Week In Review: Canopy Growth Secures US$35 Million in Private Placement; Germany Poised for Historic Cannabis Legalization; Psyence Biomedical Merges with Newcourt, California Retailer Prevails Over CDTFA

LOS ANGELES–Welcome to the far too-exciting world of cannabis and psychedelics, where it’s a tale of two markets: there’s innovation and progress in full swing in some parts of the country, while in other parts, the industry is on the ropes largely due to collapsing cannabis prices and lack of access to capital, making cannabis business models very challenging.  This week’s ‘Week In Review’ is a roundup of key developments in the industry, showcasing the news from key companies and people making news in the space.

Capital Markets

Cannabis Stocks Surge as US Market Dominates Global Performance

In a resounding show of strength, cannabis stocks marked their fifth consecutive week of positive returns, underscoring the robust momentum coursing through the market. The US cannabis MSOS ETF surged by an impressive 11.95%, while the global YOLO ETF recorded a solid 5.56% gain. Year-to-date figures reveal an equally striking picture, with MSOS boasting a remarkable 45.64% increase, and YOLO not far behind at +25.82%. The pronounced disparity between US and foreign cannabis stock performance further accentuates the dominant position of American players in the burgeoning industry.

A significant influx of capital further fueled investor optimism, with MSOS attracting $44.8 million in inflows over the past week. Of particular note was the staggering $17.8 million influx recorded on February 1st, marking the largest one-day inflow since October 2, 2023. The ETF’s Assets Under Management (AUM) now stand at an impressive $1.01 billion, underscoring the sustained investor interest in cannabis-related assets.

Trulieve Continues Impressive Streak Amid Regulatory Shifts

Trulieve (CSE: TRUL, OTCQX: TCNNF) emerged as a standout performer yet again, notching a robust 27.22% gain for the week. Year-to-date, the company has surged by an impressive 111.71%, with its performance since the HHS recommendation on August 29, 2023, reaching a staggering 212.64%. Trulieve’s expansive retail footprint positions it as a significant beneficiary of potential 280E removal, particularly given its extensive presence in key markets such as Florida and Pennsylvania. With both states eyeing the possibility of adult-use sales by 2025, Trulieve’s strategic positioning bodes well for its continued growth trajectory.

Cresco and Jushi Lead the Charge as Industry Dynamics Evolve

Cresco (CSE: CL, OTQCQX: CRLBF) and Jushi (CSE: JUSH, OTCQX: JUSHF) emerged as notable winners last week, notching impressive gains of 30.46% and 30.42%, respectively. Their robust performances underscore the evolving dynamics within the cannabis landscape, as players jockey for position in a rapidly expanding market. However, amidst the flurry of gains, AYR (CSE AYR, OTCQX: AYRWF) and The Cannabist (NEO: CBST, OTCQX: CBSTF) experienced more modest returns, with declines of 4.89% and 10.99%, respectively, highlighting the nuanced challenges facing operators in the sector.

Ongoing Legal Battles and Ethical Concerns Cast Shadows

Amid the market fervor, recent developments have also cast shadows on the industry’s ethical and legal landscape. OTC CEO Norman Jousif’s incendiary comments, captured on camera here, have sparked outrage, with revelations of his cavalier approach to paying small “mom and pop” cannabis brands who he doesn’t pay since he feels they will go out of business.  His lack of humanity sent shockwaves through the community.

On the other hand, Elliot Lewis, CEO of another retailer, Catalyst, has been making significant strides in his crusade to lower taxes within the cannabis sector, see our interview with Elliot here, a move that promises to reshape the industry’s financial dynamics  We caught up with Elliot at the latest Beard Bros Pharms Event in LA. See our review of the Beard Bros event here.

We have an exclusive interview with Elliot in this week’s newsletter in the Highly Capitalized TV section recorded at the Beard Bros recent Friday Sesh event in Los Angeles.

As cannabis stocks continue to capture headlines and investor attention, the industry finds itself at a pivotal juncture, navigating a complex terrain marked by regulatory shifts, legal battles, and ethical imperatives. As stakeholders brace for the road ahead, one thing remains abundantly clear: the cannabis revolution is far from over, and its impact reverberates far beyond the stock ticker.

We also have updates here for the New York market: https://highlycapitalized.com/insights/challenges-persist-in-new-yorks-transition-to-legal-cannabis-market-amid-illicit-trade/

Week In Review:

#1. Canopy Growth Secures US$35 Million in Private Placement to Bolster Liquidity and Reduce Debt:  Canopy Growth Corporation, a player in the cannabis industry, has announced an upsized private placement deal that aims to fortify the company’s financial standing. The agreement, confirmed on January 18, 2024, involves the sale of 8,158,510 units to institutional investors, each priced at US$4.29, culminating in aggregate gross proceeds of approximately US$35 million.

#2.Germany Poised for Historic Cannabis Legalization: Implications and Challenges; Germany is on the cusp of a historic shift in its cannabis policy, with Health Minister Karl Lauterbach announcing plans for cannabis legalization this spring. This move places Germany alongside a growing list of countries in Europe and globally that are reforming their cannabis laws.

#3.Kansas Advocates Push for Medical Cannabis Legalization: In a recent online meeting, advocacy groups in Kansas intensified their call for the legalization of medical cannabis, highlighting personal stories and the urgency for legislative action. The meeting, originally planned as a “day of action at the Capitol” in Topeka, was moved online due to inclement weather, according to the Kansas Reflector.

While the expansion presents potential advantages for smaller retail operators seeking to offload their stores, some insiders in Ontario’s cannabis retail industry advise caution, noting that buyers’ offers may not align with sellers’ expectations.

Psychedelic Market Highlights:

#1. Psyence Biomedical Merges with Newcourt, Listing and Raising US$10 Million for Clinical Trials: -Psyence Biomedical Ltd. a subsidiary of Psyence Group Inc, has successfully completed a merger with Newcourt Acquisition Corp, a special purpose acquisition company. This business combination, which received approval from Newcourt’s stockholders on January 18, 2024, will introduce Psyence Biomed to the NASDAQ stock exchange under the new ticker symbols “PBM” for common stock and “PBMWW” for warrants, starting January 26, 2024.

#2. Filament Health Corp. Gains FDA Approval for Psilocybin Clinical Trials; The U.S. Food and Drug Administration (FDA) has recently granted an investigational new drug application to Vancouver-based Filament Health Corp. (OTCQB: FLHLF) (NEO: FH) for its botanical psilocybin substance, PEX010. This approval marks a significant stride for Filament, enabling the firm to conduct clinical trials in the United States aimed at treating substance use disorders.

Events

Highly Capitalized announce coverage and/or filming at the following upcoming events:

Blunt Brunch Women-only networking event; San Diego 22 February

Benzinga’s Cannabis Capital Conference Deal-making conference; Los Angeles 23rd February

Hall of Flowers Cannabis brands & business exposition March 13 & 14; Ventura, California

InternationalCBC Cannabis business exposition 14 March, Barcelona Spain

The Cannabis Summit European Cannabis networking event; 11-12 April 2024

More dates are added regularly so follow Highly Capitalized for more information.

To have all our content delivered right to your inbox, and never miss a beat, subscribe to our newsletter at highlycapitalized.com  Stay tuned to Highly Capitalized for more updates as the cannabis and psychedelic industries continue to shape the future at the intersection of wellness and innovation. Subscribe to our newsletter and follow us on LinkedIn.