In this week's "Rising High," The Fly's recurring series focused on cannabis and psychedelic stock news, The Fly looks back on acquisitions, earnings and analyst views.
RIV CAPITAL TO ACQUIRE ETAIN: RIV Capital (CNPOF) announced Wednesday an agreement to acquire ownership and control of Etain LLC and Etain IP LLC, owners and operators of legally licensed cannabis cultivation and retail dispensaries in the state of New York. RIV Capital will acquire ownership and control of the Etain companies for approximately $247M, payable through a combination of cash and newly issued Class A common shares of RIV Capital, subject to, among other things, receipt of all required regulatory approvals, including from the New York Cannabis Control Board and the New York State Office of Cannabis Management. RIV Capital also announced that its board has named Mark Sims as President and CEO of RIV Capital, to lead the company's formal entry into the U.S. market and expansion into licensed adult-use operations in New York. Sims is a current director of RIV Capital, a role he will retain, and most recently was Senior Vice President of Strategy and M&A for The Scotts Miracle-Gro Company (SMG).
The company has four operating dispensaries, including its Manhattan flagship store and locations in Kingston, Syracuse and Westchester. RIV Capital plans to invest additional capital and resources into four new dispensaries, and to support the construction of a new flagship indoor cultivation facility, tailored to specifically address the premium New York market. The acquisition is structured to close in two stages -- the initial closing is expected to occur in the second calendar quarter of 2022 and, subject to receipt of the relevant approvals by the New York state regulators, the final closing is expected to occur in the second half of 2022. by a newly issued convertible note with a conversion price of C$1.65 per Class A common share of RIV Capital.
HIGH TIDE TO ACQUIRE BUD HEAVEN: High Tide (HITI) announced Wednesday it has entered into an agreement pursuant to which it will acquire 100% of the equity interest of Livonit Foods, operating as Bud Heaven, which operates two retail cannabis stores in Ontario, for C$2.8M. For the three months ended October 31, 2021, Bud Heaven generated annualized revenue of C$4.7M and annualized adjusted EBITDA of C$0.8M. The purchase price represents 3.5x annualized Adjusted EBITDA for the three months ended October 31, 2021. The transaction, which is an arm's length transaction, is subject to, among other things, receipt of required TSX Venture Exchange approval, Alcohol and Gaming Commission of Ontario approval, and other customary conditions of closing, is expected to close in the coming weeks. Upon the closing of Bud Heaven, as well as the Crossroads transaction announced earlier this month, High Tide will have at least 40 stores in Ontario and 119 stores nationwide.
4FRONT TO ACQUIRE ISLAND CANNABIS: 4Front Ventures announced Wednesday it has signed a merger agreement to acquire all of the issued and outstanding shares of common stock of Island Cannabis Co. "This acquisition of Island is the first step of a broader California strategy that supports our earlier decision to construct what we believe is one of the cannabis industry's largest and most efficient processing centers," said 4Front CEO Leo Gontmakher. "Once integrated into 4Front's Commerce facility, we can reduce production costs and scale volume of the Island Cannabis Co. brand. This will accelerate Island's growth by making a respected brand even more attractive to California retailers and consumers. We are also ecstatic to have Founder and CEO, Ray Landgraf, COO, Brandon Mills, and the Island leadership team join the 4Front family. We believe our Company's success in acquiring and retaining talent to our management team is imperative to value creation."
ATAI REPORTS Q4 EARNINGS: On Wednesday, Atai Life Sciences (ATAI) reported a fourth quarter net loss of ($88.9M), which compared to a net loss of ($86.6M) for the same period last year. The company also reported cash and cash equivalents of $362.3M as of December 31. "2021 was a transformative year for atai. We expanded our pipeline with the launch of seven new programs, bringing our total number of development programs to 12 by end of 2021. Meanwhile, our approach to value creation and capture was validated through a significant licensing deal with Otsuka Pharmaceuticals for PCN-101. We raised over $410M in our June 2021 IPO, Series D and other financings, and closed out 2021 well-capitalized with a cash position of $362M," said CFO Greg Weaver.
Following the report, RBC Capital analyst Brian Abrahams lowered the firm's price target on Atai Life Sciences to $9 from $12 and kept a Sector Perform rating on the shares. The company's in-progress clinical programs such as GRX-917, ibogaine and PCN-101 continue to move forward, and 2022 looks like an execution year as Atai moves a majority of its programs into the clinic, the analyst said. Abrahams adds however that while he continues to see potential for long-term value given high unmet needs in mental health, a stock inflection would require more advanced and "de-risking" clinical data.
CLEVER LEAVES PRICE TARGET LOWERED: Cowen analyst Vivien Azer lowered the firm's price target on Clever Leaves (CLVR) on Monday to $4 from $6 and kept a Market Perform rating on the shares. Q4 revenue growth of 4% quarter-over-quarter beat her estimate by 3.4% driven largely by the cannabinoid business, said Azer, who adds that continued growth in cannabinoid business will decrease gross margins in 2022 due to negative mix shift until Colombia flower sales start in 2023 and gain scale.
OTHER CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Akerna (KERN), Aleafia (ALEAF), Awakn Life Sciences (AWKNF), Audacious (AUSAF), Aurora Cannabis (ACB), AYR Wellness (AYRWF), BC Craft (CRFTF), Body and Mind (BMMJ), CanaFarma (CNFHF), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Columbia Care (CCHWF), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), Compass Pathways (CMPS), CV Sciences (CVSI), Curaleaf (CURLF), CURE Pharmaceutical (CURR), Delic Holdings (DELCF), Delta 9 (DLTNF), Fire & Flower (FFLWF), Flora Growth (FLGC), FluroTech (FLURF), Gage Growth (GAEGF), General Cannabis (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), HEXO (HEXO), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), InterCure (INCR), Ketamine One (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm (MEDIF), MedMen Enterprises (MMNFF), MJardin Group (MJARF), Neptune Wellness (NEPT), NewLake Capital (NLCP), Thermic Science (ENDO), Organigram (OGI), Planet 13 (PLNHF), Relmada (RLMD), RYAH Group (RYAHF), Skye Bioscience (SKYE), Sproutly (SRUTF), Stem Holdings (STMH), Small Pharma (DMTTF), Sundial Growers (SNDL), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Valens (VLNCF), Verano Holdings (VRNOF), Village Farms (VFF), Entourage Health (ETRGF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).