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Weekly Roundup on the Cannabis Sector & Psychedelic Sector

Key Takeaways; Cannabis Sector

  • Village Farms regained Nasdaq compliance; Weedmaps is facing a compliance issue.

  • MariMed expanded Maryland presence with a $5.3 million acquisition.

  • Tilray adjusted expectations for 2024 amid financial challenges, as they eye Canadian tax relief.

Key Takeaways; Psychedelic Sector

  • Optimi Health partnered with a New Zealand institute to supply psilocybin for indigenous healing research.

  • Awakn expanded into U.S. Southern States with groundbreaking addiction treatment partnership.

This week, a glimmer of hope emerged in the cannabis sector as the head of the Food and Drug Administration (FDA) addressed a House committee, stating that there’s “no reason” for the U.S. Drug Enforcement Administration (DEA) to delay its awaited decision on reclassifying marijuana from Schedule 1 to Schedule 3 of the Controlled Substances Act. It has been over seven and a half months since the Department of Health and Human Services forwarded their rescheduling recommendation to the DEA. However, a delay in action has left many stakeholders in the cannabis sector on edge, eagerly awaiting clarity on the regulatory front. The prospect of rescheduling holds significant implications, promising to alleviate tax burdens and pave the way for eventual federal legalization, which is long overdue in the eyes of many.

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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: Village Farms

Vancouver-based Village Farms International, Inc. (NASDAQ: VFF) successfully regained compliance with Nasdaq listing rules, marking a positive turn for the marijuana producer and supplier company. The Nasdaq requires listed companies to maintain a minimum bid price of $1 per share, a threshold that Village Farms surpassed in March. The company had previously received a warning from Nasdaq in April 2023 due to low share prices but was granted an extension until October to rectify the situation.

Meanwhile, WM Technology, Inc. (NASDAQ: MAPS), the parent company of Weedmaps, is the latest to face the non-compliance challenge. On Tuesday, WM Technology disclosed that it had received a notice of non-compliance from Nasdaq. This announcement came following the company’s failure to submit its annual 10-K report on time.

WM Technology attributed the delay in filing to recent changes in its executive finance leadership and the necessity to conclude additional financial-closing procedures associated with internal control weaknesses. Nevertheless, the company reassured stakeholders that it would submit the Form 10-K promptly. With the non-compliance notice, WM Technology now has 60 days to present a compliance plan to Nasdaq. The stock exchange may grant an extension until the end of September for the company to rectify its status.

These developments highlight the regulatory challenges faced by companies operating in the cannabis-related industry; particularly the Nasdaq’s minimum bid-price requirement, which has prompted various adjustments among listed marijuana and ancillary companies, including share consolidations. Aurora Cannabis Inc. (NASDAQ: ACB), a Canadian producer, notably consolidated its shares on a 10-to-one basis in February in response to Nasdaq regulations. Conversely, SpringBig Holdings, Inc. (OTC: SBIG), a cannabis marketing and loyalty company, opted to delist from Nasdaq in September 2023 after failing to meet the compliance the requirements.

#2: MariMed

MariMed Inc. (OTC: MRMD), a Massachusetts-based marijuana multistate operator (MSO), solidified its foothold in the Maryland cannabis market with a second significant acquisition.

The acquisition involved the closure of a $5.3 million deal for Community Wellness and Compassionate Care Center, which was finalized on April 5. This transaction added to MariMed’s existing presence in Maryland, giving them a second retail store in the state.

Following the closure of the deal, MariMed is poised to reopen the Upper Marlboro outlet, which closed in July 2023, pending regulatory approvals. The company also paid the state’s adult-use conversion fee, indicating its intention to sell recreational cannabis at the newly acquired store. With existing operations in Annapolis and a cultivation and processing facility in Hagerstown, MariMed is strategically positioned to capitalize on Maryland’s growing cannabis market.

Despite these expansions, MariMed has faced challenges, including supply chain disruptions and regulatory setbacks, impacting its financial performance. The company reported a net loss of $16 million in 2023, attributing some of these losses to delays in expansion projects across multiple states. CEO Jon Levine cited difficulties in securing basic construction materials, such as electrical panels, which have led to significant delays in the completion of expansion projects, including the Hagerstown cultivation facility.

However, MariMed remains optimistic about its future prospects in Maryland’s cannabis market. The company plans to continue pursuing additional dispensary acquisitions, with the aim of reaching the state-allowed maximum of four stores. And by strategically expanding its footprint in Maryland, the company will be able to capitalize on the state’s growing demand for adult-use cannabis products and position itself as a key player in the region’s cannabis industry.

#3: Tilray

Canadian cannabis and beverage company Tilray Brands, Inc. (NASDAQ: TLRY) revised its financial outlook for fiscal year 2024 during its third-quarter earnings call. The company’s Chief Financial Officer, Carl Merton, lowered the 2024 guidance, citing challenges in meeting previously announced projections, notably in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and adjusted free cash flow.

Tilray CFO disclosed during the earnings call that the earlier forecast of $68 million-$78 million in adjusted EBITDA for 2024 was no longer attainable. Consequently, the company revised its adjusted EBITDA range to $60 million-$63 million. Additionally, Tilray no longer anticipates achieving positive adjusted free cash flow for the entirety of the fiscal year.

As for the third-quarter results, the company posted a net loss of $105 million for the quarter ended Feb. 29, with net revenue totaling $188.3 million. While revenue increased by approximately 30% compared to the previous year, it declined from the second quarter of 2024. The revenue mix comprised $54.7 million from beverage alcohol, $63.4 million from cannabis, $56.8 million from distribution, and $13.4 million from wellness.

Considering Canada’s intricate cannabis excise tax structure, Tilray executives voiced anticipation ahead of the federal budget release, particularly regarding a parliamentary finance committee proposal to cap excise taxes on marijuana products at 10% of their value. Tilray CEO, Irwin Simon, estimated potential annual savings of $80 million if the proposal were implemented, highlighting the impact of such a change on the company’s finances.

Looking ahead, Tilray eyes the prospect of selling pharmaceutical-grade medical cannabis in the U.S. following potential rescheduling from Schedule 1 to Schedule 3, potentially diverging from current strategies pursued by American multistate operators.

Additionally, Tilray operates a medical marijuana distribution business in Germany, where recent legislative shifts may open new avenues for growth. With the removal of medical cannabis from the Narcotics Act, the company anticipates an expansion in the German medical cannabis market, facilitating easier prescription access for patients and potentially broader health insurance coverage.

Top Psychedelic Companies for Week

#1: Optimi Health

Canadian psychedelics company Optimi Health Corp. (OTC: OPTHF) solidified its international presence by striking a deal to supply psilocybin to a research institute in New Zealand. The agreement, which was made with the Mātai Medical Research Institute on behalf of the Tū Wairua Project, marked Optimi’s first venture into the New Zealand market.

Under this partnership, Optimi will provide its British Columbia-made psilocybin extracts for a clinical study focused on addressing methamphetamine use disorder among native Maori tribal members. The initiative aims to revive ancient healing practices using natural medicines within the indigenous Māori community.

Optimi’s CEO, Bill Ciprick, expressed the significance of this collaboration in honoring the cultural heritage of the Māori people; “This agreement marks our entry into a new market and underscores the historical and cultural importance of the work being undertaken by our colleagues in New Zealand to honour and respect the indigenous heritage of the Māori people,” Bill Ciprick said in the press release.

The study aligns with the indigenous tribe’s mission to reconnect with traditional healing methods utilizing natural flora and fauna. Jody Toroa, trustee of Rangiwaho Marae, emphasized the importance of utilizing Optimi’s natural fungi, which closely resembles local indigenous species, over synthetic alternatives. According to her, this approach ensures the integrity of the project and facilitates the reclaiming of cultural knowledge and customary practices. “Alongside many First Nations peoples, we have a relationship with native flora and fauna as a source of healing and reconnection to our respective indigenous cultural practices,” Toroa said.

#2: Awakn

Awakn Life Sciences Corp. (CSE: AWKN) (OTC: AWKNF) expanded its presence in U.S. southern states through a licensing partnership with Rivus Wellness and Research Institute in Oklahoma City. This marked Awakn’s debut in the U.S. southern states, bringing its innovative treatment for Alcohol Use Disorder (AUD), Awakn Kare, to a new region.

Awakn Kare has shown remarkable efficacy in trials, with an 86% abstinence rate six months post-treatment, far surpassing the current standard of care. The partnership grants Rivus access to Awakn’s therapies and training for practitioners, while Awakn receives fees and revenue shares.

CEOs of both companies expressed excitement about the collaboration, emphasizing a shared commitment to providing superior addiction treatments. Anthony Tennyson, CEO of Awakn, said “We are excited to partner with Rivus and their excellent team, there is shared ethos and vision between the two organizations which is important. Being able to provide a whole new cohort of people in Oklahoma with a new more effective treatment option whilst they are in desperate need, is what drives us.” While Dr. Lane Peyton of Rivus also echoed this sentiment saying, “The Rivus Wellness and Research Institute has consistently served the Oklahoma City mental health community with innovative treatments, interventions, and preventions, and we feel that this partnership with Awakn Kare will benefit our patients tremendously.”

This partnership reflects a significant advancement in addressing the need for more effective AUD treatments in the United States, offering hope for improved outcomes and transformed lives.