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Cannabis-Linked Securities Update March 2021 | CRB Monitor
Published on April 27, 2021

 

James B. Francis, CFA

Managing Director of Publicly Traded Securities Research, CRB Monitor

CRB Monitor tracks 1,300+ publicly traded, Cannabis-Related Businesses (CRBs) globally, which have 1,500+ traded securities.  We categorize CRBs into our proprietary cannabis risk tier framework and cannabis-based sectors.  CRB Monitor also unravels and maintains complex corporate structures, linking publicly traded parent companies to their underlying operational plant-touching subsidiaries. Custodian banks, broker/dealers, and asset managers find our data essential for pre-trade compliance, risk management, index construction, and portfolio analytics. 

CRB Monitor Securities Updates 

CRBMonitor_DonutChart_Mar2021

Source: CRB Monitor

Cannabis Securities News Highlights

The cannabis saga continues in earnest here in the United States, as the debate related to decriminalization and legalization at the federal level rages on. During the month of March, investors witnessed a deeper entrenchment of the two sides as they plan to head into a political battle.  Unfortunately for fans of legalization, there have existed headwinds that have been exacerbated by the COVID-19 pandemic, and this has caused legislators to “pump the brakes” as they battle to meet the more basic needs of their constituents. However, at the same time, the pandemic has placed many states in an economic predicament that has essentially forced their hand to find new sources of revenue. And the tax revenue opportunities that cannabis presents are right there in front of them. On that note, in the last election several states decriminalized/legalized recreational cannabis (please see our Q4 2020 Newsletter) and this trend shows no signs of reversing, given the more recent developments in New York and Virginia.

In New York, Governor Cuomo signed bill #S.854-A/A.1248-A, which: establishes the Office of Cannabis Management; Expands New York's Existing Medical Marijuana Program; Establishes a Licensing System; and Creates a Social and Economic Equity Program Encouraging Individuals Disproportionately Impacted by Cannabis Enforcement to Participate in Industry.

Meanwhile, Virginia’s legalization of recreational marijuana was expected to pass the legislature in early April, which would blend the elements of Senate Bill 1406 and House Bill 2312, which not only would legalize adult-use cannabis but also drastically reform the legal implications of cannabis possession and cultivation by private citizens.

At the Federal Government level, cannabis businesses and investors waited as the SAFE Banking Act once is once again expected to pass in the US House of Representatives. Once this happens and if passed by the Senate (a big “if”) and signed into law, The SAFE Banking Act would enable banks and other financial institutions to serve state-legal marijuana businesses without fear of federal punishment. Also happening concurrently, Senate majority leader Chuck Schumer is leading the charge in support of a comprehensive cannabis reform bill, which might be taken up by the Senate before the SAFE Banking Act.  And the final, complicating factor is that the Biden administration has opposed federal legalization, and this position does not appear to have softened. So grab your popcorn and get ready for this showdown!

As the year marches on, we continue to see new cannabis-related M&A activity. The largest company making a serious commitment to the industry in March was British American Tobacco P.L.C. (LSE: BATS).  BATS announced that its subsidiary BT DE Investments will acquire an approximately 20% stake in Tier 1B CRB Organigram. BATS joins Altria Group, Inc. (NYSE: MO) as the newest “big tobacco” company to take an ownership stake in a Tier 1 cannabis-linked company.

Also of note, investors witnessed the considerable expansion of multistate operator and Tier 1B CRB Verano Holdings Corp. (CSE: VRNO), who celebrated their new listing on the CSE exchange by making acquisitions of licensed operators in Illinois, Arizona, and Pennsylvania.

Of the thousands of news releases and regulatory filings reviewed in March 2021, our research resulted in a total of 391 updates to the CRB Monitor database (92 updates to issuers’ records, 299 news releases added). The complete list of securities and detail for these updates is available to CRB Monitor Securities database clients, but below are highlights.

Select M&A/Subsidiary Highlights

Name

Ticker Symbol

CRBM Tier

Event

Charlotte's Web Holdings, Inc.

TSX: CWEB

Tier 1B

Charlotte's Web Positions to Enter US Cannabis Wellness Market

The Valens Company Inc.

TSX: VLNS

Tier 1B

The Valens Company Closes Acquisition of LYF Food Technologies Inc. and Enters Edibles Category with Launch of Soft Chews

Ionic Brands Corp.

CSE: IONC

Tier 1B

Ionic Brands Announces Closing of the Acquisition of Cowlitz County Cannabis From Lobe Sciences, Completing the Series of Transformational Corporate Transactions

Harvest One Cannabis Inc.

TSXV: HVT

Tier 1B

Harvest One Completes Sale of Satipharm for Approximately $4 Million

British American Tobacco P.L.C.

LSE: BATS

Tier 1B

BT DE Investments Inc. Acquires Stake in Organigram Holdings Inc.

Cresco Labs Inc.

CSE: CL

Tier 1B

Cresco Labs to Gain Leadership Position in Massachusetts Through Acquisition of Cultivate

Verano Holdings Corp.

CSE: VRNO

Tier 1B

Verano Holdings to Add Depth to Arizona Footprint with Agreement to Acquire Local Joint

Halo Collective Inc.

NEO: HALO

Tier 1B

Halo Collective Signs Definitive Agreement with Nature's Best Resources LLC

Ayr Wellness Inc.

CSE: AYR.A

Tier 1B

Ayr Wellness Closes Acquisition for Parma Wellness Center, LLC Management

 

Select M&A/Subsidiary Highlights

Name/Ticker Symbol

Ticker Symbol

EVENT Type

Result

IM Cannabis Corp.

CSE: IMCC

New Listings

IM Cannabis Corp. Becomes First Israeli Medical Cannabis Operator to list on NASDAQ; Trading Under Symbol "IMCC"

Global Hemp Group Inc.

CSE: GHG

New Listings

Global Hemp Group Begins Trading on OTCQB Venture Market

48North Cannabis Corp.

TSXV: NRTH

New Listings

48North Cannabis Corp. Announces Overnight Marketed Public Offering of Units

Delta 9 Cannabis Inc.

TSX: DN

New Listings

Delta 9 Announces New U.S. Ticker "DLTNF" on the OTCQX

TAAT Lifestyle & Wellness Ltd.

CSE: TAAT

New Listings

OTC Markets Group Welcomes TAAT™ Lifestyle & Wellness Ltd. to OTCQX

BioHarvest Sciences Inc.

CSE: BHSC

New Listings

BioHarvest Sciences Inc. Announces Listing on Frankfurt Stock Exchange

Mercer Park Brand Acquisition Corp.

NEO: BRND.U

New Listing

Mercer Park Brand Acquisition Corp. Approved to Begin Trading on the OTCQX(r) Best Market Under the Ticker Symbol 'MRCQF'

GTEC Holdings Ltd.

TSXV: GTEC

New Listing

GTEC Announces Closing of $23 Million Bought Deal Public Offering of Units

 

Risk Tier/ Inclusion Updates in CRB Monitor

Name

Ticker Symbol

Action

Reason

British American Tobacco P.L.C.

LSE: BATS

Upgrade –Tier 3 to Tier 1B

BT DE Investments Inc. Acquires Stake in Organigram Holdings Inc.

PPJ Healthcare Enterprises, Inc.

OTC Pink: PPJE

Add to DB – Tier 3

PPJ Healthcare Enterprises, Inc. Updates Its Shareholders

International Land Alliance Inc.

OTCQB: ILAL

Add to DB – Tier 2

International Land Alliance Announces First Harvest From Indoor CBD Hemp Operations

Century Cobalt Corporation

OTCQB: CCOB

Add to DB – Tier 1B

Cannabis Licence Acquisition and Greenbelt Update

 

Risk Tier/ Inclusion Updates in CRB Monitor

Name

Ticker Symbol

CRBM Tier

CRBM Cannabis Sector

NR Instant Produce Pcl.

NRF(THB)

Tier 3

Food, Beverage & Tobacco

Forian Inc.

NASDAQ: FORA

Tier 2

IT Services & Software

EyeCity.Com Inc.

OTC PINK: ICTY

Tier 2

Personal Products

Silver Spike Acquisition Corp II

NASDAQ: SPKBU

Tier 2

Financial Services

Alset International Limited

SGX: 40V

Tier 3

Food, Beverage & Tobacco

 

Cannabis Linked Equity Performance

Generally speaking, there were not many bright spots for publicly traded pure-play cannabis companies during the month of March. With that said, one of the best performing Tier 1 CRBs for the month was Organigram Holdings Inc. (TSX: OGI). OGI’s stock price spiked following the mid-month announcement that British American Tobacco P.L.C. (LSE: BATS) will acquire a 20% stake in OGI. Sadly, OGI was one of the only positive stories in March 2021.

After surging for much of January and February, cannabis-linked equities, for the most part, recoiled in March, with the larger, pure-play Tier 1 companies giving back a substantial portion of their Q1 gains. Multi-state operator Verano Holdings Corp. (CSE: VRNO), after announcing the addition of licensed subsidiary businesses in multiple states, posted a negative 17% return with much of that collapse occurring about a month after its shares started trading on the CSE.  And shares of Tier 1B Cronos Group (TSX: CRON) similarly fell to earth in March after being up nearly 50% prior to the beginning of the month, in spite of their reporting encouraging 2020 full-year earnings.  

A favorite of trading desks, Tier 1B Tilray, Inc. (Nasdaq: TLRY) continued on its path of highly volatile (and also liquid) performance, losing 11% for the month of March and now moving in a similar direction and magnitude to M&A partner and Tier 1A Aphria (TSX: APHA). The two announced their merger In January 2021. And we continue to follow the performance of GW Pharmaceuticals (Nasdaq: GWPH), which closed out the month up 0.9% month after the mid-February announcement of its $7.2 billion acquisition by Jazz Pharmaceuticals plc (Nasdaq: JAZZ).  

Following a January and February that featured spectacular returns, The CRB Monitor Index of Top 10 Tier 1 cannabis-linked equities fell back to earth to close out Q1, posting a negative 9.2% return on an equally-weighted basis. This performance trailed major equity market indexes (see SPY, EFA, and VWO in the chart below).

CRB Monitor "Top 10" Tier 1 Cannabis Companies 

Source: CRB Monitor, Sentieo

CRBMonitor_Top10Tier1Companies_Mar2021

Source: CRB Monitor, Sentieo

CRB's In the News

March 2021 was a continuation of a busy news cycle for publicly traded cannabis-linked companies. The following is a sampling of highlights from the March 2021 cannabis news cycle, as tracked by CRB Monitor. Included are CRB Monitor’s proprietary Risk Tiers

Wondering what a Tier 1, Tier 2 or Tier 3 CRB is?

See our seminal ACAMS Today white paper Defining "Marijuana-Related Business" and its update Defining "Cannabis-Related Business"

 

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