The Week In Cannabis: Tilray-Aphria Merge, Aurora Continues Layoffs, Financings, Earnings, M&A

Cannabis stocks traded up this week, following news of the merger between Aphria APHA and Tilray TLRY. Benzinga spoke with Aphria CEO and chairman Irwin D. Simon, who will maintain those two positions in the new company, and Tilray CEO Brendan Kennedy, who will serve in the new corporation’s board of directors. The executives shared details on how the deal came to be, and their expectations for the future, which, they say, doesn’t include massive layoffs. For the full story, click here.

Cantor Fitzgerald’s analyst Pablo Zuanic praised the merger. The Canadian cannabis sector is in need of consolidation due to the oversupply problems and “historically low ﬂower retail prices,” he explained.

Green Market Report CEO Debra Borchardt told Benzinga the Aphria/Tilray merger “was certainly a good deal for Tilray shareholders, while the Aphria shareholders will probably have to wait a bit before they see the benefits of this deal. The combined company will definitely be a powerhouse of revenue, there is no question about that.”

ETFs

Benzinga’s ETF Professor argued a variety of exchange-traded funds are poised to benefit, perhaps none more so than the Amplify Seymour Cannabis ETF CNBS.

“The status of CNBS as a credible play on this takeover rumor is easy to explain: Its Aphria weight outpaces that of many of its rivals. Entering Wednesday, CNBS allocates 9.93% of its weight to that stock, making it the fund's largest holding, according to Amplify data,” he said in an article.

ETFs closed on the green. Over the five trading days of the week:

The ETFMG Alternative Harvest ETF MJ: gained 0.8%
The AdvisorShares Pure Cannabis ETF YOLO: was up 4.7%
The Cannabis ETF THCX: rose 2.5%
The Amplify Seymour Cannabis ETF CNBS: advanced 2.5%
The SPDR S&P 500 ETF Trust SPY was up 0.5%.

Politics

The MORE Act's status remains uncertain, but some cannabis legislation is finding success. This week, the Senate passed the Cannabidiol and Marihuana Research Expansion Act. The move follows the House's passage of the bill last week. The bill would address several areas of research and development if enacted into law, according to Marijuana Moment. It also intends to revise the research application process for studies centered on cannabis.

Policymakers in Washington State will consider letting residents cultivate marijuana at their homes. According to Marijuana Moment, the bill was pre-filed last week by Shelley Kloba, who represents Democrats and Republican rep Drew MacEwen. It would allow adults 21 and older to grow up to six cannabis plants per person.

New Jersey lawmakers have passed a measure to allow a recreational marijuana marketplace in the Garden State. The legislation will now be sent to Democratic Gov. Phil Murphy, who is expected to sign the bill. Once that happens, New Jersey cannabis businesses will be able to offer recreational weed within six months.

At this year’s MJBizCon, Resource Innovation Institute previewed the 2021 Cannabis Water Report, which will be published in February via a partnership with New Frontier Data and Berkeley Cannabis Research Center. The preview revealed that, in aggregate, the regulated, legalized cannabis industry uses significantly less water than other major agricultural crops. The report recommends that evaluation of future cannabis water efficiency be based upon canopy square footage, not plant count, as it has in the past.

“Climate change should be top of mind for everyone in agriculture including the cannabis industry,” said Derek Smith, executive director of the Resource Innovation Institute, citing how droughts and wild fires impact areas where cannabis cultivation takes place. "It’s in our best interest to make sure we optimize water usage throughout every stage of the cultivation process," he added.

Gage Cannabis Co. secured a $20 million investment from JW Asset Management, LLC as part of the company's Reg A+ equity financing. The investment will provide Gage with resources to accelerate the expansion of its retail and cultivation footprint and pursue accretive acquisitions.

“JW Asset Management is widely recognized as one of the premier investors in the cannabis sector. Their participation provides Gage with a strong balance sheet that enables us to further establish our brand in one of the fastest-growing cannabis markets in the United States," Fabian Monaco, president of Gage, told Benzinga. "We are confident in executing on our 2021 goals, driven by the growth of both the cultivation and dispensary arms of our business. We are fortunate to have developed a strong relationship with JWAM and are grateful for their support as we capitalize on the opportunities ahead in Michigan.”

Tyson Ranch, a packaging and licensing company founded by Mike Tyson, is expanding into Oklahoma, one of the fastest growing medical cannabis markets in the United States. One of Oklahoma's premier medical cannabis dispensaries, COOKIES, will begin carrying Tyson Ranch's Undisputed 87 Pre-Rolls starting on Saturday, Dec. 19.

“With Oklahoma being one of the hottest cannabis markets in the United States, it made a lot of sense to partner with Tyson Ranch to bring the best in health and wellness to the medical cannabis patients of Oklahoma,” said Tyler Dodd, founder and CEO of Arca Bellum, Tyson Ranch’s Oklahoma partner.
Verano Holdings LLC will go public in Canada through a reverse takeover of Majesta Minerals Inc.

Aurora Cannabis Inc. ACB ACB started this year with serious layoffs, and it seems it will end it in the same manner. The Canadian cannabis giant revealed this week that it had to close activities at its Aurora Sun facility and opted to reduce the production at its flagship Aurora Sky facility by 75%. Per Marijuana Business Daily, Aurora's reducing production to 25% at Aurora Sky led to the company terminating around 200 employees.

Earnings Reports

HEXO Corp. HEXO HEXO posted its first quarter of fiscal 2021 net revenue of CA$29.5 million, up by 9% from the prior quarter. Revenue improvement was driven mainly by an 8% growth in recreational cannabis sales and 54% growth in adult-use beverages.

Throughout the third quarter, cannabis retailer Fire & Flower Holdings Corp. FAF FFLWF found itself on the hunt for acquisition targets. According to the company's most recent earnings statement, the strategy paid off. Fire & Flower generated around $33.1 million at a gross profit of 34.7% in the third quarter of this fiscal year. That's a year-over-year and sequential increase of 142% and 15.8%, respectively.

Body and Mind Inc. BAMM BMMJ announced fiscal results for the fourth quarter and fiscal year ending July 31. The Vancouver-based company generated $6.23 million in consolidated revenue for the whole year and record system-wide managed revenue of $17.6 million. Fourth-quarter consolidated sales amounted to $2.17 million, up by 106% sequentially.

C21 Investments Inc. CXXI CXXIF achieved $9.5 million in the quarter ended Oct. 31. The Vancouver-based company also disclosed a positive adjusted EBITDA of $2.7 million. That's the seventh consecutive quarter of positive EBITDA. For the third quarter, cash flow from operations amounted to $3.1 million, while net income was $2.3 million for the period.

CBD of Denver Inc. CBDD reported revenue for the first sixty days of the fourth quarter amounted to $4.9 million. That's up by 250% sequentially.

Read all about these results on Benzinga Cannabis’ Earnings Center.

Financings And M&A

Cresco Labs CL CRLBF extended the maturity of its senior secured term loan and raised it to $200 million. The multi-state cannabis operator, or MSO, has had all its lenders agree to the extension and sign the new agreement, setting the maturity for Jan. 23, 2023 with a trimmed interested rate of 12% per year.

The loan was raised by $100 million, out of which $85 million was supported by both the current and new lenders and large institutional investors.

Red White & Bloom Brands Inc. RWB RWBYF announced it will acquire a THC cultivation license in Illinois alongside certain assets. The Toronto-based will pick up the issued and outstanding shares of Cannabis Capital Partners Inc. (CCP), by issuing up to 22 million common shares to CCP's shareholders.

Separately, RWB secured $60 million in financing under a non-revolving credit facility with an arm's-length institutional lender.

4Front Ventures Corp. FFNT FFNTF confirmed it has finalized a sale-leaseback agreement with Innovative Industrial Properties Inc. IIPR valued at $33 million.

Ayr Strategies Inc. AYR AYRWF has signed a definitive merger agreement with the management company of Parma Wellness Center LLC in a deal worth $17 million in cash.

TerrAscend Corp. TER TRSSF reported Friday it has secured $120 million in financing through a Senior Secured Term Loan with a syndicate of lenders.

Specialty hydroponic and organic garden centers chain GrowGeneration Corp. GRWG is acquiring Grassroots Hydroponics, Benzinga has learned. The news comes on the heels of the closing of GrowGeneration's closing a $172.5 million raise to fuel expansion.

More News From The Week

Zelira Therapeutics ZLD ZLDAF inked a licensing deal with Washington DC-based Alternative Solutions to produce and distribute HOPE throughout the district. Dr. Oludare Odumosu, CEO and Managing Director of USA for Zelira, told Benzinga that Zelira’s search for a DC license partner for HOPE was much more strategic than simply having visibility in the nation’s capital, and is a tentpole for Zelira’s overall US growth efforts for 2021.

“This latest partnership with Alternative Solutions aligns with Zelira’s long-stated mission to work with market leaders in each approved market to expand access to HOPE across the US,” said Odumosu. The first products are set to debut on Washington DC dispensary shelves in the Spring of 2021.

Next Green Wave Holdings Inc. (CSE: NGW) NXGWF announced it is moving forward with expansion plans for a 50,000 square foot indoor cultivation facility in Coalinga, California.

Medical Marijuana Inc. MJNA subsidiary HempMeds rebranded its hemp-derived CBD products as part of its recent shift in the company's consumer strategy and executive leadership. Raul Elizalde will become sole CEO of HempMeds and the company's rebranding includes a new website, updated company logos, new product formulations and refreshed packaging. HempMeds will be reformulating its RSHO product line for increased absorption and is revealing two new products, one containing cannabigerol (CBG) and another containing cannabinol (CBN).

HempMeds CEO Raul Elizalde said, “With this rebranding, HempMeds is evolving to meet the world’s shifting needs and uses for CBD and showing consumers that we are continuing to make sure that our products are of the highest quality.”

Regional grocer Save Mart agreed to expand cbdMD’s YCBD product offerings to additional locations due to strong retail sales performance of cbdMD and Paw CBD brands. Marty Sumichrast, chairman and co-CEO of cbdMD, said "US retailers are finding that the sellthrough rate of these cbdMD and Paw CBD products is extremely high and are expanding access to our offerings in their distribution outlets as a result."

CBDCapitalGroup, a CBD nutraceuticals investment and scaling company, published proprietary data gathered from its quantitative Short Form (SF)-36 Health Survey on gender-specific uses of CBD and has sent it to the Food and Drug Administration (FDA) following its scientific conference last month.

CBDCapitalGroup CEO David Metzler said, "we want to highlight the need for research relating to women-specific CBD usage. The SF-36 survey is now an established way for CBD companies to prove that their products are actually improving the quality of lives people and in 2021 we will be making these Medical Outcome Studies available to companies beyond our portfolio to help advance the industry and help federal agencies create policies on safety and quantity standards.”

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

New national dispensary franchise The Open Dør has officially launched, offering cannabis license holders the opportunity to invest in a turnkey dispensary model in legal medical marijuana and adult-use markets. The Open Dør was co-founded by international franchisor Kathryn Blackwell who has built iconic brands like Cold Stone Creamery, and cannabis consultant Chelsea Mulligan who has been involved in the launch of over 30 dispensaries.

"We created The Open Dør dispensary franchise to help cannabis license holders get to market faster and with more efficiency. Franchisees will have access to our comprehensive training and operational procedures systems with industry-specific expertise related to zoning, real estate, compliance, operations, marketing and overall consulting support in the business of cannabis," stated The Open Dør executive team in a joint statement.

Airfield Supply Co., currently the largest single-site dispensary in California, formed a partnership with CannaCraft and its recycling partner, Resynergi, to spearhead a first-in-the-nation campaign to stem plastic cannabis packaging waste from entering the traditional trash stream. Inviting customers to return their child-proof packaging and other plastic cannabis waste to the dispensary, Airfield is now a key participant in a unique system of recovery and transformation. Already visiting the dispensary weekly, CannaCraft now picks up post-consumer trash during its visits and returns it to its Sonoma County partner, Resynergi, which specializes in transforming plastic into fuel. Resynergi then turns that waste into the diesel fuel that in part powers CannaCraft's fleet of delivery vehicles, which operate under the Kind House Distribution name.

"This is a win across all fronts," said Airfield's CMO Chris Lane. "We're really pleased to be able to help our customers stop additional plastic from entering the waste stream while supporting the great work that CannaCraft and Resynergi have put into place. I think that everyone in the cannabis industry is concerned about the amount of packaging our products require in order to be compliant with child-resistant requirements and — we're certainly all committed to protecting kids. This allows us to be compliant and more environmentally sensitive, both."

Biotech company Avicanna AVCN AVCNF entered an agreement with Alliancepharma Technologies to import and distribute its pharmaceutical cannabinoid-based products into Ecuador. Separately, the company inked an agreement with Spenta, an Ecuadorian cosmetic distributor, for the distribution of its derma-cosmetic product line under the brand Pura Earth. Avicanna also announced the completion of its first export of cannabis seeds to Uruguay, on behalf of its majority-owned subsidiary, Santa Marta Golden Hemp, a cannabis cultivator with facilities in Colombia, via a strategic alliance with Uruguayan company Cannabhanga.

Acreage Holdings, Inc. ACRG ACRDF confirmed Friday it has tapped the former President Pfizer North America Consumer Healthcare, Peter Caldini, as its new CEO.

Grammy Award-winning artist and media personality Khaled Mohamed Khaled — also known as DJ Khaled — has teamed up with CBD company Endexx Corporation EDXC to launch a new CBD company.

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