Grow Life 420

Nearly two months after sending out press releases that crowed about the company’s advancements, Numinus Wellness Inc. (OTC: NUMIF) walked back those claims and blamed its public relations firm for the mistake.

Numinus released a statement after the markets closed on Friday, June 7, saying, “The releases were inadvertently disseminated by a public relations firm contracted by the company and represent information that was previously disseminated by the company. The company apologizes for any confusion.”

First error

The first error noted by Numinus related to a partnership between Numinus and Cybin (NYSE American: CYBN) (Cboe CA: CYBN) announced in a press release dated April 17 titled “Numinus and Cybin Embark on a Groundbreaking Journey: Pioneering Phase 3 Trials for Major Depressive Disorder.”

Cybin did indeed engage Cedar Clinical Research to provide clinical research services, and its Murray, Utah, location will be one of 15 U.S. research sites for Cybin’s Phase 3 multinational clinical trial of CYB003. However, the release claimed that Numinus’ Chief Science Officer Dr. Paul Thielking would be the principal investigator. In reality, Thielking is the site principal investigator for the CCR site, not the trial’s principal investigator.

Numinus made the claim again in a May 30 press release, which said, “The Phase 3 trial, set to begin enrollment in mid-2024, will delve deeper into CYB003’s safety and efficacy. Under the leadership of Dr. Paul Thielking, Numinus’s Chief Science Officer and the trial’s Principal Investigator, the study aims to further explore CYB003’s potential to address a critical unmet need in mental health care.”

Numinus clarified that it has no direct or indirect ownership interest in CYB003 and that any CYB003 research is the property of its sponsor, Cybin.

Second Error

Numinus also got ahead of itself by telling investors that it planned to launch a Numinus Network community pilot, which will be made available to its current therapists and other practitioners, alumni of its training program, and former therapists and other practitioners, including those who join the Canadian Centre for Psychedelic Healing when it launches. That press release, dated April 15, was titled “Numinus Wellness Provides Corporate Update.”

Numinus now says that it and CCPH have only agreed in principle to collaborate on the development of training content for the Numinus learning platform. However, Numinus insists that definitive terms of this collaboration will be determined in a subsequent agreement.

The new press release went on to explain that the planned community pilot program and Numinus Network do not provide access to medical infrastructure for the therapeutic administration of ketamine and other psychedelic drugs within Canada’s regulatory framework, which may be through a program such as CCPH’s co-op program.

It also added that there can be no assurance that a subscription-based model of the Numinus Network will be rolled out in Canada or the U.S.

MDMA pivot

In April, Numinus told investors it was going to ease away from the Canadian market and instead focus on the U.S. market and in particular on the drug MDMA. Numinus had high hopes that the FDA would give a positive nod to Lykos MDMA drug; instead, the FDA Advisory panel voted against the drug.

“While the decision of the (Psychopharmacologic Drugs Advisory Committee) was not the preferred outcome for many in the mental health care community, considering the dire need for an effective treatment for the millions impacted by PTSD, we understand the PDAC was acting in the best interests of patient safety and quality care,” Payton Nyquvest, Numinus founder and CEO, said about the decision.

“Based on the positive results from Lykos’ Phase 3 trial, which focused on adult patients, we are optimistic that once the PDAC’s specific concerns are addressed, MDMA-assisted therapy will be made available,” he added.

The post Numinus walks back claims made in press releases appeared first on Green Market Report.

A Florida retirement fund is suing Scotts Miracle-Gro (NYSE: SMG) and some of its executives over poor decisions that caused the value of the shares to fall damaging the group’s pension plan. The Hialeah Employees’ Retirement System is a benefit pension plan based in Hialeah, Florida filed a complaint last week in the Southern District of Ohio outlining the allegations of mismanagement at Scott’s. Scotts maintains its headquarters in Marysville, Ohio, which is situated in this District.

The pension fund claims it bought shares in the company during a period in which the value was inflated as investors were unaware of the true situation with the company’s finances. The market period was defined as between November 3, 2021, and August 1, 2023. They claim that once Scott’s told investors the truth about the financial situation, the shares sold off causing the fund to see its investment fall as well.

Accusations against Scotts

The main allegations against Scotts in the complaint revolve around inventory levels, debt levels, and maintaining a specific covenant of the debt regarding a debt-to-EBITDA ratio.

Stuffing the channels

The first complaint is that Scotts missed out on millions of dollars in sales in 2020 and 2021 due to a lack of inventory as it faced surging demand. The investors accused Scotts of buying too much inventory after having too little and then hiding the problem. They claim that instead of Scotts coming clean with investors over having more inventory than it could sell, it engaged in “stuffing the channels.” The complaint alleges that Scotts sales personnel pressured retailers to purchase more inventory than they wanted or needed. The court document read, “This scheme enabled Scotts to book as revenue the sales to its distributors and maintain earnings to debt ratios that just barely exceeded those required by its debt covenants.”

The investors also pointed to earnings calls in which the Scotts CEO Jim Hagedorn told investors about record shipments, which they say was a false claim.

Debt levels

The investors are also upset that at the beginning of the class period, Scotts held $2.3 billion of debt but by the end, Scotts’ debt had ballooned to $3.1 billion. The problem with the debt levels growing was that Scott’s has to maintain a debt-to-EBITDA ratio under 6.25 in order to remain in good standing on its debt. If the debt goes higher than the earnings by too much it breaches the debt covenants.

They alleged that by claiming the company had higher earnings, it wouldn’t trigger the debt covenants even as the debt was rising. However, quarterly sales were falling forcing the company to move the goalposts on the debt covenants to 7.0 times the debt-to-EBITDA ratio. That way the company could tell investors that it wasn’t in default of its debt covenants.

Had Scotts admitted it was in default, the investors claim the company’s lenders could have declared all outstanding indebtedness immediately due and payable.

Stock selloff

The main issue that caused the lawsuit was that Scott’s common stock plunged in value once the company told investors that it was having difficulties. When Scott’s reported its 2022 full-year earnings, the company cut its projections to roughly half of its prior guidance. The company also announced plans to take on additional debt to cover restructuring charges as it attempted to cut costs. Still, executives were optimistic, which the investor’s claim wasn’t warranted.

Then by the third fiscal quarter of 2023, the company slashed fiscal year EBITDA guidance by a staggering 25% and announced it had to take a $20 million write-down. The market responded with a selloff.

The complaint notes that Scotts had a closing price of $102.18 per share on June 7, 2022, which then fell to a closing price of $93.13 per share on June 8, 2022. As the executives began expressing the problems to the market, shares fell from $71.44 on August 1, 2023, to a closing price of $57.86 per share on August 2, 2023.

News of the investor lawsuit may have triggered more selling. The stock closed on June 7 at $68 and in early trading on Monday, shares fell to $65.

The post Scotts Miracle-Gro sued over channel stuffing appeared first on Green Market Report.

Going public is a common goal for many company founders, and RAW‘s founder Josh Kesselman is no exception. He told Green Market Report at the CWCB Expo in New York, where RAW was a sponsor, that he’d “love to” find a way – but the path would have to fit his vision.

Attired in a sparkling blazer, diamond-encrusted watch, and $900 Balenciaga sneakers, the paper impresario waxed poetic about selling shares to his customer base to create a “community.”

IPO talk

Going public “is something we would love to do,” Kesselman told GMR. “It just has to be done in our way.

“It isn’t something we’re just going to go to market and do the usual path. It’s got to be done in some way that really truly creates the kind of thing that I’m envisioning, which is more of a legacy,” he added.

During a session at the CWCB Expo, Kesselman told Tim Seymour of CNBC, “My dream would be to bring the company public in a way that only our fans – like our consumers, our smokers – can invest with us. That way it’s more of … a RAW community.”

In this dream, shares would be available via a QR code inside packs of RAW paper. “For every one you scan, you’re allowed to buy a share,” Kesselman said. “That way I can keep certain sharks out.”

For now, the vision will remain a dream, however, as there is no way to control who buys stock in a public company.

“I don’t know how we’re going to pull it off, but I really want to pull it off in a way that, 10 years from now, we brought our base in with us,” he said. “There’s got to be a way, man. There’s got to be some way.”

Seymour also asked if a deal with a large consumer packaged goods company, such as Procter & Gamble, would be considered, but Kesselman said he isn’t interested in going corporate. Even a company that has vast experience with paper products isn’t the path he wants to go down.

“I want to bring my people in. Imagine if you ran a publicly traded company where all of your shareholders were your fans who consumed your product. Imagine what that would be like,” he said.

Pre-rolls

While rolling papers cater to the audience that wants to roll their own, pre-rolls are a fast-growing category that attracts those who don’t know how to roll a joint or aren’t any good at it.  Kesselman acknowledged this trend and said he is pursuing pre-roll brands to use RAW papers and put the company’s logo on the product packaging.

“My goal would be to license RAW to people who are making really good pre-rolls in a way that they have to make it in a certain way using the certain paper, certain machines, grinders, devices, so that it’s a perfect, or what I consider to be a perfect, joint for the end user,” he said. “I prefer to license it to smaller outfits than larger ones because that way it’s more like what we already do.”

Kesselman clearly loves his product and his company. He said he began a rolling paper collection in youth, and while he is currently rebuilding it after losing the collection, he is passionate about papers.

The post Could a RAW IPO roll up to the markets? appeared first on Green Market Report.

A Fox News Poll published the results of an election survey after the close of trading markets on Thursday that included positive results regarding the legalization of adult-use cannabis in Florida.

The question for voters read, “If the election were today, how would you vote on Amendment 3, which would legalize marijuana for adults ages 21 and older? ” 66% of respondents said they would vote in favor of this, while 32% said they would vote against it. The legislation needs 60% to vote in favor and this seems to be one of the first that shows the momentum may be building for approval.

In early May, the Florida Chamber of Commerce ran a survey by Cherry Communications that determined 58% of Florida voters were in favor of the legalization versus 37% against it. This was the third poll that showed Floridians had some work to get over that critical threshold and it seems to be paying off for now.

Republicans against legalization

The Fox News poll also found support for Governor DeSantis slipping slightly. In April his approval rate was 59% and this latest poll showed his support slipped to 52%. Disapproval with the Governor grew from April’s 33% to 47% in June.

The Florida Republican Party Executive Board unanimously passed a resolution opposing Amendment 3 (adult-use cannabis). The Resolution stated that passing the legislation would “benefit powerful marijuana special interests, while putting children at risk and endangering Florida’s family-friendly business and tourism climates.”

With the Florida Republican Party officially targeting the legalization initiative, it will clear the way for Gov. DeSantis to raise money to fund an opposition campaign against the measure.

“We support killing the [marijuana and abortion] amendments as a party because it’s not good policy for the state,” Republican Party of Florida Chair Evan Power told The Miami Herald. “When you look at it, it seems like these amendments are out of step with what Floridians want.”

The post New Florida poll shows momentum building for legalization, despite Republican opposition appeared first on Green Market Report.

The Cannabis Media Council just released its 2024 report titled “Full Spectrum: Guidelines for Responsible Cannabis Advertising,” and it’s chock full of great advice for people in the cannabis industry trying to navigate the complicated landscape for cannabis advertising and marketing.

One of the key findings in the report is that cannabis marketing continues to be unfunded or underfunded (often less than 5% of annual operating budgets) compared to other traditional sectors, where marketing spending averaged 9.1-12% of annual operating budgets.

Not only that, cannabis brands spend 82% less on marketing in relation to the Consumer Packaged Goods industry when comparing marketing spend as a percentage of revenue, according to data from marketing technology firm Surfside. Even worse, Surfside found that dispensaries spend 92% (as a percentage of revenue) less on marketing in relation to the retail vertical.

Green Market Report’s Executive Editor Debra Borchardt sat down with CMC Co-founder Amy Deneson to talk about the new report and its suggested advice for cannabis marketers.

This interview has been edited for length and clarity.

I felt like this report was impressive in the amount of useful and practical information. Who do you see as your audience for this report?

Amy Deneson: We are all building this industry, and so it’s really important as we issue these guidelines that it helps empower people to build and to create for their own names. So there are two main audiences that we endeavor to inspire and also empower with the full spectrum guidelines.

One are all the cannabinoid operators who are looking to deploy their marketing dollars in a impactful way. Advertising is part of the marketing mix. (We want) to let them know that they can advertise but also that they also need to go get budgets in order to advertise.

The other audience that we’re speaking to are media providers, our outlets, our publishers, our platforms that are either open to the category and to some extent and expanding their inventory to the cannabis sector – or they are in the midst of needing to make the business case to someone internally to work with the cannabis sector as advertisers.

With the publisher side of the house, we also try to provide useful information as to the business opportunity of opening up to the sector. Encouraging publishers to be excited to work with this category and then giving them tips and tricks for how to work with either their legal team in order to set out, for example, the letter of publisher indemnification.

The other internal teams that we often need to work with is the business development team, to help them be comfortable going out to their existing advertisers and explaining why cannabis fits within the publication’s mission and community.

The report states that the cannabis industry, in general, tends to spend much less on marketing than more traditional industries. We know that a lot of that has to do with taxation, because they can’t claim marketing as a business expense. Do you think that that’s the main reason, or do you think it’s just the immaturity of the legal industry, that it just hasn’t had time to understand the benefits of marketing budgets?

Deneson: It’s a great question. For the last 10 years of being in the marketing leadership roles with a number of brands from multistate operators to startups, I truly think that it has to do with marketing not being a write-off as a business expense.

We all know the expense of getting to market, whether it’s a vertically integrated state by state or looking to try to build a brand across the industry. There’s also capital constraint on who and how much can be invested into the sector. I think brands and operators are honestly just running out of money by the time they get to market, and there’s not much left over for marketing.

The second thing is that I think that there is a very big misunderstanding that brands cannot advertise. I’ve spent four years with the Cannabis Media Council and still, on a daily basis, hear that cannabis advertisers cannot advertise. It’s not true. As we evolve, we understand that if we have the marketing dollars, advertising is a channel that’s open to us and that we can make the decision on that marketing spend. What percentage of it do we want to allocate to the paid channel versus the other parts of the marketing program and methodologies?

The use of cannabis versus marijuana has certainly been a source of debate within the industry. Within the report, you promote the use of the word cannabis, but every SEO research that we do returns marijuana as the top search term, not cannabis. We’re caught in the middle on this, and I’m curious how you see that for your media audience on this terminology debate.

Deneson: We went towards advocating for cannabis based on the plant’s name and how marijuana has been weaponized, but there’s also a full business case to be made that literally the names of programs are the medical marijuana programs.

I think that giving people a very base foundation of understanding of the terms, what is generally meant by them, and giving a launch pad to make their own business decisions is what we aim to achieve at this time.

I found the advice on dealing with Meta (Facebook/Instagram) and influencers super helpful. You really gave some practical guidelines on how to approach these social media giants who have historically not been super friendly to cannabis. Maybe you could just touch a little bit on how you were able to retrieve the information to give that guidance.

Deneson: The goal for us was to help advertisers understand why they’re seeing advertising for hemp-derived products on Facebook or Instagram when they thought that cannabis couldn’t advertise. We offer practical advice on how to engage with Meta, as you see in a case study with Embark and how they had incredible success.

But the way we secured that knowledge for Meta is (through) another hat that I wear in the industry. I am the co-founder of Pheno, an ad agency for cannabinoid brands and businesses and revolutions. I work directly with advertisers on that property to get them live, be compliant, and achieve results.

You also touch on influencers, who are becoming more important for cannabis companies to reach out to consumers. Is it difficult to figure out the way to measure the effectiveness of an influencer?

Deneson: The influencer information that we provide is twofold. One is to encourage the brand to engage with an influencer in a way that will serve them and the key performance indicators and that the return on ad spend or the return on sponsorship will work for the brand.

The second way that we encourage people to engage influencers is to understand that the brand will be held responsible for whatever the influencer says. So it’s about also the brand understanding that they need to have terms and conditions in place. They need to have scripts in place as a brand safety activity, as well as looking for the return on investment that they want to see. Within the guidelines, we talk about best practices for engaging with influencers and also provide a sample contract that brands can reference.

The full report, “Full Spectrum: Guidelines for Responsible Cannabis Advertising,” is free to download at cannabismediacouncil.com.

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The U.S. Government Accountability Office (GAO) told the Drug Enforcement Administration (DEA) that it needs to do a better job with religious exemption requests it gets for controlled substances like psychedelics. The 70-page report was published last week and made four recommendations to the DEA – mostly revolving around timelines for the requests. However, the report was also notable for all the data it provided about the DEA and these requests.

Psilocybin

The report focused on psilocybin, which is the most requested drug to be used as a sacrament for some religions. The GAO reviewed enforcement data from the DEA during fiscal years 2018 through 2023. The report pointed out that psilocybin cases represented the smallest amount of attention from the DEA with regard to investigations and seizures during this period and these cases were only 1% of all the DEA cases investigated and closed.

During this six-year study time frame, U.S. Customs and Border Protection (CBP) reported the seizure of 49 different drug types—representing a total of 371,088 drug seizures. Psilocybin accounted for 8,349 drug seizures—representing about 2% of the total seizures reported by CBP.  LSD accounted for 13,489 drug seizures—representing 4% of the total seizures reported by CBP during the same period. Most of the drug seizures during this study period by the CPB were for cannabis.

During fiscal years 2018 through September 18, 2023, CBP’s seizure data show that the number and weight of its drug seizures involving psilocybin generally increased—accounting for about a 400% increase in the number of psilocybin seizures and over a 1,000% increase in the weight (in pounds) of the seizures. Over these six years, CBP’s Chicago Field Office location accounted for about 37% (3,081), which is the CBP field office with the largest number of seizures related to psilocybin.

Long Timeline

The report stated, “Over an 8-year period—from fiscal year 2016 through January 2024—DEA reported that 24 petitioners requested a religious exemption for various controlled substances. As of January 2024, DEA reported that none of these petitions had been granted an exemption and of the 6 for psilocybin, three were withdrawn and three were pending a DEA determination. The three pending religious exemption petitions related to psilocybin ranged from about 8 months to over 3 years from the date of receipt. DEA’s information also showed instances where finalized actions regarding exemption petitions related to other controlled substances have been pending a determination for an extensive period—one almost 5 years and one almost 8 years.”

The report identified the state and local initiatives to decriminalize and deprioritize the adult use of psilocybin. The GOA also reviewed various studies underway for using psilocybin as a treatment for mental illness.

The report pointed out the conflict between the Controlled Substances Act and the Religious Freedom Restoration Act causing the DEA  to create a guidance document in 2009 that would establish a procedure for seeking religious exemptions from the Controlled Substances Act from DEA. The document was updated in 2020. The DEA approaches each religious exemption request with a case-by-case analysis that includes interviews and on-site visits.

The DEA said that the processing time varies by case for a variety of reasons. This can be insufficient information to determine whether the religious beliefs are sincerely held, unsafe practices, previous criminal convictions, and the ability to control the diversion of the drug.

Stakeholders

The GOA report said that the stakeholders it interviewed found the process to be difficult to navigate and guidance wasn’t clear. They also complained about the DEA’s communication. One of the petitioners mentioned in the GOA report was the Soul Quest Church, which Green Market Report recently wrote that a member died during a psychedelic retreat. In that situation, the courts found the church and its founder liable for the death of a young man for not providing medical care and for administering the drugs in an unsafe manner.

The stakeholders also told the GOA that it believed the DEA had no interest in granting any waivers.

Conclusions

The report made four recommendations to the DEA as follows:

1. The DEA Administrator should more clearly communicate the types of information that the Religious Freedom Restoration Act petitioners should provide to allow the DEA to evaluate petitions for religious sincerity.
2. The DEA Administrator should more clearly communicate the standards and relevant factors to the Religious Freedom Restoration Act petitioners in deciding religious sincerity.
3. The DEA Administrator should establish timeframes for the DEA to make determinations on completed religious exemption petitions to provide the Religious Freedom Restoration Act petitioners with the DEA’s final determinations.
4. The DEA Administrator should provide the Religious Freedom Restoration Act petitioners with information for petitioners to be able to receive updates on the agency’s progress related to exemption reviews.

The post New report makes recommendations to the DEA on religious exemptions for psychedelics appeared first on Green Market Report.

A three-member panel for the District of Columbia Circuit denied enforcement of part of the National Labor Relations Board‘s decision about Curaleaf Holding’s (OTC: CURLF) Arizona dispensary. The decision stemmed from the firing of worker Anissa Keane, who was a union organizer at a cannabis dispensary. However, the panel did agree with the NLRB’s position that Curaleaf violated three other labor issues.

Curaleaf did not dispute that it violated the National Labor Relations Act by:

• Threatening employees’ tips if they unionized.
• Promising employees benefits if they did not unionize.
• Creating an impression of surveillance.

However, Judge Justin R. Walker questioned whether the NLRB had jurisdiction over cannabis, which he noted was still federally illegal. He added that federal law can’t be displaced by state law. He acknowledged that Congress held that the NLRB can hold employers responsible for upholding labor laws, but that might not count when the business is an illegal operation.

Judge Walker wrote,

That distinction may be more significant than the NLRB appreciates. After all, rings of bookies and counterfeiters affect interstate commerce, but the NLRB does not seem eager to adjudicate their labor disputes. Ditto for street gangs. Why does that change when a corner boy calls himself a “budtender” and his crew incorporates under state law? To me, at least, the answer is hazy.

Employee fired

The NLRB found fault with Curaleaf over its firing of Keane, agreeing that the action was due to her attempts to unionize the dispensary. Keane was organizing with the United Food and Commercial Workers Union Local 99 in Gilbert, Arizona, according to court filings.

The dispensary only deals in cash and when an employee’s cash drawer doesn’t balance at the end of the shift, it is considered a violation. The employees had specified discipline policies that Curaleaf followed.

The NLRB found that Keane was fired after two cash drawer violations when another employee wasn’t fired until he had seven such violations. Tyler Tanselle-Hubbard, the top salesman at Curaleaf’s Camelback, Arizona store, was the only other employee fired under Curaleaf’s four-step policy. Tanselle-Hubbard had no union activities.

Curaleaf also combined employee missteps together. So, if the employee made mistakes other than the cash drawer violation, it still counted in the discipline process. With Keane, the company asserted it documented that she made a litany of errors as a budtender.

The court opinion wrote that “Keane made seven errors in a single transaction, including failing to check the patient’s medical card, dispensing the wrong quantity of marijuana, and failing to log the allotments … A senior Curaleaf Arizona manager called this transaction a ‘nightmare transaction,’ … and later testified that the transaction ‘was, in [his] five-and-a-half years, the most horrendous transaction [he had] ever seen.'”

One Curaleaf Gilbert manager sent an email at the time saying that he had “never come across a transaction that is quite this bad” in his “4 years of management.”

Curaleaf argued that Keane’s mistakes could have cost the company its license. One member of the NLRB stated that they believed Curaleaf had actually been more lenient with Keane.

Other violations

According to the court filing, Curaleak learned of Keane’s unionization attempts while she was still employed. Curaleaf management then discussed how to respond to the unionization effort.

“About a month later, Curaleaf Gilbert held two mandatory employee information sessions to discuss unionization. During one of the sessions, a Curaleaf human resources director stated that employees would receive ‘better discounts’ on dispensary products if they did not unionize, that unionizing would result in employees losing their tips, and that ‘the person trying to organize the Union was just trying to get a job with the Union because she would get paid more.'”

In addition, while fighting to get Keane rehired with back pay, the labor board ordered the company to read aloud a notice of the unfair labor practice findings to Curaleaf Gilbert employees and to grant the union access to Curaleaf Gilbert’s facilities any time Curaleaf spoke to its employees about unionization. Curaleaf pushed back on the issues with Keane but did not challenge the the other two items.

The post DC Judge questions Labor Board’s authorization over illegal business appeared first on Green Market Report.

FSD Pharma Inc. (NASDAQ: HUGE)(CSE: HUGE) won its battle with the company’s former CEO Dr. Raza Bokhari. After years of litigation and an eight-day evidentiary hearing, FSD Pharma announced that the Arbitrator ruled against Bokhari and issued three awards against Bokhari in favor of FSD, including an award for damages and awards for FSD’s fees and costs incurred in the arbitration.

The company announced that on May 29, 2024, the United States District Court for the Eastern District of Pennsylvania confirmed FSD Pharma, Inc.’s petition to confirm arbitration awards entered against Dr. Raza Bokhari by a Canadian arbitrator in 2022. FSD said it will now move for entry of final judgment against Bokhari.

Bokhari has been challenging his termination for years following a proxy battle he staged at the company but lost. The proxy battle stemmed from disagreements over acquisitions between Bokhari and the company’s founders.

He wanted FSD Pharma to pay him $30 million for his alleged wrongful dismissal. Instead, FSD will be collecting payments from Bokhari as follows:

1. $147,301.04, plus interest at a rate of 4% per annum from November 9, 2022 until the date the Judgment is satisfied.
2. C$31,912.55, plus interest at a rate of 4% per annum from November 9, 2022 until the date the Judgment is satisfied.
3. C$15,000.00, plus interest at a rate of 4% per annum from November 9, 2022 until the date the Judgment is satisfied.
4. C$2,814,229.15, plus interest at a rate of 6% per annum from May 7, 2023 until the date the Judgment is satisfied.

Certainly, some judges have a sense of humor. In the Pennsylvania court opinion, Judge Wolson started his opinion quoting South Park writing, “Raza Bokhari may be thinking, “It seems that everything’s gone wrong since Canada came along!” The line came from the South Park movie song Blame Canada, on South Park: Bigger, Longer, and Uncut (Atlantic Records 1999).

He went on to write, “While it’s easy for him to claim unfairness considering the bind he’s created, Dr. Bokhari has himself to blame for this predicament—not FSD, not the arbitrator, and certainly not Canada. He has not offered reasonable grounds for why I should refuse to enforce the award against him.”

Judge Wolson concluded saying, “Dr. Bokhari might be upset that what started as a complaint against his former company ended as a seven-figure judgment against him. I don’t blame him. But him being upset does not give me leave to interfere with a foreign tribunal’s adjudication on the merits or denying FSD’s right to enforcement in this district.”

The post FSD Pharma wins again in case against former CEO appeared first on Green Market Report.

Canopy Growth Corp. (TSX: WEED) (NASDAQ: CGC) announced its financial results for the fourth quarter and fiscal year ending March 31.

In the fourth quarter, Canopy reported that its revenue increased 7% over last year’s fourth quarter to $72.8 million. This beat the Yahoo Finance average analyst estimate for revenues of $52.99 million. The net loss for the fourth quarter was $94.7 million, an 84% increase over last year’s fourth quarter net loss.

Full-year results

Total revenue for 2024 fell to $343 million from 2023’s revenue of $381 million. It fell even further from 2022’s revenue of $537 million. Net revenue was $297.1 million in fiscal 2024, compared to $333.3 million in fiscal 2023.

Canopy attributed the decline in revenue to the divestiture of its retail business in Canada in the third quarter of fiscal 2023, as well as the divestiture of This Works in the third quarter of fiscal 2024 and a decrease in the Canadian business-to-business channel. However, the company said these decreases were partially offset by growth in the Canadian medical market, increases in Storz & Bickel, and international markets cannabis sales growth.

Canopy trimmed its net loss for the fiscal year to $657 million from a net loss of $3.2 billion for the previous year. Loss per share was ($8.79) versus last year’s net loss per share of ($70.69).

“In fiscal 2024, we fortified Canopy’s foundation for future growth. With a resolute focus on cannabis, we have momentum and are poised to seize the opportunity presented by continued regulatory developments in Germany and the United States,” CEO David Klein said.

Improving financials

Canopy Growth’s cash has dwindled from 2023’s ending year amount of $667 million to $170 million at the end of the 2024 fourth quarter. However, the company said it addressed many of the financial concerns pressing it at the end of 2023. At that time, it filed its earnings as a going concern.

In its latest regulatory filing, the company said that it had completed the following steps to alleviate its financial pressures:

• Completion of a $35 million private placement unit offering in January.
• Receipt of $25 million of proceeds in March from the BioSteel Canada asset sale.
• The exchange of the $100 million promissory note held by a subsidiary of Constellation Brands into exchangeable shares of Canopy Growth.
• Receipt of gross proceeds of approximately $50 million and the exchange of approximately $27.5 million of existing debt that will mature in September 2025 in exchange for a new senior unsecured convertible debenture of the company, maturing May 2029, and the issuance of warrants of the company.

Canopy said it does not have any material debt obligations coming due until March 2026. The company also completed the sale of This Works at the end of 2023 and no longer includes that in its earnings.

Canopy did take a $42 million impairment charge for Storz & Bickel, even as the brand reported increased revenue. Storz & Bickel’s net revenue in the quarter increased 43% compared to last year’s $22 million driven by strong sales of the new Venty portable vaporizer.

“We have made remarkable progress and delivered dramatic reductions in expenses, cash burn, and debt over the past year,” CFO Judy Hong said. “These efforts have significantly enhanced our financial stability and moved us toward achieving positive consolidated adjusted EBTIDA. With no material debt maturing until 2026, Canopy is equipped to capitalize on growth opportunities and enhance shareholder value.”

After the quarter end

Canopy Growth also made notable moves after the quarter ended that could have a material effect on its financial health going forward.

• The company overwhelmingly approved the creation of a new class of non-voting and non-participating exchangeable shares in the capital of the Company at the special meeting of shareholders held on April 12.
• On April 18, Canopy Growth announced that Constellation Brands converted its common shares to exchangeable shares of the company.
• On May 6, Canopy USA initiated the acquisitions of Mountain High Products, Wana Wellness, The Cima Group, and Lemurian Inc. (Jetty). These acquisitions are expected to close in the first half of FY2025.

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Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) has agreed to resolve its litigation with the vertically integrated Harvest of OH operation. The parties said in a statement that they have agreed upon an amicable separation that will allow each to continue growing in the ever-changing Ohio market, as adult use is on the horizon.

Trulieve said it will acquire Harvest of Ohio, LLC, which will hold licenses for medical cannabis dispensaries in Columbus and Beavercreek.  The Harvest of OH medical dispensary in Athens will be transferred to Ariane Kirkpatrick as 100% owner and will be rebranded under the name Mavuno, a Swahili word for harvest, yield, and provide.  Separately, Harvest of OH said it will divest ownership of its production facility in Ironton to unrelated third parties.  The statement said that other terms of the resolution remain confidential.

Trulieve CEO Kim Rivers said, “We are happy to announce the resolution of our litigation that triples our footprint in Ohio.  We look forward to serving medical patients and adult-use customers when permitted. We are also excited to work with the new owners at the Ironton production facility.  With our advice and support, we are certain these operators can produce the high-quality products Trulieve is known for.”

Conflict boils over

The conflict stemmed from a partnership that Kirkpatrick, 51% majority owner, formed with Harvest Health and Recreation, LLC., an Arizona-based multi-state operator which later was acquired by Trulieve.  Since its formation, the Black woman-owned and family-operated Harvest of OH,  was one of the few vertically integrated Ohio cannabis operations, consisting of medical dispensaries located in Columbus, Athens, and Beavercreek, and cultivation and processing operations co-located in Ironton.

Last year Green Market Report wrote that Trulieve filed a civil lawsuit against the former business partner in Ohio Harvest Health & Recreation over nearly $24 million in debts. Trulieve spokeswoman Nicole Yelland said the company had granted 15 delays to Harvest of Ohio on its repayment schedule. Harvest of Ohio fired back at Trulieve and said the Florida company backed out on promises it made “in a bid to gain control of the businesses built by women and people of color, kicking them to the curb.”

At the time, Harvest of Ohio said it believed that Harvest Health & Recreation only used its Ohio affiliate to inflate expenses and also interfered directly with company operations. That interference, they alleged, extended to Harvest of Ohio’s attempts to repay its debts owed to Trulieve.

Trulieve said it will enter into service agreements to provide operational support to the Ironton production facility and pay an immaterial amount to Kirkpatrick.

Kirkpatrick said, “As the first Black and the first woman-owned cannabis company to achieve 100% vertical integration in the state of Ohio, the Harvest of OH team will forever be a part of cannabis history having broken barriers and paved the way for a diverse and inclusive workforce and supply chain.”

Amonica Davis, Kirkpatrick’s sister and company’s COO added, “Our dedication and commitment will continue to be the hallmark of Mavuno in Athens and beyond, as we enter the Ohio adult-use cannabis market.”

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Decibel Cannabis Company Inc.  (TSXV: DB) (OTCQB: DBCCF) announced its unaudited interim financial results for the first quarter ending March 31, 2024. Decibel reported that its revenue fell to C$32.6 million in the first quarter from last year’s C$40.5 million for the same period.

Decibel attributed the decline to increased competition in the infused pre-roll segment, vape consumers switching towards large format 510 cartridges and disposables, and the halting of exports to Israel as the company transitioned to a new distribution partner. After the quarter ended, Decibel launched large format 510 cartridges and disposables hoping to capture sales in that format.

Decibel also reported that its net losses grew to C$3.3 million versus last year’s net loss of half a million. However, Decibel noted that the C$3.3 million impairment negatively impacted the adjusted net income on the Prairie Record’s assets held for sale during the first quarter of 2024. The company said it agreed to sell its Prairie Records retail property to Fire & Flower in February and expected to get C$3.3 million from the sale. The deal closed after the quarter ended on April 10, 2024.

“Despite the drop in revenue, we remain one of Canada’s top brands by market share.  With a focused effort on our strategy, we expect an improved Q2 and more importantly a continued path to sustainable growth and profitability.  I am currently undergoing a comprehensive business review and I look forward to sharing the initiatives undertaken before July 15th.” said Benjamin Sze, Decibel’s Chief Executive Officer.

Israel problems

Decibel said in its MD&A that in January 2024, the Israeli government issued a notification naming Canadian cannabis companies, including Decibel, indicating the launch of an “anti-dumping” investigation in respect of Canadian cannabis exports to Israel. The company was named in the investigation and told investors it was participating in the investigation, which is voluntary. The MD&A stated, “A finding of “dumping” under international trade law could result in the imposition of a dumping duty on Israeli importers of Canadian cannabis exports by companies whose pricing practices are determined to violate anti-dumping laws.”

During the quarter, the company said it signed a supply agreement with a new Israel counterparty, contemplating an annual commitment by the Israeli company to purchase 1,000 kg of craft cannabis. Also during the quarter, an Israeli customer defaulted on its payments required under a cannabis supply agreement with the company, leading it to provision C$1.6 million of such receivable.

Decibel said it took formal legal action to collect the receivable, and the Israeli company subsequently filed an insolvency motion. Decibel joined these proceedings and formally filed its claim with the trustee. The company said it believes there is 300kg of inventory related to this provisioned receivable that is currently accessible, and that a portion of the receivable may be recoverable through a resale agreement of this inventory with the trustee and another Israeli company.

The company is also reporting its earnings as a going concern, however, it said it has confidence it will be able to comply with the financial covenants applicable to the credit facility with Connect First Credit Union Ltd. for at least the next twelve months.

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Vext Science, Inc. (CSE: VEXT) (OTCQX: VEXTF) reported its revenue slipped slightly for the first quarter ending March 31, 2024. Vext told investors that revenue was $8.3 million in the first quarter down sequentially from $8.4 million and was also lower than last year’s first-quarter revenue of $9.1 million.

The company attributed the decrease in annual sales declines in Arizona revenue offset by the inclusion of Ohio cultivation & processing revenue and one month of revenue from the second Ohio retail location. Despite sales dipping in the first quarter, the cost of goods sold rose from $4.4 million in the 2023 first quarter to $6.4 million in 2024.

The net losses jumped to $6.3 million versus a net income of $73,059 in the 2023 first quarter. Cash fell from $8.7 million at the end of 2023 to $4.4 million at the end of the first quarter.

“The first quarter of 2024 continued to present consumer-related challenges to all operators, with the Arizona market overall experiencing another decline in quarterly revenue,” said Eric Offenberger, CEO of Vext. “At Vext, we utilized our expertise as seasoned operators to drive traffic by offering bundled products at the retail level, and outperforming state averages despite impacts on revenue and gross margins. With the transition to an adult-use framework occurring this year, we believe the expansion of the addressable consumer base will more than offset any continued consumer weakness, making Ohio a promising market for the foreseeable future. With relatively modest maintenance capital requirements, all significant growth capital expenditures completed, and an imminent sea change in the Ohio market, we expect to begin growing cash flow meaningfully, while driving returns for shareholders.”

Ohio

Vext has had its sights set on the Ohio market for the past couple of years. The company established its medical operations but lately has seen medical cannabis sales dip as consumers prepare for adult-use products. Sales of adult-use products could begin next month. In the meantime, Vext said that the dip in medical sales has created a wholesale opportunity for its products.

The company’s MD&A stated, “The additional dispensaries and the anticipation of adult-use beginning have increased demand at the dispensary level. We anticipate that trend continues for the foreseeable future as end sales in the state continue to accelerate with the implantation of the adult use program.”

On February 29, 2024, Vext completed the acquisition of CannAscend Ohio Columbus which included a cannabis dispensary in Columbus, Ohio, as part of the previously disclosed acquisition of Appalachian Pharm Processing, LLC. As part of the closing, Vext paid a cash consideration of $2,880,317 and also agreed to pay the seller $125,938 for the pre-closing tax liability of the Columbus Dispensary.

As of March 31, 2024, $5,638,179 was paid as a deposit on the Ohio dispensaries, Big Perm, to be renamed Herbal Wellness Center Jeffersonville and Herbal Wellness Center Athens in Ohio awaiting the transfer of the licenses by the State of Ohio projected end of 2024.
Under the terms of the Ohio expansion, the company told investors it would pay cash consideration equal to $9.4 million for construction costs, and inventory adjustments. Subject to regulatory approval by the Ohio Board of Pharmacy, Vext said it would fund approximately $3.4 million of construction costs related to the dispensaries.

In addition, the Company will provide after regulatory approval certain administrative, operational, and support services to Big Perm, in compliance with the State of Ohio rules and regulations with respect to medical marijuana, and has agreed to loan up to $3.0 million to Big Perm for capital expenditures and working capital needs associated with the dispensaries.

Mr. Offenberger added, “Ohio presents a significant, multi-year growth opportunity for Vext, and the standby credit line we announced today will offer us additional flexibility to address any short-term funding needs as the adult-use program gains momentum and our own cash flow returns to growth following the build-out of our significant presence in the state.”

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