Cannabis is not an industry for the timid. The plant remains federally illegal, with little movement toward change. Banking continues to be an issue, and legislative relief seems to be a low priority. Businesses can’t claim standard tax deductions, and rules vary wildly from state to state. And don’t forget plunging wholesale cannabis prices and a three-year bear market for cannabis stocks.

It’s no wonder some operators have thrown in the towel and left cannabis behind.

Nipped in the bud

Several recent headlines touched on cannabis operators that have pivoted into other industries.

22nd Century Group (OTC: XXII)

22nd Century was a struggling low-nicotine tobacco company that crossed the aisles to cannabis as part of the green rush. In 2022, it purchased CBD company GVB Biopharma in a deal valued at $55 million to $60 million. However, by 2023, it sold GVB for $2.5 million to reduce the company’s operating expenses and manage its debt.

Despite the refocus on low-nicotine tobacco, sales have continued to decline. The one thing working in the company’s favor is that its products comply with the FDA’s proposed new tobacco product standard for nicotine yield, and its product is the only combustible cigarette on the market that currently meets the new standard.

City View Green Holdings (OTCQB: CVGRF)

City View Green is the latest company to give up on cannabis. It received its cannabis processing license in April 2021, but never generated any revenue from its edibles business. In its most recent quarter, the company recorded a C$244,328 loss.

After warning investors in January that it was considering a pivot out of cannabis to become an investment issuer, City View announced this month that it would spin out its wholly owned subsidiary, 2590672 Ontario Inc. Following the spin-out transaction, the company said it would remain a reporting issuer to complete a reverse takeover transaction with a business that has yet to be identified.

Scotts Miracle-Gro (NYSE: SMG)

While Scotts Miracle-Grow is better known for its fertilizer, it looked like it had hit a home run in the early days of hydroponic indoor cannabis growing. The company’s subsidiary Hawthorne was racking up millions in sales. But the tables quickly turned, and losses suddenly were climbing instead of profit.

In January, Scotts decided to spin off Hawthorne.

The BC Bud Corp. (OTCQB: BCBCF)

BC Bud Corp. announced in February that it planned to shift from a pure cannabis company to an investment firm focused on digital and physical non-fiat assets, cryptocurrencies and resource sector investments. The company fulfilled that promise in March and changed its name to Digital Commodities Capital Corp. The company also changed its trading symbol to RIPP.

Neptune Wellness Solutions (NASDAQ: NEPT)

In 2023, Neptune Wellness left the cannabis industry, and the relief from that decision was evident in the company’s earnings transcript at the time. Chief Financial Officer Raymond Silcock said, “The cannabis business represented an untenable regulatory environment that was built on the expectation of deregulation. And by divesting this business, we have removed some of the obstacles in our path to profitability.”

Neptune sold its cannabis business for C$5.15 million. The company is now focused on Sprout, its organic children’s food and snack brand.

SOL Global (OTC: SOLCF)

Back in 2019, SOL Global actively spent millions to buy up cannabis companies, including Northern Emeralds, which became Bluma Wellness; MCP Wellness, a Merida property in Michigan; and a big stake in Verano Holdings Corp. By 2021, however, it had sold Bluma and engaged in a bruising battle over the Verano shares with an investor.

Meanwhile the overall company was posting big losses and trimming its cannabis holdings, reducing it to 14% of its portfolio by 2022. In November 2023, the company’s non-U.S. cannabis holdings were valued at $95.8 million, but by 2024 these had fallen to $35.8 million. Its U.S. holdings were valued at $6.7 million in November 2023, dropping to just $300,000 by November 2024.

The company’s website still includes the CBD company Simply Better Brands, Common Citizen and Jones Soda, but it mostly touts its digital assets. In February, the company announced it was planning to uplist to the Nasdaq, which would force it to get rid of any U.S. cannabis holdings.

Partial pivot

Some companies just can’t quit cannabis but have tried to stanch the bleeding by pivoting out of plant-touching businesses.

TILT Holdings (OTC: TLLTF)

TILT announced it was shifting focus solely on vape hardware and becoming an asset-light company. Originally, TILT had been a combination of brands, including cultivation facilities, dispensaries, a software business and the Jupiter vape brand. It sold the software business in 2020. Then, in 2023, the company parted ways with its CEO Gary Santo and that kicked off a further dismantling of the company.

In February, the company said it had a buyer for its Massachusetts dispensaries, but last week, investors learned the company had defaulted on its rent for properties in Massachusetts and Pennsylvania.