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 a licensing deal, earnings and analyst notes.

AVANT BRANDS, IM CANNABIS ENTER LICENSING DEAL: IM Cannabis Corp. (IMCC) and Avant Brands (AVTBF) announced Thursday the signing of an international trademark licensing agreement granting Adjupharm GmbH, IMC’s German subsidiary, the exclusive right to launch the BLK MKT brand in the German medical cannabis market. The agreement constitutes another major milestone with respect to the relationship between the two cannabis companies. Under the terms of the agreement, Avant’s subsidiary will grant IMC Germany the license to utilize Avant’s BLK MKT cannabis brand for use on their medical cannabis products. All such products will contain cannabis cultivated exclusively by Avant and subsequently exported to Germany. The collaboration between the two companies anticipates a positive outcome in the emerging German medical cannabis market, especially following the recent legalization by the government on April 1st. (read more)

CANNABIS EARNINGS: On Monday, Clever Leaves (CLVR) reported fourth quarter loss per share of ($2.95) on revenue of $4.6M, which compared to a loss per share of ($19.82) on revenue of $4.4M last year. “Throughout 2023, we executed on our strategic initiatives to refine our commercial and production operations, as well as optimize our capital efficiency and cost structure,” said Andres Fajardo, CEO. “We continued to support demand for our cannabinoid products in Australia and Brazil, resulting in a 39% year-over-year increase in our cannabinoid revenue for the full year, and we maintained progress with new strain development. Reflecting our continued cost optimization efforts, we drove year-over-year general and administrative expense reductions of 26% for the fourth quarter and 24% for the full year. Our year-end cash balance also improved to $6.9M compared to $6.5M at the end of the third quarter, benefited by the October 2023 sale of our remaining stake in Cansativa. Subsequent to the end of the fourth quarter, we completed the $1.5M sale of our Portuguese farm assets. As we progress into 2024, we remain focused on driving further capital preservation and operational efficiencies.”   The company also announced that on March 21, it entered into a stock purchase agreement with KAC Investments. Pursuant to this agreement, the company sold its non-cannabinoid business segment, comprising the company’s wholly owned subsidiary, Herbal Brands. The sale transaction was completed on March 21 for a purchase price of $8.02M. (read more)

Goodness Growth (GDNSF) reported a Q4 loss per share on Monday of (3c) on revenue of $24.2M, which compared to a loss per share of (10c) on revenue of $19M for the same period last year. Interim CEO Josh Rosen commented, “2023 was a transformational year for our Company, and our teams did an excellent job executing our CREAM & Fire strategy to deliver significant improvements in operating and financial performance. We delivered continual improvement in revenue, gross margin, and operating profit throughout the course of 2023. We’re entering 2024 in a much stronger position because of these improvements and our team is poised to capitalize on what I believe is an attractive platform for growth. As I have stated in the past, de-risking our balance sheet was another critical focus for us over the past year, and our announcement this afternoon to divest our New York assets helps position us for an exciting year in 2024.” (read more)

Additionally on Monday, ACE Ventures and Goodness Growth announced that they have executed a binding term sheet whereby Ace plans to acquire assets of Goodness Growth subsidiary, Vireo Health of New York, pending the satisfaction of closing conditions, including secured capital commitments and regulatory approval. Terms of the transaction include a purchase price between $3M and $5M for Vireo Health of New York’s licenses, inventory and assets, as well as Ace’s assumption of the lease agreement with Innovative Industrial Properties (IIPR) for the Johnstown, NY cannabis cultivation and manufacturing campus. Ace has agreed to assume VireoNY’s financial liabilities, including its operating losses, beginning on April 1, 2024. Goodness Growth and Ace anticipate regulatory approval for the transfer of the New York licenses, as well as closing of the VireoNY transaction, to occur by June 30, 2024. (read more)

Following the news, Craig-Hallum raised the firm’s price target on Goodness Growth to 45c from 20c and kept a Hold rating on the shares. Goodness Growth is a US cannabis multistate operator with a unique scientific and IP focus, the firm noted. The company is a market share leader in MN, a state with an increasingly robust medical program and an adult-use market that is set to start in 2025. The company also has strong exposure to recently legalized states of MD and NY, Craig-Hallum added. However, the company’s growth plans were intimately tied to its acquisition by Verano (VRNOF), which was terminated by Verano in October 2022, with the two parties now in litigation. (read more)

InterCure (INCR) also reported preliminary 2023 revenue of NIS 351M and adjusted EBITDA over NIS 50M on Monday. Alexander Rabinovitch, CEO of InterCure, noted: “Facing an unprecedentedly challenging year, InterCure has showcased remarkable resilience and sustained growth, achieving our fifteenth consecutive quarter of profitability. Our continued profit from operations highlights the dedication of our team and the strength of our leading platform. As pharmaceutical cannabis becomes the new global standard, we are encouraged by the FDA’s recent recommendations and the potential rescheduling of Cannabis in the US. Our established leadership, and commitment to global expansion, product portfolio enhancement, and delivering value to our patients and shareholders sets us on a path of continued growth and success.” (read more)

Safe Harbor Financial (SHFS) reported 2023 results on Monday with a loss per share of (41c) on revenue of $17.6M, which compared to a loss per share of ($1.85) on revenue of $9.5M for 2022. “Throughout 2023, we introduced several new lending and deposit products, significantly broadening our financial service offering, setting the stage for a new path of financial growth for Safe Harbor,” said Sundie Seefried, CEO of Safe Harbor Financial. “With the successful rollout of our line of credit products and interest-bearing accounts last year, we started to recognize increased account fees, higher levels of investment income and derived a steady stream of loan income, all of which, allowed us to meet our goal of creating a more diversified revenue mix. Most importantly, due to the success of our lending program, a greater portion of revenue is coming from this high-margin channel, making us less dependent on deposit fees.” (read more)

TRULIEVE BEST POSITIONED FOR FLORIDA ADULT-USE: Alliance Global Partners said Monday that Trulieve Cannabis (TCNNF) is best positioned after the Florida State Supreme Court ruled that a measure to legalize adult-use marijuana in the state will be allowed on the November ballot. The state of Florida requires 60% approval for passage, with polls giving mixed indications, and generally within the margin of error for passing, the analyst said. The firm sees “market leader” Trulieve as best positioned, along with Curaleaf (CURLF) and Verano “as leaders in the current medical market,” with Green Thumb (GTBIF), Cresco (CRLBF) and Cannabist Company (CBSTF) having a smaller presence in the state as of today. (read more)

ATAI UPGRADE: On Wednesday, Maxim upgraded Atai Life Sciences (ATAI) to Buy from Hold with a $6 price target. The company is becoming a key player in the psychedelics space and has a “healthy” balance sheet, the analyst said. The firm believes Atai’s collaboration with Beckley Psytech brings meaningful share catalysts in 2024. Psychedelic medicines have gained renewed investor attention this year as the broader biotech market shows signs of recovery, added Maxim. (read more)

Meanwhile, H.C. Wainwright lowered the firm’s price target on Atai Life Sciences to $15 from $20 and kept a Buy rating on the shares. The analyst remains “very positive” on Atai’s pipeline, and the potential value realization for shareholders in the next year as multiple data readouts further validate pipeline. (read more)

Additionally, Canaccord said it likes Atai Life Sciences’ strategic investment in Beckley and views the presence of catalysts, along with a more streamlined pipeline as something that can make the company easier to understand, and for investors to more easily conceptualize the significant value of the stock relative to the unmet need and sizes of the indications that Atai is targeting. Canaccord reiterated its Buy rating and $11 price target on Atai Life Sciences shares. (read more)

COMPASS INITIATION: On Monday, Morgan Stanley initiated coverage of Compass Pathways (CMPS) with an Overweight rating and $30 price target. The firm said treatment-resistant depression represents an area of significant unmet need and Compass has generated positive Phase II data for psychedelic therapy COMP360. The firm sees “significant room” for the shares to rise based on upcoming regulatory and data catalysts. (read more)

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Aurora Cannabis (ACB), Ayr Wellness (AYRWF), BZAM (BZAMF), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clearmind (CMND), CordovaCann (LVRLF), Cronos (CRON), Columbia Care (CCHWF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delta 9 (DLTNF), Entourage Health (ETRGF), Enveric (ENVB), Fire & Flower (FFLWF), Flora Growth (FLGC), Trees Corporation (CANN), Greenlane (GNLN), GrowGeneration (GRWG), Hemp (HEMP), Heritage Cannabis (HERTF), High Tide (HITI), India Globalization Capital (IGC), Indiva (NDVAF), Lotus Ventures (LTTSF), Lowell Farms (LOWLF), Lucy Scientific Discovery (LSDI), MediPharm (MEDIF), MedMen (MMNFF), MindMed (MNMD), NewLake Capital (NLCP), Numinus (NUMIF), Optimi Health (OPTHF), Organigram (OGI), Planet 13 (PLNHF), Red White & Bloom (RWBYF), Relmada Therapeutics (RLMD), Reunion Neuroscience (REUN), Revitalist (RVLWF), RIV Capital (CNPOF), RYAH Group (RYAHF), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Tryp Therapeutics (TRYPF), Village Farms (VFF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).