During the past trading week (August 19 to 23), a multi-state operator (MSO) offered an update on federal reviews for an acquisition it plans to make.

The second lottery in Ontario to determine what companies and individuals may get to open new cannabis stores in the province made headlines, while the latest in the scandal surrounding a Canadian cannabis producer also caught attention.

Here’s a closer look at some of the biggest news during last week’s trading period.

Cresco Labs shares positive outlook on federal reviews

As part of its Q2 2019 earnings report, Illinois-based MSO Cresco Labs (CSE:CL,OTCQX:CRLBF) offered shareholders an update on federal reviews taking place as it attempts to close its acquisition of Origin House (CSE:OH,OTCQX:ORHOF).

“The fact that a federal agency is reviewing (a mergers and acquisitions) transaction in this industry must be seen as validation,” Charlie Bachtell, co-founder and CEO of Cresco Labs, said during a call discussing the company’s earnings.

The MSO reported a 42 percent quarter-over-quarter revenue increase to US$29.9 million for the period. The company is nearing the launch of Sunnyside, its new national dispensary brand. Cresco Labs is planning to open the first store of this line in Philadelphia, Pennsylvania, later this year. The full roll out will include stores in Florida, Illinois, Ohio, Arizona, Massachusetts and Michigan.

Matthew Pallotta, equity research analyst at Echelon Wealth, issued a “speculative buy” rating for Cresco Labs, with a one year price target of C$15. As of 11:07 a.m. EDT on Friday (August 23), shares of the company were trading at C$10.87.

Ontario holds second lottery for retail stores

After a second round of its retail store lottery, on Wednesday (August 21) the Alcohol and Gaming Commission of Ontario (AGCO) unveiled the winners, which are now closer to opening a cannabis store.

For this round of the lottery, the provincial regulator introduced new stricter conditions for participants. However, the AGCO still received a wave of criticism based on the list of winners, some of the methods used to win and its entire lottery process.

The executive for one of the retail hopefuls looking to set up a shop in Ontario told the Investing News Network (INN) that the lottery system is a disappointing process that prevents the flourishing of the marijuana industry.

Tom Dyck, CEO of mīhī cannabis, told INN his firm will consider cutting deals with winners of the second round of the lottery. This tactic has led to the entry of multiple publicly traded marijuana companies.

Some early connections to the public marijuana industry include FSD Pharma‘s (CSE:HUGE,OTCQB:FSDDF), investment company Huge Shops securing one of the winning spots in the lottery to potentially open a store in Kawartha Lakes.

Moving forward, it’s possible the lottery process may be changing soon in Ontario. According to a report from Marijuana Business Daily, regulators are planning to re-introduce a previous strategy from the province to create an open system for retail store openings.

“The government is working with the AGCO and OCS to return to our original plan to allocate retail store licenses based on market demand,” Jenessa Crognali, the press secretary for Ontario’s attorney general, Doug Downey, told the news outlet.

Provincial store returns product from cannabis producer

Complications continue to pile on for CannTrust Holdings (NYSE:CTST,TSX:TRST), with the Ontario Cannabis Store (OCS) returning C$2.9 million worth of cannabis product from the producer.

CannTrust has fallen out of favor with the industry since it was revealed the company grew cannabis in unlicensed rooms at its Pelham, Ontario, facility. Since the original announcement, the company has completed an internal review, resulting in its executive braintrust being removed. A second facility of the company has also been deemed non-conforming according to Health Canada standards.

An OCS spokesperson told INN the decision to return all CannTrust product is consistent with its business standards.

CannTrust told INN there are no specifics yet on when exactly it will get back its product, which the producer confirmed includes unlicensed marijuana items.

The cannabis firm is considering bulk sales and licensed storage as a destination for its product, according to a spokesperson.

The CannTrust scandal has led to a loss for Manulife Asset Management, which added over 3.34 million shares of the producer in Q2 bringing its total to 4.87 million shares. Cannabis exposure for the subsidiary of Manulife Financial (NYSE:MFC,TSX:MFC) is relegated to the Manulife Dividend Income Plus Fund, according to a report from the Globe and Mail.

The drop in CannTrust’s value since the unlicensed growing was confirmed has cut Manulife’s holdings to less than C$14 million from C$32 million.

Market updates

The US-based cannabis exchange-traded fund (ETF) market is set to grow as AdvisorShares filed a prospectus for a new fund. If approved, the AdvisorShares Pure US Cannabis ETF is set to trade on the NYSE Arca under the ticker MJUS.

The prospectus indicates the new fund will seek to add companies that derive at least 50 percent of their revenue from the marijuana or hemp businesses in the US.

Dan Ahrens, managing director with AdvisorShares, and Robert Parker, director of capital markets with AdvisorShares, will act as the portfolio managers for MJUS. Ahrens also manages the AdvisorShares Pure Cannabis ETF (ARCA:YOLO), which launched in April.

In related ETF news, the Cannabis ETF (ARCA:THCX) announced the inclusion of cannabidiol (CBD) brand company cbdMD (NYSEAMERICAN:YCBD) into its holdings. As of Thursday (August 22), the company held a 0.49 percent weight in the fund.

“As a hemp derived CBD product, this is another milestone for our company that will offer us increased exposure to the US investment market and provide additional momentum in building on our brand,” Martin Sumichrast, co-CEO of cbdMD, said in a press release.

California-based MSO MedMen Enterprises (CSE:MMEN,OTCQX:MMNFF) announced the introduction of its new delivery service in the state. The company will start by offering delivery free of charge.

Lastly, Colombian cannabis company PharmaCielo (TSXV:PCLO,OTC Pink:PHCEF) confirmed to investors it has completed its first shipment of CBD isolates to Switzerland.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: FSD Pharma is a client of the Investing News Network. This article is not paid-for content.

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