Key Takeaways; Cannabis Sector
- High Tide reported positive free cash flow and growing revenue despite incurring losses.
- Canopy Growth announced plans to cease funding BioSteel amid restructuring.
- Innovative Industrial Properties announced Q3 2023 dividends.
- SNDL launched an e-commerce platform for its liquor retail banner, Wine and Beyond.
Key Takeaways; Psychedelic Sector
- Awakn released a corporate update on recent progress.
Below is a weekly roundup on the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.
Top Marijuana Companies for Week
#1: High Tide
High Tide Inc. (NASDAQ: HITI), a Canadian cannabis retailer, reported its financial results for the third fiscal quarter of 2023, marking a significant achievement in the challenging marijuana industry. The company reported positive free cash flow of 4.1 million Canadian dollars ($3 million), surpassing its financial forecast and indicating its ability to thrive in a tough market.
High Tide CEO, Raj Grover, expressed his satisfaction, stating that the third fiscal quarter was High Tide’s best in history. “I’m thrilled to report that our third fiscal quarter was the best in High Tide’s history since our inception, as we met our goal of generating positive free cash flow of CA$4.1 million this quarter, five months ahead of our previously communicated timeline and hence becoming less reliant on macro and industry conditions,” Grover said in a press release.
Despite this positive milestone, High Tide reported a net loss of CA$3.6 million for the quarter, up from CA$2.7 million in the same period the previous year. This loss was largely attributed to a revaluation of derivative liabilities. However, total revenue showed strong growth, increasing by 30.4% year-over-year to CA$124.4 million in the quarter.
High Tide also reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of CA$10.2 million, a 140% increase compared to the previous year. Notably, this marked the 14th consecutive quarter of positive adjusted EBITDA for the company.
In terms of market presence, High Tide remains the largest non-franchised cannabis retailer in Canada, with 156 stores and a 9.5% share of the nation’s marijuana retail market, excluding Quebec, which has a retail monopoly.
#2: Canopy Growth
Canadian cannabis producer Canopy Growth Corporation (NASDAQ: CGC) announced its decision to cease funding for its subsidiary, BioSteel Sports Nutrition Inc., and commence a court-supervised sale of the sports nutrition company. This strategic move aligns with Canopy’s ongoing restructuring, as the cannabis giant seeks to enhance profitability and focus on its asset-light cannabis strategy.
Canopy’s CEO, David Klein, explained that although BioSteel had experienced revenue growth, it did not align with Canopy’s asset-light cannabis strategy. Additionally, Klein emphasized Canopy’s commitment to taking decisive actions to enhance profitability and maintain its position as a major player in the North American cannabis sector.
“As while BioSteel’s business has shown significant year-over-year revenue growth, and we believe the brand remains an attractive asset, it does not align with Canopy Growth’s cannabis focused asset-light strategy,” Canopy CEO David Klein said in a statement.
“We have repeatedly demonstrated that we will take decisive action to enhance our profitability and ensure we are focused and positioned to be a leader in the North American cannabis sector,” he added.
This decision led BioSteel to enter creditor protection proceedings under the Companies’ Creditors Arrangement Act (CCAA). With BioSteel entering CCAA proceedings, the company aims to conserve cash and preserve its assets by effectively going into “hibernation.” The CCAA process will be utilized to identify a buyer efficiently, and if approved by the court, it will be administered by BioSteel with support from Greenhill & Co. Canada, under the oversight of the monitor, KSV Restructuring.
Canopy Growth’s decision to cease funding BioSteel and initiate a court-supervised sale reflects its commitment to optimizing its cannabis-focused strategy while addressing the financial challenges faced by its subsidiary. This strategic move is part of Canopy’s ongoing transformation as it strives to enhance profitability and leadership in the North American cannabis sector.
#3: Innovative Industrial Properties
Innovative Industrial Properties, Inc. (NYSE: IIPR), a pioneering real estate company with a focus on the regulated U.S. cannabis industry, declared its third quarter 2023 dividends. The company’s board of directors announced a dividend of $1.80 per share for common stock, contributing to a total of $7.20 per common share declared over the past twelve months. This marked a notable increase of $0.40, equivalent to a 6% rise, compared to the dividends declared in the previous twelve months.
In addition to the common stock dividend, IIP’s board of directors also declared a regular quarterly dividend of $0.5625 per share for IIP’s 9.00% Series A Cumulative Redeemable Preferred Stock.
According to the company, these dividends will be disbursed to stockholders on October 13, 2023, with eligibility based on ownership records as of September 29, 2023.
SNDL Inc. (NASDAQ: SNDL) announced its foray into the world of e-commerce with the launch of a new online platform for its popular liquor retail banner, Wine and Beyond. According to the company, this move is designed to broaden accessibility and reach for Wine and Beyond’s extensive range of products, which includes rare spirits, both local and international beers, and distinctive wines.
Robbie Madan, Chief Information and Digital Officer at SNDL, expressed excitement about this digital expansion, stating, “We are pleased to extend the Wine and Beyond experience into the digital landscape.” He emphasized that Wine and Beyond stores are known for their exceptional product selection, unique offerings, and knowledgeable staff who provide top-notch customer service.
Wine and Beyond’s online catalogue boast an impressive selection of nearly 9,000 products, with regular additions and new frequent deals. SNDL anticipates that this strategic move will not only enhance its market presence and customer outreach but also contribute to revenue growth.
Top Psychedelic Company for Week
Awakn Life Sciences Corp. (OTC: AWKNF), provided a corporate update on its recent developments and announced the closing of the third tranche of its private placement financing. The corporate update indicates that, the Toronto-based biotechnology company, which focuses on treating addiction, particularly Alcohol Use Disorder (AUD), has achieved significant milestones in recent months.
One of the key highlights in Awakn’s corporate update was the successful completion of its exit from healthcare services in August 2023, a move that was announced in June 2023. This strategic move now allows the company to concentrate exclusively on research and development efforts aimed at treating addiction. This transition also led to a reduction in Awakn’s expenses.
In addition to this, Awakn submitted a Clinical Trial Application (CTA) for phase III of its lead program, AWKN-P001, designed for the treatment of Severe Alcohol Use Disorder (SAUD). The phase III clinical trial, set to commence in the UK across ten National Health Service (NHS) sites, will involve 280 participants in a randomized placebo-controlled trial. Awakn has committed approximately GBP £800,000 towards the trial’s costs, with additional funding provided by partners such as the UK National Institute of Health and Care Research (NIHR), the UK Medical Research Council (MRC), and the University of Exeter. Pending ethical and regulatory approvals, the trial is expected to initiate treatment for the first participants in Q1 2024.
Awakn is also making progress in its Zydis®/MDMA feasibility study, which began in March 2023. The study explores a proprietary formulation of MDMA using Catalent’s Zydis® orally disintegrating tablet (ODT) technology. According to the corporate update, the company has completed two out of three planned manufacturing tests and is now advancing to the third manufacturing production run test.
Furthermore, Awakn is expanding its licensing partnership business, providing access to its proven proprietary ketamine-assisted therapy protocol for AUD treatment and additional healthcare services intellectual property. Partner clinics are now located in various regions, including New York and California in the US, Ontario in Canada, Oslo and Trondheim in Norway, London in the UK, and Lisbon in Portugal.
Regarding financing, Awakn initiated a non-brokered private placement financing in April 2023, aiming to raise up to $4,000,000 at CAD$0.46 per unit. Each unit consisted of one common share and three-quarters of one common share purchase warrant, allowing the holder to acquire additional shares at $0.63 per share for five years. The company said in its corporate update that it has now closed the third tranche of this offering, raising $767,215 for this tranche and a total of $2,734,663 for the entire offering.
In conclusion, Awakn’s corporate update indicates that the company is making substantial strides in its mission to develop effective addiction therapeutics and expand its reach in the addiction and mental health treatment space. With ongoing clinical trials, partnerships, and financing, the company remains committed to addressing the challenges posed by addiction and related disorders.
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