It was a tough week for cannabis, but a very good week for psychedelics and hemp. Four major cities took significant steps toward the decriminalization of psilocybin mushrooms and other psychedelic plants. Meanwhile, the United States Department of Agriculture released interim regulations for the production of hemp, opening a channel for the public to weigh in on them.
On the other hand, we saw a series of bad news coming out of major cannabis companies.
MedMen Enterprises Inc. (CSE: MMEN) (OTC: MMNFF) tumbled on a substantial growth in its net losses, which came in at $82.9 million for the fourth quarter, more than double the loss reported in the same period last year. Full-year revenue of $130 million, up by 227% year-over-year, hit a new record.
Hexo Corp. (TSX: HEXO) (NYSE: HEXO) also posted poor fourth-quarter results, with an adjusted net loss of CA$43.73 million ($33.5 million), which the company said was driven by “the significant scale of operations and increased stock-based compensation expense due to higher cannabis market value, increased R&D expenditures and an impairment loss on inventory.”
DionyMed Brands Inc (OTC: DYMEF) failed to restructure its debt or find a strategic buyer to acquire its assets, going into receivership. The company is in default of $24.81 million plus any additional interest, fees and expenses.
“It was a rough week for cannabis companies like MedMen, DionyMed and Hexo Corp,” Debra Borachardt, CEO of Green Market Report said. “MedMen lost control of its board, DionyMed is going bankrupt and HEXO has stumbled badly on projected revenues. It’s the cannabis industry version of The Real World.
“Companies are being forced to reckon with unrealistic and expensive business strategies and get real with the actual money coming in and what can be spent. Investors have shown their displeasure with pie in the sky plans and want real results now.”