In a week that can only be described as eventful, Illinois lawmakers passed a bill to legalize adult-use cannabis – which now only needs the governor’s signature; the FDA held a public hearing on the regulation of products containing CBD; and a federal appeals court re-opened a case against the federal government and the DEA, which challenges cannabis’ illegality – ultimately the court urged the federal government to move forward with the de-scheduling of marijuana “with all deliberate speed.â€
Commenting on Illinois’ legalization, Charlie Bachtell, CEO of Chicago-based Cresco Labs Inc (OTC: CRLBF), told Benzinga, “The legislation passed in Illinois reflects the positive social equity and economic impact that the regulated recreational-use cannabis industry can have on cities and states.â€
Regarding the lawsuit against the federal government, one of the plaintiffs, Nelson Guerrero, executive director of the Cannabis Cultural Association told Benzinga: “Come fall we will be heard again by the second circuit, and hopefully the DEA will do right by the people with a fair and fast decision. The unconstitutional prohibition of cannabis is coming to an end under this administration or the next; we are one step closer to freeing the plant so we can free the people.â€
In relation to the FDA hearing, Benzinga spoke with Wendy May Real, MBA, founder and CEO of Pure Bloom CBD. She said the FDA’s public hearing, featuring more than 100 speakers, medical professionals and advocates within the CBD industry, left her with mixed emotions.
“I was happy to see of the FDA’s willingness to hear public comment and acknowledged the need for a more defined regulatory framework. But, [the FDA] was unable to provide any immediate timeline or path forward for this framework.â€
In other news, the Transportation Security Administration updated its rules to allow people to travel with certain hemp-derived CBD products, Arizona’s Supreme Court ruled in favor to the legality of cannabis extracts – reversing a lower court decision, and South Africa passed legislation that partially legalizes CBD and CBD products.
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On the markets front, we learned Harborside, one of the most iconic cannabis dispensary chains, is going public on the Canadian Securities Exchange under the symbol “HARV.†Harborside was founded by activist Steve DeAngelo and is known for completing the first legal cannabis sale ever in California.
We also witnessed a myriad of big earnings reports and other big developments in the corporate world, all featured in detail below.
Story of the Week: Heisman Healer Ricky Williams Talks Wellness In Detroit: 'Cannabis Can Help You Connect To Yourself'
Marijuana Stocks & ETFs
Over the last five trading days, including last Friday, since U.S. markets were closed on Monday due to Memorial Day:
• The Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) (TSE:HMMJ) lost 7.4 percent.
• The ETFMG Alternative Harvest ETF (NYSE: MJ) tumbled 7.4 percent.
• The AdvisorShares Pure Cannabis ETF (NYSE: YOLO) lost 6.1 percent.
• The SPDR S&P 500 ETF Trust (NYSE: SPY) closed the period down 2.66 percent.
Here are some of the top marijuana stocks (market cap above $500 million) in U.S. exchanges and how the performed over the last five trading days:
• Acreage Holdings (OTC: ACRZF): down 3.85 percent
• Aphria Inc (NYSE: APHA): down 10.3 percent
• Aurora Cannabis Inc (NYSE: ACB): down 8.7 percent
• CannTrust Holdings Inc (NYSE: CTST): down 7.9 percent
• Canopy Growth Corp (NYSE: CGC): down 9.4 percent
• Cronos Group Inc. (NASDAQ: CRON): down 8.45 percent
• Curaleaf Holdings Inc (OTC: CURLF): down 9.1 percent
• Green Growth Brands Inc (OTC: GGBXF): down 9 percent
• Green Organic Dutchman Holdings Ltd (OTC: TGODF): down 13.3 percent
• Green Thumb Industries Inc (OTC: GTBIF): up 2.6 percent
• GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH): down 5.65 percent
• Hexo Corp (NYSE: HEXO): down 5 percent
• Harvest Health & Recreation Inc (OTC: HRVSF): down 10.7 percent
• iAnthus Capital Holdings Inc (OTC: ITHUF): up 1 percent
• Marimed Inc (OTC: MRMD): down 5.75 percent
• MedMen Enterprises Inc. (OTC: MMNFF): up 0.2 percent
• OrganiGram Holdings Inc (NASDAQ: OGI): down 3.3 percent
• Scotts Miracle-Gro Co (NYSE: SMG): up 0.7 percent
• Tilray Inc (NASDAQ: TLRY): down 13.4 percent
In Other News
'The Week In Cannabis' Exclusive
Cannabis compliance software provider Simplifya will announce Monday former senior DOJ official John Vardaman is joining the company as Chief Compliance Officer and General Counsel. While at DOJ in 2014, Vardaman drafted the department’s marijuana banking policy memo, one of the federal government’s first efforts to enable banking services for the cannabis industry.
Vardaman will help lead the team at Simplifya that analyzes state and local cannabis compliance and regulatory requirements, so that those requirements can be reflected in the software in a simple and easy-to-follow format. Simplifya’s software is guiding the compliance efforts of cannabis cultivators, retailers and product-makers across 12 states.
Earnings Madness
Green Thumb Industries announced record revenue of $28 million and record sequential revenue growth of 34 percent for first quarter 2019. Highlights of the company’s year-to-date performance includes the opening of five new Rise retail stores across Ohio and Florida; the closing on acquisitions of Advanced Grow Labs and the Beboe brand; and the closing of a $105.5 million senior secured debt financing.
Brand development and distribution is key to GTI’s strategy, according to GTI founder and CEO Ben Kovler.
“Our core brands Rythm, Dogwalkers, The Feel Collection and Beboe, are experiencing great quarter-over-quarter growth, driven by new distribution across the country. Rythm has new distribution in Florida and Nevada; Dogwalkers has begun selling in Nevada and Massachusetts; and The Feel Collection is gaining great traction in Florida. We've expanded the Beboe brand with the launch of Beboe Therapies, a premium CBD-infused skincare line, which began selling online and in select high-end retailers including Barneys New York and Neiman Marcus.
"We believe the mainstream visibility will reinforce the core TCH product line as we launch it across the country. We continue to invest in our core brands and believe that our branding will be further elevated as we explore new distribution channels in both existing and new markets,†he said.
Acreage Holdings said in its first-quarter report that its revenue grew substantially despite regulatory delays in the opening of dispensaries. Total revenue for the first quarter of 2019 totaled $12.9 million, marking a 487-percent jump from the same period last year. Acreage reported pro forma revenue of $33.1 million and a net loss of $31.2 million. Full results here.
Trulieve Cannabis stated that the first quarter of 2019 marked another milestone in record revenue. Compared to the same quarter the previous year, Trulieve's revenue grew 192 percent, totaling $44.5 million. Other financial highlights for the quarter include an adjusted EBIDTA that increased from $6.1 million the same period the previous year to $19 million in 2019. Full results here.
Origin House (OTC: ORHOF) reported first-quarter results that showed substantial revenue growth — and expenses that grew proportionately higher. The company's revenue of CA$11.2 million ($8.29 million) was significantly higher than CA$600,000 a year earlier and grew by 41 percent sequentially. Origin House's gross margin amounted to C$A1.7 million in the quarter versus a flat figure in the same period of 2018.
“Moving forward through the balance of the year, we’re confident that, once completed, the combination of Cresco Labs’ scale and Origin House’s California-wide distribution footprint will further accelerate growth and build significant value for the shareholders of both companies,†Origin House CEO and Chairman Marc Lustig told Benzinga. Full results here.
Cresco Labs released its unaudited financial results with revenue growth of 313 percent year over year.
First-quarter revenue came in at $21.1 million, which was also up 24 percent quarter over quarter. That revenue number missed the consensus estimate of $22.8 million, according to Refinitv. Full results here.