landlord terminated the Zabala Road lease via a letter dated October 6, which was served by its counsel on the company on October 10. In October, the company filed a lawsuit for breach of contract and specific performance against the landlord to enforce the settlement terms. The landlord filed counterclaims and an unlawful detainer action against the company, claiming damages of more than $36M, which the landlord claims are based on an analysis of accelerated rent due through the end of the term of the Zabala Road lease, along with attorney’s fees, improvements, and other undefined costs. The company intends to vigorously defend itself against the claims made by the landlord. (read more)

CORDOVA PROVIDES UPDATE ON STAR BUDS STORES: CordovaCann (LVRLF) provided an update on Tuesday on its Star Buds Cannabis Co. retail operations in Canada. The company said Star Buds Cannabis Co. stores had a strong close to 2023. The ompany’s 11 retail stores continue to increase market share and expand margins due to strong cost controls, optimizing product assortment and continued focus on the customer. The Star Buds Cannabis Co. chain generated revenues of $3.5M in the last quarter of calendar 2023. The average store in the network grew revenues 10.1% year-over-year in October, 14.4% year-over-year in November, and 14.5% year-over-year in December. The stores in Ontario grew revenues at an even faster pace, with monthly revenues in these stores increasing an average of 17% year-over-year in the 3-month period. Furthermore, in December, two stores posted monthly revenue records, and the total store chain produced revenues equal to the previous monthly record, despite there being three fewer stores operating in the chain. Gross margin continues to improve, and the stores posted an aggregate gross margin of 27% for the 3-month period ending in December. The company said strong revenue growth and improving gross margin trends have continued into 2024. Management expects Star Buds Cannabis Co. to continue to benefit from closures of competing stores, industry consolidation, and increased customer awareness. (read more)

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Audacious (AUSAF), Aurora Cannabis (ACB), Atai Life Sciences (ATAI), Avant Brands (AVTBF), Ayr Wellness (AYRWF), Awakn Life Sciences (AWKNF), Body and Mind (BMMJ), BZAM (BZAMF), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clearmind (CMND), Clever Leaves (CLVR), Cresco Labs (CRLBF), Cronos (CRON), Columbia Care (CCHWF), CURE Pharmaceutical (CURR), Curaleaf (CURLF), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Enveric Biosciences (ENVB), Fire & Flower (FFLWF), Flora Growth (FLGC), Trees Corporation (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Hemp (HEMP), High Tide (HITI), India Globalization Capital (IGC), Indiva (NDVAF), IM Cannabis (IMCC), Innovative Industrial Properties (IIPR), InterCure (INCR), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lotus Ventures (LTTSF), Lucy Scientific Discovery (LSDI), MediPharm (MEDIF), MedMen (MMNFF), MindMed (MNMD), NewLake Capital (NLCP), Organigram (OGI), Planet 13 (PLNHF), Reunion Neuroscience (REUN), Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Safe Harbor Financial (SHFS), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Tryp Therapeutics (TRYPF), Verano (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).