Cannabis stock report: Rough week for weed producers as little guys look for an edge

One of the hardest-hit was Charlotte’s Web Holdings Inc., which saw its share price fall by 17.1 percent between Monday and Friday.

Charlotte's Web Holdings Inc. has made use of a temporary COVID-19 exemption to delay reporting its executive compensation to shareholders. Photo by Charlotte's Web Holdings Inc.

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Normally, the weekly CannCentral cannabis stock report focuses on the big Canadian licensed producers. But because it was a dismal week for all of them, we’ve included developments about some of the smaller weed companies deeper in this article.

But let’s start with Canopy Growth Corp, which still has the largest market capitalization by far—$8.1 billion—despite a less-than-stellar week.

It opened in Toronto on June 22 at $23.45, rising to $24.77 the following day. But then, things turned sour over the next three days after announcing that it had modified a proposed takeover agreement with New York–based Acreage Holdings.

Canopy Growth closed on Friday (June 26) at $21.82, down seven percent on the week.

Aphria Inc. also had a rough ride, dropping eight percent to close the week at $5.54 in Toronto. And HEXO Corp. shares fell 6.8 percent to end the week at US$0.69 on the New York Stock Exchange.

But those declines weren’t as dreadful as the 11 percent weekly drop in the value of Organigram Holdings Inc. shares, which closed on Friday at $2.29 in Toronto.

The biggest loser, however, was Charlotte’s Web Holdings Inc., which is based in Boulder, Colorado, and is listed on the Toronto Stock Exchange. The self-described market leader in hemp CBD extract products saw its shares fall a whopping 17.1 percent over the week, closing on Friday at $5.14.

On June 26, Charlotte’s Web announced that is also making use of a COVID-19 regulatory exemption to delay reporting executives’ salaries. This information will be included in the company’s information circular that will be made public before the annual general meeting scheduled on September 3.

With a $654.2-million market capitalization, Charlotte’s Web is significantly more valuable than some smaller weed companies that also revealed this week that they’re delaying filing information under the same exemption.

Meanwhile, Aurora Cannabis Inc. fell 4.8 percent on the week to close at $17.08. Cronos Group declined by 4.1 percent over the same five-day period, closing on Friday at $8.20. They’re both traded in Toronto.

Things were a tiny bit better for shareholders in Tilray Inc., whose investment dropped 3.6 percent on the week.

Tilray closed at US$7.95 on NASDAQ on June 26, down significantly from earlier in the month when it peaked at US$10.44.

Now, to the smaller players. Meta Growth Corp., which is listed on the TSX Venture Exchange, announced this week that it has sold its Canadian medical clinics business unit to The Clinic Network Canada Inc.

In a news release, Meta Growth stated that the buyer paid $500,000 in cash with an “earn-out of up to $300,000 within 12 months” in TCNC common shares.

“Given the continued expected growth of the Canadian recreational cannabis retail market, particularly within the province of Ontario, META’s strategic focus has shifted from medicinal to recreational cannabis,” the company stated. “The divestiture of its Canadian medical clinics completes the disposition of its portfolio of medicinal cannabis assets, having recently sold its Australian medicinal cannabis clinics, as well as its Canadian pharmacy business unit.

“These divestitures have allowed the Company to monetize non-core assets into total consideration of up to $2,800,000 to assist in funding its recreational cannabis expansion initiatives.”

Meta Growth Corp. shares closed the week at $0.12 and it has a $27.2-million market capitalization.

Meanwhile, Israel-based InnoCan Pharma Corp., which is listed on the Canadian Securities Exchange, announced results from its first double-blind, randomized clinical study of its Relief & Go and Shir product lines. According to the company, the study demonstrated that its topical products are “non-irritating to the skin”.

The company’s manufacturer, Fancystage, is in the “advanced production stage” as InnoCan is an “advanced negotiations” with distributors, according to a June 26 news release. InnoCan shares closed at $0.15 on Friday and its market capitalization is $21.6 million.

A Vancouver weed company, CSE-listed B.C. Craft Supply Co. Ltd., announced on June 25 that it closed a nonbrokered private placement generating $1.7 million.

This resulted from 34.2 million units being sold at $0.05, with each unit consisting of one common share and one-half of a transferable common-share purchase warrant. Each whole warrant allows for the purchase of one common share at $0.10 for up to 18 months after the closing date.

Of the 34.2 million units, just over 4.6 million were acquired directly or indirectly by three directors of the Vancouver-based company. B.C. Craft Supply Co. Ltd. shares closed the week at $0.095. Its market capitalization is $13 million.

Another Vancouver licensed producer, Zenabis Global, announced on June 25 that it closed an offering of 181.3 million units, raising gross proceeds of $23.6 million. They were priced at $0.13 per unit. That included one common share and a share purchase warrant, enabling holders to buy another common share at $0.16 in the 60 months following the closing.

Zenabis shares closed the week at $0.07. Its market capitalization stands at $30.2 million.

A third Vancouver weed company, New Leaf Ventures Inc., stated on June 26 that its initial public offering and its acquisition of New Leaf USA were delayed due to the ongoing COVID-19 pandemic. The IPO was not fully subscribed.

New Leaf provides consulting services, equipment for lease, and licences to a Washington-based cannabis producer, packager, and distributor. New Leaf shares closed the week at $0.37, leaving it with a market capitalization of $11.13 million.

Another CSE-listed weed company, Cannabis Growth Opportunity Corporation, announced that it was delaying filing its interim financial statements until, at the latest, August 13.

The Toronto-based company can do this under the temporary exemption offered by securities regulators in response to the COVID-19 pandemic. Its shares closed at $0.37 on Friday, leaving it with a market capitalization of $9.15 million.

In other cannabis business news, Columbus, Ohio–based Green Growth Brands announced that its forbearance period with Green Ops Group LLC expired on June 26. This enables Green Ops Group to exercise its rights in connection with Green Growth’s debt obligations.

Green Growth Brands is listed on the CSE and is in the midst of insolvency proceedings under the Companies’ Creditors Arrangement Act (Canada).

“The Company has also received a letter from legal counsel to Green Ops notifying the Company of the acceleration of all secured obligations of the Company under the Forbearance Agreement and that all guaranteed obligations of the Company owing to Green Ops are immediately due and payable in full,” Green Growth stated in a news release. “The Company has been notified that Green Ops intends to enforce its rights under such loan documents and applicable law through the seizure of collateral granted by the Company and the Grantors (as defined in the Forbearance Agreement).”

This week’s stock report ends with news of a takeover. Osoyoos Cannabis Inc. announced on June 26 that it agreed to buy 100 percent of the shares of privately owned 1196691 B.C. Ltd., which holds 100 percent of the shares of AI Pharmaceuticals Jamaica Limited.

According to Osoyoos Cannabis, AI Pharma researches and develops cannabinoids and mushroom-based (psilocin) pharmaceutical, nutraceutical, and cosmeceutical formulations.

This takeover is a share-purchase agreement accomplished  through the transfer of 36 million common shares of Osoyoos Canabis at a deemed price of $0.07, closing on June 30.

Osoyoos Cannabis is based in Toronto, not the B.C. town of Osoyoos, and is listed on the CSE. Its shares closed on Friday at $0.07 and its market capitalization is $2.57 million.

Charlie Smith

I'm the editor of the Georgia Straight newspaper in Vancouver, as well as a CannCentral contributor.

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