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The Cannabis Issue
CONTENTS
Letter from the Editor | 4
Tune In | 6
Catch up on what’s happening in the capital markets with the CSE’s content hub
Perspectives on the
Cannabis Industry | 7
Richard Carleton, CSE CEO, shares his insights on the state of the cannabis industry, from challenges to opportunities in 2024 and beyond
Market Leaders | 8
The CSE's top cannabis companies by market capitalization
Vext Science | 20
Positioned just right as positive change set to sweep U.S. cannabis industry
Greenway
Greenhouse
Cannabis | 24
Unique expertise and steady strategy have this cannabis company positioned to reach new markets
StickIt Technologies | 28
Innovative delivery technology designed to change the nature of cannabinoid consumption
Trulieve Cannabis | 12
Trulieve is setting the pace in a U.S. cannabis market on the verge of major change
MariMed | 16
MariMed succeeds with growth strategy prioritizing conservatism over quick wins
SPOTLIGHT ON Stuart Schady | 32
Get to know Stuart Schady, the CSE’s Vice President of Trading & Market Data, including his background, role and plans for the CSE
PUBLISHER
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GROUP PUBLISHER
Hamish Khamisa
EDITOR-IN-CHIEF
James Black
EDITORS
Peter Murray
Libby Shabada
Michelle Baleka
ART DIRECTOR
Nicole Yeh
WRITERS
Oli Haill
Angela Harmantas
Emily Jarvie
Libby Shabada
FREE DIGITAL SUBSCRIPTION
Published by Sparx Publishing Group on behalf of the Canadian Securities Exchange. To receive your complimentary subscription, please visit go.thecse.com/Magazine and complete the contact form.
To read more about the companies mentioned in this issue, visit blog.thecse.com or proactiveinvestors.com
TERRITORY ACKNOWLEDGEMENT
The Canadian Securities Exchange acknowledges that our work takes place on traditional Indigenous territories.
Letter from the Editor
As the CSE continues to celebrate its milestone 20th anniversary this year, we turn our attention in this issue of Canadian Securities Exchange Magazine to an industry that has played a pivotal role in our growth: cannabis.
Nobody could have predicted the outsized role the Canadian Securities Exchange would play in accelerating the growth of the legal cannabis market worldwide. Since our first listing in this space a decade ago, the CSE has listed over 150 cannabis companies that have collectively raised more than $15 billion and represent some of the most storied names in the cannabis industry.
The journey for publicly traded cannabis companies and their investors has often been characterized by change. Since our last cannabis-themed issue in late 2022, however, the industry has faced significant
hurdles, including increased cost of capital, heightened competition, regulatory headwinds and contracting valuations. The narrative has shifted from rapid expansion to a focus on ruthless efficiency. This emphasis on efficient operations is a key theme among all five CSE listed companies featured in this issue, reinforcing the observation that the cannabis industry is moving strategically forward rather than at the breakneck speed of its early years.
While there are certainly challenges in the cannabis space, there are also numerous silver linings. Since our last issue on the industry, more jurisdictions have legalized cannabis, and in the U.S., there is continued, albeit slow, momentum toward greater acceptance of cannabis. Additionally, one of the biggest talking points this year, especially among the companies featured in this issue, is the proposed rescheduling of cannabis within the Controlled Substances Act from Schedule I to Schedule III, a move that could provide additional financial benefit to cannabis businesses in the U.S.
An insightful perspective piece by Richard Carleton, our CEO, frames what these regulatory changes could mean and how they may impact investors, publicly listed companies and the industry as a whole. This issue of the magazine also provides
viewpoints of leaders from both large and early-stage cannabis companies and offers a uniquely informative snapshot of the cannabis industry sentiment heading into a year marked by pivotal elections worldwide.
Another important perspective in this issue comes from the trading and market data side of the Exchange, with a special profile of Stuart Schady, our Vice President of Trading & Market Data. As cannabis listings have opened the CSE to a global investor audience and to significant trading volumes accompanying them, Stuart and his team ensure that trading on the CSE remains accessible and efficient. Be sure to check out that interview.
As we continue to plot a course forward, the next few months will be key to shaping the fortunes of cannabis companies and their investors. As an exchange committed to always investing in the success of our clients and their stakeholders, we are as excited as they are about where the journey in the cannabis industry will take us next.
James Black Editor-in-Chief james.black@thecse.com
CSE TV
Keep your finger on the pulse of what's happening in the capital markets. Join our community of savvy subscribers who tune in to CSE TV for insightful content about developments in cannabis and beyond. Subscribe now: go.thecse.com/CSETV
THE EXCHANGE FOR ENTREPRENEURS PODCAST
Listen to a variety of in-depth conversations with thought leaders and innovators on Season 4 of The Exchange for Entrepreneurs Podcast. You can find it on Apple Podcasts, Google Play, Spotify, Stitcher, YouTube, and iHeartRadio. Tune in: blog.thecse.com/cse-podcasts
Tune In
Catch up on what’s happening in the capital markets with the CSE’s content hub
Richard Carleton’s Interview at Benzinga
At the Benzinga Cannabis Capital Conference in Hollywood, Florida this past April, Richard Carleton, CSE CEO, was interviewed by Benzinga's Zunaid Suleman to discuss the CSE’s role and successes in the cannabis sector, industry trends and challenges and the current state and outlook of valuations.
Check out the interview on our YouTube channel, CSE TV.
MORE CONTENT ON CSE TV
Subscribe to our YouTube channel to watch new episodes and replays: youtube.com/CSETV
1933 Industries’ Issuer Update Clip
Paul Rosen, CEO of 1933 Industries (CSE:TGIF), joined us to discuss the rescheduling of cannabis in the U.S. and to provide an update on this vertically integrated, brand-focused cannabis company, including its cultivation and manufacturing operations in Nevada via its two subsidiaries, its performance in Q1 and its upcoming milestones.
Watch the episode on our YouTube channel, CSE TV.
Jushi Holdings’ Issuer Update Clip
Get to know Jushi Holdings (CSE:JUSH), a multi-state cannabis operator. Trent Woloveck, Chief Strategy Director, sat down with us to share his takes on the rescheduling of cannabis in the U.S. and federal normalization, his insights into industry wins and challenges and the company’s plans for growth in adult-use markets.
Watch the episode on CSE TV.
PERSPECTIVES
ON THE Cannabis Industry
Richard Carleton, CEO, shares his thoughts on the state of the cannabis industry, from challenges to opportunities in 2024 and beyond
Anyone familiar with building a publicly listed cannabis business is no stranger to working through big challenges. From competition originating in both legal and illicit markets to the constantly evolving regulatory and legal landscape to accessing financial services and securing low-cost capital, to name only a few, adapting to change is par for the course.
In the decade or so since the Canadian Securities Exchange established itself as the go-to stock exchange for publicly listing cannabis-related securities in North America, we’ve witnessed our fair share of twists and turns. This year, however, there are several important events unfolding in the U.S. that could significantly impact
the industry’s trajectory by year-end and into 2025.
The confluence of proposed rescheduling of cannabis under the Controlled Substances Act, a national election in the U.S. and potential shifts in monetary policy are clearly on the radar of cannabis business operators as well as investors in the space. Each of these factors alone could shape the direction of the industry, so it is of little surprise, then, that their convergence this year has resulted in an emerging “wait-and-see” sentiment in a sector often characterized by proactive entrepreneurial vigour.
The good news for the U.S. cannabis industry is that change, while at times excruciatingly slow, is happening. Nearly three-quarters of Americans now live in states where marijuana is legal for medical or recreational use. And this fall’s elections will see more voting on legalizing adult recreational use – most notably in Florida. Public and regulatory sentiment have come a long way since the early 1970s when cannabis was designated as a Schedule I substance under the Controlled Substances Act, the same category as heroin.
From a business perspective, the proposed rescheduling of cannabis from Schedule I to Schedule III opens the door to tax relief for cannabis businesses and materially improve the bottom lines and balance sheets of cannabis companies. For entrepreneurs and investors, this is a positive development and a big part of the reason why we’ve seen a notable recovery of CSE listed cannabis company valuations over the past six to twelve months.
That said, there are important caveats to consider. Firstly, the timing of the rescheduling is uncertain. The process involves multiple government agencies – the Drug Enforcement Administration, Department of Justice, Department of Health and Human Services and White House Office of Management and Budget to name a few – and is inherently bureaucratic. Although progress has been made toward having cannabis rescheduled, the finish line is likely beyond the next election cycle in the US.
Secondly, even if cannabis is rescheduled to Schedule III, it will still be federally illegal, meaning many existing operational,
financial services and investment challenges cannabis company operators are facing will persist. Unless the tension between federal and state law regarding the provision of financial services to cannabis businesses is resolved, cannabis industry leaders have indicated that attracting larger and more diverse pools of capital will remain difficult. Additionally, U.S. stock exchanges’ reluctance to list cannabis companies and custodians’ hesitation to handle their shares are ongoing issues that will continue to affect the industry’s ability to access different pools of capital in the US and beyond.
Given the regulatory uncertainty and high cost of capital, businesses and investors are likely to continue operating cautiously and strategically. One area in which this has surfaced is in mergers and acquisitions. While significant M&A activity was expected to take place in the cannabis industry, the current funding climate has led to a more selective approach, with firms cherrypicking particular assets. In terms of public capital, we are seeing some firms successfully raise capital, generally in the form of debt or convertible debt, but market sentiment reflects that these can be expensive options at this time.
At the CSE, we recognize our role as a critical pipeline through which public capital from both U.S. and Canadian investors can flow into this space. To ensure we remain a source of stability in an otherwise uncertain landscape, the CSE team works closely with our clients’ executive, legal and accounting teams to help our listed companies meet all disclosure rules. The CSE also engages with our expansive network of investment bankers and capital markets stakeholders to stay informed on capital markets trends in the cannabis space.
As the cannabis industry navigates the current terrain, the community of entrepreneurs, investors and the broader capital markets ecosystem that supports them are aligned on wanting to bring to fruition sustainable businesses for the long term. And, if the past 10 years are any indication, regardless of the challenges, entrepreneurs will be up for the task of making it happen.
Market Leaders
The CSE's top 20 cannabis companies by market capitalization as of June 19, 2024
GREEN THUMB INDUSTRIES INC.
GTII
Market Capitalization: $3,397,031,001 CL
TRUL TRULIEVE CANNABIS CORP.
Market Capitalization: $1,935,948,828
CRESCO LABS INC.
Market Capitalization: $709,747,166 PLTH
Market Capitalization: $283,399,828 GRIN
PLANET 13 HOLDINGS INC.
Market Capitalization: $227,614,660
ROGUE INTERNATIONAL INC.
Market Capitalization: $201,127,460
GROWN
AAWH.U ASCEND WELLNESS HOLDINGS, INC.
Market Capitalization: $188,478,009
JUSH
EPIC
JUSHI HOLDINGS INC. CLASS B SUBORDINATE
VOTING SHARES
Market Capitalization: $159,271,594
BIOHARVEST SCIENCES INC.
Market Capitalization: $133,864,377
IANTHUS CAPITAL HOLDINGS INC.
Market Capitalization: $132,306,525
4FRONT VENTURES CORP.
Market Capitalization: $105,101,259
MARIMED INC.
Market Capitalization: $85,425,988
1CM INC.
Market Capitalization: $76,529,007
INNO
INNOCAN PHARMA CORPORATION
Market Capitalization: $68,988,683
VIREO GROWTH INC.
Market Capitalization: $62,733,455
CANNABIX TECHNOLOGIES INC.
Market Capitalization: $62,177,816
C21 INVESTMENTS INC.
Market Capitalization: $42,616,973
VEXT SCIENCE, INC.
Market Capitalization: $41,871,328
RED WHITE & BLOOM BRANDS INC.
Market Capitalization: $39,968,861
CANSORTIUM INC.
Market Capitalization: $38,304,381
VEXT
Trulieve Cannabis
Trulieve is setting the pace in a U.S. cannabis market on the verge of major change
By Emily Jarvie
Since launching in Florida’s medical cannabis market in 2015, Trulieve Cannabis (CSE:TRUL) has grown its operations to encompass a total of nine states across the U.S., expanding its team from 10 members to more than 6,000 and surpassing US$1 billion in revenue.
The company now operates the world’s largest retail network of cannabis dispensaries, not to mention more than 4 million square feet of domestic cultivation facilities, with 3 million square feet of that in Florida. Well-established hubs in the Northeast, Southeast and Southwest are anchored by leading market positions in Arizona, Florida and Pennsylvania.
Canadian Securities Exchange Magazine caught up with Trulieve Chief Executive Officer Kim Rivers in mid-May to discuss recent milestones achieved by the multistate operator and upcoming catalysts in existing and new markets as regulatory initiatives at both the state and federal levels gain momentum.
Trulieve recently reported its first quarter financial results. Can you run through some of the highlights?
We had 4% revenue growth, both sequentially and year-over-year, to $298 million. We had a margin uptick from 54% in Q4 of 2023 to 58% and a significant increase in adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA) from 31% to 36%, with over $100 million in adjusted EBITDA.
We’re seeing the consumer strength and behaviour that we experienced at the end of Q4 continue into Q1. We’re the only one of our peers that has reported strong sequential growth. The initiatives that we’ve invested in for the last 12 to 18 months are beginning to show up in a real way in our financials.
You are Florida-based with the majority of your operations in that state. How would approval of the Smart & Safe Florida initiative on the November 2024 ballot benefit the company?
We were very excited to have the Supreme Court rule in favour of allowing Amendment 3 on the ballot, which would allow for adult, personal use of cannabis in the state of Florida. We have been a big supporter of the expansion of access to cannabis wherever we operate. With Florida being our backyard, it’s very close to home for us and we’re very passionate about it. This is the first time the issue will be before Florida voters.
Florida already is one of the best cannabis markets in the country with its medical market at close to 900,000 patients. If adult-use does pass, we anticipate that the market will grow to approximately $6 billion.
We had 4% revenue growth, both sequentially and year-over-year, to $298 million.
It’s important to build that adult-use program on top of existing infrastructure. We currently operate 135 medical locations in the state and have extensive cultivation and manufacturing capability in Florida as well. Florida is a vertical market so everything in our stores in the state comes from a plant that we grew. It’s true, strict seed-to-sale.
So, it’s a tremendous opportunity for us in the state of Florida and a tremendous opportunity for Floridians. I’m really looking forward to having the opportunity to vote on the initiative in November.
Your other cornerstone markets are Pennsylvania and Arizona. What opportunities do you see in those markets?
In Pennsylvania, we are very encouraged by the momentum that is happening right now in the legislature. Governor Josh Shapiro is very supportive of moving to adult-use and we’re seeing increased discourse and bipartisan support of passing a bill in the legislature to move that market to adult-use. We believe that Pennsylvania could be an approximately $4 billion market. Pennsylvania also has a very robust, healthy medical market. We have seen tremendous growth in our brands, particularly among Roll One and Modern Flower.
Trulieve is in Arizona through our acquisition of Harvest Health & Recreation. We are at the point now
where we have opened some brand new locations under the Trulieve banner and are looking forward to transitioning 100% of our store locations this year from the Harvest name into the Trulieve platform.
We also just launched our revamped loyalty program. Arizona was our first large market for the launch and that has done tremendously well. We had an approximately 30% adoption rate in just two months, and we’ve seen a 50% increase in return frequency from those customers who are opting into that loyalty program, an incredible start out of the gate. We are looking to roll that program out to all of our other markets this year.
We’re also really excited about Ohio moving to adult-use, and us being positioned to take advantage of that opportunity. We are waiting for some additional clarity, but it looks like it could be as soon as the summer for adult-use to turn on in that market.
There is a lot of positive momentum around policy reform in the U.S. with cannabis set to be rescheduled from a Schedule I to Schedule III drug and the SAFER Banking Act. How do you see this playing out?
Rescheduling will have huge implications, as it is the first significant policy change for cannabis to happen at the federal level. I believe that it’s the first
important domino that could set off a series of additional policy changes.
It takes a long time in the U.S. to have policy shifts. I think folks forget that the average length of time for a policy to make it from an idea to final passage is approximately 11 years. With SAFER Banking, we’re at the 10- to 11-year time horizon right now. That certainly gives me additional optimism that we could pass SAFER Banking on the heels of an official rescheduling of cannabis to Schedule III.
The second thing is that it will open the door for additional research. I’m super excited about the possibility of having more clinical trials produce data we can lean into for our products and to make sure the public is as educated as they can be as it relates to the benefits and health concerns that this wonderful plant can help address.
One of the major benefits of rescheduling would be that cannabis operators will no longer be subject to tax code 280E. How would this impact your financial position?
For folks who don’t know, 280E is a penalty tax for businesses working with a Schedule I drug, under which cannabis is
currently classified alongside methamphetamine and heroin. It does not allow you to make any normalized business deductions, so we have a massively increased tax burden. After rescheduling, we would become a normal payer, which would drastically reduce that liability. The great news here is that we won’t have to wait for another process to unfold. It’s automatic.
To put the impact in context, our 280E tax liability from 2021 to 2023 was $350 million. For the first quarter, our 280E exposure would have been approximately $46 million. It has a sizable, very material impact on our financials.
Those potential savings are significant. Are there any particular initiatives you would reallocate these funds to?
Optionality is critical in this business. There are a lot of things that happen externally that we look to influence but that are out
of our control. We want to have optionality as it relates to our balance sheet position as well as flexibility for when opportunities do present themselves so we can act quickly on them ahead of growth cycles and catalysts.
What can investors expect from Trulieve for the remainder of 2024?
We have built this company to be profitable and durable and you’re seeing that in our numbers. The only way we are able to deliver those results is through the strength of our products and our relationships with our customers, so we continue to invest in our customer experience and our employees. Also, our fully automated 750,000 square foot indoor cultivation facility in Florida has turned on and is contributing to significantly lower costs, which show up in our margins and give us greater optionality and flexibility in terms of the customer experience we’re able to deliver.
Kim Rivers Chief Executive Officer Company
Trulieve Cannabis CSE Symbol TRUL
Listing date
September 25, 2018
Website trulieve.com
Emily Jarvie began her career as a political journalist in Australia. After she relocated to Canada, she worked as a psychedelics journalist, reporting on business, legal and scientific developments before joining Proactive in 2022. Emily has worked as a reporter in Australia, Europe and Canada.
Emily Jarvie began her career as a political journalist in Australia. After she relocated to Canada, she worked as a psychedelics journalist, reporting on business, legal and scientific developments before joining Proactive in 2022. Emily has worked as a reporter in Australia, Europe and Canada.
MariMed
MariMed succeeds with growth strategy prioritizing conservatism over quick wins
By Emily Jarvie
MariMed (CSE:MRMD) has captured opportunities across the cannabis value chain with its “seed-to-sale” approach, encompassing flower cultivation, product development, marketing and distribution and retail operations in key cannabis growth markets in the U.S.
Importantly, the company chose a deliberate and evenly paced approach over the lure of rapid expansion to reach this point. The resulting financial and operational stability positions MariMed to take full advantage of the expected reclassification of cannabis under the Controlled Substances Act to Schedule III from Schedule I following a related submission by the U.S. Drug Enforcement Administration in mid-May.
The Norwood, Massachusetts-based company was co-founded by Chief Executive Officer Jon Levine and the late Robert Fireman in 2011 with an initial focus on the medical segment to help people improve their everyday lives. It began as an advisory company to cannabis licence holders, and subsequently transitioned to a plant-touching operation that has since built out its business to six states: Illinois, Massachusetts, Maryland, Delaware, Ohio and Missouri, with plans to enter additional markets.
Levine told Canadian Securities Exchange Magazine that MariMed has taken a conservative approach to operations and acquisitions to ensure it did not overextend itself
operationally or financially as so many cannabis companies have done.
“We had a vision of growing this business profitably to multiple states, and that’s where we have been very successful,” Levine says.
“We grew the company slower than most of our multi-state operator (MSO) competitors, focusing on fundamentals and profitability versus rapid, unprofitable growth just to say you are the biggest. We have one of the strongest balance sheets in the industry as a result,” he explains, highlighting that the company has very little debt, nearly all of which has a 10-year maturity, versus maturities of three to five years for most of their larger MSO peers.
MariMed focuses primarily on limited-licence cannabis markets in the U.S. All states in this category issue a predetermined number of licences to cannabis businesses. The high barrier to entry balances patient and consumer access to cannabis products, bringing price stability and other benefits.
But that doesn’t mean the company has seen less success in states that don’t adhere to the limited-licence approach, such as its home state of Massachusetts. Here, Levine says the company’s high-quality products, with their all-natural ingredients and precision dosing, have allowed it to remain competitive without being forced to drop prices nearly as much as the competition.
Under its portfolio are multiple award-winning cannabis products and brands, including
Betty's Eddies fruit chews, Nature's Heritage flower and concentrates, a full line of InHouse value-priced products, Bubby's Baked brownies and other confections, and Vibations, a hydrating powder drink mix.
“The winners in cannabis will be the companies with the strongest brands. We’ve believed that right from the start,” Levine explains. “People will trust and pay higher prices for consistent, high-quality brands. Similar to traditional consumer products, customers want to know that they will get the exact same Betty’s Eddies every time they purchase it and no matter the market. It sounds simple but not many cannabis operators deliver on that promise like we do.”
MariMed’s ultimate goal is to grow deeper in the states where it is currently operating until it is fully vertical and has maxed out its licences and then do the same in additional states. The company has applied for cannabis licences in Virginia, New York and Texas, which Levine says present significant growth opportunities in their respective medical markets. The company also intends to apply for licences in Kentucky, which recently approved a medical cannabis program.
In addition to its commitment to high-quality products, MariMed takes its position as an industry leader very seriously. Its advocacy on behalf of others has focused on the removal of U.S. tax code 280E, a provision that results in cannabis companies paying higher taxes than most other U.S. businesses due to marijuana’s status as a Schedule I controlled substance. The company last year held a 280E protest event where executives and team members tossed cargo chests emblazoned – but not actually filled – with “weed” into the Boston Harbor, taking inspiration from the famous Boston Tea Party tax protest of 1773 during its 250th anniversary.
The Drug Enforcement Administration is expected to formally approve the rescheduling of cannabis as a lower-risk, Schedule III drug in the coming months, meaning cannabis companies will no longer be burdened by 280E.
Levine hails the move as “historic” and a big win for the industry and the consumers it serves. “Among the most important benefits of rescheduling is that more credible research will be implemented to show the benefits of
Jon Levine Chief Executive Officer
date
12, 2022
“
We are battling additional competition, economic factors and seasonality, but long-term the future is bright for MariMed and the industry.
— Levine
cannabis. We should ultimately see an exponential increase in the number of people who embrace cannabis as part of their health and wellness lifestyle.”
It will also result in industry-wide savings for cannabis companies, with MariMed expecting millions of dollars in tax reduction annually from the removal of 280E. Levine says these cost savings will free up funds for MariMed to accelerate growth, including expansion into new markets and investment in product innovation. The company is also adding new stock-keeping units, or SKUs, to its product lineup.
“We’re going to see improvement to our financials in revenue, margins and earnings before interest, taxes, depreciation and amortization (EBITDA) as we grow toward the end of the year,” Levine explains.
The company expects to see revenue growth in the range of 5% to 7% and adjusted EBITDA growth of up to 2% for 2024.
For the first quarter, MariMed reported a 10% year-over-year increase in revenue, led by significant growth
in its wholesale division and solid performance at retail. The strong revenue expansion led to the company achieving its 17th consecutive quarter of positive adjusted EBITDA.
“We’re heading in the right direction,” Levine says of MariMed’s financial performance. He spotlights that the company outperformed its competition in every market it operates in during the first quarter, including Illinois, where it began selling products through its new wholesale business in January. MariMed expects margins and revenue in Illinois to grow throughout 2024 as it bolsters operations, including opening its first cultivation facility.
“We are battling additional competition, economic factors and seasonality, but long-term, the future is bright for MariMed and the industry,” the CEO explains. “We’re very excited, for example, to continue ramping our Illinois production and cultivation and watch our revenue and margins increase along with that.”
The company also expects to have its third adult-use dis pensary up and running in Massachusetts very soon, which Levine said will drive MariMed’s margins and rev enue higher for that state. It aims to open a new process ing centre in Missouri as well and to expand the size of its Maryland cultivation facility to meet the growing demand for its products in that highgrowth state.
With Ohio recently becoming the 24th state to legalize recreational cannabis
use, the company plans to open a second dispensary there. It’s also evaluating opportunities to purchase a processing or cultivation facility and additional dispensaries to maximize its Ohio footprint.
“Those are things we expect to come that will bring more revenue and better margins in the second half of the year,” Levine notes.
MariMed’s momentum has carried into the second quarter. The Illinois brand rollout continues with its products available in over 130 dispensaries. In Massachusetts, the company recently announced a partnership with two iconic Boston music venues, MGM Music Hall at Fenway and Citizens House of Blues Boston. Positioned as each venue’s exclusive cannabis category sponsor, the partnership is generating enormous visibility and goodwill for its Nature’s Heritage brand.
“We’re very excited that MariMed’s best days are still ahead,” says Levine.
Emily Jarvie began her career as a political journalist in Australia. After she relocated to Canada, she worked as a psychedelics journalist, reporting on business, legal and scientific developments before joining Proactive in 2022. Emily has worked as a reporter in Australia, Europe and Canada.
Emily Jarvie began her career as a political journalist in Australia. After she relocated to Canada, she worked as a psychedelics journalist, reporting on business, legal and scientific developments before joining Proactive in 2022. Emily has worked as a reporter in Australia, Europe and Canada.
About the Author
Vext Science
Positioned just right as beneficial new rules set to sweep U.S. cannabis industry
By Angela Harmantas
U.S. multi-state operator (MSO) Vext Science (CSE:VEXT) is looking forward to big federal and state catalysts that it and others in the cannabis sector have long been preparing for.
The vertically integrated cannabis company has established a significant footprint in its main markets of Arizona and Ohio. Vext is well known for state-of-the-art cultivation facilities, fully built-out manufacturing operations and dispensaries where consumers often choose its Vapen brand, one of the top-performing THC concentrate, edible and distillate cartridge brands in Arizona.
The company has made a big push into Ohio as that state prepares to transition from a medical cannabis market to an adult-use one. In early June, the state began accepting applications for dispensaries seeking to sell recreational cannabis.
This shift is anticipated to significantly reduce the illicit market and provide easier access for consumers who do not want to obtain a medical cannabis card.
Meanwhile, the U.S. Drug Enforcement Administration's recent announcement about rescheduling cannabis from a Schedule I to a Schedule III drug will have beneficial tax implications for companies in the industry and could potentially lower costs for consumers.
Vext generated approximately US$4.4 million in net income after tax in the year ended December 31, 2023, and anticipates significant growth with the upcoming launch of the adult-use program in Ohio. The company will be well positioned with a Tier I cultivation facility, a manufacturing facility and four dispensaries in the state. It also sees potential for three additional adult-use licences based on proposed new dispensary caps in Ohio, which would give it the opportunity to operate a total of seven dispensaries in the state.
In a recent interview with Canadian Securities Exchange Magazine, Vext Chief Executive Officer Eric Offenberger discussed how strategic vision and a commitment to operational excellence position Vext to thrive in a market characterized by constant change, plus what the company’s plans are to capitalize on the opportunities that lie ahead.
Eric Offenberger Chief Executive Officer
Company
Vext Science
CSE Symbol VEXT
Listing date May 13, 2019 Website vextscience.com
Vext is a vertically integrated MSO with operations in Arizona and Ohio. What sets the company apart from its peers?
One of the key differentiators is our cautious approach to growth. We identified states with vertical integration and a limited number of licences to make better and more sustainable returns. We’ve also been prudent with our capital and balance sheet structuring, always considering what growth we could support and what our shareholder base could support.
Our philosophy differed from others who expanded broadly; we focused on depth rather than breadth. We also entered the market later, going public in May 2019, which allowed us to learn from others' experiences and avoid some of the pitfalls.
Your Q4 and full-year 2023 results show a slight decline in revenue from a year earlier but a notable increase in earnings before interest, taxes, depreciation and amortization (EBITDA). What were the key drivers behind this improved profitability?
The magnitude of the increase in EBITDA needs to be considered in context as it includes a bargain purchase price for our Ohio asset, which led to an increase in EBITDA. We've been funding Ohio from Arizona for a couple of years.
The cannabis industry, like any other, is affected by inflation impacting consumer spending. Until this year, Arizona was the primary operational state funding our Ohio expansion. Now, with Ohio becoming operational, we’re seeing results, and we expect to see both revenue and cash flow ramp up significantly as adult-use comes online through the second half of the year.
With Ohio's adult-use market projected to reach US$4 billion by 2028, how is Vext preparing to capture market share there?
From day one we knew we wanted to be vertically integrated and to focus on a footprint that would enable us to capture incremental wholesale profit in the early
years of the market, while scaling only to the level where we could fully supply our own dispensaries over the medium and longer terms. Being vertical and supply-demand matching within your own operations is key to long-term success in these markets. Additionally, Ohio’s structured limitations on storefronts and cultivation prevent oversaturation, making it an advantageous market for us. Through acquisitions, we have assembled a portfolio that includes a Tier 1 cultivation facility, manufacturing operations and four dispensaries. The latest of those dispensary acquisitions closed in March 2024.
Ohio’s transition from a medical to an adult-use market is important given our exposure in the state. The potential customer base expands dramatically, presenting an intriguing opportunity. We’ve invested heavily in Ohio, using our Arizona assets and additional capital to fund this growth. We believe this positions us well to benefit from Ohio’s growing market
The Arizona market is quite competitive. How is Vext positioning itself to maintain and potentially increase market share in that environment?
Arizona is experiencing an oversupply issue, with many cultivators entering the market and driving down prices. Inflation is also impacting consumers' disposable income, leading to decreased spending.
“
Now, with Ohio becoming operational, we’re seeing results, and we expect to see both revenue and cash flow ramp up significantly as adultuse comes online through the second half of the year.
Offenberger
We’re focusing on cost control and price discipline, ensuring efficiency in our operations. Despite the challenges, our vertically integrated model in Arizona helps us mitigate risks better than those heavily reliant on wholesale markets. While the market is down, we are only down about half as much. And this is a fantastic long-term market as supply
and demand come into balance, as they always do in the long term. The population is expected to keep growing.
What strategies are you employing to handle these pressures?
We're focusing on cost control, price discipline and inventory management. Basic business principles apply here, and we’ve been diligent about maintaining these even during better times. In Ohio, we anticipate a broader customer base, which will allow for growth in a more controlled market environment.
Can you comment on the innovative strategies Vext has implemented at the dispensary level?
We introduced "speed " windows, similar to bank teller windows, allowing customers to quickly pick up online
orders. This innovation improved customer traffic and transaction volume, outpacing state averages. It's an example of how small changes can significantly impact operational efficiency and customer satisfaction.
As someone who has transitioned from COO to CEO and with your background in MSOs and manufacturing, what lessons have you learned about running a successful cannabis company?
My background in retail, distribution and manufacturing shaped my view of cannabis as a commodity like any other. Consumers seek value, convenience and consistency. Whether it's milk, poultry or cannabis, the principles remain the same. Efficient operations and a deep understanding of consumer behaviour are critical for success.
Industries evolve and cannabis is no different. From my experiences in dairy and other commodities, I’ve learned that consumer expectations drive market dynamics. Understanding these expectations and adapting operations accordingly is crucial. Efficient growth, maintaining control over expansion and ensuring product quality are fundamental lessons that apply across industries.
President Biden's administration is moving toward rescheduling cannabis from a Schedule I to a Schedule III drug. How do you foresee this impacting Vext Science's operations and financial performance?
I think rescheduling cannabis as a Schedule III drug does a few things. It starts to change how people think about cannabis. If it becomes a Schedule III drug, it could lead more people back
into the medical market, seeking pain relief or other benefits. It might become easier to prescribe and purchase, and it would have a different tax structure, potentially giving consumers more purchasing power.
Regarding banking, I'm not sure if it changes anything immediately. It might attract investors who have previously not focused on the sector, allowing them to view cannabis in a different light.
Socially, I'm unsure of the broader impacts, but I think it sets the stage for a more favourable environment. For a company like Vext, with a strong balance sheet and asset ownership, it creates a more attractive vehicle for future use, whether through acquisition or collaboration with like-minded companies.
How does your strategy for building the company ensure its resilience and value, particularly with the expected rescheduling of cannabis?
We always aim to build a company that someone would want to acquire one day – and that is not to say the company is “for sale,” because it’s not. However, by focusing on this end state even a long time down the road, you will naturally focus on building an efficient organization with happy and engaged staff and driving profitability and cash flow. Ultimately, this approach brings value to shareholders, employees and investors.
We believe rescheduling propels us into the next phase of market evolution. If you build the company right, you'll be able to take advantage of future opportunities, ensuring the success of a strong, unified team.
Angela Harmantas is a senior financial journalist with Proactive. She has 10 years’ experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from multiple countries, including Canada, the US, Australia, Brazil, Ghana and South Africa. Prior to joining Proactive, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government. Angela currently resides in Toronto.
Greenway Greenhouse Cannabis
Unique expertise and steady strategy have this cannabis company positioned to reach new markets
By Oli Haill
Greenway Greenhouse Cannabis (CSE:GWAY) entered Canada’s frenzied cannabis market not long after the country legalized recreational use in October 2018 but with a different game plan than most of its peers.
While the company was smaller than many licensed producer (LP) rivals, the agricultural lineage of its leadership team proved an important advantage after the industry’s initial excitement gave way to hard business realities.
Greenway is still led by the two men who co-founded the company: Chief Executive Officer Jamie D’Alimonte and President Carl Mastronardi, both of whom co-chair the organization.
D’Alimonte is a third-generation farmer whose family focuses on tomatoes, peppers, cucumbers and strawberries, which have been on shelves across Canada and in major U.S. retailers since the 1950s. The Mastronardi name is known in North
American agricultural circles for their family’s work in greenhouse growing, stretching back to the 1940s.
While the initial frenzy in financial markets for cannabis names led to billions of dollars of investment and the creation of dozens of LPs, the Greenway strategy was more modest by design.
“We wanted to approach it as an agricultural product from the onset and we started very small, with a one-acre facility as well as the nursery back in 2020,” says D’Alimonte.
“We received the certification for our growing facility in 2021 and our intention was to be a B2B wholesale supplier, selling one-kilogram packages to other brands or marketers who could decide whether to sell it as flower, pre-rolled joints or edibles.”
The approach called for learning the market and keeping costs low as the team found ways to leverage its agricultural expertise.
“Honestly, prior to the gold rush and all the hype and hysteria around Canada’s legalization, what brought us to this industry is that we saw a lot of people that we didn't think were doing it efficiently and going about it from an agricultural standpoint,” D’Alimonte explains.
“There are all kinds of controls required to keep costs down from a plant nutritional perspective and to maintain high production standards. We saw a lot of things going on that we thought fell short of our knowledge base, so we got excited and saw potential for growth over time. We felt we could really do something.”
Thanks to those decades of experience, Greenway’s weighted average cash cost for finished goods inventory was $0.75 per gram at the end of December 2023, amongst the lowest in the Canadian market.
“Even in inflationary times, we have been able to keep costs down and quite level,” he says.
“Early on, and even recently, you're seeing costs at some other LPs well over
“ We gave ourselves time to prove to the public and our shareholders what makes us different, keeping costs down and growing a superior product.
D'Alimonte
$1.50 to $2.00 per gram. That really is the difference with us, as well as production per plant, with some yielding upwards of 250 to 300 grams.”
Situated in Leamington, Ontario, Greenway’s facility is in one of the southernmost and sunniest points in Canada, affording a perfect climate for greenhouse production.
Greenway also captures heat from power generated on site with natural gas, storing the warmth from engines
to redistribute when greenhouses need it at night. Meanwhile, the rockwool substrate it uses in place of soil allows nutrients to be preserved, meaning a pasteurization process can be employed so that water gets reused.
“We do not utilize any pesticides but instead rely on integrated pest management,” says D’Alimonte. “In other words, we have an entomological team and we bring in good bugs to eat the bad bugs.”
To control aphids and white flies, for example, the control team uses ladybugs and a type of wasp called Encarsia formosa. “Greenhouse growing in general is very safe for the environment,” D’Alimonte notes.
While the Greenway founders were correct that their approach was robust, the rollercoaster trajectory taken by the broader industry made the first few years a much rougher ride than hoped.
With the rapid entry of large producers, some with facilities 20 or 30 acres in size, oversupply of cannabis, much of it of mediocre quality, sent prices tumbling.
Canadian cannabis wholesale prices fell more than 40% last year as companies continued to work through stubborn supply gluts.
The fallout, which coincided with slower legalization south of the border than anticipated, undermined share prices and led to many companies collapsing or consolidating.
D’Alimonte and Mastronardi had been careful not to overreach but still saw profits squeezed by the weak pricing environment. “It really hurt our revenues and returns,” says the CEO.
Nevertheless, in the quarter ended December 31, 2023, Greenway reported the second-best revenue number in its history, up more than 33% over the same period a year earlier to $1,388,200. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at a modest loss of $252,395.
“We have definitely seen a rebound in the market in the last six to eight months,” says D’Alimonte. “There have been a lot of bankruptcies and a lot of facilities closing or downsizing, matching and becoming aligned. Since that's been happening, we are seeing our revenue increase and the price per gram increase as well.”
Also helping returns is entry into the retail market, with the first shipment of product under the company’s own MillRite pre-roll brand taking place in March. Early sales put MillRite as the number four brand in its segment. The EPIC premium flower brand launched one month later. Both brands are available in Ontario, with Greenway already eyeing other provinces such as British Columbia, Manitoba and Saskatchewan.
MillRite is priced to attract price-conscious consumers, with Greenway’s low production cost enabling it to compete and still anticipate profitability on its sales.
In April, Greenway announced the receipt of CUMS-GAP and GACP certification, bringing with it the chance to ship internationally.
“Some current customers with export arms requested that certification, so we can export through existing customers or through new ones we are currently vetting,” says D’Alimonte.
“Export prices are much higher than we are getting in Canada, and some of our product has already been earmarked for Australia. And with the change in the market, we are being approached by many LPs who decided to pivot and focus on marketing rather than production. We are having discussions with lots of them.”
The timing of this new market dynamic is perfect, as growing facility expansion finished last year, bringing capacity to 167,000 square feet of cultivation space and 22,000 square feet for processing.
This enables annual capacity of 24,000 kilograms and carries with it the potential for a major increase in earnings.
“I envision us probably being fully planted within 12 to 18 months, and it could be even sooner if one or two of the new customers we are currently talking to come on board,” says D’Alimonte.
He acknowledges that it has not been an easy journey for shareholders, of which he is one, with insiders owning about 70% of the 131 million shares outstanding.
“We have been very conservative – lots of sweat equity,” says D’Alimonte. “We have been true to our goals; we didn’t get into processing or CPGs right at the start like our competitors. We gave ourselves time to prove to the public and our shareholders what makes us different, keeping costs down and growing a superior product. We see this industry as a marathon not a sprint, and Greenway is still gathering speed.”
Jamie D’Alimonte Chief Executive Officer
Company
Greenway Greenhouse
Cannabis
CSE Symbol GWAY
Listing date September 21, 2021 Website greenway.ca
Oli Haill has been writing about companies and markets since the early 2000s, beginning as a financial journalist at Growth Company Investor and later becoming its section editor and head of research. Before joining Proactive, he worked as a freelance reporter contributing to the Financial Times Group, ITV, Press Association, Reuters and several other high-profile publishers.
StickIt Technologies
Innovative delivery technology designed to change the nature of cannabinoid consumption
By Angela Harmantas
StickIt (CSE:STKT) has carved out a niche for itself in the cannabis market, despite not exactly being a cannabis company.
Listed on the CSE since October 2023, StickIt develops innovative consumer products resembling toothpicks, as well as straws and spoons, which can be infused with different types of cannabinoids, such as THC and HHC.
StickIt operates primarily through a B2B model that allows the company to leverage its patented technologies by relying on partners to handle mass manufacturing. This facilitates market penetration and scalability across multiple regions without requiring large capital outlays to establish production facilities.
The approach sees StickIt license its delivery technologies to entities that produce and distribute the infused items under the StickIt brand name. And unlike some traditional cannabis products, which vary significantly in dosage and quality, StickIt's offerings provide a consistent and reliable user experience.
The company’s primary product, the Extra-C “cannabis stick,” resembles a toothpick that can be easily inserted into a pre-roll. The stick consists of cannabis extracts that burn at the same pace as the pre-roll does.
A product that uses a similar concept but in a completely different form factor is the StickIt SipIt straw. The idea here is to provide
“ This development eradicates the hassle of traditional consumption methods, offering rapid, discreet and precise dosing without compromising taste or experience [...] We're not just changing the way cannabis is consumed; we're revolutionizing it.
— Haroosh
people the soothing effects of cannabinoids while they enjoy their favourite beverage.
Unveiling the straw in March of this year, StickIt Chief Executive Officer Eli Ben Haroosh said: “This development eradicates the hassle of traditional consumption methods, offering rapid, discreet and precise dosing without compromising taste or experience. It's a win-win for both consumers and producers, opening doors to untapped markets and elevating the cannabis experience to unprecedented levels. We're not just changing the way cannabis is consumed; we're revolutionizing it."
StickIt is clearly onto something, so there are other products coming to the lineup as well, including a hot drink shaker stick.
Speaking to Canadian Securities Exchange Magazine, StickIt Chief Financial Officer Sophie Galper explains how these new products are intended for people who want to consume cannabinoids without the taste and smell of oil-based products.
“This is what’s unique about the straw. You want to have your juice or water or whatever you are consuming without it being mixed with the taste of cannabis oil,” explains Galper.
“The technology allows exactly this. It's a delivery system. You're sipping it but it's only being activated in your stomach.”
To provide an even clearer idea, Galper draws an analogy with consuming sugar. “If it's a warm drink, you feel the sweetness of the sugar. If it's a very cold
drink, the sugar is not dissolved, so you can consume sugar in your body without really tasting the sweetness.
“StickIt’s technology is essentially a delivery system that creates almost sand-like granules, and when you sip your drink it's getting into your body without tasting like oil.”
One big plus is that StickIt-branded products come labelled with the precise dosage amount, so you know exactly what is entering your system.
But perhaps attention to detail should not be surprising, considering how the company views its position.
“As much as StickIt is active in the cannabis market, it’s essentially a technology company, not a cannabis company,” Galper says.
And StickIt does indeed have considerable tech credentials behind it. The company’s founder, Dr. Asher Holzer, has decades of experience in starting and growing medical technology companies, including InspireMD, which is focused on the proprietary microNET stent platform technology for the treatment of complex vascular and coronary diseases.
StickIt is in the process of building joint venture partnerships in cannabis-friendly jurisdictions around the world, though Galper admits it hasn’t been completely smooth sailing so far.
“The business model involves licence agreements with local manufacturers in every country. Launching these agreements has taken longer than expected, as is always the case,” Galper explains.
“This is partially because there's absolutely a shortage of people who want to fund this industry right now.”
Galper is referring to the elephant in the room here. For all of the hype and promise, the regulated cannabis industry has underperformed.
In Canada, in particular, the market has experienced saturation and regulatory hurdles that have made it difficult for businesses to thrive.
Nonetheless, StickIt is moving forward with strategic partnerships with licensees in multiple countries.
In 2023, StickIt entered into a licence and distribution agreement with Ripco Processing in Canada, authorizing Ripco to use StickIt’s raw materials in the manufacturing of products within the Canadian market. Ripco plans to focus on THC-infused sticks for the rapidly growing infused pre-roll segment.
Despite investors being cool toward cannabis investments at the time, StickIt went public on the CSE in October 2023 via a reverse takeover.
Funding was less of an issue for the group, having secured capital via two crowdfunding rounds. Plus, StickIt’s cash burn rate is “very low,” adds Galper.
Going public was a promise to the 600-odd crowdfunding participants and the CSE provided a liquidity venue for their shares.
“The public vehicle is a good platform to continue with M&A,” says Galper. “StickIt is very much oriented to M&A to integrate different technologies."
Eli Ben Haroosh Chief Executive Officer
Sophie Galper
Chief Financial Officer
StickIt Technologies CSE Symbol STKT
Listing date October 27, 2023
Website stickit-labs.com
Angela Harmantas is a senior financial journalist with Proactive. She has 10 years’ experience covering the equity markets in North America, with a particular focus on junior resource stocks. Angela has reported from multiple countries, including Canada, the US, Australia, Brazil, Ghana and South Africa. Prior to joining Proactive, she worked in investor relations and led the foreign direct investment program in Canada for the Swedish government. Angela currently resides in Toronto.
Stuart Schady
Get to know Stuart Schady, the CSE’s Vice President of Trading & Market Data, including his background, role and plans for the CSE
By Libby Shabada
Your experience in the capital markets has not only crossed borders but has crossed oceans. Can you share a little bit about your journey to the CSE?
My career in the capital markets began rather inconspicuously in the graduate program at Standard Bank, one of the large African banking groups headquartered in South Africa. After moving through a number of divisions to learn the ins and outs of the banking business, I landed a job on the retail trading desk, allowing me to gain exposure to the bank’s capital markets division and get the foundational education about managing a trading business I needed to propel my career.
After some consideration, I finally took the plunge and moved to Canada, which I have since found to be an open and welcoming country. Through a few lucky breaks and chance encounters, I secured a position at one of the trading technology vendors that services most of the major brokers in Canada, where I cut my teeth on the complex world of Canadian market structure and made many of the relationships that still serve me well today.
When I was approached to join the CSE in 2019, I jumped on the opportunity, and the rest is history.
In January 2023, you were appointed to your current role. What are the key responsibilities of this position? Please briefly share some of the significant developments since you took the reins.
I am responsible for managing the trading and market data businesses of the CSE. This includes coming up with the strategy, managing the team that executes the strategy and being accountable to the CEO for the performance of those business lines.
Since taking the reins, I have directed many significant developments across both business lines.
On the trading front, we have deepened relationships with our clients and greatly improved the range of trading solutions that are available to them by offering new order types and pricing models that better support their trading objectives.
With respect to market data, we have completely revised the fee model so that our clients can more easily understand it and benefit from the improved processes we have implemented for subscribing to CSE market data.
What are some of the important trends/ developments related to trading that could impact investors/traders or listed issuers in the near future?
Canadian regulators are always paying attention to both industry trends and
regulatory developments globally. I anticipate that we will see recent U.S. SEC regulations reflected in Canadian regulatory activities, specifically on minimum pricing increments. Changes to the U.S. cannabis regime and the prevailing interest rate policies worldwide can also have a significant impact on trading trends as we look forward.
The CSE recently celebrated its 20th anniversary. What’s been your biggest learning during your time with the CSE so far?
Since joining the CSE I have learnt the impressive power of a good management team that puts their clients at the heart of everything that they do. I believe that this is the key to the continued success and sustained growth of the CSE, and I have been extremely fortunate to be able to take on a leadership role within this company, learning and working with some of the absolute best.
What are you most excited about in the trading division in 2024 and 2025?
One of the most exciting upcoming features is the introduction of our Market-on-Close (MOC) facility, which will be used to establish the official closing price for most of our CSE listed securities. The model we have selected for our MOC facility is both battle-tested and the de facto standard for Canadian and North American marketplaces. The CSE MOC will provide more transparency and deeper liquidity around the close, benefiting not only CSE listed issuers but also our dealers and their clients. As an additional advantage, the CSE MOC will make CSE listed securities more likely to be included in indices and ETFs not just in Canada but around the world.
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