The year 2024 has proven to be a rollercoaster ride for the cannabis industry, with several companies facing financial challenges and, in some cases, being delisted from major stock exchanges. The combination of financial instability, low stock values, compliance issues, and a generally volatile market has created a perfect storm for many cannabis businesses. This article delves into the stories of some of these companies, highlighting their strategies, outcomes, and the broader trends impacting the sector.
One of the most recent delistings involved Bright Green Corporation. On September 19, 2024, trading of its shares was suspended from Nasdaq after the company’s appeal against delisting was denied. Bright Green has struggled to meet the exchange’s compliance standards due to various operational and financial challenges. To address these issues, the company has been working to improve its financial position through a reverse stock split, aimed at boosting shareholder value. Bright Green is also exploring partnerships and acquisitions as strategic alternatives. However, its delisting reflects the wider pressures faced by cannabis companies to maintain market confidence and a stable stock value.
In contrast, Aurora Cannabis (ACB), a prominent player in the global cannabis market, successfully avoided delisting by executing a 1:10 reverse stock split earlier in the year. Aurora’s stock had been trading below Nasdaq’s $1 minimum share price for an extended period, a common problem for cannabis companies struggling in the current market environment. By consolidating its shares, Aurora was able to meet Nasdaq’s requirements. This move paid off, with the stock value oscillating around a healthy $5.79 per share at the time of this writing.
Clever Leaves Holdings Inc. took a different path, choosing to voluntarily delist from Nasdaq in May 2024. The Colombian company, which focuses on medicinal cannabis production, cited its inability to maintain compliance with listing requirements and the high costs associated with regulatory obligations as its primary reasons. Clever Leaves decided that removing itself from the public market regulations would allow it to focus on strengthening its core operations.
Heritage Cannabis Holdings Corp. faced a more severe fate. In August 2024, the company was delisted from both the Canadian Securities Exchange (CSE) and the OTCQX market as part of creditor protection proceedings. Financial difficulties and the need to restructure through a sale and investment process led to Heritage’s exit from public markets, mirroring the struggles faced by many cannabis companies dealing with overextension and market instability.
Another recent delisting involved Lotus Ventures Inc., which completed a financial transaction in August 2024 by selling 1,000 shares to 5008679 Ontario Limited for CA$2.54 ($1.82 million). This gave the purchaser 100% ownership, resulting in the cancellation of all other shares and the company’s delisting from the Canadian Stock Exchange and OTC Markets. Lotus also ceased reporting as a public company in Alberta, British Columbia, and Ontario.
Despite the challenges, 2024 appears to be a better year for the cannabis industry than 2023 in terms of delistings and overall financial health. While some companies like Aurora successfully navigated the storms by implementing internal reorganizations, others like Heritage and Bright Green were less fortunate. Many of the financial problems faced by the cannabis industry are directly linked to federal prohibition in the United States and delays in the anticipated rescheduling of marijuana. With the industry facing growing competition, many companies are searching for new strategies to maintain financial stability in a challenging market.
