The Week In Cannabis: Stocks Trade Up On Federal Bill (MORE Act), Earnings, Big M&A

Cannabis stocks traded up this week, aided by strong earnings reports, big M&A announcements and the reintroduction of the Marijuana Opportunity Reinvestment and Expungement Act (MORE) into Congress, after the previous year's version failed to pass the Senate.

The MORE Act would remove marijuana from the federal Controlled Substances Act (CSA) while addressing resentencing for cannabis offenses and preventing federal agencies from prohibiting security clearance or benefits because of cannabis use.

If passed, the bill would also provide extended Small Business Administration (SBA) aid for those affected by the War on Drugs.

The MORE Act comes with the backing of over 150 organizations across the country, including the Drug Policy Alliance (DPA).

The Senate is preparing its own reform bill.

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

On the capital markets front, HEXO Corp HEXO HEXO signed an agreement to buy the family-owned Canadian cannabis producer Redecan for $925 million in cash and stock.

Under the agreement, the purchase consideration of $925 million will consist of $400 million in cash, and $525 million in shares of Hexo, assuming a price of $7.53 per share.

After the transaction is finalized, shareholders of Redecan will own around 32% of Hexo’s shares on a pro forma non-diluted basis.

The transaction is expected to close during the third quarter.

EFTs all traded up over the five trading days of this week:

The ETFMG Alternative Harvest ETF MJ: gained almost 7%.
The AdvisorShares Pure Cannabis ETF YOLO: advanced 7%.
The AdvisorShares Pure US Cannabis ETF MSOS: rose 4.7%.
The Cannabis ETF THCX: was up 10.5%.
The Amplify Seymour Cannabis ETF CNBS: rose almost 9%.
The SPDR S&P 500 ETF Trust SPY closed the week up 1.26%.

Policy, Science And Data

During a Wednesday Senate budget hearing, Francis Collins, director of the National Institutes of Health (NIH) shared positive remarks about the therapeutic potential of psychedelics such as psilocybin and MDMA, as well as about the progress being made in access to medical marijuana for federal research.

“We’re making some progress. You may know that in the past, researchers who wanted to do clinical studies on marijuana had all kinds of limitations," Collins said, adding that for the past five decades there had been only one source of marijuana for federal research purposes.

“That of course is an issue because it’s a limited opportunity for access.”

The Brightfield Group released a report on the U.S. CBD market, speculating that the U.S. hemp-derived CBD market will reach $5.3 billion in retail sales in 2021. This would imply a 15% increase over 2020 sales of $4.6 billion.

What’s more, Brightfield Group expects sales to reach $16 billion by 2026, driven by accelerated growth of ingestibles (tinctures, capsules, drinks). New consumers are expected to enter the market as prices continue to drop and access expands.

Another report from ResearchAndMarkets said that the global medical cannabis market is poised to grow at a CAGR of 23.9% over the next seven years and is expected to reach $49.1 billion by 2028.

New York and Colorado joined several states that have already banned delta-8 THC made from hemp.

As of May 2021, America's adult-use cannabis marketplaces collectively generated $7.9 billion in tax revenue, according to the Marijuana Policy Project (MPP).

The report, which used figures from each legalized state, demonstrated how legal cannabis sales enhanced local tax bases and often funded various state services and programs, including social equity, reentry programs, public health initiatives and support for law enforcement.

Minnesota Democratic Governor Tim Walz placed his signature on a bill legalizing medical cannabis flower, approved by the House of Representatives.

The Illinois House passed cannabis-related legislation meant to improve the 2019 Cannabis Regulation and Tax Act regarding a licensing lottery that had been delayed by the pandemic, controversy and legal disputes for over a year.

The new measure would set up two new cannabis dispensary lotteries awarding 55 licenses each as compared to the initial lottery, which was set to award 75 in total. There were many issues with the original lottery, including delays. After only 21 out of more than 900 applicants received a perfect score, making them eligible for the lottery, the whole process was put on hold.

Financings And M&A

New Mexico Governor Michelle Lujan Grisham continues to support cannabis-related activities. Following the governor's signing of the Cannabis Regulations Act in April, Bright Green Corporation confirmed its $300 million investment in a state-of-the-art agricultural ecosystem, which will make New Mexico home to one of the largest cannabis manufacturing and research facilities in the nation.

Verano Holdings Corp. VRNO VRNOF closed three previously announced acquisitions and significantly boosted its retail footprint in Pennsylvania. The company acquired:

TerraVida Holistic Centers LLC and GVB Holding Group LLC in a deal valued at $62.5 million in cash and 3,013,500 Class A Shares (worth roughly $60 million and The Healing Center, LLC for $110.3 million, including $55.15 million in cash and $55.15 million in Verano’s Class A subordinate voting shares and Class B proportionate voting shares.
NSE Pennsylvania, LLC.: Verano separately closed the acquisition of all issued and outstanding equity interests in NSE Pennsylvania, which enabled it to launch three medical marijuana dispensaries in the Keystone State.
Hydrofarm Holdings Group, Inc. HYFM will buy a producer of quality nutrients, House & Garden, for around $125 million.

GrowGeneration Corp. GRWG acquired the hydroponic supply center and the cultivation design innovator The Harvest Company, bringing its footprint to 55 locations nationwide.

HempFusion Wellness Inc. CBD CBDHF will buy CBD brand Sagely Naturals in a $25 million stock and cash deal.

Power REIT PW will buy a greenhouse cannabis cultivation and processing facility in Michigan for around $18.5 million.

Auxly Cannabis Group Inc. CBWTF is selling KGK Science Inc. to Myconic Capital Corp. MEDI for up to $16.5 million.

Hervé closed an oversubscribed $3 million Series A funding round.

Earnings Reports

4Front Ventures Corp. FFNT FFNTF revealed its system-wide pro forma revenue (a non-GAAP measure) increased 26% sequentially to $31.4 million in the first quarter of 2021. GAAP-reported revenue amounted to $23 million.

Chalice Brands, previously operating under the name Golden Leaf Holdings Ltd. CHAL GLDFF, released its first-quarter earnings with record revenue of $5.5 million, up by 18% year-over-year.

Evogene Ltd. EVG reported its first-quarter financial results with revenue of $333,000, compared to $75,000 in the same period of 2020.

TILT Holdings Inc. TILT TLLTF reported its financial results on Tuesday for the first quarter of 2021. The company generated $46.8 million in revenue in the first three months of the fiscal year, representing 15% year-over-year growth.

Vext Science, Inc. VEXTF VEXT released its first-quarter unaudited financial results with revenue of $9.16 million, compared to $4.1 million in the same period of 2020.

Jushi Holdings Inc. JUSH JUSHF disclosed that its revenue in the first three months totaled $41.7 million, increasing 29% sequentially.

Gage Growth Corp. GAGE GAEGF posted its first-quarter financial results with revenue growth of 67.9% quarter-over-quarter and 219.4% year-over-year, respectively, reaching $17.6 million.

Planet 13 Holdings Inc.’s PLTH PLNHF revenue increased 41.8% year-over-year, reaching $23.8 million in the first quarter of 2021.

Auxly Cannabis Group Inc. (TSX - XLY) CBWTF reported its financial results for the first quarter of the year, with a net loss of $10.49 million, compared to a net loss of $12.74 million in the same period a year ago.

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

Other News

High Tide Inc. HITI HITID (FRA:2LYA) is poised to debut on the Nasdaq Capital Market.

Vertical Wellness announced the early expansion of its brand The Organic Candy Factory (OCF) through a new listing with Walmart.com. OCF is available for purchase on Walmart.com as a 6-Pack of 2.5oz bags.

MATTIO Communications launched a full-service influencer marketing firm under the name Confluence Agency.

Saucey Farms and Extracts announced that it had entered into an agreement with TPCO Holding Corp. GRAM GRAMF, doing business as The Parent Company.

The Parent Company, which will manage manufacturing and distribution of all Saucey products in California, brings together global icon and entrepreneur Shawn “JAY-Z” Carter, entertainment powerhouse Roc Nation, California’s leading direct-to-consumer platform Caliva and top cannabis manufacturer Left Coast Ventures. The offering will include a premium array of exotic cannabis flower strains, all-natural cannabis oil cartridges and "kiefed" pre-rolls.

Front Range Biosciences (FRB), a cannabis and hemp genetics platform company, signed an agreement with AgriScience to license its Hop Latent Viroid (HLVd) test for use in the Colorado market.

Executive Moves

The Parent Company named the members of its social equity fund advisory, which include George Atallah, Marcia Dyson, Jeff Gray, Faith Leach, Carmen Perez, Mary Pryor and Angela Rye.

Also find out all about the latest executive moves at:

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Policy, Science And Data

Financings And M&A

Earnings Reports

Other News

Executive Moves

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