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 is racing against a possible delisting.

A California-based cannabis player took a major hit after revealing poor quarterly results, and two Canadian marijuana 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 continues to fight for its spot on the New York Stock Exchange (NYSE) after receiving a notice that it is no longer compliant with the exchange’s listing standards.

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 had 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 that time, its common shares will continue to trade on the NYSE. Early in the trading day on Friday, its share price slipped 5.4 percent in New York and was 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. It led 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. The company’s license was also suspended by 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.

Its share price 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 brand’s premium experience and footprints,” said interim CEO Ryan Lissack in an earnings call.

Near the end of January, the company’s longtime 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 (selling, general and administrative expenses), 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 announced it was, among other cost-saving initiatives, laying off over 190 employees across the company, including 80 corporate-level roles, in an effort to achieve positive EBITDA.

Delta 9, Auxly to target Manitoba edibles market

Two cannabis players in Canada have come together to tackle the edibles space in part 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 an 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 among 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, opening at C$0.43 on Friday. Delta 9 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 home delivery of products such as vape pens and cartridges, topical creams and oral tinctures.

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 labor 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.