Cannabis Weekly Round-Up: MSOs Take New York to Court

Companies dispute New York's recreational rules

The Coalition for Access to Regulated and Safe Cannabis (CARSC) is suing New York over a decision from the Office of Cannabis Management (OCM) and the Cannabis Control Board (CCB).

The regulators have elected to reserve adult-use retail licenses for social equity applicants.

The complaint was filed in the Albany County Supreme Court, and "alleges unconstitutional overreach and policymaking, egregious abdication of duties, and actions that put New Yorkers’ health and safety at risk," according to the (Syracuse) Post-Standard.

The operators represented by CARSC — including Curaleaf Holdings (CSE:CURA,OTCQX:CURLF), Green Thumb Industries (CSE:GTII,OTCQX:GTBIF), Acreage Holdings (CSE:ACRG.A.U,OTCQX:ACRHF) and private operator PharmaCann — believe their access to these licenses is being restricted.

In its text the suit complains about the following:

“Rather than perform the tasks required by the (Marijuana Regulation and Taxation Act) — which would promote a safe and regulated cannabis industry for medical patients and adult-use consumers alike — CCB and OCM have improperly assumed the role of the Legislature to impose their own policies over those of New York’s elected officials and, by extension, their constituents.”

Earnings reports show continued challenges

This past trading week saw more cannabis companies release their latest financial results, and the numbers show that the investment landscape remains difficult. Here's a look at some of the most recent reports:

• TerrAscend (CSE:TER,OTCQX:TRSSF) reported its Q4 and year-end 2022 financial results on Thursday (March 16). The firm saw its quarterly revenue increase by 4 percent from the previous period; for the full year, the company saw a significant uptick to reach US$247.8 million in revenue. "Perhaps most noteworthy was that, in addition to an $80 million reduction in debt during the quarter, Q4 2022 also marked our second consecutive quarter of generating positive cashflow from operations," Jason Wild, executive chairman of TerrAscend, said.

• Cresco Labs (CSE:CL,OTCQX:CRLBF) reported revenue increases for both Q4 2022 and its full operating year. Charles Bachtell, CEO and co-founder of Cresco Labs, congratulated his team on its approach to the "challenges" of 2022. "From our front-line position, we were disappointed that federal reform did not pass late last year, but last year's efforts have led to strong momentum for change with the new Congress. None of the challenges of 2022 change the long-term thesis and opportunity that is cannabis,” he said.

• HEXO (NASDAQ:HEXO,TSX:HEXO) announced a net income line of nearly C$1 million for the second quarter of its 2023 fiscal year compared to a net loss of C$56.3 million a year ago. “While cannabis prices have dropped sharply across the market, it is our view that slashing prices is not a sustainable strategy," said Charlie Bowman, president and CEO of HEXO. "We’re confident our products will continue to deliver excellent value to customers and shareholders alike.”

Cannabis company news

• Acreage Holdings announced shareholder approval for its proposed strategic arrangement with Canopy Growth (NASDAQ:CGC,TSX:WEED) and Canopy USA. “This is an exciting opportunity for our shareholders to realize the value of their investment in the strong platform Acreage has built," Peter Caldini, CEO of Acreage, said.

• Heritage Cannabis Holdings (CSE:CANN,OTCQX:HERTF) received approval from Brazil's health authority to import its CBD products into the country. “This is a very important step for Heritage as we continue to expand the reach of our high quality products beyond the borders of Canada,” said Heritage CEO David Schwede.

• Tilray Brands (NASDAQ:TLRY,TSX:TLRY) obtained investor approval to go ahead with a plan to reclassify some of its shares. "We are forging an entirely new kind of CPG company that is responsive to the times, aligned with consumers, and poised to deliver meaningful value over the coming years," Chairman and CEO Irwin Simon said

• Organigram Holdings (NASDAQ:OGI,TSX:OGI) is reviewing its legal options after receiving a notice from Health Canada indicating that some of its Jolts lozenge products are wrongly classified in the "extract" category rather than as "edible" items. The company told investors it believes in its current pending product classification.