CRLBF - Cannabis Weekly Round-Up: CannTrust Faces Possible Delisting
During the past trading week (February 24 to 28), the ever-struggling CannTrust Holdings (NYSE:CTST,TSX:TRST) announced that it was racing against a possible delisting.
A California-based cannabis player took a major hit after revealing some poor quarterly results, while two Canadian cannabis firms teamed up through a new supply agreement to push cannabis-infused products into the Manitoba market.
Here’s a closer look at some of the biggest cannabis news over the week.
Fall from grace continues for CannTrust with looming NYSE delisting
CannTrust Holdings continued to fight for its spot on the New York Stock Exchange (NYSE) after receiving a notice that it is no longer compliant with the NYSE’s listing standard rules.
The firm told investors on Friday (February 28) that the NYSE requires listed companies to maintain a US$1 share price over a consecutive 30-day trading period to remain active on the bourse. As of Tuesday (February 25) CannTrust has come up short with a 30-day average closing price of US$0.99.
Now, CannTrust has six months to bring its share price back up to scratch or risk being booted off the exchange during which its common shares will continue to trade on the NYSE. Early in the trading day on Friday, prices slipped 5.4 percent in New York, sitting at US$0.62 as of 10:27 a.m. EST.
Troubles for the company started last summer when a damning illegal growing scandal broke, leading to the loss of top names in the company, including former CEO Peter Aceto and former chairman Eric Paul after it was found that some executives knew of the illicit operations, and a license suspension from Health Canada.
MedMen falls further on quarterly losses
MedMen Enterprises (CSE:MMEN,OTCQX:MMNFF) revealed that it continues to struggle with the volatility facing the entire cannabis sector after reporting significant losses in its most recent quarterly report after market close on Wednesday (February 26).
The California-based firm’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) loss was US$35.1 million for Q2 2020, while its net loss attributable to shareholders came in at US$40.6 million.
Share prices fell 6.5 percent across the trading session on Thursday (February 27), adding to the months-long drop the company has dealt with. Over the last six months, MedMen has slumped dramatically, falling over 85 percent.
“While we acknowledge the financial complexities we face, we have a tremendous opportunity to build upon our brands premium experience and footprints,” said Interim CEO Ryan Lissack during an earnings call.
Near the end of January, the company’s long-time leader and co-founder Adam Bierman left his role as CEO and was replaced by Lissack, the firm’s chief operating officer and chief technology officer.
“We will continue to focus on our SG&A materially reducing it further as we right-sized our operation, improve our execution, and work on becoming cash flow positive. Second, we will dedicate our focus to our retail business,” Lissack added.
Restructuring started in earnest in November, when the firm first announced it was laying off over 190 employees across the company, including 80 corporate level roles, in an effort to achieve positive EBITDA, among other cost-saving initiatives.
Delta 9, Auxly to target Manitoba edibles market
A pair of cannabis players in Canada have come together to tackle the edibles space in a portion of the Prairies.
On Tuesday, Delta 9 Cannabis (TSX:DN,OTCQX:VRNDF) told investors it has entered into a supply agreement with Auxly Cannabis Group (TSXV:XLY,OTCQX:CBWTF) to sell Auxly’s branded Cannabis 2.0 products, including oils, chocolates, and vape products, across its stores in Manitoba.
The new agreement follows the initial deal between the two companies that was confirmed back in 2018 when Auxly agreed to a strategic investment of C$16.3 million to help finance the expansion of Delta 9’s marijuana cultivation facility in Manitoba.
John Arbuthnot, CEO of Delta 9, said the growing reputation of Auxly’s products amongst customers played a part in the development of the deal.
“Since the launch of cannabis 2.0 products in late 2019, we have seen a significant consumer response to Auxly chocolates, chewables, and vape products under the Foray, Kolab Project and Dosecann brands,” said Arbuthnot in a press release.
The past trading week has been a trying one for Auxly, which lost nearly 22 percent of its value in the open market, opening at C$0.43 on Friday. Delta 9, for its part, fared much better, falling only a slight 3.5 percent over the week and starting Friday off at C$0.56.
Market news
On Thursday, Cresco Labs (CSE:CL,OTCQX:CRLBF) confirmed that it has brought its four cannabis dispensaries in New York State together under its Sunnyside* brand.
The firm also launched a new delivery service for the New Hartford area of New York, allowing medical marijuana patients to place online orders for products, including vape pens and cartridges, topical creams and oral tinctures, for home delivery.
WeedMD (TSXV:WMD,OTCQX:WDDMF) told investors on Monday (February 24), that it’s now the preferred supplier of medical cannabis to the participants of the IUPAT Province of Ontario Health & Welfare Trust Fund, a Canadian trade labour union.
As a part of the new deal, about 7,000 IUPAT members and their dependents will receive WeedMD’s medical cannabis as an insured benefit, the company said in a press release.
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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.