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 DEA reclassification, earnings and a regulatory approval.

DEA TO RECLASSIFY MARIJUANA: The Drug Enforcement Administration will move to reclassify marijuana as a less dangerous drug, the Associated Press’ Zeke Miller, Joshua Goodman, Jim Mustian and Lindsay Whitehurst reported Tuesday, citing people familiar with the matter. The DEA’s proposal, which still must be reviewed by the White House Office of Management and Budget, would recognize the medical uses of cannabis and acknowledge it has less potential for abuse than some of the nation’s most dangerous drugs. However, it would not legalize marijuana outright for recreational use. (read more)

Meanwhile, Craig-Hallum told investors that “by far the biggest impact from an investor perspective” is that cannabis operators will no longer be subject to onerous 280E taxes, which effectively tax these operators on gross profit instead of normal pretax income. The firm, which expects this decision to initially provide a significant boost to cash flow from operations, followed by significant increases in capex and marketing spend for many operators, recommends buying shares of “high quality, efficient operators,” including Green Thumb Industries (GTBIF), Trulieve Cannabis (TCNNF) and TerrAscend (TSNDF). (read more)

Additionally, Clarus raised the firm’s price target on TerrAscend to C$3.75 from C$3 and kept a Buy rating on the shares. The firm sees potential for substantially more re-rating of multi-state operator cannabis stocks, such as TerrAscend, over the coming months as DEA moves towards the final rule implementation to reschedule cannabis. (read more)

CANNABIS EARNINGS: On Monday, Acreage Holdings (ACRHF) reported a fourth quarter loss per share of (27c) on revenue of $52.8M, which compared to a loss per share of (85c) on revenue of $57.5M for the same period last year. “Throughout 2023, we completed various strategic initiatives that have positioned us strongly ahead of our acquisition by Canopy USA,” said Dennis Curran, CEO. “We firmly believe we have built one of the strongest Northeastern footprints, and our robust presence in states such as New York, New Jersey, and Connecticut will continue to grow our topline as we deepen our presence in these developing markets in anticipation of our entry into Canopy USA.” (read more)

Additionally on Monday, Cannara Biotech (LOVFF) reported a Q2 loss per share of (C$0.04) on revenue of C$19.7M, which compared to a loss per share of (C$0.01) on revenue of C$13M last year. “This past quarter, despite a challenging market environment, Cannara continued to demonstrate continued positive execution towards becoming one of the leading cannabis companies in Canada. With our tenth grow zone now operational, our annual production capability has increased to 33,500 kg, underlining our dedication to increasing capacity to meet the growing market demand for our product,” said Zohar Krivorot, President & CEO. (read more)

Red White & Bloom (RWBYF) also reported earnings on Monday with a loss per share of (C$0.24) on revenue of C$19.9M, which compared to a loss per share of (C$0.47) on a revenue of $15.4M for the same period last year.  Colby De Zen, President, stated, “RWB continued to effect value-added transformations of its business during fiscal 2023. We focused on higher margin revenue opportunities and sunsetting of low margin products, as can be seen in our results, which has led to a 30% increase in gross margin with revenue only increasing marginally over the same period. Moving into fiscal 2024, the company has targeted several near-term priorities, including a fulsome restructuring of its current financing arrangements, resourcing its key business segments, both in Canada and across incumbent and prospective US states, providing a path for our company and its valued team members to achieve profitable growth and sustainable liquidity.” (read more)

On Tuesday, Entourage Health (ETRGF) reported 2023 revenue of C$54.1M, which compared to revenue of C$54.5M in 2022. “In 2023, Entourage made significant strides, advancing production and diversifying our market presence with innovative products,” noted George Scorsis, CEO. “Dime Bag’s success is a prime example—quickly rising to become one of Ontario’s fastest-growing pre-roll brands and maintaining its market leadership for two consecutive quarters. Driven by surging demand for our products and the effectiveness of our enhanced business model, we’re achieving growth while improving cost efficiency, firmly establishing ourselves in a favourable financial position.” (read more)

On Wednesday, InterCure (INCR) reported a 2023 loss per share of (NIS 1.36) on revenue of NIS 355.6M, which compared to earnings per share of NIS 0.99 on revenue of NIS 388.7M in 2022. Alexander Rabinovitch, CEO, noted: “Despite extraordinary external challenges this year, InterCure showed solid performance, achieving our fifteenth straight quarter of profitability. This consistent performance highlights the commitment of our team and the effectiveness of the company’s operational strategy. As the global landscape for pharmaceutical cannabis evolves, we are encouraged by the latest FDA recommendations and the optimistic outlook regarding rescheduling of cannabis in the U.S. Our leadership in the field, dedication to expanding internationally, enhancing our product offerings, and our focus on adding value for our customers and investors remain pivotal to our ongoing success and growth.” (read more)

PLANET 13 GETS APPROVAL FOR SALE, VIDACANN ACQUISITION: On Monday, Planet 13 Holdings (PLNHF) announced it received approval for the proposed sale of Planet 13 Florida and approval for the proposed acquisition of VidaCann, each of which owns a Medical Marijuana Treatment Center License, from the Florida Office of Medical Marijuana Use. The approvals from the OMMU for the sale of Planet 13 Florida and the acquisition of VidaCann are the final regulatory approvals required for Planet 13 to close the transactions. The company has extended the end date of the VidaCann acquisition to May 31, 2024 and currently expects to close the transactions in May 2024. (read more)

SUNSTREAM TO ACQUIRE CANNABIS ASSETS: SNDL (SNDL), through its joint venture in SunStream Bancorp, announced Thursday the SunStream USA group of companies intends to proceed with the acquisition of equity positions in U.S. cannabis assets. This follows the completion of a review by SNDL’s listing authority, Nasdaq.  SNDL has been in regular and active dialogue with Nasdaq, in respect of structuring and governance related to the SunStream USA Group. Based on SNDL’s opinion of counsel and Nasdaq’s review, SNDL is satisfied that the SunStream USA Group structure conforms to applicable laws and is not aware of any reason that would cause SNDL to not be compliant with Nasdaq listing rules. SunStream USA I and SunStream USA II are among the entities that comprise the SunStream USA Group. Each entity includes one or more third-party investors, which are independently managed and governed. SNDL’s affiliate, SunStream Opportunities II is anticipated to own non-voting and non-participating exchangeable securities in the SunStream USA entities. SNDL will not consolidate the financial statements of any entity within the SunStream USA Group until such time it is permissible to do so under applicable law and listing regulations. SNDL, as a capital sponsor of the SunStream USA Group and through SunStream Opportunities II LP, would be afforded prospective economic interests in SunStream USA, through the SSU Exchangeable Securities. With SNDL having satisfied itself on Regulatory Compliance matters, SunStream USA is now braced to acquire certain non-performing credit investments from SunStream Opportunities, resulting in majority equity positions in select assets of Surterra Holdings and Greenpeak Industries. Skymint operates in the state of Michigan, while Parallel is a multi-state cannabis operator, currently operating in Florida, Massachusetts, Nevada and Texas. SSU I and SSU II are anticipated to acquire certain assets of Skymint and Parallel, respectively, in each case subject to certain closing conditions and milestones. SNDL anticipates providing a further update on the Parallel and Skymint transactions alongside its second quarter 2024 financial and operational results. (read more)

COMPASS ENTERS RESEARCH COLLABORATIONS: On Monday, Compass Pathways (CMPS) and Journey Clinical announced that they entered into a research collaboration agreement to inform the development of a scalable and practical delivery and healthcare provider training model for COMP360 psilocybin treatment, if approved for treatment-resistant depression. The first phase of the collaboration comprises an in-depth information exchange on the COMP360 psilocybin treatment delivery model. Together, Compass and Journey Clinical will work to better understand the patient care experience, depression patient pathways and care reimbursement processes, and explore innovative care pathways for TRD patients, should COMP360 psilocybin treatment be approved. They will conduct research into therapist training, support, and education, and exchange information on treatment settings for psychedelic therapies. (read more)

Additionally on Thursday, Compass Pathways and Mindful Health Solutions announced that they have entered into a research collaboration agreement to inform the development of a scalable and cost-effective delivery model for COMP360 psilocybin treatment, if approved for treatment-resistant depression. The collaboration with MHS will include an in-depth information exchange on Compass’s potential delivery model for investigational COMP360 psilocybin treatment, and how it might fit into a healthcare delivery system similar to MHS. Compass and MHS will chart the depression and TRD patient pathway and investigate challenges with the current patient care experience, including potential approaches to address these. MHS will complete training and learning sessions on Compass’s psychological support model and therapist training program and conduct research to better understand therapist training needs. Compass and MHS will exchange information on model treatment rooms, site activation services, and coding and reimbursement considerations related to psychedelic treatments.  (read more)

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Atai Life Sciences (ATAI), Aurora Cannabis (ACB), Ayr Wellness (AYRWF), Avant Brands (AVTBF), BZAM (BZAMF), Cannabist Company (CBSTF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clearmind (CMND), Clever Leaves (CLVR), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), Curaleaf (CURLF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delta 9 (DLTNF), Enveric (ENVB), Fire & Flower (FFLWF), Flora Growth (FLGC), Trees Corporation (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), GrowGeneration (GRWG), Hemp (HEMP), Heritage Cannabis (HERTF), High Tide (HITI), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), 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), Relmada Therapeutics (RLMD), Reunion Neuroscience (REUN), Revitalist (RVLWF), RIV Capital (CNPOF), RYAH Group (RYAHF), Safe Harbor Financial (SHFS), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Tryp Therapeutics (TRYPF), Verano (VRNOF), Village Farms (VFF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).