Key Takeaways; Cannabis Sector

• SNDL acquired Indiva in efforts to strengthen position in cannabis edibles market.

• Ascend Wellness overhauled leadership amid financial struggles.

• Avicanna reduced debt with $2M private placement funds.

• InterCure reported a break-even first half of 2024 despite Israel-Hamas war disruptions.

Key Takeaways; Psychedelic Sector

• Awakn announced a breakthrough in aminoindane pre-clinical program.

• Red Light Holland reported a strong quarterly performance amidst planned expansion.

Cannabis investors have proven to be a resilient group. Despite facing repeated setbacks and ongoing declines in stock valuations, they remain committed to the sector. The latest hit came this week with news of a delay in the federal rescheduling process, triggering another sharp drop in cannabis stocks. A new report from Congress’ official policy-research arm suggested that rescheduling marijuana alone is “unlikely by itself” to resolve the cannabis industry’s banking challenges. The August 26 analysis from the Congressional Research Service also echoed earlier concerns, warning that moving marijuana from Schedule 1 to Schedule 3 “without other legal changes” would still leave state-legal cannabis businesses in conflict with federal law.

Below is a weekly roundup of key events in the cannabis and psychedelic sectors. We examine the major developments and groundbreaking initiatives among companies in these industries, from advancements in medical research and therapeutic applications to shifts in legal frameworks and current market trends.

Top Marijuana Companies for Week

#1: SNDL

Canadian cannabis and alcohol company SNDL Inc. (NASDAQ: SNDL) won its stalking-horse bid to acquire Indiva Limited (OTC: NDVAF), a leading producer of cannabis edibles in Canada. The acquisition includes Indiva’s 40,000-square-foot production facility in London, Ontario, along with a portfolio of popular owned and licensed edibles brands such as Pearls by Grön, No Future, Wana Brands, and Bhang Chocolate.

The deal, which is subject to approval by the Ontario Superior Court of Justice, is expected to close in SNDL’s fourth quarter. SNDL said that it plans to seek court approval on or around September 19. The acquisition will enable SNDL to expand its presence in the cannabis edibles market, leveraging Indiva’s strong market share of 28% to 32% in key provinces such as Ontario, Alberta, and British Columbia.

Zach George, CEO of SNDL, expressed enthusiasm for the deal, stating, “This transaction will materially improve our market share in the edibles category and is expected to unlock value through improved capacity utilization, a reduction in aggregate corporate expenses, and the potential sale of redundant real estate holdings.”

Indiva, which had been facing significant financial challenges, owed SNDL a substantial loan amount. Earlier this year, Indiva had repaid CA$2 million of its CA$19.2 million loan from SNDL and restructured some of its debt terms. Additionally, Indiva carried CA$2.5 million in outstanding convertible debentures, further straining its balance sheet. The company’s mixed financial results, including a net loss of CA$1.8 million for the first quarter of 2024, prompted it to explore strategic alternatives.

In April, Indiva hired SSC Advisors to evaluate options to maximize shareholder value after reporting accumulated deficits of CA$71.6 million and negative working capital of CA$2.2 million. Despite these headwinds, Indiva maintained a strong position in the Canadian edibles market, with its Pearls gummies brand continuing to drive sales growth.

This acquisition marked the second major deal announced by SNDL in August 2024. Earlier in the month, SNDL agreed to buy the remaining shares of Alberta-based Nova Cannabis Inc. (OTC: NVACF) (TSX: NOVC) for approximately CA$40 million.

These moves are part of SNDL’s broader strategy to enhance operational efficiency and market positioning, which includes a restructuring plan to reduce corporate expenses, eliminate 106 jobs, and achieve over $20 million in annual savings.

By acquiring Indiva, SNDL aims to solidify its market leadership in the cannabis edibles sector and capitalize on the growing demand for cannabis-infused products in Canada.

#2: Ascend Wellness

Ascend Wellness Holdings, Inc. (CSE: AAWH-U.CN) (OTC: AAWH), a New York-based marijuana multistate operator (MSO), announced significant leadership changes following a period of declining revenue and increased losses. The company announced the termination of its Chief Executive Officer (CEO), John Hartmann, and Chief Financial Officer (CFO), Mark Cassebaum, effective immediately. The company stated that the move is part of a broader strategy to realign the company amid recent performance challenges.

Samuel Brill, the lead independent director on Ascend’s board, was appointed as the new CEO, replacing Hartmann, who had only assumed the role in May 2023 following a prior leadership shake-up. Replacing Cassebaum as CFO is Roman Nemchenko, who has served as Ascend’s Chief Accounting Officer.

Ascend co-founder and director Francis Perullo was also appointed as the company’s new president.

The leadership overhaul comes as Ascend Wellness struggles with a mixed financial performance. The company reported a net loss of $21.8 million in the second quarter of 2024, a significant drop from the net income of $841,000 reported in the same quarter the previous year. Despite achieving an adjusted EBITDA of $28.3 million, a 33% increase year-over-year, the figure represented a 12.7% decline from the previous quarter.

The company cited increased retail competition in key markets like Illinois, Massachusetts, and New Jersey as factors behind its sequential decline in revenue. This challenging environment prompted Ascend to revise its full-year guidance, with an expected 2024 revenue growth of 11-13% year-over-year, down from the previous forecast of 12-15%.

Abner Kurtin, Executive Chairman of Ascend’s board, expressed confidence in the new leadership team’s ability to guide the company through its next growth phase. Kurtin emphasized that the changes aim to “realign our strategy and address recent performance challenges.” He added that the company’s focus will be on improving operational performance while continuing to deliver high-quality products and services to its customers.

#3: Avicanna

Toronto-based biopharmaceutical company Avicanna Inc. (TSX: AVCN) (OTC: AVCNF) successfully paid off $1.4 million in debt from August 2023, just days after closing a $2 million non-brokered private placement.

The non-brokered private placement involved the issuance of 6.6 million shares. The issued shares, warrants, and any convertible securities are subject to a four-month hold period under Canadian securities laws, with the offering requiring approval from the Toronto Stock Exchange (TSX), where Avicanna’s shares are listed under the ticker AVCN.

Avicanna, which specializes in cannabinoid-based products, announced plans to allocate the remaining funds for general working capital, administrative expenses, production, manufacturing, and research and clinical development.

Last year, Avicanna expanded its portfolio by acquiring Medical Cannabis by Shopper’s Business from Canadian pharmacy chain Shoppers Drug Mart for CA$2.6 million ($1.9 million) plus earnout payments based on net revenue over a two-year period. This acquisition, alongside the launch of the MyMedi.ca platform, contributed to Avicanna’s significant revenue growth of 314%, increasing from $2 million in 2022 to $16.8 million in 2023. The company’s consolidated gross profits also rose by 500%, from $1.1 million in 2022 to $6.7 million in 2023

#4: InterCure

Israeli medical marijuana company InterCure Ltd. (NASDAQ: INCR), operating as Cannadoc, came close to breaking even in the first half of 2024, despite disruptions from the ongoing Israel-Hamas conflict.

The company reported a total comprehensive loss of just NIS 6,000 (US$1,654) for the period ending June 30, 2024, a significant drop from a profit of NIS 3.8 million in the same period of 2023 but a significant improvement from the NIS 63.5 million loss reported for the entire year of 2023.

Revenue for the first half of 2024 dropped by 40% to NIS 125.7 million, down from NIS 208.6 million in the same period the previous year. Gross profit remained flat sequentially at NIS 40.4 million but was also down 40% from the prior-year period. Despite this, the gross profit margin nearly recovered to 32%, compared to 33% in the first half of 2023, while operating profit stood at NIS 10.5 million.

The company ended the period with total assets of NIS 740.9 million, including NIS 20.8 million in cash, against total liabilities of NIS 278.8 million.

InterCure continues to focus on growth, with CEO Alexander Rabinovitch emphasizing the company’s strategic actions to strengthen its cultivation and supply chain in Canada and Europe. “InterCure is set for a significant growth in the coming quarters and years in all territories, and to that end, we have executed strategic actions to strengthen the company’s high-quality cultivation and supply chain in Canada and Europe,” Rabinovitch said in a statement.

Additionally, InterCure reported in its financial statement that its southern facility at Kibbutz Nir Oz, which was damaged during the October 7 attack by Hamas, is under restoration. The company stated that it had received advance payments from Israeli authorities, amounting to “tens of millions of NIS,” which have been invested in restoration efforts. InterCure expects additional substantial payments to continue the restoration, although access to the site remains partially restricted.

Moreover, last week the company also announced a strategic expansion in Germany through a new agreement with Cookies, the globally recognized cannabis brand. Under this agreement, InterCure will cultivate, manufacture, import, and distribute Cookies-branded products from its facilities. Initially, these products will be available in eight licensed branded pharmacies across Germany, through Cookies Corners.

Top Psychedelic Companies for Week

#1: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF), a biotechnology company focused on treating substance use and mental health disorders, announced significant progress in its pre-clinical program through its partnership with Graft Polymer (UK) Plc. This collaboration is working on a novel class of therapeutics aimed at treating trauma-related mental health disorders, including Post-Traumatic Stress Disorder (PTSD).

The recent advancements included the identification of two promising chemical series as co-leads for development, which represent a potential breakthrough in treatment options for PTSD. The company also reported that it had successfully established synthesis pathways for these compounds, enabling scalable production.

Awakn also said that it had selected Charnwood Discovery, a UK-based drug discovery service provider, as its synthesis partner to ensure high-quality production. Additionally, Awakn announced that it had filed a provisional patent application on August 27, 2024, covering a new class of aminoindane chemical entities and their derivatives, bolstering the intellectual property framework of the collaboration.

Anthony Tennyson, CEO of Awakn, highlighted the progress, stating, “Our collaboration with Graft Polymer is advancing well, bringing us closer to developing new therapeutics for PTSD and other trauma-related conditions.”

#2: Red Light Holland

Red Light Holland Corp. (CSE: TRIP) (OTC: TRUFF) reported notable improvements in its financial performance for the first quarter ending June 30, 2024. The company’s revenue increased to C$1.5 million, up from C$1.2 million in the same period last year, marking a 29.7% year-over-year growth. Despite this positive trend, Red Light Holland’s comprehensive net loss was reduced to C$1.4 million from C$1.9 million the previous year. The company’s cash reserves declined slightly to C$13.3 million from C$14.1 million in March 2024.

The company CEO, Todd Shapiro, highlighted the company’s positive performance and strategic focus on growth and cash management. “Our financial performance in the first quarter of 2025 reflects our strategic commitment to growth while maintaining strong cash management. We’ve increased revenues by 29.7% year-over-year, a clear indicator of our market strength and operational efficiency. Unlike many companies in our sector facing severe financial challenges, Red Light Holland continues to move forward with positive momentum, driven by our diversified revenue streams and prudent cash use. We look forward to continued, patient growth and we are excited to discuss our updated strategy in mid-to-late September 2024, as we’ll host a live Q&A for our loyal shareholders,” Todd said in a statement.

Significant progress in the quarter included a notable reorder from Costco Canada, which increased its purchase of Red Light’s mushroom grow kits by 33.33% to 26,880 units. Additionally, Red Light’s iMicrodose and Maka magic truffles are now being distributed in the Netherlands and supported by the iMicroapp tele-counseling platform.

Looking ahead, Red Light is advancing its development of the AEM Ontario facility, which has received a building permit and is set to start construction in early spring 2025. The facility is projected to generate around C$80,000 in weekly revenue upon completion, with an expected annual revenue run rate of C$16 to C$17 million. Additionally, the company aims to increase shiitake mushroom sales at its AEM Farm, targeting weekly revenues of C$24,000 to C$30,000 at full capacity.