The social media platform X has certainly seen its fair share of word battles between cannabis executives and the latest has had many eating popcorn.

Green Thumb Industries Inc. (OTC: GTBIF) CEO Ben Kovler has been very vocal on the site about the AdvisorShares Pure Cannabis ETF (NASDAQ: MSOS) inner workings, giving voice to several questions other stakeholders have also been wondering about.

In December, Kovler wrote on X, “Nothing about this is personal. MSOS owns a lot of GTBIF & I have a duty to understand this in simple terms. I called Dan for the first time in more than a year (maybe 3) to ask, is it right that there have been no redemptions in MSOS since the election? That seems puzzling when the underlying are down 50%+. Dan confirmed no redemptions & didn’t have any firm answer about why except, ‘amazingly sticky investors.’ I wondered & still do, is there more to the story: Is there hidden leverage somewhere? Are the market makers shorting the underlying to hedge their long MSOS position pre redemption? How much of a factor is $MSOX which owns 6M shares of MSOS? (Of note MSOX has only seen inflows (!) since the election) How much of the 130M shares ($490M) long MSOS is ‘real’ vs AI?”

There is a vocal cohort on X that consistently criticizes the ETF, and they cheered Kovler on. Green Market Report reached out to Green Thumb for comment but got no response.

Yet GTI remains the largest position in the ETF at 34% of the holdings, with 21 million shares, despite complaints about the fund selling shares. The fund has a negative cash position and the selling was related to addressing that. As it was the largest position, it makes sense that it was the easiest position to trim.

AdvisorShares Investments CEO and Founder Noah Hamman said, “I think what Ben was talking about in some of his tweets… is we have a negative cash balance. And so what that commentates is a small amount of leverage. If I’ve got positive cash, it means I’m underinvested by a certain percentage, and if I have negative cash, I’m overinvested by a certain percentage.”

GTI is a heavily weighted position in the ETF, so it made sense for the fund manager Dan Ahrens to trim that large holding. Hamman added that rather than making a large transaction that would have an oversized impact on trading, they opted to do smaller trades over several days.

“He can sort of take his time and be gentle about it, not be disruptive relative to pricing is too much,” said Hamman. “And it helps us resolve our negative cash balance, which we’ve moved from a roughly negative $14 (million) now to about a negative $10 (million).”

The Twitterverse, though, saw the selling as a personal response to Kovler’s criticism. Hamman shot that down by saying that GTI is his favorite position.

“It’s a good company. It’s a good stock. I think people were trying to tie Ben’s comments and questions around it to those changes, but they’re not related. They (GTI) really did weather the storm better than most last year,” Hamman said.

Hamman also noted that the same critics didn’t like what they considered “garbage stocks” in the portfolio.

“We still like some of the companies that people would refer to as tier two, tier three, tier four. Having those smaller stocks did help. It didn’t hurt the portfolio performance last year,” he said.

The fund was down 45% in 2024 and squeezed out a positive performance in 2023 of 0.29%. It was down 72% in 2022 and 29% in 2021.

Hamman seemed to accept the criticism as the par for the course.

“I don’t mind everyone having their own opinion of how they would run the portfolio if it was theirs. They can pick other products, they can pick the stocks themselves, but at the end of the day, relative benchmarking relative peer group, Dan is seemingly doing a great job. And at this point, not shockingly, we’re used to a lot of what I’ll call armchair stock-picking quarterbacks,” he said.

AdvisorShares also continues to manage the Pure Cannabis ETF (NYSE: YOLO).

Less competition

Naysayers will have fewer cannabis ETFs to complain about soon. Amplify ETFs announced earlier this month that it was closing the Amplify U.S. Alternative Harvest ETF (NYSE Arca: MJUS). The fund will be liquidated and a final distribution to shareholders is expected to occur on or around Jan. 30, 2025. The fund had 19 holdings and $62 million in assets under management. Its top holding was also GTI, which comprises 18% of the portfolio. Since its inception in 2021, the ETF is down a whopping 91%.

The remaining ETFs include the Cambria Cannabis ETF (CBOE: TOKE) which has $14 million in assets under management and 24 holdings. The Amplify Seymour Cannabis ETTF remains open with $11 million in assets and 26 holdings. The Roundhill Cannabis ETF (CBOE: WEED) is also still active, albeit with less than $5 million in assets under management.

The Daily Hit is a recap of the top financial news stories for Thursday, November 21, 2024.

On the Site

Cannabis stocks up briefly Thursday before plunging on Gaetz withdrawal

The potential appointment of a pro-cannabis attorney general had boosted sentiment among cannabis investors.

Read more here.

Agrify gets $26M lifeline as GTI’s Kovler eyes extraction, hemp biz

Kovler has previously cited the GTI’s interest in Agrify’s extraction division.

Read more here.

Ayurcann terminates SPAC deal, citing regulatory filing failures

Arogo also initiated its own claim that the deal had been terminated, demanding the same $250,000 fee.

Read more here.

Earnings:

In Other News

Kentucky

Kentucky Gov. Andy Beshear announced Thursday that patients can start seeing doctors to get their written certifications for cannabis cards on Dec. 1.

Read more here.

Slang Worldwide

Highline Financial Group LLC has been named as the receiver of the assets, undertakings and property of certain Colorado subsidiaries of Slang Worldwide. The company also received a conditional extension of its waiver and support agreement.

Read more here.

Lifeist Wellness

Lifeist Wellness named Andrea Judge as chief executive officer, effective immediately. Judge has served as CEO of Lifeist’s subsidiary Mikra Cellular Sciences since July.

Read more here.

It could be rescheduling hopes or just more optimism in general, but it seems investors are warming up to cannabis again. In just the past couple of weeks, more companies have announced huge private placements and increased offerings. Is this an early sign of green shoots from credit markets?

One example: On July 18, Jones Soda Co. (CSE: JSDA, QTCQB: JSDA) upsized its private placement twice to satisfy the thirst for the stock. What began as a $3 million offering, got bumped up to $4 million and then again to $5 million.

“Based on strong demand, we are pleased to increase the size of the private placement to allow more interested parties the opportunity to participate,” CEO David Knight said just a week ago.

Jones said that its focus in 2024 was sales growth with plans to expand the Jones Soda glass bottle business in existing and new sales channels, expand the fountain program in the United States and Canada, and grow the Mary Jones brand, which includes tetrahydrocannabinol (THC) and cannabidiol (CBD)-infused beverages, edibles, and other related products.

Other recent deals

Also this week, Willow Biosciences Inc.(TSX: WLLW) (OTCQB: CANSF) closed its previously announced brokered private placement offering of 16,397,365 units at a price of $0.10 per unit for aggregate gross proceeds of $1,639,736.50. Dr. Chris Savile, president and chief executive officer of Willow said, “The proceeds provide the company with the funds needed to continue execution of our programs and partnerships through to commercial realization that are anticipated in 2024 and into 2025”.

Not wanting to be left out of the party, Avant Brands Inc. (TSX: AVNT)(OTCQX: AVTBF) announced the terms of a proposed non-brokered private placement of unsecured convertible debenture units at a price of $1,000 per convertible debenture unit for gross proceeds of up to C$3.9 million. That follows a C$2.39 million private placement closed on June 3, according to regulatory filings. The company also restructured some debt during the quarter, including extending a convertible debenture’s maturity.

Ascend Wellness Holdings Inc. (CSE: AAWH-U.CN) (OTCQX: AAWH) closed its previously announced private placement of $235 million of 12.75% senior secured notes due in 2029. The company used the net proceeds of the notes, together with cash on hand, to prepay $215 million of principal amounts outstanding under its existing term loan.

“Ascend’s successful refinancing signals an opening of the credit markets, and we expect other solid MSOs to follow suit,” Viridian Capital Advisors’ analysts wrote. “In particular, GTI has a $275 million term loan maturing on 4/25, and we expect the company to take action to refinance that relatively soon.”

Not a minute too soon

Viridian also found that capital fundraising activity in the marijuana and psychedelics industries had dropped by almost 40% in the last year. By sheer dollar amount, fundraising is down nearly 50%.

As the comment period for rescheduling cannabis from a Schedule 1 drug under the Controlled Substances Act to a Schedule 3 drug draws to a close, interest in the space looks to be growing again. The price of the AdvisorShares Pure U.S. Cannabis ETF has risen from a recent low of $6.98 to sell lately at $7.70.

On Monday, Water Tower Research analyst Jesse Redmond wrote, “It was a good week for cannabis stocks, with the US cannabis MSOS ETF gaining 6.15% and global YOLO increasing 5.15%. The Cannabist (OTCQX: CBSTF) +16.67% was the biggest winner among the larger MSOs, while MariMed (OTCQX: MRMD) -10.53% lost the most.”