AnalysisEuropean Cannabis Stocks Review: Akanda Becomes Second Cannabis Company...

European Cannabis Stocks Review: Akanda Becomes Second Cannabis Company In Less Than 6 Months To Face Possible NASDAQ Delisting

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NEWS broke yesterday evening that US President Joe Biden has moved to federally pardon thousands of Americans with minor cannabis convictions. 

The news has sent North American cannabis stocks flying, with MSO’s across the US and Canada experiencing record gains, seeing Tilray, Curaleaf, Cresco Labs and Truelieve all shoot up over 30%. 

At the time of writing, the gains are yet to have had a major impact on European cannabis stocks, but movements are expected over the coming weeks. 

Despite the US finally making some progress on its promise of federal cannabis reform, some analysts remained skeptical. 

Capital Alpha Partners analyst Ian Katz wrote in a note Thursday that ‘if investors were betting that Biden’s action will lead to legalisation of marijuana, they will likely be disappointed.’

Akanda


As predicted by BusinessCann in July, Akanda has now joined its NASDAQ-listed stablemate IMC in being threatened with delisting from the exchange. 

Akanda, which listed its shares on NASDAQ just over six months ago, informed investors this week that it had received notification from the Listing Qualifications Department warning that it was ‘not in compliance with the minimum bid price requirement’. 

Under NASDAQ’s listing rules, securities are required to ‘maintain a minimum bid price of $1 per share’, and should share prices remain below this threshold for ‘30 consecutive days’, companies face being delisted. 

Following its listing in March 2022, Akanda’s share price skyrocketed to highs of around 350x its $4 listing price, but soon stabilised at around $8. 

The young cannabis company was able to maintain this strong valuation until early May, when its stock price fell off a cliff edge, dropping to just over $1. 

Since then, Akanda has struggled to keep its share price above this $1 threshold, but peaked above it three times between May and August, meaning the share price was never below $1 for 30 days straight. 

Since August, however, Akanda’s share price has entered a gradual decline, dropping from just over $1 to its current share price of around $0.4. 

According to its written notification from NASDAQ, Akanda has 180 calendar days, or until March 27, 2023, to bring its closing bid price above $1 for a minimum of 10 consecutive business days. 

“In the event the company does not regain compliance by March 27, 2023, the Company may be eligible for additional time to regain compliance or may face delisting.”

Meanwhile, IMC, which was handed the same warning on July 13, has until January 9, 2023 to bring its share price back above $1, a feat it has been unable to achieve since its notification. 

Voyager Life

CBD retailer Voyager Life, which joined the Aquis Stock Exchange just over a year ago, has seen its shares return to trading after a temporary suspension last week. 

Voyager is understood to have requested the temporary suspension following ‘press speculation’ that it was in line to rescue organic health product wholesaler Tree of Life UK from administration. 

According to an RNS, Voyager had been weighing up a potential acquisition of Tree of Life, which appointed Chris Pole and Ryan Grant as joint administrators on August 22, 2022.

Despite acknowledging that the ‘vertical integration with the company’s product range and our own brand manufacturing could create value’ for shareholders, Voyager ultimately decided to abandon its acquisition plans due to ‘several risk factors’. 

The speculation surrounding its acquisition is understood to have been driven by the recent consolidation of Cellular Goods and Cannaray Brands, a trend which Voyager’s ‘board of directors expect to continue’. 

As reported in Voyager’s full year results last month, the company has been exploring a number of consolidation and partnership opportunities, and has received a number of enquiries to date. 

“As the market in which it operates consolidates and further opportunities present themselves for Voyager to expand its range of activities, the Directors will continue to examine potential collaborations and combinations whilst at all times maintaining its conservative approach to running costs and the importance of sustainable revenue generation.”

Tilray Brands


The Canadian cannabis giant saw its stock edge up this week as it continued its push into the European medical cannabis market.

Tilray announced this week that it had successfully relaunched its EU GMP-produced medical cannabis oral solution in Ireland. 

Crucially, it has become one of a handful of cannabis medicines to be approved under Ireland’s Medical Cannabis Access Programme (MCAP), and receive approval for patient reimbursement.  

“The MCAP reimbursement approval is a tremendous step in providing patients with greater access to Tilray’s high-quality medical cannabis products that address their needs,” Tilray’s Chief Strategy Officer and Head of Business Denise Faltischek said. 

The company added that it ‘intends to supply Irish patients with its full suite of medical cannabis products when local regulations allow’. 

It follows news late last month that Tilray had received approval from the Italian Ministry of Health to import and distribute the same medical cannabis oral solution. 

Weeks earlier, reports suggested that Tilray had been in ‘talks’ with German Drug Commissioner Burkhard Blienert to ‘help develop responsible cannabis regulations’.

While the company continues to strengthen its position in the European cannabis market, like many cannabis stocks, its share price has remained largely dependent on developments across the Atlantic Ocean. 

One report published this week suggested that growing calls for a ‘Protecting Kids from Candy-Flavoured Drugs Act’ in the US Congress could further stymie the profit growth of US cannabis operators, as edibles are reportedly the most profitable form of retail cannabis. 

This weakening of gross profit margins for big cannabis companies means that, even if it is legalised at the federal level, ‘Congress may snatch defeat out of the jaws of victory, and ensure marijuana remains an unprofitable business for the foreseeable future,’ thus keeping share prices on their downward trajectories. 

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