Hexo settles board dispute following six-month-long investor standoff 

Hexo settled a board dispute with one of its investors on Tuesday by restructuring the company's director slate ahead of a shareholder vote next month. Hexo said it will add two directors nominated by Kaos Capital's CEO Adam Arviv to its board - Nocera Investment Corp. Director and former Eight Capital CEO Mark Attanasio and Brown Lab Industries President Rob Godfrey - effective immediately. Those directors will replace Hexo's Chair John Bell, Emilio Imbriglio, Adam Miron, and current Chief Executive Officer Scott Cooper, all of which announced they would step down from their board duties. Arviv also has the right to nominate an eighth director after the shareholder vote. The settlement appears to end a six-month-long stand-off between Arviv and Hexo management following the company's financing efforts over the past year aimed at acquiring several cannabis producers to help it emerge as the top-ranked Canadian pot company by sales. Hexo's shares are down more than 92 per cent over the past year. 

Alberta eyes profits for provincial cannabis business as retailers prep online sales

Alberta expects its provincial cannabis regulator to turn a profit next year, according to the province's budget released on Thursday. The Alberta Gaming, Liquor and Cannabis Commission should see a $7 million profit in its cannabis department, fuelled in part by a six per cent wholesale mark-up charged to retailers. Alberta is also ending a two-per-cent "education fee" that was previously charged to regulators. "Charging a mark-up was delayed to permit the legal market to become firmly established, and costs of production have been falling," the province said in its budget. As well, Alberta expects to net $157 million in cannabis-related taxes in the next fiscal year. Meanwhile, Alberta cannabis stores are preparing to launch online sales after the province announced last year it plans to shut down its provincially-run e-commerce website. According to the CBC, Alberta cannabis stores must apply to expand their licences to online sales and provincial inspectors must endorse any website before it goes live.

Health Canada yet to begin review of Cannabis Act

Health Canada has yet to begin its review of the Cannabis Act, despite being mandated to do so three years after the legislation was first passed, MJBiz reports. Canada's cannabis regulator told MJBiz that "preparations are underway for the launch of the legislative review" without giving specifics on why the delayed occurred. It is believed that Health Canada's management of the COVID-19 pandemic has led to the review's delay. Industry advocates have been waiting for the opportunity to update the legislation that first legalized cannabis in Canada in Oct. 2018, stating that it fails to address several shortfalls including beverage allowances, potency levels for edibles and taxation issues for smaller producers. 

Black entrepreneurs look to stand out in Canada’s cannabis industry 

Black Canadian entrepreneurs are trying to stand out from the country's legal cannabis industry which remains overwhelmingly white and male, according to several reports. The Canadian Press said that Black people are significantly outnumbered in the cannabis sector and find that the system often works against them in their attempts to establish a legal pot business. "Everyone had the same background. It was all the finance people running the industry," said Keenan Pascal, chief executive officer of cannabis manufacturing business Token Naturals. The Toronto Star reports that one Black entrepreneur had to change his name to push past barriers that he felt were stopping him from taking part in the cannabis industry. According to a report from the Centre on Drug Policy Evaluation (CDPE) and the University of Toronto, 84 per cent of executives and boards members at more than 200 licensed Canadian cannabis producers or their parent companies were white, while just one per cent were Black. 

Nearly half-million Americans employed in U.S. pot industry: report

There are nearly a half-million Americans employed in the country's legal cannabis industry, according to a report co-authored by Leafly. To be exact, there are 428,059 full-time equivalent jobs supported by the U.S. legal cannabis sector as of January 2022, an increase of 33 per cent from a year earlier, the Leafly Jobs Report said. The figure includes "plant-touching" jobs but also positions in ancillary businesses such as accounting, human resources and legal affairs as well as "indirect" jobs in cannabis-related media, lobbying and public relations. To compare, Canada's legal cannabis industry supports about 98,000 jobs, 11,000 of which are directly in the industry while the rest are deemed "indirect" or "induced", according to recent research from Deloitte.


Here's a summary of some of the cannabis industry companies that reported quarterly results this week: 

  • Avant Brands: Fourth quarter revenue up four per cent to $2.3 million, $1.2 million in an adjusted EBITDA loss, compared to a $263,000 loss a year earlier.  (Release)  
  • WM Technology: Fourth quarter revenue up 22 per cent to US$54.2 million, US$3.8 million in adjusted EBITDA, compared to a US$11.1 million gain a year earlier.  (Release)  



Analysts trim Cronos price targets

A pair of analysts slashed their 12-month price target on Cronos Group following the cannabis producer's third-quarter results. BMO Capital Markets Analyst Tamy Chen reduced her price target on Cronos to $4 from $6.50 while maintaining a "market perform" rating (the equivalent of a "hold") based on a reduced 2023 sales outlook. Chen now sees Cronos generating $105 million in 2023 revenue as the company remains in a transition period following a re-alignment of its assets. "We believe the opportunity for cost reductions may be greater than the initial $20 million to $25 million target, but we suspect it will be difficult to achieve positive EBITDA until Cronos can enter (the) U.S. cannabis (market)," Chen said. 

Meanwhile, Cowen & Co.'s Vivien Azer reduced her 12-month price target on Cronos to $4.50, from a prior target of $9 per share. Azer - who is also maintaining a "market perform" rating on Cronos, believes that the company will need to do more work to cut costs beyond management expectations if it wants to become profitable. She also noted that Cronos reported its ninth-straight quarter of negative gross margins while its U.S. CBD business remains in focus given the $236-million impairment charge it incurred in the last quarter and a planned "rationalization" of those products.  


$5.20 per gram

-- This week's price is up 0.6 per cent from the prior week, according to the Cannabis Benchmark’s Canada Cannabis Spot Index. This equates to US$1,848 per pound at current exchange rates.


"While there are many things I would have done differently, my only regret is not making changes sooner."

- Part of a statement from Hexo co-founder Adam Miron that he posted on the day the company announced he was stepping down from the company's board.