The Week In Cannabis: $2B+ In M&A And Financings, Hexo, Terrascend, Gage, The DEA, NY, Panama And More

The Week In Cannabis: $2B+ In M&A And Financings, Hexo, Terrascend, Gage, The DEA, NY, Panama And More

Below is a recap of the main news related to the cannabis industry and markets for the week of August 30, 2021.

Hexo’s $925M Acquisition Of Redecan

Hexo Corp. HEXO HEXO closed its $925 million acquisition of Redecan, Canada’s largest privately-owned licensed producer.

Following the news, Cantor Fitzgerald issued a new report on Hexo.

Analyst Pablo Zuanic maintained a Neutral rating but increased the 12-month price target to CA$3.45 ($2.73) from CA$3.40 ($2.70) after tweaking pro forma estimates. 

“We will remain Neutral for now, partly on a legacy of continued dilution, but if over time, all this translates to a profitable cash generating LP (one of the largest, if not the largest), then we think the stock should start to rerate at some point,” Zuanic wrote.

According to the firm’s analysis, key potential drivers for the company going forward are:

  • Investors getting a better sense of the scale and prowess of the combined company on an ongoing basis.
  • HEXO starting to report positive EBITDA in FY22.
  • More visibility about the company’s U.S. strategy.
  • Management clearly stating that further stock dilution is unlikely in the year ahead.

Later in the week, Hexo completed its purchase of 48North Cannabis Corp. NRTH for $50 million.

TerrAscend Acquires Gage Growth In $545M All-Stock Deal

TerrAscend Corp. TER TRSSF and Gage Growth Corp. GAGE GAEGF have entered into a definitive agreement, under which TerrAscend will acquire all of the issued and outstanding subordinate voting shares of Gage for around $545 million.

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

Upon completion of the transaction, the combined business will have operations in five states and Canada, including 7 cultivation and processing facilities and 23 operating dispensaries serving both medical and adult-use cannabis markets in the U.S. and Canada.

Policy

The U.S. Court of Appeals for the Ninth Circuit ruled on Monday against a petition to request that the Drug Enforcement Administration (DEA) reschedule cannabis in all of its forms under the Controlled Substances Acts (CSA).

The DEA Seeks To Increase Federal Production Limits For Psilocybin And Marijuana Research

The Drug Enforcement Administration is proposing a significant increase in federal limits for the production of psilocybin, psilocin and marijuana for research purposes.

In a clear proof of institutional interest for the therapeutic value of some Schedule 1 substances, the DEA is scheduled to publish a new document in the Federal Register on Thursday advocating for an increase in the aggregate production quotas for these naturally-produced substances.

The agency wants to allow for the production of 2 million grams of marijuana, or 500,000 more grams than its initial quota for this year. The DEA also wants to upscale cannabis extract production, doubling it to 500,000 grams.

Former Brooklyn Assemblywoman Tapped To Become Chair of N.Y. Cannabis Control Board

New York's state Senate confirmed Tremaine Wright (D), former Brooklyn assemblywoman, to lead the agencies that will regulate cannabis sales in New York.

Wright was confirmed as chair of the Cannabis Control Board and the Office of Cannabis Management. Wright was serving as the Director of the Office of Financial Inclusion and Empowerment in the NYS Department of Financial Services at the time of the appointment by New York Gov. Kathy Hochul.

Texas

Texas is loosening its policies regarding cannabis, starting with changes to state law allowing more eligible patients to request a prescription for medical cannabis.

In addition, a Texas court declared unconstitutional a law prohibiting the smoking of hemp.

Panama Legalizes Medical Cannabis

Panama's National Legislative Assembly approved a bill legalizing medical cannabis in a unanimous vote of 40 to zero.

Thus, the country will become the first in Central America to regulate the medicinal use of cannabis. However, the new regulations must be approved by Panamanian President Laurentino Cortizo.

The new legislation creates a regulatory framework that allows "monitored and controlled" access to medical cannabis and its derivatives.

In addition, the law creates the National Program for the Study of the Medicinal Use of Cannabis and its Derivatives to promote research and develop educational campaigns addressed to the population.

The new regulation establishes that only seven licenses for the manufacture of cannabis derivatives will be granted.

According to France 24, licensed companies will be able to export seeds, plants and derivatives. To do so, they must submit an export plan and register buyers with Panama's regulatory authorities.

Meanwhile, the law establishes that it is prohibited to sell cannabis from home or outside authorized establishments and that advertising pertaining to marijuana may only appear in scientific journals, not the media or social networks.

Growing marijuana could result in a penalty of ten to fifteen years in prison.

Merrill Lynch Relaxing Its Approach To Cannabis Businesses

Merrill executives unveiled plans for “streamlining” and adding more “flexibility” to the process of onboarding clients who own or invest in marijuana-related businesses, as part of its new initiative.

Merrill Lynch Wealth Management executives launched the Project Thunder initiative to address some of the frustrations of the firm’s financial advisors.

The program is introducing relatively small tweaks initially and will include a total of at least 24 changes over a period of eight weeks.

Markets

Over the five trading days of this week:

  • The ETFMG Alternative Harvest ETF MJ: gained 0.4%.
  • The AdvisorShares Pure Cannabis ETF YOLO: rose 0.6%.
  • The AdvisorShares Pure US Cannabis ETF MSOS: advanced 0.6%.
  • The Cannabis ETF THCX: was up 0.1%.
  • The Amplify Seymour Cannabis ETF CNBS: advanced 1.7%.
  • The SPDR S&P 500 ETF Trust SPY closed the week up 0.6%.

M&A

License owned by Harvest Health & Recreation Inc. HRVSF

Financings

Acquiring Company Acquired Company Price Conditions
Cresco Labs Inc. CL CRLBF Cultivate $90M Cash and stock
Ayr Wellness Inc. AYR AYRWF PA Natural Medicine $80M Cash and stock
Planet 13 Holdings Inc. PLTH (OTCQX: PLNHF) $55M Cash
The Valens Company Inc. VLNS VLNCF Citizen Stash Cannabis Corp $54.3M Stock
Harborside Inc.  HBOR HBORF Accucanna $4.92M Cash and stock
Green Thumb Industries Inc. GTII GTBIF GreenStar Herbals Undisclosed Undisclosed
Company Lead Financier Amount
Ascend Wellness Holdings, Inc. AAWH AAWH Seaport Global Securities $210M senior secured term loan
BeLeaf Medical AFC Gamma, Inc. AFCG $23M
Hound Labs Entourage Effect Capital $20M
Lowell Farms Inc. LOWL LOWLF Beehouse Partners $18M non-brokered private placement
 MAINSTEM Merida Capital Holdings $5M

Earnings Reports

  • Harborside Inc. HBOR HBORF reported its financial results for the second quarter ending June 30, 2021, revealing total net revenue of $15.4 million which compares to $12.4 million in the same period of 2020.
  • Red White & Bloom Brands Inc. RWB RWBYF reported its select second-quarter financial results and subsequent events revealing quarterly revenue of $13.3 million up by 13% from $11.8 million in Q1, 2021. The Toronto-based company also disclosed adjusted sales for the first six months of $58.5 million.

Also reporting earnings this week were:

  • Water Ways Technologies Inc. WWT WWTIF
  • Australis Capital Inc. AUSA AUSAF dba Audacious
  • Panaxia Labs Israel Ltd. PNAX PXLIF

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

Greenlane And KushCo Complete Merger

Greenlane Holdings, Inc. GNLN and KushCo Holdings, Inc. KSHB completed their previously announced merger. The combined company, operating as Greenlane, brings together two of the pioneering cannabis ancillary product and service companies with more than 26 years of operating history to create an undisputed leader in the cannabis industry.

International News

Medical Marijuana, Inc. MJNA’s subsidiary Kannaway launched its operations in Hong Kong.

One of Israel’s largest cannabis companies, InterCure Ltd. INCR began trading on the NASDAQ Global Market on Wednesday.

Khiron Life Sciences Corp. KHRN KHRNF has registered its first two finished medical cannabis products in Peru.

Tech

WM Technology Inc MAPS’s Weedmaps launched an enhanced Apple APPL iOS app. The new app introduces a simpler way for its roughly 10 million monthly users to submit orders with licensed retailers directly within the app. 

Leafly’s iOS app update will now allow adults in legal markets to place pickup orders for cannabis products within the app. A new update to Leafly’s iOS app will enable iPhone and iPad users to place pickup orders for cannabis in legal state markets.

Amazon.com, Inc. AMZN is asking its delivery partners to openly advertise that they don’t screen applicants for marijuana use in an effort to address the shortage of the company's delivery drivers.

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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