Key Takeaways; Cannabis Sector

• Ascend Wellness reported Q2 revenue growth amid rising competition and profit decline.

• Green Thumb Industries surpassed Q2 expectations with 11% revenue growth.

• Trulieve beat Q2 sales estimates with 8% revenue growth.

• Ayr Wellness reported modest Q2 growth

• Verano Holdings reported a Q2 revenue decline, missing analysts’ expectations.

• Curaleaf reported 2% revenue growth in Q2 2024 amid ongoing losses and leadership changes.

• The Cannabist reported Q2 revenue drop but beat expectations.

Key Takeaways; Psychedelic Sector

• Awakn initiated phase 3 trial of AWKN-001 for severe alcohol use disorder.

• Mind Medicine announced a public offering to raise $75 million.

This week marked a significant moment in the cannabis sector as earnings season kicked off, with numerous companies releasing their financial reports. The results sparked a wave of reactions and discussions among investors, offering fresh insights into the industry’s growth and overall health. Below is a weekly roundup of what happened this week in the cannabis and psychedelic sectors. In this ever-evolving landscape, we explore the major developments and groundbreaking initiatives happening among companies operating in these industries; from advancements in medical research, therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: Ascend Wellness

Ascend Wellness Holdings, Inc. (OTC: AAWH) reported a mixed performance for Q2 2024, highlighting both growth and challenges. During the quarter, the company saw a 15% increase in revenue, reaching $141.5 million, compared to the same period last year. However, in terms of profitability, Ascend took a hit with a net loss of $21.8 million, which was a sharp decline from the $800,000 net income recorded in Q2 2023.

Despite a 33% year-over-year rise in adjusted EBITDA to $28.3 million, the figure dropped by 12.7% from the previous quarter. According to the company, increased competition, particularly in Illinois, New Jersey, and Massachusetts, contributed to the downturn, though the company stated that some retail growth was noted in Pennsylvania and Maryland.

Additionally, Ascend revised its 2024 revenue growth forecast to 11-13%, down from the initial 12-15%, citing intensified competition and declining wholesale profitability. Nonetheless the company promised that it will continue to expand, open new dispensaries and secure a cultivation license in Massachusetts.

During the quarter, Ascend also announced that it had closed a $235 million private placement of senior secured notes, to refinance existing debt, signaling ongoing efforts to strengthen their financial position despite market pressures.

#2: Green Thumb Industries

Green Thumb Industries Inc. (CSE: GTII) (OTC: GTBIF), a leading cannabis company based in Chicago, reported strong second-quarter results for 2024, with revenue increasing by 11% year-over-year to $280 million, surpassing analyst expectations of $277.36 million. The company’s net income also rose to $20.7 million, up from $13.4 million in the same period last year.

The company’s adjusted EBITDA reached $93.8 million, representing 33.5% of revenue, a significant 23.7% increase from the previous year. Additionally, Green Thumb generated $20 million in cash flow from operations, this is despite paying over $50 million in taxes. The company currently maintains a solid cash position of $196.1 million.

Moreover, Green Thumb opened five new Rise dispensaries across Florida and New York, expanding its retail presence to 97 locations in 14 states. The company is also set to benefit from Ohio’s new adult-use cannabis market, which launches this week.

Despite its strong performance, uncertainties remain at the federal level, particularly regarding cannabis rescheduling. During the earnings conference call, GTI Founder and CEO Ben Kovler urged the DEA to expedite the rescheduling process and emphasized the company’s commitment to long-term value creation for shareholders.

#3: Trulieve

Florida-based Trulieve Cannabis Corp. (CSE: TRUL) (OTC: TCNNF) reported a strong second quarter for 2024, with revenue reaching $303 million, an 8% increase from the same period last year, surpassing analyst expectations of $293.63 million. This marked the third consecutive quarter of revenue growth for the company, which according to the company was driven by higher retail traffic and increased wholesale revenue.

Despite beating the analyst estimates, the company reported a net loss of $12 million, which was a 48% improvement from the previous quarter and a 97% improvement from the $403.8 million loss in the same quarter last year. Trulieve’s adjusted EBITDA rose to $107 million, representing 35% of revenue, and a 36% year-over-year increase. The company also achieved a gross margin of 60%, with a GAAP gross profit of $182 million, and ended the quarter with a strong cash position of $356 million.

Additionally, Trulieve continued its retail expansion during the quarter, opening three new dispensaries in Florida and acquiring two in Ohio, bringing its total to 206 locations across the U.S. The company also launched adult-use cannabis sales at three Ohio locations, marking its entry into the state’s recreational market.

Trulieve’s CEO, Kim Rivers, highlighted the company’s solid foundation for long-term success and its leading position for future growth catalysts. Additionally, Trulieve supported the Smart and Safe Florida campaign to legalize recreational marijuana in Florida with its “#YesOn3” product line, aiming to open a significant new market in the state.

Trulieve also received $2 million in tax refunds related to its challenge of the 280E tax code, though details on the ongoing tax dispute were not disclosed. The company’s performance and scale in key markets position it well for upcoming growth opportunities.

#4: Ayr Wellness

Ayr Wellness Inc. (OTC: AYRWF) reported a slight revenue increase for second quarter 2024 results, with earnings of $117 million, a modest 0.5% improvement compared to the same quarter last year but a 0.6% decline from Q1 2024. This performance fell short of analysts’ estimates, which forecasted $119 million.

The decline was attributed to an 8.6% drop in same-store sales, though this was partially offset by gains from new store openings and acquisitions. Notably, wholesale revenues surged by 51.8%, driven by expansions in New Jersey and other markets.

Despite a 10.4% reduction in operating expenses, net losses grew to $38 million, up from $29 million in the previous year, due to higher income taxes and increased interest expenses according to the company. The company reported an earnings per share loss of ($0.34), missing the expected ($0.25).

Looking ahead, Ayr expects Q3 2024 revenue growth in low to mid-single digits and aims to improve EBITDA margins as operational efficiencies and market expansions take hold in the latter half of the year. The company also anticipates positive cash flow for the full year, assuming the elimination of certain tax liabilities.

#5: Verano Holdings

Verano Holdings Corp. (OTC: VRNOF), a prominent player in the cannabis industry, reported a slight dip in revenue for Q2 2024, falling short of analysts’ expectations. The company posted revenues of $222 million for the quarter ending June 30, reflecting a 0.5% increase from the previous quarter but a 5% decline year-over-year. Despite this, the revenue aligned with the company’s earlier guidance for flat to low single-digit growth. However, it narrowly missed the average analyst projection of $224.36 million.

The company reported a net loss of $22 million, an increase from the $13 million loss in the same period last year. Verano’s gross profit stood at $114 million, representing 51% of revenue, while SG&A expenses accounted for 39% of revenue.

Verano Founder and CEO, George Archos, highlighted several strategic initiatives, including a share repurchase program and capital investments aimed at strengthening the business. He also pointed to several near-term growth opportunities in the cannabis sector, such as the recent launch of adult-use cannabis sales in Ohio and potential legislative changes in Florida and Pennsylvania.

Additionally, during the quarter Verano expanded its retail footprint with new dispensary openings in Florida, Connecticut, and Pennsylvania.

Moreover, recently the company also announced its intent to acquire operations from The Cannabist Company Holdings Inc. (OTC: CBSTF) in Arizona and Eastern Virginia, a move which is expected to drive future growth.

However, due to uncertainties surrounding pending acquisitions, Verano declined to provide financial guidance for the upcoming quarters. The company ended the quarter with $130 million in cash and cash equivalents.

#6: Curaleaf

Curaleaf Holdings, Inc. (OTC: CURLF) reported a net loss of $49.8 million for the second quarter ended June 30, 2024, totaling over $100 million in losses for the year-to-date. Despite the losses, the company saw a 2% increase in revenue, reaching $342.2 million for the quarter, up from $335.5 million a year earlier. For the first half of 2024, revenue stood at $681.2 million, compared to $668.1 million in the same period last year.

Curaleaf generated $6 million in free cash flow and $30.2 million in operating cash flow during the quarter. CEO Boris Jordan, who took over from Matt Darin, highlighted the benefits of recent business streamlining and efficiency improvements. Jordan anticipates continued growth as markets in New York, Ohio, and Germany mature, and the company’s new hemp division expands. “Our global strategic vision is playing out on multiple fronts, yet there is much more for us to accomplish,” Jordan said.

During the quarter, Curaleaf also made significant strides in its global presence, opening its 62nd dispensary in Florida, acquiring Northern Green Canada, and expanding medical cannabis sales in Germany. The company has also entered the hemp sector and recently expanded its operations in New York and Ohio.

As of June 30, Curaleaf’s total assets were valued at $3 billion, with $89.3 million in cash and an equal amount in liabilities. The new CEO, Jordan, also expressed gratitude to Darin, who will remain as an advisor until the end of the year to support the transition.

#7: The Cannabist

For the second quarter ending June 30, 2024, The Cannabist Company Holdings Inc. (OTC: CBSTF) (formerly Columbia Care), which is one of the most experienced cultivators, manufacturers and retailers of cannabis products in the U.S., reported a mixed performance. Revenue grew sequentially by 2% to $125 million but fell short of last year’s $129 million. Despite this, the company surpassed analysts’ revenue estimates of $124 million. Net losses were reduced to $14 million from $35 million in the same period last year. Earnings per share improved to ($0.03), beating the anticipated ($0.05).

Cash from operations was negative $3 million, an improvement from the previous quarter’s negative $6.2 million. The company’s cash reserves decreased to $22 million from $44 million.

During the earnings release, the company’s CEO, David Hart, highlighted progress in their corporate restructuring, which is expected to save about $10 million annually. Key achievements included a 24% increase in wholesale revenue and improved wholesale gross margins due to successful brand partnerships and a shift towards finished goods. During the quarter, the company also adjusted its retail footprint, opening one store in Richmond and closing four others.

Looking ahead, The Cannabist is optimistic about continued growth, particularly in its mid-Atlantic markets and the recent expansion into adult-use cannabis sales in Ohio.

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) announced on Friday that it had screened the first patient for its Phase 3 trial of AWKN-001, a novel treatment for severe Alcohol Use Disorder (AUD). The trial, which is known as MORE-KARE, is a significant study aimed at evaluating AWKN-001’s effectiveness.

AWKN-001 is a novel medication-assisted treatment that combines intravenous ketamine, an N-methyl-D-aspartate receptor modulator, with structured psycho-social support. This approach is designed to address severe AUD by reducing heavy drinking days and improving overall outcomes.

The MORE-KARE study, which is co-funded by the UK’s Medical Research Council (MRC) and the National Institute for Health and Care Research (NIHR), along with Awakn Life Sciences, will be conducted at eight NHS sites across the UK. The trial will assess the impact of AWKN-001 through various endpoints, including reductions in heavy drinking days and continuous abstinence over a six-month period.

Professor Celia Morgan, who is the trial’s lead from the University of Exeter, highlighted the urgent need for effective treatments for AUD, noting that current options have low success rates. She expressed enthusiasm for this groundbreaking study, which aims to address the significant gap in treatment options.

Additionally, Awakn’s Chief Scientific Officer, Professor David Nutt, also emphasized the potential of this trial to transform the treatment landscape for severe AUD, offering new hope to those with limited options.

This Phase 3 trial follows a successful Phase 2 study, which demonstrated promising results with high abstinence rates and a significant reduction in heavy drinking days.

#2: Mind Medicine

Mind Medicine (MindMed) Inc. (NASDAQ: MNMD) announced a new public offering aimed at raising $75 million by selling approximately 9.2 million shares at $7 each. The company is also offering about 1.4 million shares at a slight discount of $6.99 to select investors. The offering is expected to close on August 12, with Leerink Partners and Evercore ISI serving as the joint bookrunning managers.

According to the company, the funds will be allocated to research and development for MindMed’s psychedelic treatments, which are currently in clinical trials for anxiety.

During the first fiscal quarter earnings call in May, the company reported holding $252.3 million in cash, which it stated would sustain operations until 2026. However, it also reported a $54.4 million net loss for the first quarter of 2024 and an accumulated deficit of $344.6 million.

Currently, MindMed is advancing its development pipeline, including MM120, an LSD-based drug targeting generalized anxiety disorder, which has received Breakthrough Therapy designation from the U.S. Food and Drug Administration. This designation highlights the potential of MindMed’s psychedelic treatments to make significant progress toward market introduction.