The Week In Cannabis: Stocks Down, Republican Legalization Bill, Germany, Uruguay, Earnings, New ETF And More

The Week In Cannabis: Stocks Down, Republican Legalization Bill, Germany, Uruguay, Earnings, New ETF And More

Below is a recap of the main news related to the cannabis industry and markets for the week of November 15, 2021.

Contents

  1. GOP Legalization Bill
  2. New Cannabis ETF
  3. New York Bans Cannabis And Psychedelic Mushroom Ads On Public Transport
  4. Germany To Legalize Cannabis Sales
  5. Markets
  6. M&A
  7. Financings
  8. Earnings: Trulieve, Verano & Many More
  9. Cantor Fitzgerald: Cresco Is 'Top Pick', Raises Price Target By More Than 50%
  10. Aurora Launches Plant Genetics Licensing Business
  11. Curaleaf Teams Up With Southern Glazer's
  12. Spotify Collaboration & Joe Rogan As Exclusive Advertiser Pushes cbdMD's Stock Up
  13. Exec Departures At Canopy & Hexo
  14. Top Stories Of The Week

GOP Legalization Bill

Rep. Nancy Mace (R-SC) officially laid out her cannabis legalization plan on Monday. Titled the States Reform Act and co-sponsored by at least a half-dozen Republicans, the plan would essentially legalize cannabis on a federal level “in a manner consistent with the right of states to determine what level of cannabis reform or legalization each state wants to regulate, or not.”  

Highlights of the bill:

  • Federally decriminalizes cannabis and fully defers to state powers over prohibition and commercial regulation
  • Regulates cannabis products like alcohol products
  • Institutes a 3% federal excise tax on those products to fund law enforcement and small business programs.
  • Ensures the continued existence of state medical cannabis programs and patient access while allowing for new medical research and products to be developed
  • Protects our veterans by ensuring they will not be discriminated against in federal hiring for cannabis use or lose their VA healthcare for following their doctor’s advice to use medical cannabis
  • Protects children and young adults under 21 from cannabis products and advertising nationwide
  • Protects medical cannabis for the following uses: arthritis, cancer, chronic pain, sickle cell, HIV/AIDS, PTSD and other medical uses per a state’s specific cannabis regulations.

By comparison, the proposed legislation to legalize cannabis from democratic senators Chuck Schumer, Cory Booker and Ron Wyden would carry an excise tax of 25.5%, viewed as unreasonably high, especially for small businesses.

New Cannabis ETF

Poseidon Investment Management, one of the longest-running dedicated cannabis investment funds, launched the AdvisorShares Poseidon Dynamic Cannabis ETF PSDN.

It is sponsored by AdvisorShares and is sub-advised and managed by the Poseidon team, including co-founders and managing directors Emily Paxhia and Morgan Paxhia and managing director Tyler Greif.

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

The fund seeks to identify companies strategically positioned to benefit from the cannabis industry and its supporting infrastructure in the U.S. as well as emerging global cannabis markets. PSDN's portfolio is diversified across subsectors of the cannabis industry and dynamically managed to tactically overweight or underweight specific countries, subsectors or individual companies. The new ETF may seek to take advantage of specific market opportunities by intelligently using leverage to maximize potential returns.

New York Bans Cannabis And Psychedelic Mushroom Ads On Public Transport

As New York continues to update on its cannabis-related rules and regs, an odd one seemed to slip into the books as the Metropolitan Transit Authority (MTA) banned all cannabis and psychedelic mushroom ads on subways, buses and trains.

The advertising policy update comes after the MTA reached a settlement in a case related to a sexual wellness brand, Dame, which had been underway for the past three years. In that case, Dame will be permitted to advertise under certain restrictions, yet the MTA decided that weed and psychedelics are off-limits. 

Germany To Legalize Cannabis Sales

Germany might be the next country in Europe to legalize adult-use cannabis. This October, Luxembourg gave the green light to legal cannabis cultivation for personal use, and now Germany is about to decriminalize certain sale and consumption rules through an important drug policy change being undertaken by the ruling coalition government.

The political coalition, dubbed “traffic light” and comprised of the Social Democratic Party of Germany (SPD), the Free Democratic Party (FDP) and the Greens, is pushing to legalize cannabis sales.

“We are introducing the controlled distribution of cannabis to adults for recreational purposes in licensed shops,” a representative of the working group with an assignment to assess the policy change said, according to Der Spiegel, also citing a report by Funke.

Furthermore, the report reveals the policy, led by Olaf Scholz, the German chancellor-in-waiting, will be reexamined after four years to evaluate its social effects.

Germany decriminalized medical cannabis some four years ago, and now analyses from the Institute for Competition Economics (DICE) at the Dusseldorf Heinrich Heine University suggest that a fully legal cannabis market could bring Germany around €3.4 billion ($3.85 billion) in tax revenue.

What’s more, it would save roughly €1.3 billion annually for the judicial system. According to the same survey, the legal cannabis market in Germany would open 27,000 new jobs.

Considering Germany's population of nearly 84 million, legalization would create one huge cannabis market.

Markets

Stocks took a massive beating this week. Over the five trading days of this week (and as of the time of publication):

  • The ETFMG Alternative Harvest ETF MJ: lost almost 16%.
  • The AdvisorShares Pure Cannabis ETF YOLO: tumbled 4.5%.
  • The AdvisorShares Pure US Cannabis ETF MSOS: fell 13.6%.
  • The Cannabis ETF THCX: was down 15.7%.
  • The Amplify Seymour Cannabis ETF CNBS: dropped 16.2%.
  • The SPDR S&P 500 ETF Trust SPY was up 0.12%.

M&A

Acquiring Company Acquired Company Price Conditions
Jushi Holdings NuLeaf, Inc. $62.5M Cash & Stock
Village Farms International, Inc. VFF VFF 70% of ROSE LifeScience $37.2M Cash & Stock
Flora Growth Corp. FLGC Vessel Brand $30M Cash & Stock
Schwazze Two Emerald Fields Cannaboutique Dispensaries $29M Cash & Stock
The Green Organic Dutchman Holdings Ltd. TGOD TGODF Galaxie Brands Corporation $21M Stock
Schwazze, SHWZ Smoking Gun, LLC and Smoking Gun Land Company, LLC $4M + 100,000 shares  

Financings

Company Lead Financier Amount  
Ayr Wellness Inc. AYR AYRWF Senior Secured Notes $150M  
SLANG Worldwide Inc. SLNG SLGWF  Trulieve Cannabis Corp. TRUL TCNNF and two of its shareholders Pura Vida Investments and Seventh Avenue Investments $17.3M  
Humble & Fume Inc. Private placement $8M  
Pistil Data Snoop Dogg’s Casa Verde Capital $6.5M  
Akanda Corp. Private placement $5M  

Earnings: Trulieve, Verano & Many More

Trulieve Cannabis Corp. TRUL TCNNF reported its third-quarter financial results Monday with net revenue of $224.1 million, up by 64% from the same period in 2020.  

Q3 Financial Highlights

  • Gross profit of $153.9 million and gross margin of 68.7% compared to gross profit of $102.2 million and gross margin of 75.0% in the third quarter 2020. 
  • Net income of $18.6 million, impacted by $16.4 million of one-time compensation and transaction costs primarily associated with the Harvest acquisition. 
  • Adjusted EBITDA of $98.0 million, or 43.7% of revenue
  • Trulieve and Harvest combined third-quarter revenue of approximately $316 million, a net loss of approximately $9.8 million and adjusted EBITDA of approximately $121 million.
  • Cash of $213.6 million as of September 30, 2021

Verano Holdings Corp. VRNO VRNOF disclosed its results Tuesday for the third quarter ended September 30, 2021, reporting revenues of $207 million, compared to $101 million in the same period year ago. The Chicago, Illinois-based company noted that the reported financial data accounts for the AltMed acquisition as if completed on January 1, 2021.

Q3 Financial Summary

  • Gross profit increased 33% sequentially on an unadjusted basis and excluding the impact of biological assets, to $133 million, or 64% of revenue, compared to $100 million or 50% of revenue reported in the second quarter of 2021.
  • Third-quarter adjusted EBITDA was $111 million or 54% of revenue compared to $81 million or 41% of revenues in the prior quarter. Third-quarter EBITDA on an unadjusted basis was $107 million or 52% of revenues.
  • SG&A expense was $32 million or 15% of revenue.
  • Net income, including the impact of biological assets, was $104 million. Excluding the impact of biological assets, net income was $15 million in the third quarter of 2021, compared to $32 million reported in the second quarter of 2021.
  • Cash flow from operations was $68 million and Free Cash Flow was $35 million.
  • As of September 30, 2021, the company’s current assets on a consolidated basis were $629 million, including cash and cash equivalents of $57 million.

Also reporting earnings this week were:

  • Avicanna Inc. AVCN AVCNF
  • Willow Biosciences Inc. WLLW CANSF
  • Auxly Cannabis Group Inc. XLY CBWTF
  • HempFusion Wellness Inc. CBD CBDHF
  • IM Cannabis (NASDAQ:IMCC) (CSE:IMCC)
  • Delta 9 Cannabis Inc. DN DLTNF
  • MediPharm Labs Corp. LABS MEDIF
  • CV Sciences, Inc. CVSI
  • Charlotte's Web Holdings Inc. CWEB CWBHF
  • TPCO Holding Corp., doing business as The Parent Company GRAM GRAMF
  • Greenlane Holdings, Inc. GNLN
  • Schwazze, SHWZ
  • TILT Holdings Inc. TILT TLLTF
  • InterCure Ltd. INCR INCR
  • Entourage Health Corp. ENTG ETRGF
  • TerrAscend Corp. TER TRSSF
  • Neptune Wellness Solutions Inc. NEPT NEPT
  • Indiva Limited NDVA NDVAF
  • MariMed, Inc. MRMD
  • Rubicon Organics Inc. ROMJ ROMJF
  • Jushi Holdings Inc. JUSH JUSHF
  • Evogene Ltd. EVGN EVGN
  • Halo Collective Inc. HALO HCANF
  • Medical Marijuana, Inc. MJNA
  • Pure Harvest Corporate Group, Inc. PHCG
  • 4Front Ventures Corp. FFNT FFNTF
  • Marijuana Company of America, Inc. MCOA
  • Decibel Cannabis Company Inc. DB DBCCF
  • RIV Capital Inc. RIV CNPOF
  • Body and Mind Inc. BAMM BMMJ

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

Cantor Fitzgerald: Cresco Is 'Top Pick', Raises Price Target By More Than 50%

Cantor Fitzgerald maintained its rating of ‘Overweight’ for Cresco Labs Inc CRLBF and raised its price target from $12 to $19, calling the stock a “top pick.” 

Citing Cresco’s position to grow as a dominant player in other states, like Cresco has done in Illinois, Cantor's Pablo Zuanic said Cresco is looking to grow its foothold in Pennsylvania and Massachusetts, where the company is currently the number two supplier. 

“That said, despite talk of increased competition, Cresco brands have kept their #1 position in IL wholesale, and #2 in PA/MA, according to management; and we believe the company must have share of shelf depth as it has garnered these metrics selling into fewer stores (1,100) than others claim (2,000),” said Zuanic, who added that Cresco, along with other multi-state operators, are expected to trade higher in the coming days as Republicans released a bill on Monday to legalize cannabis. 

Aurora Launches Plant Genetics Licensing Business

Aurora Cannabis Inc. ACB ACB announced the launch of its new genetics licensing business unit – Occo – a leading innovator in the scientific discovery and commercial advancement of novel cannabis cultivars, backed by Aurora's state-of-the-art breeding and genetics facility in Comox, British Columbia.

With the largest catalog of high-quality genetics available for licensing in Canada, Occo is positioned to further develop the scientific understanding of cannabis, commercialize high-quality products and provide value for cannabis growers.

The Canadian cannabis giant said that Occo will be based out of its Coast research and development hub.

Curaleaf Teams Up With Southern Glazer's

Curaleaf Holdings, Inc. CURA CURLF inked a national distribution agreement with Southern Glazer's Wine & Spirits, a distributor of beverage alcohol.

Uruguay To Move Forward With Cannabis Tourism

In an interview with the journal El País, from Uruguay, Daniel Radío, Secretary-General of the National Drug Secretariat (SND) and president of Uruguay's Institute for the Regulation and Control of Cannabis (IRCCA) said that he would like to implement cannabis tourism in the country "as soon as possible, to start testing what happens."

Currently, Law 19,172 enacted in 2013, allows access to marijuana through self-cultivation, cannabis clubs or authorized pharmacies. In addition, consumers must be over 18 years old, have Uruguayan citizenship or permanent residence in the country.

Spotify Collaboration & Joe Rogan As Exclusive Advertiser Pushes cbdMD's Stock Up

cbdMD, Inc. YCBD inked a contract extension of its advertising partnership with Spotify SPOT and the Joe Rogan Experience.

The Charlotte, North Carolina-based company said that the exclusive CBD partnership, which was signed back in 2019, will continue through 2022 with the chart-topping podcast.

Exec Departures At Canopy & Hexo

Canadian cannabis giant Canopy Growth WEED CGC announced Friday that it is undertaking some strategic changes to its executive management committee - effective immediately. Mike Lee, executive vice president and chief financial officer, and Rade Kovacevic, president and chief product officer will both be stepping down from their respective roles and will leave the company on December 31, 2021.

In the interim, both Lee and Kovacevic will serve in an advisory capacity to support the transition.

HEXO Corp HEXO HEXO announced Friday that Sebastien St-Louis has resigned from HEXO's board of directors.

The latest move follows St-Louis' recent departure as co-founder and CEO of the Ottawa-based company, following the finalization of its strategic reorganization.

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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