The Daily Hit is a recap of the top financial news stories for Tuesday, December 3, 2024.

On the Site

With second lease on life, Eaze CEO says Florida key to success

Azzalino said Eaze’s upcoming Florida infrastructure investment will be critical to future stability.

Read more here.

LeafLink projects cannabis market to reach $55 billion by 2030

If cannabis is rescheduled, it could increase industry cash flow by $2-3 billion annually.

Read more here.

Canopy Growth to close Acreage deal next week

After years of delays and restructuring, some shareholders could walk away empty-handed.

Read more here.

CEA Industries to buy unnamed specialty retailer

CEA Industries has seen its revenues plunge as cannabis companies pull back on spending.

Read more here.

Curaleaf sues former director of operations in Colorado

Cura Co. is accusing Jamison Vosnos of sharing confidential information with Michael Quattrone of Crowded House cannabis.

Read more here.

In Other News

Nebraska

The Nebraska Attorney General’s Office filed a second “amended cross-claim” Friday on behalf of Secretary of State Bob Evnen in a lawsuit against two successful medical cannabis measures.

Read more here.

Pennsylvania

With a new legislative session just a month away, Pennsylvania state lawmakers plan to once again introduce legislation to decriminalize recreational marijuana.

Read more here.

Christina Lake Cannabis

The Company issued 56,663,636 Common Shares for gross proceeds of approximately $1,869,900 at a price of $0.033 per Common Share under the closing of the first tranche.

Read more here.

Canadian cannabis producer Canopy Growth Corp. (TSX: WEED) (Nasdaq: CGC) plans to complete its acquisition of U.S.-based Acreage Holdings Inc. (CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) next Monday, finally setting a firm timeline, though the deal’s value has essentially evaporated for some.

The transaction will transfer Acreage’s multi-state operations to Canopy USA, LLC, the company’s American subsidiary, according to a joint statement. The deal’s completion would mark Canopy’s largest step yet into the U.S. market, adding to its existing portfolio of American cannabis brands including Wana and Jetty.

Holders of Acreage’s floating shares will receive 0.045 Canopy shares per share when the deal closes in mid-December, the companies said. However, holders of Acreage’s fixed shares won’t receive any consideration unless Canopy’s stock price rises above $5 on the Nasdaq prior to closing, the companies previously said.

The exchange of shares will be handled through Odyssey Trust Company. Upon completion, Canopy USA will own 100% of Acreage’s issued and outstanding shares.

Canopy originally announced its intention to acquire Acreage in 2019, structuring the deal to comply with cross-border cannabis regulations. The company has since worked to shore up its finances ahead of closing, including a $100 million debt prepayment in October.

The companies noted ongoing labor disputes at Canada Post may affect document delivery to shareholders. Registered Acreage shareholders are encouraged to contact Odyssey Trust directly with questions about share exchanges.

Acreage posted a $22.2 million loss last quarter as revenue fell 30% to $39.6 million. The company reported $274.6 million in debt as of Sept. 30. Meanwhile, Canopy recorded a C$128 million loss in its latest quarter.

Holders of Acreage Holdings’ (CSE: ACRG.A.U, ACRG.B.U) (OTCQX: ACRHF, ACRDF) fixed shares will likely get nothing when Canopy Growth (TSX: WEED) (Nasdaq: CGC) acquires the U.S. cannabis operator next month, a stark yet unsurprising reversal from the deal’s multi-billion-dollar valuation half a decade ago.

A June convertible note offering severely diluted the fixed shares, Acreage said Monday, making them worthless at Canopy’s current $3.90 share price. The company provided a sliding scale showing fixed shareholders would only start receiving value if Canopy’s stock rises above $5.

“As a result of the material impact of the Offering it is anticipated that the current holders of Fixed Shares will receive zero value upon closing of the Acquisitions,” Acreage said in a statement.

The deal’s completion would mark the end of a complex, years-long trudge first announced in 2019 when Canopy agreed to buy Acreage for about $3.4 billion, betting on U.S. legalization. Those early consolidation wagers have mostly soured since, with deal terms repeatedly revised as cannabis stocks plunged and federal legislative efforts lulled.

Acreage reported a $22.2 million third-quarter loss as revenue fell 30% to $39.6 million. As of Sept. 30, the firm carried $274.6 million in total debt. Earlier this month, Canopy posted a C$128 million loss on declining revenue of C$73.9 million.

“We remain highly optimistic about the momentum building within Canopy USA,” Canopy CEO David Klein said on an earnings call earlier this month, noting plans to leverage Acreage’s assets alongside recently acquired brands Wana and Jetty.

Klein, who plans to step down by March, said Canopy is focused on “deeper, not wider” U.S. market penetration through its Canopy USA subsidiary. The Canadian firm’s worked to shore up its finances, prepaying $100 million in debt last month.

Acreage’s floating shareholders will still get 0.045 Canopy shares per share held when the deal closes, expected in mid-December.