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The Week In Cannabis: DEA Research Licenses, Wisconsin, An Israeli Index, M&A, And More

January 3, 2021 9:32 am
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The Week In Cannabis: DEA Research Licenses, Wisconsin, An Israeli Index, M&A, And More

In the last week of 2020 — a year that saw the cannabis movement score major victories on national and international levels — marijuana stocks underperformed the wider market.

Over the last five trading days, including Dec. 24:

  • The ETFMG Alternative Harvest ETF (NYSE:MJ): lost 4.4%
  • The AdvisorShares Pure Cannabis ETF (NYSE:YOLO): was down 3.8%
  • The Cannabis ETF (NYSE:THCX): tumbled 4.5%
  • The Amplify Seymour Cannabis ETF (NYSE:CNBS): declined 5.8%
  • The SPDR S&P 500 ETF Trust (NYSE:SPY) was up 1.4%

We also learned the U.S. Drug Enforcement Administration is expanding the number of research licenses it will grant to cannabis cultivators in 2021. Right now, only one entity, the University of Mississippi, holds this type of license.

“DEA believes a range of three to 15 growers is a reasonable sestimate for purposes of this economic analyses, with the understanding that the actual number could vary considerably,” the rule says.

Wisconsin Governor Tony Evers proposed cannabis legalization as a potential way to boost tax revenue, looking to offset the impact of the COVID-19 pandemic. The prospect of adult use is up for consideration in Wisconsin's 2021 budget proposal, but nothing has been decided so far.

In Israel, a new cannabis-focused index launched on the Tel-Aviv Stock Exchange. The index includes shares of nine companies belonging to the cannabis subsector under the biomed sector. The cannabis subsector includes companies in various medical cannabis sectors, such as research, sale, cultivation, production, and marketing.

The nine companies have a collective market cap of 1.7 billion shekels ($529 million).

Benzinga Cannabis content is now available in Spanish on El Planteo.

Real estate finance firm AFC Gamma is going public on the Nasdaq under the ticker symbol “AFCG.” Seaport Global Securities, JMP Securities and Ladenburg Thalmann were appointed as underwriters. The goal is to raise up to $115 million, and become the second REIT focused solely on cannabis to list on a major exchange, with the first being Innovative Industrial Properties (NYSE:IIPR).

On Tuesday, shares of Aurora Cannabis (NYSE:ACB) saw unusual options activity. Call sweeps at $8.00 reflected the markets bearishness.

Financings And M&A

Calgary, Alberta-based Sundial Growers Inc. (NASDAQ:SNDL) acquired a special purposed vehicle that owns $58.9 million of Zenabis Global's senior secured debt. The loan carries interest at a rate of 14% annually, with a maturity date of March 31, 2025. In addition, it's secured by Zenabis' assets as well as assets of its subsidiaries.

Medical cannabis company Allied Corp. (OTCQB:ALIDsigned a letter of intent to buy the psilocybin company Pacific Sun Fungi.

Stem Holdings Inc. (OTCQX:STMH) (CSE:STEM) closed on the purchase of e-commerce and DaaS (delivery-as-a-service) provider Driven Deliveries Inc. (OTCQB:DRVD). The all-stock deal is valued at about CA$41.3 million.

Keef Brands acquired an equity position in BevCanna Enterprises Inc. (CSE:BEV) (OTC:BVNNF). According to BevCanna, Keef Brands is the “highest-grossing cannabis beverage company in the U.S.,” taking the first place in both units and dollars sold.

Israeli-based IM Cannabis (CSE:IMCC) has entered the North American market through the acquisition of Canadian-based Trichome Financial (CSE:TFC) and its adult-use cannabis operations. The combined company will operate under the IMC brand and expand its presence in the Canadian market in addition to its growing sales channels in Germany and Israel. IMC expects to finalize its listing on the NASDAQ Capital Market during the first quarter of 2021.

Oren Shuster will remain CEO of the combined company. Trichome Financial founder Marc Lustig will be executive chairman of IMC.

“The acquisition of Trichome is a strategic step in our global growth plan," Shuster said. "With the completion of this transaction, IMC is getting a very robust and well-established operational platform in the Canadian market that can serve other international markets where we have a presence or are planning to enter. Furthermore, we are welcoming into the IMC family a highly skilled and knowledgeable Canadian team with a wealth of experience in the North American cannabis market.”

Denver-based MassRoots Inc. (OTC:MSRT) wants to buy Herbfluence’s technology platform. 

Earnings

1933 Industries Inc. (OTCQX:TGIFF) reported it has generated roughly CA$2.7 million ($2.1 million) in revenue over the first quarter of fiscal 2021. That’s a sequential increase of 13%.

1933 president Eugene Ruiz said operating business units achieved profitability for the month of November 2020.

Lotus reported $4.6 million in sales and 31 straight harvests completed without any crop failures in the first fiscal year of production. The Lotus Kalifornia strain has consistently tested with rich cannabinoid and terpene content and has been a big part of the company’s profitable success so far.

“Our group has been very disciplined through this whole process as we dialled in our growing systems early on," COO Carl Correia told Benzinga. "From there we felt in control of our growing environment, which is a crucial component to how we’re able to produce a top-quality product consistently. We’ve learned a lot over the past year, and we’re excited to build on our next phase of growth in the Okanagan, B.C.”

More News

Canopy Growth Corp (NYSE:CGC) filed a federal lawsuit against Britain’s GW Pharma (NASDAQ:GWPH), accusing the latter of unauthorized usage of its intellectual property related to a CBD extraction method.

Canopy Growth said it has obtained the intellectual property with its acquisition of Germany’s C3 Cannabinoid Compound Co. in 2019 for more than $250 million. The same day the lawsuit was filed, Canopy was issued the U.S. patent.

According to Canopy, GW Pharma has been relying on the extraction method in question for the production of its flagship epilepsy drug Epidolex.

CbdMD Inc. (AMEX:YCBD) is broadening its direct-to-consumer offering in the United Kingdom with a website solely focused on U.K. customers.

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Lead image by Ilona Szentivanyi. Copyright: Benzinga.