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Nova Cannabis Inc. (TSX: NOVC) posted quality revenue and profits in its fourth-quarter and annual financials ending Dec. 31, 2023, as it continues to make its way out of the red.

The Edmonton-based firm saw revenue rise to $259.3 million, up 14.5% from $226.4 million the previous year. The company’s financials showed a net profit of $3 million, a reversal from a $11.2 million loss in 2022.

Gross profit was $61.6 million, accounting for 24% of its sales, versus 19% or $43.9 million in the preceding year.

Fourth-quarter earnings saw a consistent revenue stream of $67.4 million, matching the third quarter and showing a 10% year-over-year rise. The company made a profit of $400,000 during the quarter, a big improvement versus the same time in 2022 when the firm lost $4.8 million, according to filings. That’s an earnings increase of more than double (109%).

“Nova has achieved significant milestones this year, marked by sequential gross profit growth and positive net earnings for three consecutive quarters,” CEO Marcie Kiziak said in a statement.

The CEO thanked improved gross profit margins, efficient inventory management, and the expansion of its data licensing program, which generated $4.2 million in the final quarter of 2023. The company’s gross profit for the same quarter was $17.1 million or 25% of revenue.

By the end of 2023, Nova operated 96 stores, up from the previous count, with a meaningful market presence in Alberta and Ontario. The company noted its growth in these regions, estimating its market share at approximately 19% in Alberta and 4% in Ontario.

The year’s operational gains included enhanced cash flow from operations, totaling $11.7 million, an improvement from the slight negative cash flow in 2022. Nova’s cash reserves amounted to $13.8 million as of Dec. 31, 2023.

Nova said it’ll continue to target expansion in the Canadian cannabis retail market, with a focus on British Columbia and Ontario. The company pointed to its Value Buds brand and private label products as key components of that growth strategy.

SNDL scrap

Nova and Canadian grower SNDL (Nasdaq: SNDL) also decided not to proceed with their planned partnership due to regulatory challenges, the companies announced in November.

Despite so, SNDL said it would still support Nova by extending the due date for a loan they provided to March 31, 2024. SNDL also decided not to go ahead with giving Nova’s shares to SNDL’s shareholders as initially planned.

However, both companies said they would honor their existing management and administrative services agreement. SNDL’s CEO, Zach George, said that the company would continue to support Nova’s growth and business development.

Originally, the partnership was supposed to include merging over 20 of SNDL’s cannabis stores in Ontario and Alberta with Nova’s retail operations. The deal’s closure had been postponed multiple times before due to regulatory reviews in Canada.

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Auxly Cannabis Group Inc. (TSX: XLY) (OTCQB: CBWTF) reported a financial upturn in its fourth-quarter and full-year results ending Dec. 31, 2023, finding ways to lower its losses and beef its balance sheet.

The company’s net revenues for 2023 amounted to $101.1 million, representing a 7% rise from the previous year, with fourth-quarter revenues reaching $26.9 million, an increase of $2.2 million year-over-year.

“Thanks to a tremendous team effort, we achieved our profitability targets despite overall industry and macro-economic headwinds,” CEO Hugo Alves said in a statement.

“We focused and optimized our business, resulting in meaningful cost savings and industry-leading margins, all done while delivering quality products and meeting the ongoing demands of our consumers. We also successfully strengthened our balance sheet and improved the financial position of the Company.”

Still, Auxly reported a net loss of $44.5 million for the year. The figure represents a reduction in net loss versus the previous year’s $130.3 million. The firm said that the decrease in net loss was attributed to improved gross profits, lower operating expenses, and better overall financial performance.

“Although the Company did not meet its full growth ambitions, it made significant progress in optimizing its portfolio to expand margins by leveraging the Company’s competitive advantages in vapes, pre-rolls and dried flower products,” the company said, which are “the product formats which mirror how Canadians are choosing to consume cannabis, and represent, in aggregate, approximately 85% of the adult-use recreational market.”

Auxly reported an adjusted EBITDA of $1.5 million for the year and generated $8.2 million in cash from operations. The company’s gross margin on finished cannabis inventory sold was 34% for the year, peaking at 40% in the fourth quarter.

The financial report also noted Auxly’s market performance, including its position as the fifth-largest licensed producer in Canada’s recreational cannabis market, capturing 5% of total market share. The company has seen success in the vape category and expanded its product line in the pre-roll and dried flower sectors.

Following the end of the fiscal year, Auxly amended its credit facility and improved its balance sheet, mostly through a previously announced financing deal with Imperial Brands plc, which converted $123.4 million of debt into equity in Auxly.

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California is known for strong cannabis, but recent tests from dispensaries have shown that the reported strength is starting to fall.

The state’s legal cannabis market recorded a 7% drop in median THC potency over the last quarter, according to data from analytics firm Headset.

The firm analyzed more than 90,000 samples from California stores. In December, the average THC level was 30.7%, but by March, it fell to 28.5%.

But that doesn’t mean the weed itself is getting weaker, experts suggest. Instead, it’s more about California getting increasingly serious about making sure the THC levels on labels in the state’s dispensaries are accurate.

In the past, there have been wide concerns that some labels showed higher THC levels than the cannabis actually had, mostly because higher THC can mean higher prices.

Complaints that THC levels have been exaggerated has also led to lawsuits.

The bevy of complaints spurred regulatory changes in the state, including stricter testing protocols and a revised THC calculation method implemented earlier this year.

San Francisco-based testing lab, Anresco Laboratories, took note of the market-wide adjustment in potency figures following the regulatory updates.

“We certainly heard from customers and potential customers that they’re seeing potency values dropping at other laboratories,” Zach Eisenberg, vice president of the lab, told SFGate.com.

“Some labs were even proactively saying, ‘Be prepared for our results to be lower after this change.’”

The changes are meant to make the numbers on labels more trustworthy, as a slew of issues ranging from extensive illicit distribution rings involving major legal players to unpaid tax tabs (or its over-collection) continue to plague the state industry.

“I highly doubt anything has changed in terms of the actual composition of the cannabis products,” Eisenberg said.

Now, only labs that meet the new strict standards can test marijuana in the state. Around 12 out of 38 labs were in compliance with the new rules in January, according to the outlet. And although fewer labs can test now, officials reportedly don’t expect product delays.

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The Oregon Liquor and Cannabis Commission on Monday launched the Cannabis and Alcohol Management Program (CAMP), a new online system for licensing state recreational marijuana and alcohol businesses.

According to the OLCC, CAMP will make it easier for businesses to handle all their licensing needs in one place, such as changing the location of a marijuana business or getting a license to sell alcohol at a restaurant.

“We’ve learned a lot from our initial online marijuana licensing system, as well as moving our alcohol service permitting process online,” Rich Evans, OLCC’s senior director of compliance, said in a statement. “And we’ve used that knowledge to streamline the process for licensees, as well as improving our own data collection, which will help us make better informed compliance and policy decisions going forward.”

The new system is designed offer a better user experience. It will allow business owners to:

• Use common online accounts for logging in
• Make electronic payments
• Manage multiple licenses on one dashboard
• Readily access important information

It was also built to increase public transparency by making information more accessible, in line with Oregon’s public records laws.

The announcement came on the heels of the state legislature’s passage of a bill that limits the number of cannabis business licenses based on the state’s population, among other items. The approach is  much like how Oregon regulates liquor stores.

“It is more similar now than it ever has been,” Joy Hudson, co-founder and CEO of Oregon-based Nimble Distribution, told Green Market Report.

The bill also codified OLCC’s authority to create and adjust rules to make sure the systems they implement work effectively.

CAMP will initially be available to recreational marijuana licensees, with alcohol licensees to be included later in the year. The program will be implemented in stages over 16 months, with future updates to include liquor licensing, permit renewals, and compliance processes, the agency said.

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Delta-8 may be the target of many regulators and lawmakers, but it’s as popular as ever – particularly among teens.

A recent study funded by the National Institutes of Health found that roughly 11% of high school seniors in the U.S. reported using delta-8-THC in the past year.

The analysis is based on data from the 2023 Monitoring the Future survey and marks the first time research has tried to quantify the prevalence of delta-8-THC use among adolescents.

The hemp-derived compound, which induces effects akin to the more widely recognized delta-9-THC – the primary psychoactive ingredient in marijuana – has seen a surge in popularity in recent years.

“11% is a lot of people – that’s at least one or two students in every average-sized high school class who may be using delta-8,” Nora Volkow, director of the National Institute on Drug Abuse, which is part of the NIH, said in a statement.

“We don’t know enough about these drugs, but we see that they are already extremely accessible to teens.”

Delta-8 products are often sold online or in places like gas stations and smoke shops without age restrictions.

A vast majority – 91% – of the teens who said they’ve used delta-8 also reported using marijuana, according to the findings. But that overlap isn’t telling the whole story, as the use of delta-8 was more common in the South and Midwest areas with states that still lack regulated marijuana access and where there are no specific rules about delta-8.

The study emphasized the need for more research into the effects of delta-8 specifically, as well as better education for young people and parents about the risks associated with cannabis products.

Delta-8 hate

The situation with delta-8 THC in the U.S. is quite mixed and a bit confusing.

While marijuana has been moving toward expanded legality in states, delta-8 THC is facing bans or heavy restrictions in many of those same places. At least 24 states already have heavy restrictions on delta-8 products, with 17 outright bans, according to October 2023 coverage from Green Market Report.

In addition, since then, more states have targeted the hemp-derived product, including New York, Virginia, and most recently, Florida. Ohio Gov. Mike DeWine in January asked for a ban on “intoxicating hemp” goods, including all delta-8 products, as part of their work on amending the ballot measure that legalized recreational cannabis in the state last year.

However, not every state is moving to ban delta-8. Some states, such as Illinois and New Jersey, allow both delta-8 hemp products and marijuana. And states that have been less enthusiastic about legalizing marijuana, such as Texas and Alabama, have not imposed such restrictions on delta-8 products.

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Florida-based cannabis giant Trulieve (OTCQX: TCNNF) finally filed a lawsuit against its former financial chief for misusing company funds for personal expenses.

Filed in the U.S. District Court for the Northern District of Florida, the suit accuses Alex D’Amico of leveraging his position to finance personal luxuries, including vacations, expensive clothes, and legal fees; all under the guise of business-related expenditures.

“Throughout his tenure as CFO, D’Amico surreptitiously acted as though his position entitled him to raid the corporate coffers to finance his personal largesse as if it were his own personal slush fund,” the suit said.

The total disputed amount is estimated to be between $350,000 and $400,000 over approximately four years.

Additionally, he is accused of seeking reimbursements through the company’s expense management system, CONCUR, for the same expenses already charged to the corporate card, as well as some completely made up.

“Not only did D’Amico double dip by submitting personal reimbursements for the very same “corporate expenses” he had already inappropriately charged to Trulieve on his company credit card, but also for purely fabricated expenses never incurred by him,” the company wrote.

The discrepancies were identified through a company-led investigation last year, following irregularities in expense reports. The probe triggered D’Amico’s resignation in June, amid ongoing scrutiny by the company’s board and audit committee.

According to the suit, D’Amico purchased thousands of dollars’ worth of clothing from high-end retailers such as Nordstrom, Lululemon, Vuori, and BYLT Premium Basics. For instance, on April 12, 2023, he allegedly charged $236.00 at Lululemon, and on May 12, 2023, he charged $819.00 at BYLT Premium Basics.

D’Amico is also accused of using company funds to pay for his personal attorney’s retainer, amounting to thousands of dollars, a cost which the lawsuit asserts was not a legitimate business expense.

On April 15, 2023, he is said to have charged $1,318.88 to his corporate card for a purchase from eye care chain, Pearle Vision.

On May 6, 2023, he allegedly made three separate unauthorized charges totaling approximately $130 at the Legoland Discovery Center in East Rutherford, New Jersey.

He also used the card to pay for a $24,000 “executive training” program that the company claims was neither authorized nor beneficial.

Despite the company presenting evidence of misconduct, D’Amico resigned last year without acknowledging any wrongdoing. His compensation at the time of resignation included a base salary of $400,000, along with $207,000 in stock awards and options for 197,000 company shares.

Following his resignation from Trulieve, D’Amico briefly joined CytoSorbents Corp as CFO, a position he left shortly after Trulieve made its internal audit and his departure public, according to Law360.

The lawsuit demands restitution and damages on grounds including breach of contract, breach of fiduciary duty, unjust enrichment, civil fraud, and conversion.

D’Amico had been with Trulieve as the CFO since 2020. After D’Amico left, Ryan Blust temporarily took over. Then, Tim Mullany was chosen as the new CFO in July but left just 10 days later for personal reasons. Blust then was asked to step in again while the company launched another search for a permanent CFO.

The company tapped Wes Getman in December 2023 to take over the role.

TrulieveCFOsuit

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Produce and cannabis grower Village Farms International (Nasdaq: VFF) reported its financial outcomes for the fourth quarter and the fiscal year ending Dec. 31, 2023, showing a rise in consolidated sales alongside a net loss drop.

For the fourth quarter, Village Farms posted consolidated sales of $74.2 million, a 7% increase from $69.5 million during the same period in 2022. That beat Seeking Alpha’s analyst average by $3.27 million.

The company’s net loss improved to $22.5 million from a loss of $49.3 million in the fourth quarter of the previous year.

In the Canadian sector, the company noted a 15% climb in net sales to $32 million. That was attributed to a huge rise in non-branded wholesale sales, which jumped by 339%. The net loss in this segment improved to $1 million from $2.8 million year over year.

“Our Canadian cannabis business remains the undisputed leader in that market, with record sales and another quarter of positive adjusted EBITDA and cash flow in the fourth quarter,” CEO and president Michael DeGiglio said in a statement.

“We reclaimed the number two national market share rank across all categories and are steadily closing the gap on the top position. Record retail branded sales were complemented by another especially strong quarter for non-branded wholesale sales. In our non-branded wholesale channel, we took advantage of improved supply conditions and pricing created by the shift of many of our peers to asset light models, significantly reducing our non-brand-spec inventory. While these close out sales are temporarily affecting gross margin and adjusted EBITDA, they are generating additional cash flow, and will support more efficient, higher cash conversion inventory turnover this year and beyond.”

Village Farms’ U.S. subsidiary, Balanced Health Botanicals, saw a slight reduction in net sales to $5.1 million versus $5.3 million; but reported an improvement in net loss, which was down to a loss of $13.7 million from a net loss of $20.9 million, mostly due to a $13.5 million write down of intangible assets.

The company’s produce division saw an uptick in sales, reporting $37.1 million compared to $36.2 million in the previous year, and a notable reduction in net loss from $20.7 million to $4 million.

Village Farms said it is expanding its international market presence, particularly focusing on Europe and Australia. The company started exporting to the U.K. and began building production facility in the Netherlands in order to enter the legal recreational market in Europe.

Additionally, Village Farms is engaging in sustainable energy projects, such as the Renewable Natural Gas (RNG) Project in Delta, British Columbia, which is expected to contribute to the firm’s profitability and sustainability goals.

Hart added, “We are encouraged by early signs of a more favorable operating environment for our Canadian cannabis segment. Reduction in biomass oversupply, recent stabilization of retail pricing, more aggressive actions to address ballooning delinquent excise duties, and recommendations to change the excise duty to 10% of sales will benefit the industry’s profit potential, and especially our business as a profitable leader.”

The CEO said the company in 2023 paid C$78 million in excise duties on sales of C$232 million, which is an effective rate of almost 34%.

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Curaleaf Holdings (OTCQX: CURLF) (TSX:CURA) beat on moderate revenue growth in its fourth-quarter and full-year revenue for the year ending Dec. 31, 2023, as it gears up for what Executive Chairman Boris Jordan described as a “catalyst year.”

The New York-based cannabis giant reported fourth-quarter revenue of $345 million, a 1% year-over-year increase from $340.2 million in the same period of 2022. The company saw a 4% rise in revenue versus the previous quarter. This beat Yahoo analysts’ average by $7.59 million.

“Our fourth quarter results are a solid reflection of the discipline and rigor we have put into evolving our business and the committed work of our team members,” CEO Matt Darin said in a statement.

“It is thanks to all of them that we have leading market share and growth in key markets like Arizona, Florida, New York, and Pennsylvania, a domestic wholesale business that grew 15% sequentially, and a U.S. retail business that grew 9% for the year, eclipsing the $1 billion mark for the first time.”

The company also reported adjusted EBITDA of $83 million for the fourth quarter, which made up 24% of revenue. That represents a 490-basis-point improvement from the year-over-year figures. However, Curaleaf posted a net loss of $57.7 million in the fourth quarter, though that was an improvement over 2022’s $370 million loss.

For the entire year of 2023, Curaleaf reported revenue of $1.35 billion, a 6% increase from 2022. The company maintained a consistent adjusted gross margin of 46% for the year. The annual figures showed a net loss of $281.2 million, hinting at ongoing profitability challenges.

Despite the losses, the company remains optimistic about future growth and is eyeing expansion and new product launches in various states and countries, including Utah and Germany.

“Curaleaf ended the year strong and is positioned extremely well for the future,” Jordan said. “The global opportunities we’ve been building our business toward are unfolding rapidly.”

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Delivra Health Brands Inc. (TSXV: DHB) (OTCQB: DHBUF) net revenue fell 14% in its second quarter, which ended Dec. 31, 2023, but the company was still able to boost its gross profit for the period.

The consumer health and wellness company saw a net revenue fall to C$2.1 million from C$2.4 million in the same period last year. The decrease was attributed primarily to lower sales of Dream Water in the U.S., driven by shifts in customer ordering patterns.

Conversely, sales in Canada, particularly of the company’s LivRelief cannabis-infused creams, showed improvement.

Despite the revenue downturn, Delivra Health reported an increase in gross profit to C$1.1 million, up from C$987,000 year-over-year. That boosted the company’s gross profit margin to 54% from 41%. The company cited a shift towards higher-margin products and more profitable customer segments.

Operating expenses rose by 30% to C$1.3 million, up from C$968,000 in the corresponding quarter of the previous year, largely due to higher spending on marketing and digital advertising.

The company recorded an adjusted EBITDA loss of C$84,000 compared to a profit of C$140,000 in the same period the previous year. The lower adjusted EBITDA was linked to the reduced net revenue and higher operational expenses.

Still, CEO Gord Davey said that the company’s earnings results are “on track” with its goals.

“The results demonstrate that the company’s business model is a resilient model that works well with changes in sales volume when it comes to producing sustainable margins,” Davey said in a statement.

He also noted that Delivra Health is focused on expanding its marketing efforts and introducing new products to extend its market presence both in North America and internationally.

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A class action lawsuit has been filed against Glass House Brands Inc. (OTCQX: GLASF) and several of its subsidiaries, alleging numerous labor law violations.

The employee-led suit accused the California-based company of not providing sick leave, failing to pay minimum wage, and denying legally mandated lunch breaks, according to court documents obtained by Law360.

Additionally, it alleges that the company enforced unlawful work quotas on its employees.

Lead plaintiff Gerardo Melendez aims to represent a wide group of current and former employees who worked in real estate or cannabis cultivation for Glass House in Carpinteria. The lawsuit also names Labor Force Management Inc., a staffing firm accused of supplying workers to Glass House under these conditions.

The complaint contends that Glass House required employees to work more than eight hours per day and 40 hours per week without paying overtime, in violation of state labor laws. It also claims the company set excessive work quotas, such as expecting a single worker to process four pounds of cannabis each day, breaching California labor laws.

Further allegations include not compensating workers for time needed to put on and remove work-required gear, failing to provide a second lunch break during 10-hour shifts, and a range of other violations such as not offering suitable seating, accurate wage statements, reimbursement for business expenses, or final wages upon termination of employment.

The lawsuit seeks damages under California’s Private Attorneys General Act for anyone who worked for the company over the past four years. It specifically mentions an extension of the statute of limitations for certain claims during the COVID-19 pandemic, from April 6 to October 1, 2020.

Named in the suit are subsidiaries GH Camarillo LLC, Glass House Camarillo Cultivation LLC, Glass House Brands Inc., and Mission Health Associates Inc. Although CEO Kyle Kazan is mentioned, he is not listed as a defendant in the lawsuit.

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MindBio Therapeutics Corp. (CSE: MBIO) posted positive outcomes from its Phase 2a clinical trial involving the take-home microdosing of its depression treatment drug, MB22001.

According to the company’s announcement on Monday, the trial achieved its primary efficacy endpoint, with participants experiencing a mean 14.1 point reduction in the Montgomery-Asberg Depression Rating Scale (MADRS), which comes out to a 60% decrease in depressive symptoms. Additionally, 53% of the participants were reported to have achieved complete remission of depression symptoms.

“These Phase 2 trial results are transformative for the Company as it takes its next steps into late-stage pharma,” CEO Justin Hanka said in a statement.

For the study, participants self-administered microdoses of a proprietary form of Lysergic Acid Diethylamide (LSD) over an eight-week period.

MindBio said that MB22001 was well tolerated by participants, with no severe or serious adverse events related to the treatment reported. The finding is meaningful as it suggests the potential for safe, at-home use of microdosed psychedelics under controlled conditions.

The trial’s success also marks MindBio as the only organization currently approved for the take-home use and handling of a psychedelic medicine in clinical trials, it said.

The company added that it has collected extensive data over three years from its clinical trials, including psychometric data, speech analytics, sleep, biometric, activity data, EEG, ECG, PK/PD, and DNA sampling. The dataset is intended to support the development of a “scalable, safe, and effective” treatment model for depression that can be tailored to individual patient needs.

“I must admit, the scale of the improvements in depressive symptoms even surprised me as we advance this novel medicine through late-stage clinical trials,” Hanka said in a LinkedIn post.

“A patient can self-administer MB22001 in titratable microdoses at home and then get on with their day and it’s exactly what we have been testing with regulatory support in clinical trials in the real world.”

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Mississippi regulators plan to revoke the operating license of Rapid Analytics, one of the state’s two medical marijuana testing labs, due to serious rule violations that led to a product recall.

“This decision follows an investigation conducted between December 21, 2023, and February 9, 2024, revealing significant deviations from regulatory standards and approved procedures,” the Mississippi State Department of Health (MSDH) said in a news release Thursday.

“Medical cannabis testing is critical to ensuring product safety for patients, and Rapid Analytics’ disregard for regulatory compliance poses a threat to public health and welfare.”

The company, however, has been granted a twenty-day period to appeal the decision, which is scheduled to process on March 13.

The revocation action stems from an earlier incident in December when discrepancies in Rapid Analytics’ pesticide and mycotoxin testing results led to an administrative hold on a wide swath of the state’s medical cannabis products. The findings followed an anonymous tip that claimed many of the goods were tainted with pesticides.

The hold impacted approximately 70% of the market, regulators said at the time, with some industry insiders suggesting to Green Market Report that the figure was as far-reaching as 80%.

Sources at the time said it caused considerable disruption, especially among new retail outlets, some of which had to close temporarily. MSDH noted that no illnesses had been reported related to the impacted products.

In response to the discrepancies, retesting of the affected products was taken over by an undisclosed third-party toward the end of December, overseen by the agency.

A representative of the lab told the Magnolia Tribune at the time that the concerns were “baseless,” asserting that its methods are sound. Mike Watkins, Executive Director for the Mississippi Independent Cannabis Association, also told the outlet that two additional facilities are in the process of being certified to test product.

Rapid Analytics’ owner, Mami Henry, told WLOX in December, “We have everything they need to get this done. There is absolutely no reason for them to hire someone else to re-test our product when we have our product available that we would gladly provide for the state.”

The retesting process, funded by the MMCP, started with cannabis flower products before moving on to concentrates and infused products.

MSDH could not be immediately reached for comment.

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