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 an IP acquisition, a CBD partnership and an analyst downgrade.

LUCY ACQUIRES HIGH TIMES IP: Lucy Scientific Discovery (LSDI) announced Thursday the acquisition of the intellectual property of High Times. The company said, “This acquisition provides a stream of high-margin licensing and royalty income from the well-regarded High Times, Cannabis Cup, and 420.com brands, including their respective domain names.” Lucy will issue 19.9% of its outstanding stock to High Times and make payments semi-annually for the next five years based on EBITDA generated from the acquired IP, which can be settled with either stock or cash at Lucy’s option. Additionally, Lucy will license the right to operate retail stores and manufacture and sell THC products in the United States back to High Times, in return for a license fee of $1M per year, increasing to $2M per year upon Federal legalization. The transaction is subject to customary closing conditions and is expected to close within two weeks.

Lucy will be acquiring brand rights with plans to monetize the IP through current and planned royalty agreements by further extending and enhancing the existing domestic and international licensing arrangements currently held by High Times, including consumer products and merchandise. The company intends to preserve the essence of the High Times, Cannabis Cup, and 420.com brands while identifying new avenues for growth and development.  The company expects the acquisition of High Times IP, including the 18 licensing agreements across various product categories it will acquire, to add at least $10M of revenue and $5M of EBITDA to its 2024 results and provide a solid foundation of growth as cannabis becomes legal around the world. Richard Nanula, CEO of Lucy Scientific Discovery, commented, “Lucy expects this acquisition to drive high margin revenue quickly and sustainably across the cannabis sector around the world. This is a great opportunity to grow the market presence of the nearly 50 year old High Times brand globally through licensing and online distribution. We are confident that this opportunity can add significant value for our shareholders.” (read more)

AURORA EXPANDS CBD PORTFOLIO INTO BRAZIL: Aurora Cannabis (ACB) announced Wednesday an expansion of its hemp-derived CBD portfolio into Brazil. In partnership with Herbarium, Aurora will launch the company’s full-spectrum, single-source 3% CBD oil, under the Herbarium brand. Now available under the direction of medical doctors, patients across Brazil have access to high quality CBD as part of their healthcare. “We are proud to continue our international expansion and bring quality CBD products to Brazilians alongside our partner, Herbarium, a trusted brand in the market,” says Andre Jerome, EVP of Global Business Development at Aurora Cannabis. “Brazil has strong growth potential, and we look forward to leveraging our leadership in the market to further unlock key opportunities in South America.” The CBD oil is produced at Aurora’s production facility in Uruguay. Aurora is continuing to develop its range of CBD oil products and together with Herbarium, looks to expand their CBD offerings in Brazil over time. (read more)

Additionally on Thursday, the company announced the launch of Honour, a new cannabis cultivar designed for veterans, by veterans and the second offering from Aurora’s Strain for Heroes portfolio. Five per cent of net profits from the sale of Strain for Heroes products will be used to support veteran organizations across Canada. (read more)

CHICAGO ATLANTIC DOWNGRADE: On Tuesday, Compass Point downgraded Chicago Atlantic (REFI) to Neutral from Buy with an unchanged price target of $16. While the firm thinks there were some positive signs in the first eight months of 2023 for the marijuana industry – such as price stability in markets where supply contracted, more states voting to legalize the product for medical or recreational use, and the HHS recommendation to the DEA to reschedule marijuana from Schedule I to Schedule III – it does not think this will help marijuana operators obtain debt financing from regulated financial institutions because most nationally-chartered banks will not act in defiance of the Federal ban. Compass Point is updating its earnings models for companies in marijuana-linked real estate with the expectation that growth in earning assets and earnings “continues to be elusive in 2024.” (read more)

Additionally on Friday, Piper Sandler initiated coverage of Chicago Atlantic Real Estate Finance with a Neutral rating and $16 price target. There is a long-term opportunity for cannabis sales in the U.S. and in turn lending, but Chicago Atlantic is trading at a premium valuation relative to peers, the analyst said. Piper expects the company to maintain its premium, but without meaningful valuation expansion from here. (read more)

CLEARMIND COLLABORATES WITH JOHNS HOPKINS: Clearmind Medicine (CMND) announced Wednesday that the company has entered into a clinical trial agreement with Johns Hopkins University School of Medicine to conduct its Phase I/IIa clinical trial of its proprietary MEAI-based CMND-100. “We are honored to collaborate with JHU for our first in human clinical trial. JHU is one of the global leaders in psychedelics clinical research and in researching addictions, and we are very grateful to partner with them to study our proprietary CMND-100 to treat Alcohol Use Disorder,” said Clearmind’s CEO Adi Zuloff-Shani. “Johns Hopkins is our second US clinical site joining our trial, following Yale School of Medicine’s Department of Psychiatry. We are excited to be working closely with two of the world’s leading medical centers, who have researched our treatment and agreed to participate in our clinical program.”

The primary end point of the clinical trial is to find the tolerable dose and characterize the safety and pharmacokinetics/pharmacodynamics of single and repeated doses of CMND-100 in healthy subjects and those with Alcohol Use Disorder. The secondary end point is to evaluate the efficacy of CMND-100 in reduction of drinking patterns and cravings, in individuals with moderate-to-severe AUD. Oral capsules will be administered once daily, for ten consecutive days. The patients will report their drinking patterns and craving for alcohol during the clinical trial period. CM-CMND-001 clinical trial is a multinational, multi-center, Phase I/II single- and multiple-dose tolerability, safety and pharmacokinetic study in healthy volunteers and AUD subjects. (read more)

CURALEAF LAUNCHES ZERO PROOF DRINKABLES: Curaleaf Holdings (CURLF) announced Tuesday the launch of Zero Proof, a new brand of THC drinkables in fast-acting, sessionable and easy-to-use formats. The brand’s inaugural product offering, Squeeze, is now available at all Curaleaf locations in Illinois and will be followed by additional SKUs in the coming months. The beverage complement offers a controllable and customizable experience with an easy-to-pour dispenser and compact design delivering 2.5mg THC per dose for discreet enjoyment. At launch, four flavors will be available including Dash of Cherry, Dash of Orange, Dash of Lime and Dash of Sweet. “Zero Proof exemplifies our commitment to providing high-quality, consistent consumer products in familiar and approachable formats that model traditional consumer packaged goods,” said CEO Matt Darin. “Curaleaf has been on the forefront of creating sophisticated cannabis experiences which we believe will ultimately redefine the way people socialize. We’re proud to bring Zero Proof Squeeze to our patients and customers in Illinois first before expanding to additional markets.” (read more)

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Aleafia Health (ALEAF), Acreage (ACRHF), Atai Life Science (ATAI), Audacious (AUSAF), Avant Brands (AVTBF), Ayr Wellness (AYRWF), Awakn Life Sciences (AWKNF), Body and Mind (BMMJ), BZAM (BZAMF), Cannara Biotech (LOVFF), Canopy Growth (CGC), Clever Leaves (CLVR), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), Columbia Care (CCHWF), Compass Pathways (CMPS), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Enveric Biosciences (ENVB), Fire & Flower (FFLWF), Flora Growth (FLGC), General Cannabis (CANN), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Goodness Growth (GDNSF), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), InterCure (INCR), IM Cannabis (IMCC), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm Labs (MEDIF), MedMen (MMNFF), MindMed (MNMD), NewLake Capital (NLCP), Numinus Wellness (NUMIF), Organigram (OGI), Planet 13 (PLNHF), Reunion Neuroscience (REUN), Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Safe Harbor (SHFS), Small Pharma (DMTTF), 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).