GB Sciences awaits drug data, WeedMD mixes acquisition & advocacy, Cresco & Organigram raise capital and more

By Craig Behnke and Mike Regan

GB Sciences building cash reserves for potential FDA trials

GB Sciences (OTCQB: GBLX) signed a letter of intent on Dec. 5 to sell 75% of its membership interests in its Las Vegas cultivation and production operations.

This might be a good signal of the company’s confidence in the interim data from Parkinson’s disease animal studies expected in late December.

According to the announcement, the company wants to focus solely on development of its biopharmaceutical and wellness assets, which include three patents, four patent applications and four provisional patent applications.

The letter of intent also includes the option for the buyer to acquire the remaining 25% of the operations in the near future.

Organigram and Cresco announce stock sale programs

New Brunswick, Canada-based Organigram (TSX: OGI; Nasdaq: OGI) and Chicago’s Cresco (CSE: CL) both announced at-the-market equity raises of CA$55 million this week.

The Organigram program runs through Dec. 25, 2021, and Cresco can sell shares at any time for a period of 25 months after July 25, 2019.

These straight common equity capital raises are a welcome change from many of the recent cannabis industry raises that have warrants attached with varying strike prices.

Capital raises with warrants and convert features complicate capital structures and make it more difficult for investors to accurately value company shares.

WeedMD mixes acquisition, advocacy

WeedMD (TSX: WMD) on Nov. 29 agreed to acquire a fellow Ontario, Canada-based company, medical marijuana-focused Starseed Holdings, in an interesting mix of acquisition and advocacy.

Starseed’s strategic investor, the Labourers’ Pension Fund of Central and Eastern Canada, will make a concurrent $25 million equity investment directly into WeedMD.

The interesting part of the acquisition: Starseed has a partnership with Canada’s largest construction union, the Laborers’ International Union of North America, to provide medical cannabis as a fully covered drug benefit for its more than 100,000 members. The deal improves access for union members while opening the door to a new group of customers.

Akerna acquisition details

Denver-based Akerna (Nasdaq: KERN) on Tuesday hosted a conference call to provide more detail about its recent acquisition of Boston’s Solo Sciences. Akerna acquired 80% of the technology company for 1.95 million shares valued at $8.00 per share, or $15.6 million.

KERN also has an option to acquire the remaining 20% of Solo within one year.

On the conference call, management said it will invest another $2.4 million in cash in 2020 for working capital to get Solo to positive cash flow.

Solo Sciences has a patented anti-counterfeit technology that provides a unique custom code for every package. That code can be scanned by a consumer’s mobile phone to confirm the authenticity of the product.

The tag can be used for entire value-chain tracking from seed-to-sale and reportedly has a lower cost than RFID.

The key benefit of the deal is that Solo will provide Akerna a more direct connection between revenue and unit growth in the cannabis industry. This resolves a key concern we had with the drivers needed to achieve Akerna’s ambitious revenue-growth targets.

Currently, the majority of Akerna’s growth is driven by the number of dispensaries and state governments that purchase the software, which lacks a direct and meaningful tie to increased cannabis industry revenue and unit growth.

Investor Intelligence Conference and MJBizCon next week!

We hope to see all our subscribers at our Investor Intelligence Conference at the Cosmopolitan Hotel in Las Vegas on Dec. 9-10.

We’ll be addressing several key investment topics and opportunities, including:

  • New ways to conduct due diligence with solid evaluations and realistic projections.
  • Personal insight into management teams and best practices.
  • CPG production, extraction, new trends and identifying retail and emerging market potential.
  • How to avoid common mistakes with insights into legal and regulatory cannabis issues and concerns.

There will also be plenty of time to meet and connect with those looking for capital and those looking to place it.

All conference information, including the complete two-day speaker and session agenda, can be viewed here.