In 2024, several cannabis-related companies faced financial difficulties, with some being delisted or under threat of delisting from major stock exchanges due to financial uncertainty, declining value, compliance issues, and market turmoil.
In this article, we look at some of the major companies that have faced delisting and their strategies and outcomes, which range from those that survived the delisting to those that succumbed to the delisting and faced a restructuring.
Diverse situations
Bright Green Corporation is one of the latest cannabis companies to be delisted in 2024. On September 19, 2024, the company's shares were suspended from trading on the Nasdaq following the cancellation of a scheduled delisting appeal hearing.
The company has struggled to meet the exchange's compliance standards due to a variety of operational and financial challenges.
Bright Green has been working to strengthen its financial position, including planning a reverse stock split aimed at increasing shareholder value. Additionally, the company is exploring strategic options such as partnerships and acquisitions. Despite these efforts, the company's delisting reflects broader issues within the cannabis industry, where companies are under pressure to maintain market confidence and share price.
Aurora Cannabis ACB, a Canadian giant that plays a key role in the global cannabis market, avoided delisting by carrying out a 1:10 reverse stock split earlier this year.
Aurora's stock had been trading below Nasdaq's minimum price of $1 for an extended period of time, a common issue for cannabis companies struggling in the current market environment. Aurora was able to meet Nasdaq's requirements by consolidating its shares. The reverse split worked, and the company's stock price is trading around $5.79 per share as of this writing.
Related article: Nasdaq-listed Aurora Cannabis breaks up with Uruguay: It's the market, not you
Unlike Aurora, Clever Leaves Holdings has chosen to voluntarily delist from Nasdaq in May 2024. The Colombian company cited its inability to maintain compliance with listing requirements and high costs associated with regulatory obligations as the main reasons for the decision. Clever Leaves, which focuses on producing medical cannabis, decided that being freed from the burden of public market regulations would allow it to focus on strengthening its core business.
Heritage Cannabis Holdings Inc. faced an even tougher fate. The company was delisted from both the Canadian Securities Exchange (CSE) and the OTCQX in August 2024 as part of a creditor protection proceeding. Financial difficulties and the need to restructure through a sale and investment process led Heritage to withdraw from the stock market, reflecting the struggles faced by many cannabis companies struggling with over-expansion and market volatility.
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In another recent case, Lotus Ventures Inc. completed a financing transaction to sell 1,000 shares to 5008679 Ontario Limited for C$2.54 ($1.82 million), giving the buyer 100% ownership. As a result, all other shares will be cancelled and Lotus will be delisted from the Canadian Securities Exchange and the OTC Market on August 20, 2024. The company will also cease reporting as a public company in Alberta, British Columbia and Ontario.
2024: The year to turn things around?
So far, 2024 has proven to be a tough year for the cannabis industry, but it looks better than last year in terms of delistings and the overall financial health of the market.
While some companies, like Aurora, have weathered the storm by implementing internal restructuring, others, like Heritage and Bright Green, have not been so lucky. Many of the financial issues facing the cannabis industry have to do with federal prohibition in the United States and delays to long-awaited rescheduling.
In this climate, many in the industry continue to seek new strategies to maintain financial health in an increasingly competitive marketplace.
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