In this week's "Rising High," The Fly's recurring series focused on cannabis and psychedelic stock news, The Fly looks back on a bid agreement, a productivity milestone and earnings.
SUNDIAL ENTERS BID AGREEMENT FOR ZENABIS ASSETS: Sundial Growers (SNDL) announced Monday that, in the context of the initial order pursuant to the companies' Creditors Arrangement Act pertaining to the Zenabis Group rendered on June 17, it entered into a purchase agreement, in the form of a "stalking horse bid," pursuant to which the shares of Zenabis Global and the business and assets of its direct and indirectly wholly-owned subsidiaries would be acquired by Sundial. The Bid Agreement is subject to the approval by the Quebec Superior Court supervising the CCAA Proceedings, and to potential alternative bids pursuant to bidding procedures that will follow. Subject to the Court's approval of the Bid Agreement and of bidding procedures that will be sought on July 5, 2022, the Bid Agreement will set the floor, or minimum acceptable bid, in a sale and investment solicitation process, which is designed to achieve the highest and best offer for the Zenabis Group's business and assets and is under the supervision of Ernst & Young, acting as CCAA Monitor. The assets covered by the Bid Agreement include the 380,000 square foot indoor growing facility located in Atholville, New Brunswick with an annual production capacity of approximately 46,000 kgs of dried cannabis and 15,000 kgs of extraction capacity. The facility received EU GMP certification, providing a license to the facility to export internationally to Israel, Malta, the United Kingdom, and the EU. Zenabis Group also has a joint venture agreement with ZenPharm Limited, based in Malta, allowing for commercial bulk imports into Malta from the facility in Atholville and subsequent exports of finished medicinal cannabis products to countries of the EU and United Kingdom. The Bid Agreement also provides for the acquisition of a decommissioned 255,000 sq. ft. indoor facility in Stellarton, Nova Scotia, that was used as a packaging, processing, and value-added cannabis product manufacturing facility. Based on HEXO Corp.'s (HEXO) publicly filed financial statements and MD&A, contribution from the Zenabis Group to consolidated net revenue was $11.1M in the second fiscal quarter of 2022.
CRONOS, GINKGO ACHIEVE THCV PRODUCTIVITY MILESTONE: Cronos Group (CRON) and Ginkgo Bioworks (DNA) announced Tuesday the achievement of the third target productivity milestone in their partnership to produce eight cultured cannabinoids. Using Ginkgo's platform for organism design and development, Cronos has successfully achieved the productivity target for tetrahydrocannabivarin, a cannabinoid hypothesized to reduce the appetite-enhancing property of THC. Access to additional rare cannabinoids will support Cronos' innovation pipeline and commercialization strategy. As a result of the achievement of the final productivity target for THCV, Cronos has issued to Ginkgo approximately 2.2 million common shares.
BODY AND MIND REPORTS Q3 EARNINGS: Body and Mind (BMMJ) announced Tuesday third quarter loss per share of (2c) on revenue of $7.88M, which represented a 10% increase over 3Q21 revenue of $7.16M. "Our team continues to expand retail and wholesale operations as our newer facilities in Ohio, Arkansas and Michigan ramp up with increased product offerings," stated Michael Mills, CEO of Body and Mind. "Our Arkansas cultivation has reached a steady state and our perpetual harvest and innovative craft cannabis strains have driven increased visits to our dispensary as well as growing our wholesale operations. We applaud the recent announcement that winning dispensary licenses in Chicago will be released in late July and look forward to bringing our retail expertise to the important Illinois market. Our most recent quarter saw an impact on earnings from our previous Michigan construction expenses as well as a dip in margins due to systemic economic impacts. Our recent debt extension and reduced cash payment for the Seaside acquisition provide flexibility as we plan for future expansion and we are excited to continue to expand our wholesale Body and Mind products and retail locations across new markets."
Body and Mind also provided an update on Tuesday on the first amendment to the Seaside dispensary purchase agreement. The company, through its wholly owned subsidiary, DEP Nevada, executed definitive agreements to purchase the Reef dispensary in Seaside California on November 30, 2021 and has been operating the dispensary since December 1, 2021. DEP has executed a first amendment to such definitive agreements to reduce the cash purchase price of the transaction and to issue shares of common stock having the same value as the cash reduction. The transaction has been amended to reduce the cash purchase price from $2.5M to $1.25M. The company will issue $1.25M worth of shares of the company's common stock based on the 10-day VWAP on the ten consecutive trading days prior to June 17.
AUDACIOUS, HEMPIRE ENTER NY AGREEMENT: Australis Capital (AUSAF), operating as AUDACIOUS, announced Thursday that the company has entered into an agreement with Hempire Farms, a New York based cannabis company licensed to cultivate, process and distribute cannabis products in the New York State recreational market. The agreement between Audacious and Hempire is contingent upon state approval. AUDACIOUS' partner, Hempire, meets all requirements and was awarded an Adult-Use Conditional Cultivator License. The license also includes the ability to manufacture and distribute cannabis products, activities that the state has yet to fully define. AUDACIOUS and Hempire intend to commence planting its first batch of adult use cannabis towards the end of June 2022, with first harvest anticipated some 8-10 weeks later. Under the regulations, the company is allowed to have one acre of canopy, which equates to approximately 1.5 acres in total space. The company anticipates this to yield approximately 2,100 lbs of dried flower and trim. The operations will be located in Broome County, New York.
VALENS, COLDHAUS ENTER PARTNERSHIP: The Valens Company (VLNS) announced Wednesday that it has secured an exclusive cannabis partnership with Coldhaus Distribution to provide integrated logistics solutions for Valens-branded cannabis products across Ontario, Alberta, and British Columbia. Pursuant to the two-year partnership, Coldhaus in conjunction with Valens will be responsible for store level representation, brand advocacy, distribution route coverage and retail staff education to drive brand visibility and commercial retail presence. The company said, “The dedicated field team to be put in place through this partnership will allow Valens to connect with and educate retail staff in respect to our brands and product attributes providing a unique opportunity to help drive consistent in-store category strategy while supporting retailers as they focus on enriching consumer experience.”
OTHER CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Akerna (KERN), Aleafia (ALEAF), Atai Life Sciences (ATAI), Awakn Life Sciences (AWKNF), Ayr Wellness (AYRWF), Aurora Cannabis (ACB), BC Craft (CRFTF), Cannara Biotech (LOVFF), Canopy Growth (CGC), RIV Capital (CNPOF), Chicago Atlantic (REFI), Columbia Care (CCHWF), Compass Pathways (CMPS), CordovaCann (LVRLF), Clever Leaves (CLVR), Cresco Labs (CRLBF), CV Sciences (CVSI), Curaleaf (CURLF), CURE Pharmaceutical (CURR), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), General Cannabis (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), High Tide (HITI), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), InterCure (INCR), Innovative Industrial Properties (IIPR), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm (MEDIF), MedMen (MMNFF), Neptune Wellness (NEPT), NewLake Capital (NLCP), Thermic Science (ENDO), Organigram (OGI), Planet 13 (PLNHF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Sproutly (SRUTF), Stem Holdings (STMH), Small Pharma (DMTTF), Skye Biosciences (SKYE), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Tryp Therapeutics (TRYPF), Verano Holdings (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).