Cannabis Weekly Round-Up: HEXO Faces Investor Challenge, NFL Funds Cannabinoid Study

Ailing cannabis company facing investor troubles

HEXO started the week by letting investors know that the NASDAQ has warned that the company's shares are no longer compliant with the minimum bid price requirement for the exchange.

It is now on notice to meet the requirement again — HEXO has 180 days to get the price of its common shares over the minimum bid price of US$1 and must maintain that level for at least 10 days before a July 25 deadline.

But that date won't be the end of the line for the company. If the firm doesn’t cross the threshold by then, it “may be eligible for an additional period of 180 calendar days to regain compliance or may be subject to delisting.”

In terms of percentage, HEXO's share price on the NASDAQ actually increased by double digits over the past week of trading, but it still remains under US$1.

On top of its poor stock performance, HEXO is now having to contend with pushback from an active investor.

Adam Arviv, a self-identified concerned shareholder who has a 2 percent stake in the company through his fund KAOS Capital, told HEXO he plans to “nominate five new independent directors” for the company.

In a lengthy statement released on Wednesday (February 2), Arviv said he has been “waging a battle with management at the cannabis company over the past months.” The incident between the two originally started with HEXO’s acquisition of Ontario cannabis producer Redecan Pharm in 2021.

The investor is calling on the company to change management as its share price continues to slide.

“This has to stop. The market has spoken loudly and HEXO shareholders have made it clear that they have no confidence in the direction of the Company and in the ability of the incumbent Board to right the ship and reverse the downward slide … Shareholders of HEXO deserve leadership that can deliver a tangible future,” Arviv, who believes he should be one of the five nominees to replace the current board of directors, said in his statement.

A HEXO representative told BNN Bloomberg the firm is frustrated by Arviv’s statement.

"It is disappointing that Mr. Arviv has decided to proceed with this unnecessary, disruptive and expensive approach rather than continuing working with the company in a normal course," the spokesperson said.

NFL asks University of Regina to lead cannabinoid research

In an attempt to explore solutions for concussions and head injuries, the NFL has committed US$500,000 to kick off a study evaluating cannabinoids in treating concussions and for overall pain management.

Leading the study is Dr. Patrick Neary, an exercise physiologist and professor in the faculty of Kinesiology and Health Studies at the University of Regina, according to the school’s announcement.

“We anticipate our CBD/THC formulation will show significant and positive changes to what it does to the brain — that it will reduce pain and use of prescription medications (opioids), show a reduced number of concussions during athletic competition, and provide physiological and psychological benefits,” Neary said.

The University of Regina was selected from 106 proposals geared at addressing novel treatments for head injuries. “As with the league’s broader approach to health and safety, we want to ensure that our players are receiving care that reflects the most up-to-date medical consensus,” said Dr. Allen Sills, the NFL’s chief medical officer.

Alongside the NFL’s money, the Canadian school will receive an additional US$400,000 from My Next Health, a US-based healthcare company. "We are very excited to work under Dr. Neary's exceptional leadership and interdisciplinary team to improve the lives of all of those who suffer from the effects related to concussions including chronic pain,” Dr. Richard Heinzl, CEO of My Next Health, said.

Cannabis company news

• Avicanna (TSX:AVCN,OTCQX:AVCNF)issued its Q4 2021 quarterly report alongside guidance for its 2022 fiscal year. The firm is projecting a record revenue line of C$1.3 million for the quarter, which would bring its 2021 fiscal year revenue to C$3.3 million. As for the 2022 fiscal year, the company expects to produce C$9 million in consolidated revenue.

• Columbia Care (NEO:CCHW,CSE:CCHW,OTCQX:CCHWF)completed a private placement worth US$185 million for 9.5 percent of “senior-secured first-lien notes due 2026.” The funds will be used to explore strategic acquisitions, and for general corporate expenses and capital expenditures.

• Rubicon Organics (TSXV:ROMJ,OTCQX:ROMJF)shared an update in which it reaffirms its belief in the premium cannabis market in Canada. “Our conviction in our strategy is also bolstered by the fact that the premium cannabis market is gaining momentum and outpacing the growth of the total market, which should bode very well for the premium product innovations we are bringing to market in 2022 under our complete house of brands,” CEO Jesse McConnell said.

• Fire & Flower Holdings (TSX:FAF,OTCQX:FFLWF)has amended its option and licensing agreements with its US-based subsidiary known as Fire & Flower US Holdings. “We believe the amendments to the strategic agreement provide a meaningful near and long-term benefit to Fire & Flower shareholders in our option to acquire Fire & Flower US," said CEO Trevor Fencott.