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The Ninth Circuit Court of Appeals is set to hear arguments in August in a closely watched case about whether terminally ill patients have the right to use the psychedelic drug psilocybin under federal and state “right-to-try” laws, Law360 reported.

The case, Advanced Integrative Medical Science Institute v. U.S. Drug Enforcement Administration, was brought by Dr. Sunil Aggarwal, a Seattle physician who’s seeking to provide psilocybin to his dying cancer patients to treat depression and anxiety.

Aggarwal and his clinic argue that laws aimed at allowing terminal patients to try experimental medications should permit the use of psilocybin in this context. The DEA and Justice Department counter that right-to-try statutes don’t override the federal prohibition on the substance.

Oral arguments in the case are scheduled for the morning of Aug. 19 in San Francisco, the Ninth Circuit announced Sunday.

The current appeal is part of a broader effort by Aggarwal to expand access to psilocybin for end-of-life care. The DEA has repeatedly rejected his proposals, arguing that providing the substance would be inconsistent with public health and safety and that Aggarwal must register as a researcher to obtain it.

Aggarwal sued the DEA in 2022, alleging its decisions were arbitrary and contradicted legal precedent allowing limited therapeutic use of other restricted drugs. The agency has insisted that Aggarwal hasn’t provided sufficient evidence and that it can’t fully assess his waiver request without more specifics.

In a separate case, the Ninth Circuit ordered the DEA to clarify its rationale for keeping psilocybin in Schedule I after rejecting a petition by Aggarwal to reclassify it.

Though currently illegal, psilocybin has received “breakthrough therapy” designation from the FDA twice and is now undergoing late-stage clinical trials. Any ruling by the Ninth Circuit in Aggarwal’s case could mean reverberations for its legal status and availability to patients.

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Scotts Miracle-Gro (NYSE: SMG) trimmed its financial expectations for the fiscal year on Thursday, but the company but reiterated its commitment to critical targets and signaled confidence in its strategy despite a more challenging environment.

The Marysville, Ohio-based company now anticipates adjusted EBITDA earnings of $530 million to $540 million, about 20% above the previous year but below its earlier forecast of $575 million, according to a news release. Scotts also dialed back its outlook for U.S. consumer segment sales growth to 5% to 7%, from a prior estimate of high-single digits.

“We are seeing year-over-year growth and feel good about our overall performance,” Chairman and CEO Jim Hagedorn said in a statement, noting the company’s confidence in its ability to drive long-term shareholder value despite the revised guidance.

Central to that effort is Scotts’ goal of generating $1 billion in free cash flow over two years. The company said it remains on track, with plans to deliver $560 million in the current fiscal year. Scotts also aims to pare its debt by at least $350 million and boost its full-year gross margin by a minimum of 250 basis points.

“Our decisive actions are contributing to sales growth, strong free cash flow generation, and significantly improved year-over-year adjusted EBITDA, putting us in position to exit 2024 with leverage below 5 times,” CFO Matt Garth said.

The lawn-and-garden giant has grappled with oversupply and a sharp downturn in its Hawthorne unit, which serves the cannabis growing industry. In April, Hawthorne surprised the company by outperforming internal profit forecasts for the first time, buoyed by strength in higher-margin proprietary brands.

The cannabis industry, while struggling, is showing some signs of life. Hawthorne stands to benefit from a potential merger involving one of its investments,  New York-based RIV Capital (CSE: RIV) (OTC: CNPOF), which is in late-stage talks to combine with Florida-based Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF). The deal would give Scotts a sizable stake in a new multistate operator with greater scale and reach.

Federal action to ease marijuana restrictions could also provide a lift, though Scotts has been measured in its optimism on that front.

The company previously said a restructuring effort, which included layoffs and facility closures, has better positioned Hawthorne to navigate a range of scenarios. Scotts still sees long-term value in the cannabis industry, Hagedorn told investors this year.

Scotts plans to share additional details on its outlook at the William Blair growth-stock conference Thursday in Chicago. The company reaffirmed its commitment to its strategy and key financial targets.

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After rumors raced through the industry, Ben Kovler, CEO of Chicago-based Green Thumb Industries (GTI) (CSE: GTII) (OTCQX: GTBIF), officially confirmed that he sent a letter to the chairman of  The Boston Beer Company (NYSE: SAMS), Jim Koch, outlining the potential benefits of joining forces.

In the letter, which was made public on X Wednesday, Kovler pitched a vision for the combined company to create a “powerhouse of brands” that would cater to evolving consumer preferences, particularly as younger consumers drink less alcohol. He also noted that the merger would allow GTI to trade on a major U.S. stock exchange; the company currently trades on the U.S. Over-the-Counter markets and the Canadian Securities Exchange.

Kovler proposed that the combined entity would be well-positioned to innovate in established cannabis product formats and pursue further mergers and acquisitions. He also suggested that GTI could make a superior offer to Boston Beer shareholders that other rumored proposals.

The situation wasn’t entirely clear up until now, with a representative for GTI earlier this week stating that the company does not comment on market rumors. Boston Beer It has not publicly commented on the proposal, nor has it responded to Green Market Report’s requests for comment.

Stock prices for Green Thumb Industries posted steady gains since the letter was leaked, going from $11.59 on Tuesday morning to a peak of $12.40 Wednesday morning. Boston Beer’s stock initially declined, however, it reset to just above the price it traded at at close on Tuesday.

As of Wednesday, GTI had a market capitalization of approximately $2.89 billion, while Boston Beer’s market capitalization was around $3.52 billion.

Alcohol companies have already been investing in the cannabis industry, such as Constellation Brands (NYSE: STZ), which made a $4 billion investment in Canadian grower Canopy Growth (NASDAQ: CGC). However, Constellation has recently taken steps to distance itself from the deal after incurring financial losses, which highlights the continued challenges for the cannabis industry.

GTI reported revenue of $1.05 billion in 2023, according to the letter. The company currently operates in 15 U.S. markets, including Illinois, Pennsylvania, and Florida.

Despite growing legalization of marijuana at the state level, cannabis remains illegal under federal law, which restricts the ability of U.S. cannabis companies to list on major exchanges like the New York Stock Exchange and Nasdaq. Many are convinced rescheduling wouldn’t even give up-listing to a major exchange a fighting chance.

A merger between GTI and Boston Beer would likely face significant regulatory challenges, given the patchwork landscape of state and federal laws governing the cannabis and alcohol industries. The deal would also require approval from both companies’ shareholders. Additionally, Boston Beer already has a presence in the cannabis industry with its THC-infused brand TeaPot.

Kovler’s letter touted growth of the U.S. cannabis market and suggested federal legalization is inevitable. He also compared the situation to the end of alcohol prohibition, which fueled the rise of brands like Jim Beam and Jack Daniel’s.

GTIletterreadable

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Canopy Growth Corp. (TSX: WEED) (NASDAQ: CGC) said Tuesday that it has exercised its option to acquire New York-based Acreage Holdings Inc. (CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) through Canopy’s U.S. subsidiary, Canopy USA.

The move comes less than a week after Canopy reported its financial results for fiscal year 2024, which ended on March 31 and showed that despite a decline in revenue, the company managed to significantly reduce its net loss versus the previous fiscal year.

The acquisition is part of Canopy’s long-boiling strategy to expand its presence in the U.S. as more states legalize recreational and rescheduling talks move forward. Canopy USA has also recently completed the acquisition of California-based cannabis brand Jetty and two out of three business units of Colorado-based Wana Brands, it said.

“We’re excited to see this advancing as more of Canopy USA’s priority markets come online for adult use across the Midwest and Northeast,” said David Klein, CEO of Canopy Growth and a board member of Canopy USA, in a statement.

However, the acquisition of Acreage comes with its risks. Financial filings show that Acreage had a mere $7.3 million in cash and a staggering $365.2 million in total liabilities as of March 31. The company also warned of its potential inability to continue operations through the next year, with multiple notices of default on debts and accumulated deficit of $775 million.

Despite the red flags, Klein remains confident that Acreage’s financial woes will be resolved once it is fully integrated into Canopy USA.

“We anticipate that these actions will drive growth and the realization of commercial synergies across Canopy USA’s operational platform,” Klein added.

Still, analysts have mixed opinions on Canopy’s acquisition of Acreage.

Matt Karnes, founder of GreenWave Advisors, recently told Green Market Report that Canopy might be “stuck” with the deal and must “make lemonades out of lemons.” While acknowledging some potential bright spots for Acreage, such as the launch of Ohio’s recreational marijuana market and ongoing developments in New York and New Jersey, Karnes criticized Acreage’s management for “poor choices” that likely contributed to its current predicament.

The lead-up

Canopy has been after Acreage since 2019, when the two companies first entered into an arrangement agreement. The initial deal was contingent upon federal legalization of cannabis in the country.

Under the terms of the original agreement, Canopy would acquire 100% of Acreage’s shares for a total value of approximately $3.4 billion, pending U.S. federal legalization. The deal also included an upfront cash payment of $300 million by Canopy to Acreage shareholders.

By the summer of 2020, the two companies amended the agreement to provide Canopy with more flexibility to pursue other opportunities in the U.S. market. The amended deal reduced the upfront cash payment to $37.5 million and allowed Canopy Growth to acquire 70% of Acreage’s shares upon U.S. legalization, with an option to acquire the remaining 30% later.

Now, with the recent announcement, Canopy has exercised its option to acquire Acreage fully, nearly five years after the initial agreement was made.

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The city of Pittsfield, Massachusetts, agreed to pay $786,625 to settle lawsuits brought by three cannabis retailers over community impact fees.

The settlements with Temescal Wellness, Berkshire Roots, and Bloom Brothers were approved by the Pittsfield City Council in a 10-1 vote, according to the Berkshire Eagle. Under the deals, Temescal will receive $360,375, Berkshire Roots $341,000, and Bloom Brothers $85,250.

The legal disputes centered on the municipality’s authority to impose fees on cannabis businesses under Massachusetts law. Pittsfield Mayor Peter Marchetti said that the settlement amounts were less than what the companies paid the city, but avoided potentially larger losses at trial.

“If we were to go to trial and lose, the conditions of that would be far greater than the monies that they owed us,” Marchetti told the Eagle.

The lawsuits alleged Pittsfield failed to justify the community impact fees it charged the cannabis companies under host community agreements. A 2022 state clarification also limited the fees municipalities could impose.

The settlements follow similar legal actions brought against other Massachusetts towns and cities by cannabis companies seeking refunds of previously paid fees. Boston at one point returned nearly $3 million in fees to local cannabis businesses, while the town of Uxbridge paid $1.2 million to settle with one retailer.

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Cansortium Inc. (CSE: TIUM.U) (OTCQB: CNTMF) reported stronger sales and a smaller loss for the first quarter ending March 31, as the multistate cannabis company benefited from continued growth in Florida’s medical marijuana market.

The Miami-based company booked revenue of $25.2 million for the period, up 14% from a year earlier, fueled by a 16% sales increase to $21.1 million in its home state of Florida. Net loss narrowed to $4.2 million from $7.4 million in the year-ago quarter.

“We delivered another quarter of year-over-year revenue growth and positive cash flow generation during the first quarter as we continued to execute on our growth objectives,” said CEO Robert Beasley in a statement.

The firm has been trying to expand its retail footprint and enhance its cultivation operations in Florida, where it sells medical cannabis products under the Fluent brand. The company opened several new dispensaries in the state over the past year and now operates 35 retail locations. It plans to add three more by the end of 2024.

Cansortium has also been upgrading its Florida cultivation facilities to produce a wider variety of high-THC flower strains and cannabis extracts, it said, which typically carry higher price points than lower-potency products.

“Our flower quality seeing further improvement and our average THC percentage now exceeding 27% with many of our strains routinely exceeding 35%,” Beasley said on a company earnings call. “Our improved product quality has enabled us to sustain higher pricing across virtually all product categories, including flower and baked cartridges.”

These efforts helped boost the company’s adjusted EBITDA to $6.8 million from $5.8 million a year earlier.

Beasley also acknowledged the potential for adult-use legalization in Florida, saying “We remain focused on operating our business under the current regulatory framework, and we look forward to doing our part to help this measure pass the referendum.”

CFO Jeff Batliner provided details on Cansortium’s restatement of its first three quarters of 2023, stemming from issues in its biological asset reporting, depreciation and an employee retention tax credit. The largest impact was $6.7 million related to the biological asset adjustment, split across the first quarter through the third quarter.

Cansortium also struck a deal to acquire cannabis investment firm RIV Capital (CSE: RIV) (OTC: CNPOF) in an all-stock transaction. The deal will give it a presence in New York, Pennsylvania and Texas in addition to Florida upon closing later this year.

“We are excited about the business combination with RIV Capital…laying the groundwork for a presence in four of the five largest population states in the country upon closing,” Beasley said.

Under the deal terms, RIV Capital shareholders will receive 1.245 Cansortium shares for each share held. Upon closing, existing Cansortium investors will own about 51% of the combined company, while RIV Capital and affiliated firm The Hawthorne Collective will control around 49%.

Management believes the deal will accelerate Cansortium’s growth by establishing a foothold in states that have attractive regulatory structures and limited competition.

However, Cansortium is still losing money as it spends heavily to grow its business. According to filings, the company in April raised $10 million through a private placement of convertible debt and expects to secure another $6 million in the coming weeks.

At the end of March, Cansortium had $8.5 million of cash and cash equivalents, with total debt of $62.9 million.

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Glass House Brands Inc. (CBOE: GLAS.A.U) (OTC: GLASF) is seeking approval that could allow it to raise more than half a billion dollars from stock sales to investors north of the border over the next two years.

The Long Beach, California-based firm announced Wednesday that it filed a shelf prospectus with Canadian regulators to allow for the issuance of up to C$782 million (US$576 million) in new equity shares through April 2026.

While Glass House said it has no immediate plans to sell shares, the filing gives it a quick path to raise capital from equity offerings if opportunities arise.

“With our strong operating performance, long-term growth prospects, and increase in share price over the past 18 months, having a base shelf will provide additional flexibility to add growth capital and lower our cost of capital when we judge the time to be right,” Chairman and CEO Kyle Kazan said in a statement. “At that time, we will consider all available options including debt, equity, and preferred equity or any combination.”

California cannabis businesses have limited access to traditional financing sources like bank loans because marijuana remains illegal at the federal level. That’s led some to look to investor-friendly Canada as an alternative funding path while uncertainties remain around federal enforcement and legalization efforts.

Glass House closed out 2023 with $271 million in revenue, a 56% increase from the previous year. The new Canadian shelf prospectus filing did not show any material ongoing litigation or going concern issues for the unprofitable cannabis producer, which was at a net loss and had an accumulated deficit of $209 million as of March 31.

Glass House on Tuesday dropped defamation claims against Catalyst defendants who alleged the company is the “largest black marketeer” of cannabis. This came after a California court in March entered a $2.865 million judgment against Element 7 and its owners in favor of Glass House’s subsidiary GH Group over claims of fraud and breach of contract.

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The Alaska legislature passed a bill to establish a task force that will help prepare the state for potential federal legalization of psychedelic therapies, officials said.

The task force won’t take a stance on whether psychedelic treatments are beneficial, said Rep. Jennie Armstrong, an Anchorage Democrat who introduced the House version of the bill that passed on May 10, but it aims to ensure the state is ready if the U.S. Food and Drug Administration approves such therapies, she said.

The FDA is expected to decide this fall on whether to approve MDMA, sometimes known as ecstasy, as a treatment for post-traumatic stress disorder. Veterans, first responders, and Alaska Native people experience PTSD at higher rates than the general population, according to Alaska Public Media.

Rep. Armstrong said the task force’s main focus will be ensuring that any federally approved psychedelic therapies are covered by insurance, including Medicaid, so that all Alaskans have access. The group will purportedly include advocates for the health care needs of Alaska Native people, veterans, and survivors of domestic violence and sexual assault.

“When you look at the rates of trauma, and harm and mental health issues and addiction issues, and suicide rates in our state…you can just imagine how profound that is going to be on the state of Alaska, if we can ensure that those who qualify and need this medicine can get access to it,” Armstrong said.

While some other states have moved to decriminalize psychedelics, Armstrong said Alaska’s approach is different because the task force recommendations will align with any FDA approvals rather than advancing state-level legalization.

What the task force will do is develop recommendations on licensing, insurance coverage, and regulations for psychedelic treatments. Under the measure’s guidelines, the task force It will operate for one year. The bill now awaits a signature from Gov. Mike Dunleavy, a Republican.

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Seelos Therapeutics Inc. (Nasdaq: SEEL) has raised approximately $1.1 million through a combined registered direct offering and private placement, according to a news release Thursday.

The New York-based biotech, which is focused on developing treatments for central nervous system disorders and rare diseases, sold 380,968 shares of common stock at $2.46 per share to institutional investors through the direct offering. It also issued pre-funded warrants for the purchase of up to 81,239 additional shares.

Seelos said it expects around $1.1 million in gross proceeds from the registered direct portion before fees and expenses. Concurrently, it agreed to issue unregistered warrants to the same investors for the private placement purchase of up to 924,414 shares at $2.21 per share.

The transactions, undertaken with Roth Capital Partners acting as the placement agent, are anticipated to close around May 21, subject to customary conditions.

For Seelos, the $1.1 million cash infusion provides a modest financial lifeline as the company looks to pivot following a string of clinical trial disappointments over the past year.

In March, Seelos reported that its drug candidate SLS-005 failed a study evaluating its potential to treat amyotrophic lateral sclerosis (ALS), causing the company’s shares to plunge from around 93 cents to 37 cents on the day before partially recovering.

Seelos had been hopeful the low molecular weight disaccharide drug could help slow the progression of the incurable neurodegenerative disease, which impacts motor neurons and results in progressive muscle wasting and paralysis. However, the study missed its primary and secondary endpoints, despite some potential efficacy signals in a subgroup analysis.

The ALS trial failure came on the heels of another setback last September, when Seelos’ investigational ketamine nasal spray therapy SLS-002 aimed at treating acute suicidal ideation in depression patients failed to achieve its primary endpoint in a Phase 2 study.

Citing financial constraints that prevented the company from reaching its planned enrollment target, analysts at Cantor Fitzgerald subsequently downgraded Seelos stock over doubts about its ability to effectively conduct and complete future clinical trials.

Despite the high-profile study failures, Seelos has pushed forward with SLS-002’s development path. That following November, it announced the drug’s inclusion in a Department of Defense-funded adaptive platform trial evaluating potential treatments for post-traumatic stress disorder in military personnel.

Seelos said at the time that the larger DoD study, if successful, could potentially support pursuing regulatory approval for SLS-002 to treat PTSD based on its data — positioning the drug as a potential path to profits if it can prove effective across a bigger trial population than Seelos’ prior studies.

With its latest $1.1 million raise, the company said it intends to use the net proceeds for general corporate purposes, funding development of its pipeline candidates like SLS-002, and servicing its outstanding convertible debt obligations.

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North Carolina-based cbdMD Inc. (NYSE: YCBD) reported a wider loss for its fiscal second quarter ending March 31, as sales slumped and the company recorded certain one-time charges.

The company posted a net loss of $4 million, or $1.35 per share, versus a loss of $2.3 million, or $1.74 a share, a year earlier. The latest results included a $1.4 million non-cash charge related to the potential convertibility of notes issued during the quarter.

Revenue fell 30% to $4.4 million from $6.2 million a year ago. Direct-to-consumer sales declined 26% while wholesale revenue tumbled 44%.

cbdMD said it issued a $439,926 credit to a wholesale customer related to a $1 million order from March 2022. Gross margin contracted to 59% from 64% a year ago, primarily due to that credit.

Despite the disappointing results, management signaled optimism that recently enacted cost cuts will generate $2.4 million in annualized savings by August. The reductions include layoffs, vendor renegotiations and consolidation of offices.

cbdMD launched its ATRx functional mushroom brand into about 1,500 GNC stores nationwide during the quarter. Kennedy said third-quarter revenue is currently pacing ahead of the March period.

“Transformation is not always linear, and while our second fiscal quarter 2024 results fell short of our ambitions, we believe the operational changes we’ve enacted are set to propel us forward,”  CEO and CFO Ronan Kennedy said in a statement. “We’re particularly excited about our ATRx Platinum line national rollout at GNC, which not only broadens our market presence but also validates our expansion into functional mushrooms.”

cbdMD’s primary revenue driver is its direct-to-consumer online sales channels for its CBD products like tinctures, gummies, topicals and other consumer CBD goods across its cbdMD, Paw CBD and new ATRx functional mushroom brands. Wholesale sales to retailers make up a smaller portion of the company’s overall sales.

The CBD company had $2.1 million in cash remaining at the end of March, down slightly from $1.8 million in September 2023.

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Canadian cannabis producer Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF) reported flat revenue and a swing to a loss in the first quarter, citing seasonal weakness and lingering consumer pessimism as dampening factors. Still, the company was up 50% trading at $0.40 cents a share after the close Wednesday afternoon.

For the period ending March 31, Rubicon posted net revenue of C$8.9 million, a 1% uptick from the first quarter of 2023. But adjusted EBITDA fell to a loss of C$400,000 versus a C$1.7 million profit in the year-ago period. The company did not immediately provide bottom-line net profit/loss figures for the quarter.

“We anticipated a challenging first quarter due to typical seasonality and the overhang of weak consumer sentiment from 2023,” CEO Margaret Brodie said in a statement. “I expect to recover from this temporary dip from our streak of positive adjusted EBITDA in the second quarter.”

A key part of Rubicon’s optimism lies in the launch of its new full-spectrum extract vape products under the 1964 Supply Co. brand. The release said the company received initial purchase orders for these vapes from Alberta, British Columbia and Ontario provincial distributors.

“The vape market has demonstrated robust growth over recent years and trends in Canada and the U.S. demonstrate indicating the vape category’s increasing prominence, rivaling or surpassing traditional flower products,” the company said, framing the launch as a way to capitalize on the segment’s upside.

Brodie added, “With a focus on quality, we are confident that our vape launch will not only drive revenue growth but also solidify our position as a leader in the Canadian cannabis market.”

Rubicon did log a 28% year-over-year decline in first quarter gross profit to C$2.2 million, which Brodie attributed to an unfavorable product mix shift during the quarter.

“In the first quarter, a changing product mix reduced our gross margin, but this spring we’ve shifted focus to higher-margin products, expecting improved results in the second quarter and beyond,” she said.

The company also highlighted its strong market positions, citing Hifyre data showing it was the top premium licensed producer across all cannabis product categories in Canada during the first quarter.

When it comes to cash flow, Rubicon recorded negative operating cash flow of C$900,000 for the first quarter. At the end of March, its working capital included C$10.7 million in current loans and borrowings.

CFO Janis Risbin said, “With the expected re-financing of our debt later this year, we remain focused on strengthening our already solid foundation and continuing to invest opportunistically for growth in 2024 and beyond.”

Looking ahead, Rubicon projected year-over-year revenue growth for full-year 2024, though also anticipating lower gross margins as it uses more external cultivation capacity for branded products. Pricing pressures were also expected to persist industry-wide, according to the release.

Despite the headwinds, management struck an upbeat tone about 2024 overall, forecasting continued positive operating cash flow and positioning Rubicon “as one of the premier cannabis companies in Canada.”

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With Ohio poised to begin issuing the first of its adult-use licenses next month, several cannabis operators are preparing to become an early player in the new state market. However, one of the largest multistate cannabis operators is warning that the accelerated timeline could lead to supply shortages out of the gate.

During its first quarter earnings call on Wednesday, executives from Chicago-based Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF) addressed the double-edged sword of an earlier-than-expected start for Ohio’s new recreational cannabis market next month.

Cresco CEO Charles Bachtell acknowledged the positive surprise of adult-use licenses coming out in June, calling it “great news” for the industry, but he also raised a yellow flag about the development.

“That comes with its own potential challenges too,” Bachtell told investors. “The ability to service the significant increase in expected volume in the state of Ohio, just realistically, the CapEx and the expansion plans needed to go from medical to adult use in the doubling, tripling, whatever it may be, it’s going to take more time than nine months to 10 months.”

Most operators, including Cresco, had been making plans based on previous projections that Ohio’s adult-use market wouldn’t kick off until later in 2024. That timeline shifted after state regulators announced this week that dual-use applications – which would provide existing medical operators with the opportunity to sell adult-use products as well – would be ready by June 7.

To ready for the transition, Cresco said it has steadily invested in incremental capital expenditures to expand cultivation capacity at its production facility in Ohio. CFO Dennis Olis said the company expects “a slight increase” in inventory levels in the second quarter as it builds up supply for the new adult-use market.

However, Olis noted most of Cresco’s major production site investments have already been made, and some remaining funds will be needed to expand certain retail dispensaries to handle increased foot traffic and volume.

Cresco took “a phased approach” to capital allocation in Ohio given the uncertainty around how exactly the program would unfold, Bachtell explained. He said there was “quite a bit of risk” from opposition when the adult-use law was approved by voters in November.

For cultivation and retail, the compressed timeline was a curveball. Cannabis companies raised concerns that they might not be able to adequately boost supplies and staffing if sales opened up to all adults so soon after the ballot initiative passed.

While acknowledging potential short-term bottlenecks, Cresco still struck an optimistic tone about navigating the challenges and capitalizing on the lucrative Ohio market opportunity. President Greg Butler projected an initial spike in cannabis pricing before the market stabilizes as more supply comes online.

Medical marijuana dispensaries that had been operating in the state for at least five years as of Dec. 7, 2023, will receive first crack at adult-use licenses to convert to the new market. The state’s new Division of Cannabis Control will also issue up to 50 additional new stand-alone adult-use dispensary licenses, with licensing preference given to social equity applicants.

For multistate operators like Cresco that already have cultivation and retail assets in Ohio’s medical program, the adult-use transition represents a hotly anticipated growth catalyst – supply constraints or not. Other established cannabis companies in the state are also investing heavily to scale up operations.

“We’re all very happy that it looks like a good guy all around where it moved forward faster than expectations,” Bachtell said.

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On the heels of its announced partnership with MindBio (CNSX: MBIO) this week, Enveric Biosciences (NASDAQ: ENVB) said that it is trying to nail down potential licensing contracts for more of its pipeline candidates, as the biotech company also advances a lead “non-hallucinogenic” asset, it said in an earnings release Wednesday.

In the first quarter ending March 31, the clinical-stage biotech company reported a net loss of $2.46 million for the first quarter of 2024. Enveric had $6.36 million in cash remaining at the end of March after raising $4.5 million in the quarter from warrant and equity issuances, the company said.

“We continue to receive significant interest from strategic partners in the pharmaceutical industry for new drug candidates that target depression and anxiety disorders,” CEO Joseph Tucker said in a statement. “We believe there is a need for new therapeutics that could potentially provide the anxiolytic and antidepressant properties clinically reported in the literature for certain psychedelic compounds without, at the same time, inducing the hallmark hallucinatory effects that defines such agents.”

Enveric is developing EB-003, a neuroplastogenic small molecule designed not to cause hallucinations, as a potential treatment for depression and anxiety. The company said it continues advancing EB-003 toward an investigational new drug application filing and planned Phase 1 clinical trial.

Enveric executed seven non-binding term sheets to potentially out-license other drug candidates from its proprietary pipeline to four strategic partners. If definitive agreements are reached based on these term sheets, Tucker said the deals could represent up to $410 million in aggregate milestone payments for Enveric, plus future royalties.

The partnering candidates were discovered using Enveric’s Psybrary and PsyAI artificial intelligence platforms, which have so far yielded over 1,000 proprietary molecules across seven drug classes, according to Tucker, “around which the company has built a substantial intellectual property estate.” The compounds originate from psychedelic and cannabinoid backbones and span therapeutic areas including cancer, joint disease and neuropsychiatric conditions.

Tucker called the quarter “highly productive.”

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Clinical-stage biopharmaceutical firm Alto Neuroscience Inc. (NYSE: ANRO) gave a business update alongside its first quarter 2024 financials ending March 31.

Alto reported cash and equivalents of $205.9 million at the end of March, expected to fund operations into 2027. R&D expenses rose to $10 million from $5.6 million a year ago, driven by costs for the ALTO-100 and ALTO-300 studies.

The net loss for the quarter was $13.4 million versus $7.3 million in the same period last year, reflecting higher R&D investment and public company costs. Alto went public in February via an upsized $133 million IPO.

“Our team’s commitment to developing personalized therapies for the brain is exemplified by our continued clinical execution and the recent progress across our pipeline,” CEO Amit Etkin said in a statement. He pointed to five Phase 2 studies initiated since the company’s inception.

On the pipeline front, Alto announced the initiation of a Phase 2 proof-of-concept study evaluating its compound ALTO-203 in patients with major depressive disorder (MDD) and increased levels of anhedonia, or inability to feel pleasure. Topline data is expected in the first half of 2025.

ALTO-203 is an oral small molecule that acts as a histamine H3 inverse agonist, with demonstrated effects on dopamine release and positive subjective emotion measures in prior studies.

For its lead asset ALTO-100, a Phase 2b study in 266 MDD patients is ongoing, with topline results anticipated in the second half of this year. ALTO-100 is designed to enhance neural plasticity.

Another Phase 2b study is underway for ALTO-300 (agomelatine) as an adjunctive MDD therapy, with data expected in the first half of 2025.

The company also reported positive Phase 1 results for ALTO-101, a novel transdermal PDE4 inhibitor being developed for cognitive impairment associated with schizophrenia (CIAS). Alto plans to initiate a Phase 2 proof-of-concept CIAS study in the first half of 2024.

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MediPharm Labs Corp. (TSX: LABS) (OTCQX: MEDIF) posted a 67% rise in revenue and a narrower net loss for the first quarter ending March 31, as expansion looks to backpack off regulatory momentum in its key markets.

The Toronto-based company’s revenue came in at C$9.8 million Canadian dollars (US$7.3 million), up from C$5.8 million in the same period last year. This beat Seeking Alpha’s expectations by nearly C$2.8 million.

Gross profit rose to C$2.7 million, or 27% of revenue, a significant improvement from the 6.6% gross margin recorded in the first quarter of 2023 and the 24.3% margin in the fourth quarter of 2023.

Net loss narrowed to C$3.6 million from C$3.1 million in the prior-year period, according to company filings. The company’s adjusted EBITDA loss also improved by 70% to C$900,000 from C$3.1 million in the first quarter of 2023. The firm said it expects more profitability improvements in 2024, with plans to optimize its production and logistics facilities, which could lead to an additional C$1 million to C$2 million in adjusted EBITDA.

“MediPharm’s balance sheet is in an excellent position to consider future investments in growth,” CEO David Pidduck said in a statement. “With adjusted EBITDA getting close to breakeven, the leadership team can now devote even more energy to growing our business.”

At the end of March, the company had a strong balance sheet with C$17 million in cash and less than C$3 million in debt.

MediPharm Labs said its optimistic that the potential reclassification of cannabis as a Schedule III drug could allow for increased medical research. The company, which specializes in precision-based cannabinoids, believes its FDA-inspected facility and experience with DEA-approved clinical trials position it well to capitalize on future opportunities in the U.S. market.

In the first quarter, the company also saw growth in its international medical cannabis sales, particularly in Germany and Australia, driven by regulatory changes and an expanded product portfolio. MediPharm Labs now has 14 product registrations under its Beacon brand in Germany, up from five in the fourth quarter of 2023.

“Regulatory changes in Germany and Australia and potential upcoming changes in the U.S. are all very favourable for the company,” Pidduck said.

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The New York Cannabis Control Board seems to still be wading through the mud after announcing new winners in its adult-use lottery rollout, as challenges of enforcement and resource allocation loom.

News also broke during the meeting that the state’s governor has asked the head of the the Office of Cannabis Management, Chris Alexander, to step down.

The governor is scheduled to announce the findings on Friday afternoon of a month-long review that Gov. Kathy Hochul directed Jeanette Moy, commissioner of the state Office of General Services, to conduct of the cannabis agency’s operations. The Times Union reported that the review was apparently not shared with members of the state Cannabis Control Board before details were leaked to the New York Times by Hochul’s administration.

Licensing updates

The Cannabis Control Board green-lit 104 adult-use cannabis licenses, among a series of other actions, during its meeting Friday.

The board approved the following applications from the window that closed in December:

• 23 retail dispensaries
• 14 microbusinesses
• 27 cultivators
• 23 distributors
• 17 processors

This latest round of approvals brings the total number of adult-use licenses issued in 2024 to 540.

“We have transitioned from provisional to final licensure with 540 licenses issued this year,” said Alexander. “We do see the supply chain getting strengthened, and we’re excited on the ability that we’ve been able to create and deliver opportunity to many New York business owners.”

In addition to the new licenses, the board voted to extend the 12-month provisional license period for CAURD licensees, many of whom faced delays due to litigation. The extension also removes geographical restrictions on CAURD provisional licensees, allowing them to seek viable locations across the state.

“To just give an opportunity for those folks to make up the lost time,” Alexander said. “We do know that the field has changed as there are a lot more licensees out also looking for viable locations.”

The board also approved requests from registered organizations (ROs) to open additional medical cannabis dispensaries in unserved or underserved areas of the state.

“I just want to highlight too…the work that’s being done by the office to expand access to medical cannabis in the state, investments that have not been made since the inception of the program,” Alexander said. “So, really proud to be able to make those investments and also allow for an expansion of the medical program.”

Program updates

Additionally, the board released supplemental policy guidance for reviewing adult-use cannabis applications from the October 2023 window. The guidance clarifies that the office will review all applications in the “November queue” and prioritize them before reviewing retail and microbusiness applications from the “December queue.” Cultivation licenses will be reviewed concurrently.

The guidance also details reasons why a retail applicant may receive a provisional license, such as if their proposed location conflicts with another or is in a municipality that has opted out of allowing dispensaries.

“The board will provide an update on the license targets for applications in the December queue based on updated information from supply and demand analysis in the supply chain,” Alexander added.

Board Chair Tremaine Wright noted the importance of flexibility in the licensing process, saying that the board retains the power to assess market conditions and issue licenses accordingly.

“If it means increasing the number of growers, or processors, or distribution licenses, if it means that we’re looking at the number of dispensaries, if we’ve realized that we have oversaturation and consumption spaces, or that we might really need to be able to provide some in regions where there’s not enough access — that we have that power and the authority,” Wright said. “So, that’s what this reflects. It reflects in all openness. And to say that we are going to be flexible and that we will continue to move according to what the demands are.”

The board also denied certain CAURD applications that failed to meet eligibility requirements, primarily due to either lacking a qualifying marijuana-related conviction or failing to prove operation of a qualifying business. Board member Adam Perry raised concerns about the denial process and the lack of advance notice provided to the board.

Enforcement

Competition with the illicit market continues to be a challenge for the regulatory board, even with new powers granted earlier this year. However, Perry questioned the office’s ability to effectively enforce regulations with its current staff of fewer than 30 compared to other state agencies.

“Creating new notices that need to be given to landlords, and then following up on every single one of those notices, and then following escalating notices, and then taking third level enforcement actions — that all takes additional personnel time,” Perry said. “Are we being guaranteed that we will have workers to use the tools, or are we just creating a bunch of tools with nobody to actually work on them?”

Linda Baldwin, general counsel for the OCM, noted that the legislation includes provisions to hold landlords accountable for renting to unlicensed businesses and allows local governments to bring nuisance actions against them.

The meeting also included the approval of emergency enforcement regulations and discussions on collaboration with local law enforcement to address illicit cannabis operations. Perry emphasized the need for additional resources and personnel to effectively implement the new enforcement tools.

“What I don’t want to repeat is a situation where we pass a bill, we pass some regulations, we’re given no additional resources, and a few months down the road it’s, ‘Well, the OCM isn’t doing anything,’ when the fact is that it’s a matter of actually having personnel assigned and resources assigned to get the job done,” Perry said.

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A Drug Enforcement Administration judge has postponed a June hearing on the agency’s proposal to ban two psychedelic substances after a pharmaceutical company filed a federal lawsuit challenging the move, according to court documents released Thursday.

Administrative Law Judge Paul Soeffing ordered the DEA to cancel the June 10 hearing while Panacea Plant Sciences’ lawsuit plays out in U.S. District Court in Seattle, Law360 reported. The Washington-based company is seeking to halt the regulatory proceedings.

In December, the DEA initiated a proposed rulemaking process to classify the hallucinogens 2,5-dimethoxy-4-iodoamphetamine (DOI) and 2,5-dimethoxy-4-chloroamphetamine (DOC) as Schedule I controlled substances, the most restrictive category under federal law.

Panacea, which is researching the substances’ potential therapeutic benefits, filed the lawsuit last month, arguing the DEA’s administrative rulemaking process has been unlawful and would hamper its research efforts.

“Although the public interest may lie in an expeditious and efficient resolution to these proceedings, the public interest also lies in ensuring parties are not potentially subjected to an adjudication process found unconstitutional,” Judge Soeffing said in his decision.

The judge directed the DEA to publish a notice informing the public that the June hearing is canceled and proceedings are stayed pending the lawsuit’s resolution. As of Thursday, no notice had been published in the Federal Register.

“Panacea Plant Sciences is thankful the (administrative law judge) agreed in the need for a stay,” CEO David Heldreth said in an email to the outlet. “We look forward to DEA publishing the ordered notice to alert the public to the cancelation of the hearing.”

The company’s lawsuit seeks an injunction halting the regulatory proceedings and a declaration that the DEA’s process has been unlawful. Panacea alleges moving the drugs to Schedule I would critically hamper its research into their potential uses for treating asthma, pain, and inflammation.

1835000-1835534-scheduling of doi and doc_order granting panacea second motion to stay

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Canadian cannabis producer SNDL Inc. (NASDAQ: SNDL) posted record gross profit margins and better-than-expected revenue in the first quarter as the company positions itself for potential expansion into the U.S. market through its new investment platform.

SNDL’s revenue for the quarter edged up 4% year-over-year to C$197.8 million, beating Yahoo Finance analysts’ average estimate by C$86 million. The growth in its cannabis retail and operations segments offset a flat performance from its liquor retail business. However, sales were down 20% from fourth-quarter 2023 levels amid typical seasonality impacts on its retail divisions.

For the period ending March 31, net loss was $4.65 million, an improvement of 87% over the year versus $36.14 million in the first quarter of 2023.

SNDL posted a gross profit of C$50.4 million, representing a gross margin of 25%. That was up from 17% gross margins in the prior-year quarter.

The Calgary-based company said the margin improvement was driven by increased sales of private-label brands, supply chain initiatives and the consolidation of cultivation facilities following the closure of its Olds, Alberta site last October.

“The SNDL team has delivered a solid first quarter result, exemplified by a record gross margin of 25% and the undeniable improvement in the profitability of all of our operating segments over multiple years,” CEO Zach George said in a statement.

The company recorded an operating loss of C$4.4 million, a vast improvement from an operating loss of C$32.2 million a year earlier. Cash flow from operations was negative C$6.1 million.

Despite the quarterly operating loss, SNDL ended March with C$783.2 million in cash, securities and investments on its balance sheet following the sale of shares and warrants throughout 2022 and 2023. It currently has no outstanding debt.

“We are well positioned to further expand our retail network and product distribution in Canada where we expect further consolidation and attrition,” George said. “Building on the momentum of our Canadian operations, the recent completion of Nasdaq’s review of our SunStream USA structure creates an opportunity for SNDL to close on U.S. assets currently under restructuring.”

SNDL is targeting the acquisition of equity positions in certain U.S. cannabis operators like Parallel and Skymint through its newly formed SunStream USA investment platform following Nasdaq’s confirmation that the structure complies with listing rules.

The company also said potential federal reclassification of cannabis to Schedule III could further facilitate investment opportunities and tax benefits if finalized.

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AFC Gamma Inc. (NASDAQ: AFCG) posted a net loss for the first quarter ending March 31, despite higher revenue as it upped reserves for potential loan losses.

According to filings, revenue climbed 10.4% year-over-year to $12.6 million, reflecting higher rents and lending activity. Funds from operations rose to $10.6 million from $9.5 million in the first quarter of 2023.

AFC Gamma reported a net loss of $54,116 for the period versus a net income of $10 million a year earlier. The Connecticut-based real estate investment trust’s net interest income rose to $14.8 million from $16.8 million in the same period last year.

“We are pleased to have originated a total of $90.4 million of loans in the first quarter of 2024, with $34 million in loans to cannabis operators and $56.4 million to commercial real estate developers,” CEO Daniel Neville said in a statement. “On the cannabis side, we completed a $34 million debt investment in Sunburn Cannabis, a private, vertically integrated single-state Florida operator.”

He added, “The investment underscores our commitment to fostering long-lasting relationships with our borrowers and focusing on limited license states with attractive supply and demand dynamics. Additionally, we are encouraged by the promising legislative developments at both the federal and state level, including the anticipated rescheduling at the federal level and the potential transition to adult-use cannabis in states like Ohio and Florida.”

The results also showed a $4.9 million provision for expected loan losses, up sharply from $702,426 set aside a year ago.

AFC Gamma increased its quarterly dividend to 41 cents per share.

At the end of the period, AFC Gamma’s loan portfolio spanned 108 properties across 19 U.S. states. It funded $7.9 million in additional tenant improvements and acquired a $4 million Connecticut cultivation facility leased to an existing borrower.

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Canadian cannabis company Cronos Group Inc. (NASDAQ: CRON) reported higher revenue in the first quarter ending March 31, as its portfolio of brands like Spinach and Lord Jones gained market share in Canada and Israel.

Cronos posted revenue of $25.3 million, up 30% from a year earlier. The Toronto-based firm said sales were propelled by a 31% revenue increase in Canada and 27% growth in Israel year-over-year.

“Cronos achieved its highest quarterly net revenue from continuing operations on record,” CEO Mike Gorenstein said in a statement. “The top line was propelled by 31% growth year-over-year in Canada, and 27% growth year-over-year in Israel.”

Still, Cronos recorded a net loss of $2.5 million for the quarter, an improvement from a loss of $18 million a year ago. Its adjusted EBITDA loss of $10.7 million was a 32% improvement from the first-quarter 2023’s result.

In its home Canadian market, Cronos saw its Spinach branded cannabis products solidify the No. 2 position across edibles, vapes and flower products. New offerings like SOURZ by Spinach edibles and vape products helped drive that momentum.

The company said its relaunched premium Lord Jones brand is also “gaining momentum” in categories like vapes, edibles and pre-rolls in the early stages since returning to the Canadian THC market.

In Israel, top sellers under the Peace Naturals brand included the Wedding Cake and GMO strains. Cronos is also eyeing new opportunities after entering the U.K. medical cannabis market through a partnership with distributor GROW Pharma.

“We continue to focus on bringing our leading cannabis genetics to Israel, with top-performing flower products such as Wedding Cake and GMO, under the PEACE NATURALS brand, winning with consumers,” Gorenstein said.

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