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The Week In Cannabis: Trulieve's $2.1B Acquisition, New ETF, Earnings, Federal Legalization And More

May 14, 2021 4:50 pm
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The Week In Cannabis: Trulieve's $2.1B Acquisition, New ETF, Earnings, Federal Legalization And More

In a week of big M&A news and mixed earnings reports, cannabis stocks traded mostly down.

On Monday, Trulieve Cannabis Corp. (CSE:TRUL) (OTCQX:TCNNF) announced it's purchasing Harvest Health & Recreation Inc. (CSE:HARV) (OTCQX:HRVSF) for roughly $2.1 billion in stock. Harvest shareholders will own roughly 26.7% of Trulieve's issued and outstanding pro forma shares on a fully diluted basis.

Commenting on the deal, Debra Borchardt, CEO of Green Market Report, told Benzinga, “The acquisition is likely to come with its fair share of headaches. Harvest Health has a mountain of debt and lots of lawsuits over various deals. Still Trulieve is certainly on a quest to become a nationwide company and this will certainly help pave the way.”

Cantor Fitzgerald’s Pablo Zuanic kept an Overweight rating on Trulieve’s stock but lowered the price target to $76 from $89. Changes to the price target were necessary in response to the new merger and increased share count to 181 million, explained Zaunic.

On Thursday, Trulieve reported its financial results for the first quarter of 2021. The Tallahassee, Florida-based company revealed it generated record quarterly revenue of $193.8 million over the period, representing sequential and year-over-year growth of 15% and 102%, respectively.

The Boston Beer Company Inc (NYSE:SAM) is creating a Canada-based subsidiary focusing on research and development of non-alcoholic  cannabis beverages. While current federal U.S. law prohibits the commercial sale of cannabis products, the company believes this could change in the near future.

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

ETF Manager Group (ETMG), the issuer behind the wildly successful ETFMG Alternative Harvest ETF (NYSE:MJ), launched its new ETFMG US Alternative Harvest ETF (NYSE:MJUS), focused on U.S. cannabis companies.

Curaleaf Holdings (OTC:CURLF) posted its first-quarter 2021 financial results with total revenue of $260.32 million, up by 170% from the same period of 2020. The company reported a positive adjusted EBITDA of $62.63 million, which compares to $20 million in the same quarter of the prior year.

Following the earnings report, the closing of its EMMAC acquisition and an $80 million financing, Cantor's Zuanic reiterated an Overweight rating on Curaleaf’s stock and kept his 12-month price target of $26.50, stating the company seems on track to hitting its fiscal year 2021 sales guidance of $1.2 to $1.3 billion.

Also this week, Curaleaf International's subsidiary, Adven GmbH, introduced its medical cannabis products in Germany.

ETFs were all in the red. Over the five trading days of this week:

  • The ETFMG Alternative Harvest ETF (NYSE:MJ): lost 7.8%.
  • The AdvisorShares Pure Cannabis ETF (NYSE:YOLO): tumbled 7.8%.
  • The AdvisorShares Pure US Cannabis ETF (NYSE:MSOS): shed 4.7% of its value.
  • The Cannabis ETF (NYSE:THCX): dropped 11%.
  • The Amplify Seymour Cannabis ETF (NYSE:CNBS): was down 9.3%.
  • The SPDR S&P 500 ETF Trust (NYSE:SPY) closed the week down 1.18%.

Policy, Science And Data

In China, the government has announced that all synthetic cannabinoids will be included in the list of banned drugs. This is the second time that China has banned an entire category of substances, following the veto of fentanyl-related drugs in 2019.

In addition, the authorities announced a ban on 18 other psychoactive substances. According to a press release, the changes will come into effect on July 1.

Two Republican congressmen introduced a bill that would bring federal cannabis legalization to the U.S. Representatives David Joyce and Don Young, from Ohio and Arkansas respectively, introduced the Common Sense Cannabis Reform for Veterans, Small Businesses and Medical Professionals Act on Wednesday.

The Louisiana House of Representatives approved a cannabis-related legislative bill that should remove jail time for low-level cannabis possession offenses. House Bill 652 will now be sent to the Senate for review.

The measure proposes that possession of up to 14 grams of cannabis should be penalized only with a $100 fine.

Project Twenty 21 published its first findings in the accredited scientific journal Psychopharmacology.

  • The findings suggest that patients living with chronic pain, multiple sclerosis, Tourette's syndrome, epilepsy and post-traumatic stress disorder could significantly improve their quality of life by using legally prescribed cannabis.
  • According to the collected data, patients suffering from neuropathic pain are more likely to benefit from medical cannabis than classical treatments, such as commonly prescribed drugs, including benzodiazepines or opioids.
  • The results of the study also showed a 50% increase in patients who were able to lead a more normal life after using cannabis. In addition, more patients are efficiently managing anxiety, insomnia and depression, which often come with primary disabling conditions.

Financings And M&A

HEXO Corp. (TSX:HEXO) (NYSE:HEXO) created an at-the-market equity program to issue and sell up to CA$150 million ($124 million) of its shares. The company will also acquire its first U.S. production facility via its U.S. subsidiary for an undisclosed price. The facility covers 50,000 sq. ft. and is located in Northern Colorado.

Parallel sold its Pittsburgh, Pennsylvania warehouse to an affiliate of cannabis REIT Innovative Industrial Properties, Inc. (NYSE:IIPR) for roughly $68 million. The companies also signed a long-term lease agreement.

Colombia-based cultivator and producer Flora Growth Corp. (NASDAQ:FLGC) started trading on the Nasdaq after an initial public offering price, consisting of 3,333,333 common shares, priced at $5 per share. Shares lost more than 15% of their value since their public debut.

Earnings Reports

Village Farms International, Inc. (NASDAQ:VFF) (TSX:VFF) posted first-quarter consolidated revenue of $52.4 million, up by 63% from the same period in 2020.

Aleafia Health Inc. (TSX:AH) (OTCQX:ALEAF) revealed revenue had dropped by 51% year-over-year to $7.07 million in the first three months of 2021. Benzinga spoke with the company’s CEO right after the earnings report.

Acreage Holdings, Inc. (CSE:ACRG)(OTCQX:ACRDF) posted its first-quarter unaudited financial including $38.4 million in consolidated revenue in the first three months of 2021, representing a 58% year-over-year and 22% sequential growth.

Charlotte's Web Holdings, Inc. (TSX:CWEB) (OTCQX:CWBHF) generated $23.4 million in consolidated revenue in the first quarter of 2021, representing a year-over-year increase of 9.1%.

Sundial Growers Inc. (NASDAQ:SNDL) posted its first-quarter earnings with a net loss of CA$134.4 million ($111.40 million), compared to a net loss of CA$64.1 million in the previous quarter.

MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF) reported its third-quarter fiscal 2021 financial earnings with net revenue of $31.7 million, compared to $45.9 million in the same period of fiscal 2020.

Its gross margin rate was 42% in the quarter as compared to 53% in the second quarter.

Zynerba Pharmaceuticals, Inc. (NASDAQ:ZYNE) disclosed its first-quarter net loss of $8.0 million or a loss of 20 cents per share, compared to $12.34 million in the same period of 2020 or a loss of 53 cents per share.

The company said it plans to launch a Phase 3 trial of Zygel, a pharmaceutically-produced CBD, patent-protected gel for transdermal delivery, in children and adolescents with fragile X syndrome (FXS) during the third quarter of 2021.

Green Thumb Industries (CSE:GTII) (OTCQX:GTBIF) reported its first-quarter financial results. Revenue came in at $194.4 million, up 9.7% sequentially and 89.5% year-over-year.

GAAP net income was $10.4 million or $0.05 per basic and diluted share, marking the third consecutive quarter of positive GAAP net income.

The company also announced the grand opening of the first COOKIES store in Nevada this week.

Flower One Holdings Inc (OTC:FLOOF) announced first-quarter financial results and operational highlights, posting record-breaking performance and emerging as the top flower producer in Nevada.

Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB) stock plunged after the company reported a drop in recreational cannabis revenue, missing estimates. The company revealed a 19.5% year-over-year and 17% sequential decline in revenue to CA$58.4 million ($48.1 million), before provisions, in the third quarter of 2021.

Supreme Cannabis Company, Inc. (TSX:FIRE) (OTCQX:SPRWF) (FRA: 53S1) reported having earned $16.8 million in gross revenue in the third quarter of 2021, representing a sequential decrease of 22.5%.

Vireo Health International, Inc. (CSE:VREO) (OTCQX:VREOF) reported its financial results for the first quarter of 2021 with $13.2 million in GAAP revenue for the first three months of 2021, representing a year-over-year increase of 8.8%.

Find all the details on these and other earnings reports on Benzinga Cannabis’ Earnings Center.

Other News

Glass House Group was awarded two additional retail licenses by Santa Barbara County for adult-use dispensaries in Santa Ynez and Isla Vista.

“We are thrilled to expand our Santa Barbara retail portfolio with the addition of two, coveted retail dispensaries in highly sought-after locations,” said Graham Farrar, co-founder and president of Glass House Group. “These additional locations are a testament to our history of quality operations and our team's ability to navigate complex and competitive regulatory environments as we execute ahead of our expansion plan and continue to secure new opportunities across the state.”

Materia earned EU GMP certification for its production site in Malta. EU GMP is the global gold standard for pharmaceutical production and is a requirement for medical cannabis products in most European countries.

The company has been developing the facility for over two years and is positioning itself as an entry point into Europe for its partners. It intends to process flower and oils in Malta for distribution across all major European markets. Its primary focus will be Germany, where its subsidiary Materia Deutschland GmbH has been importing and selling third party manufactured products since last year.

Nick Pateras, managing director for Europe, told Benzinga, “This is a watershed moment for us as a European-focused company aiming to be a leader in production and distribution. We can now tap into our network of qualified suppliers to bring innovative new products to patients across Europe.”

SugarTop Buddery is teaming with agriculture technology company Terra Vera to ensure its cannabis is completely pesticide-free.

Everscore launched a marketplace designed to make cannabis approachable for the curious consumer. The company is applying machine learning and data science to reach the consumers most likely to make a purchase on premium lifestyle publishers. Using proven technology from its partner VTEX, consumers will enjoy a best-in-class shopping experience.

“The growth opportunity we saw, and the opportunity our online marketplace creates for established and emerging brands, is in connecting to millions of curious people who should be a customer but walked right past the front door,” said Jeff Sampson, founder and CEO of Everscore.

Columbia Care Inc. (NEO: CCHW) (CSE:CCHW) (OTCQX:CCHWF) announced the launch of its new retail brand, Cannabist.

The publishing company behind High Times Magazine, Hightimes Holding Corp., will launch its first cannabis offering dubbed High Times Black Label.

Executive Moves

TILT Holdings Inc. (CSE:TILT) (OTCQX:TLLTF), a global provider of cannabis business solutions including inhalation technologies, cultivation, manufacturing, processing, brand development and retail, announced that current President Gary Santo will be appointed as the company’s new CEO, effective June 1, 2021.

Current CEO Mark Scatterday will continue to serve as chairman of the Board. He will also serve as a special advisor to TILT’s research and development team as they continue to create new technology and product innovations.

Find out all about the latest executive moves at:

Top Stories Of The Week

Check out the top stories on Benzinga Cannabis this week:

Top Spanish stories:

Lead image by Ilona Szentivanyi. Copyright: Benzinga.

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