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Cannabis Briefs for December 21, 2021

December 21, 2021

•Canopy Growth is cutting its losses on one of its acquisitions. The Canadian company announced that it is divesting its interest in German cannabis company C3 Cannabinoid Compound Company, which it paid C$343 million ($265m) for in May 2019. Canopy will take a loss on the transaction as it’s selling C3 to Grünwald, Germany-based pharmaceutical company Dermapharm Holding for C$115.5 million ($90m), with an additional C$61.4 million ($47m) contingent on future milestones for C3’s business. Pending regulatory approval, the transaction is expected to close by January 21.

•The European island nation of Malta legalized recreational cannabis, making it the first E.U. country to do so. Passed by the Maltese parliament last week, the law allows residents to grow four cannabis plants, keep up to 50 grams of dried cannabis at home, and carry up to seven grams with them in public, though public consumption will remain prohibited. Retail stores will be forthcoming as well. With a population of just over half a million people, Malta will hardly be an economic powerhouse for the cannabis industry but it still represents an important first step toward cannabis acceptance in Europe.

•Gatineau, Quebec-based Hexo reported results for the quarter ended October 31, in which revenue grew 29% but failed to keep pace with losses. Hexo’s total net revenue for the three months just surpassed C$50 million ($39m), up from C$38.7 million ($30m) the quarter before. However, the cost of goods sold ballooned to a loss of C$83 million ($64m), worse than in the previous quarter. Other impairments, expenses, and operating costs pushed the company to a total net loss of C$117 million ($90m) in the three-month period. Hexo plans to implement The Path Forward, a transformation agenda that calls for the reduction of production costs, streamlining the organizational structure, realizing cost synergies, focusing on revenue management, and accelerating growth. Additionally, CFO Trent MacDonald will step down, effective March 11, staying on until then to ensure a smooth transition while his replacement is sought.

•Denver, Colorado-based therapeutic CBD producer Charlotte’s Web appointed Jacques Tortoroli as its new CEO. Tortoroli was previously chief administrative officer at Bacardi Ltd and has been on Charlotte’s Web board since November 2019. He replaces Deanie Elsner, the former president of Kellogg’s, who has been CEO of Charlotte’s Web since May 2019.

•Irvine, California-based cannabis company and brand accelerator Petalfast has added Los Angeles-based cannabis brand Pilgrim Soul to its portfolio. Founded in 2019, Pilgrim Soul produces proprietary cannabis oil blends and vape pens containing them. The company markets itself on a message of inspiring creativity and also offers creative thinking journals that contain more than 50 creativity exercises. As part of Petalfast, Pilgrim Soul will have access to its distribution connections and retail placement across California.

•Los Angeles-based Day One CBD Sparkling Water has aligned with Coast Beverage to expand distribution across southern California. Coast Beverage, based in San Diego, will manage distribution of Day One across San Diego and Imperial Valley, California. Day One produces three flavors of sparkling water: grapefruit, lemon, and lime, all of which feature 20mg of CBD a 12-ounce can. The company plans to expand distribution in numerous new states next year including Texas, Illinois, and Florida, among others, and ships to all 50 states, with a 12-pack retailing for $36 on its website.

•Cresco Labs unveiled its new Illinois Cannabis Education Center (ICEC) in Chicago, a business incubator and workforce development center. It will expand on the work Cresco Labs started with its Social Equity & Educational Development initiative to provide immersive education and hands-on training in a functioning dispensary for social equity licensees, minority-owned ancillary businesses, and members of communities hurt by the war on drugs. The ICEC will open in early 2022.

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