Week In Review: Cannabis & Psychedelic Sectors Diverge: TerrAscend Leads Cannabis Stocks, Canopy Growth Struggles, Awakn & Cybin Forge Ahead

LOS ANGELES- In the fast-paced world of cannabis and psychedelics, last week’s developments & ”liquidity events” have left investors and industry experts alike eagerly observing the unfolding landscape. These events have showcased both encouraging victories and significant challenges among companies operating in these rapidly evolving industries.

Cannabis Sector Takes a Positive Turn with TerrAscend’s Uplisting

Cannabis investors heaved a sigh of relief as TerrAscend Corp. (OTC: TRSSF) achieved a major liquidity event by uplisting to the Toronto Stock Exchange (TSX). This move came after enduring a prolonged bear market that had dampened investor sentiments for nearly two years. The TSX uplisting, however, did more than simply provide a psychological boost; it garnered recognition from financial powerhouse Morgan Stanley, which subsequently removed TerrAscend from its restricted list.

With this restriction lifted, investors can now trade TerrAscend’s stock on TSX without any limitations, signifying a substantial step forward for the company. The impact was immediate and widespread, with the US Cannabis ETF experiencing a 3.7% surge following the news. TerrAscend’s stock also witnessed a notable jump of 2.5% to reach $1.71. While it has yet to reach its 52-week high of $3.09, the momentum instilled by the uplisting has injected optimism into the industry.

Furthermore, TerrAscend’s successful uplisting potentially opens doors to even greater opportunities for growth and investment. The possibility of being listed as an American Depository Receipt (ADR) on a major American exchange is now within reach, paving the way for broader expansion and heightened investor interest.

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Canopy Growth Faces a Dire Financial Situation

In stark contrast to TerrAscend’s triumph, Canopy Growth Corp. (NASDAQ: CGC), one of the world’s largest cannabis companies, found itself grappling with significant challenges. The company’s stock plummeted by over 40% after NASDAQ issued a warning due to its stock price falling below $1 for over 30 consecutive days.

To address this pressing financial crisis, Canopy Growth took proactive measures by initiating a series of agreements aimed at reducing its debt burden. Privately negotiated redemption agreements with holders of unsecured senior notes due July 15, 2023, along with agreements with select lenders under its term loan credit agreement, are expected to lead to a reduction of approximately $437 million in total debt over the next six months. Additionally, these efforts are projected to lower annual interest costs by $20 to $30 million.

Canopy Growth’s Chief Financial Officer, Judy Hong, expressed satisfaction with these agreements, highlighting their ability to preserve cash and strengthen the company’s balance sheet. However, skepticism from analysts and investors persists, with Fitch Ratings downgrading the company’s long-term issuer default rating (IDR) from CCC- to RD due to concerns over recent debt swaps and operational issues.

Despite the challenges, Canopy Growth remains resolute in its commitment to long-term value creation, emphasizing ongoing cost reduction programs and strategic actions to mitigate financial strain. However, the road to recovery appears arduous, and the company must navigate carefully to regain its former financial stability.

Organigram Reports Mixed Financial Results

Organigram Holdings Inc. (NASDAQ: OGI) faced a decline in net revenue and rising operating costs during the third quarter of fiscal year 2023, ending May 31. The company saw a 14% decrease in net revenue, amounting to $32.8 million compared to the same period the previous year, largely attributed to declining recreational flower sales. This decline, in turn, led to increased costs of sales and a decrease in gross margin.

Despite the challenging financial results, Organigram’s CEO, Beena Goldenberg, remains optimistic about the company’s future. Goldenberg expressed confidence in Organigram’s strategy and emphasized its focus on sustainable, long-term growth.

Organigram’s CFO, Derrick West, attributed the sales and margin decline to some producers inflating THC values on their product labels. The company has responded to this issue by taking measures to increase whole flower THC levels to meet consumer demand and expects to return to positive adjusted EBITDA in Q4 Fiscal 2023.

Moving forward, Organigram anticipates higher net revenue in the fourth quarter, driven by growth in its expanded product line across multiple categories. The company also expects improved adjusted gross margins and a return to positive adjusted EBITDA, bolstering its capital position and ensuring sufficient liquidity in the near to medium term.

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Psychedelic Sector Thrives with Awakn and Cybin at the Forefront

In the psychedelic sector, Awakn Life Sciences Corp. (OTC: AWKNF) made headlines with the successful sale of its subsidiary, Awakn London Limited, which operates the renowned Awakn Clinics London in the United Kingdom. The subsidiary was acquired by Awakn Via Amitis Ltd., a joint venture between Via (formerly WDP), a leading UK healthcare charity, and Amitis Group, a private UK investment company.

The completion of this sale marks a crucial milestone for Awakn Life Sciences, as it enables the company to focus its resources on research and development (R&D) programs while ensuring uninterrupted care for clients and employees in London. Awakn CEO Anthony Tennyson expressed satisfaction with the transaction, emphasizing the consortium’s ability to expand and scale the clinics business, thereby benefiting a broader range of patients in need of effective treatment options.

Meanwhile, Toronto-based Cybin Inc. (NYSE: CYBN) showcased its commitment to advancing psychedelic therapies with the development of the scalable psychedelic facilitation training program, EMBARKCT. Building upon the existing EMBARK Training Program, EMBARKCT aims to increase Cybin’s capacity to screen, qualify, train, and certify facilitators for future pivotal studies of its lead candidates, CYB003 and CYB004. These candidates show potential as treatments for major depressive disorder and generalized anxiety disorder, respectively.

Cybin’s strategic move coincides with the American Medical Association’s (AMA) introduction of new Current Procedural Terminology (CPT) Category III codes. These codes cater to continuous in-person monitoring and intervention during psychedelic medication therapy, paving the way for standardizing psychedelic treatments and integrating them into mainstream medical practices. By leveraging the newly established AMA codes, Cybin hopes to attach its Embark Training Program to insurance reimbursement, thereby enhancing the accessibility and acceptance of psychedelic-based therapies.

As the cannabis and psychedelic sectors continue to evolve, these recent developments offer a glimpse into the dynamic nature of these industries. The journey for cannabis companies remains a roller-coaster ride, with successes like TerrAscend’s uplisting offering hope amidst the challenges faced by companies like Canopy Growth. In the psychedelic realm, Awakn and Cybin’s forward-thinking initiatives propel the sector toward greater acceptance and integration within mainstream medical practices. Amidst the uncertainty, the industries forge ahead, driven by innovation and the pursuit of groundbreaking solutions to address pressing global needs.