Cannabis Weekly Round-Up: US Reform Talk Cools Off, Analyst Says

Cowen analyst points to changes in US legalization talk

In an interview with Yahoo Finance Live, Vivien Azer, Cowen's managing director and senior research analyst covering the cannabis sector, said the messaging from US cannabis executives has changed around when regulatory changes could be on the way.

“The messaging out of 1Q '22 earnings season, I think, appropriately tempered some of the enthusiasm that some of the CEOs had been expressing around the potential for regulatory change,” she said.

Azer said the fundamentals of the cannabis industry continue to be “sluggish.” But she also admitted that the lack of regulatory change in the US is hurting the appeal of cannabis stocks.

When asked where the smart money is heading, Azer affirmed that US opportunities are the clear favorites at the moment given the “much larger addressable market.”

Stock market woes follow Aurora's share sale

Shareholders of Aurora have been on a tough ride this past trading week on the heels of a US$172.5 million bought-deal offering. The financing was originally set at US$125 million, but was upsized.

The company has face criticism for the US$2.45 per unit price, which is effectively a 10 percent discount compared to the last trading level for Aurora shares. Each unit contains a common share of Aurora, as well as one common share purchase warrant, which the Globe and Mail said "made the discount even more extreme."

According to the news outlet, hedge funds likely “saw value in the accompanying warrant,” leading to the rapid interest in the offering at first since the deal was upsized.

However, Aurora saw less favorable returns in the open market as the company hit a week low of C$1.94 in Toronto. The company had declined in value by over 11 percent as of the opening bell on Friday (June 3).

Also on Friday, the cannabis producer repurchased US$20 million worth of convertible senior notes.

Cannabis company news

• Fire & Flower Holdings (TSX:FAF,OTCQX:FFLWF)appointed Stéphane Trudel, an executive from partner Alimentation Couche-Tard (TSX:ADT), as the new CEO of the cannabis retailer. “Having worked closely with Stéphane over the past three years, I believe he is absolutely the right person to lead the company into this next exciting phase of its growth," departing CEO Trevor Fencott said.

• Ikänik Farms (CSE:IKNK.U)has undergone a name and stock ticker change in connection to a business and executive transition. Its new name and ticker, Pideka Group (CSE:PDKA), relate to its intentions to become a Colombia-focused medical cannabis producer.

• Akerna (NASDAQ:KERN)notified shareholders of layoffs in order to cut costs and focus on its small- and medium-sized business division. Akerna CEO Jessica Billingsley said the executive leadership team has also taken a 25 percent pay cut to aid the company’s finances.

• The Flowr Corporation (TSXV:FLWR,OTC Pink:FLWPF)confirmed its shares have been reinstated after the TSX Venture Exchange suspended the company due to a failure-to-file cease trade order issued in May. The firm shared its financial report with the market, reporting a year-on-year net loss reduction from C$6.1 million to C$2.2 million.