Several cannabis companies They faced financial challenges in 2024and some of them have been delisted or are under threat of delisting from major stock exchanges due to financial instability, low valuations, compliance issues and a turbulent market.
This article examines some of the key players who faced delisting, their strategies and outcomes, from those who managed to pull through to those who succumbed and faced restructuring.
Various situations
Bright Green Corporation is one of the last cannabis companies to cease trading in 2024. On September 19, 2024, trading of its shares The shares were suspended from the Nasdaq following the cancellation of their scheduled delisting appeal hearing..
The company has struggled to meet the exchange's compliance standards due to various operational and financial challenges.
Bright Green has been working to strengthen its financial position, with plans for a reverse stock split aimed at increasing shareholder value. Additionally, the company is exploring strategic alternatives, including partnerships and acquisitions. Despite these efforts, its delisting reflects broader issues within the cannabis industry, where companies face pressure to maintain market confidence and share value.
Aurora Cannabis ACBThe Canadian giant and major player in the global cannabis market managed to avoid delisting by executing a 1:10 reverse stock split earlier this year.
Aurora's stock had been trading below the Nasdaq's floor price of $1 per share for an extended period, a common problem for cannabis companies struggling in the current market environment. By consolidating the stock, Aurora was able to meet Nasdaq's requirements. The reverse split paid off: its stock value hovers around a healthy $5.79 per share at the time of writing.
Read also: NASDAQ-listed Aurora Cannabis breaks with Uruguay: It's not you, it's the market
Unlike Aurora, Clever leaves Holdings Inc. The Colombian company decided to voluntarily withdraw from Nasdaq in May 2024. The company cited failure to comply with listing requirements and high costs associated with regulatory obligations as key reasons for the decision. Clever Leaves, which focuses on the production of medicinal cannabis, decided that freeing itself from the burdens of public market regulations would allow it to focus on strengthening its core operations.
Cannabis Heritage Corporation. faced a harsher fate. In August 2024, the company was delisted from the list of 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 the public markets, reflecting the struggles faced by many cannabis companies struggling with overextension and market instability.
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In another recent case, Lotus Ventures Inc. completed a financial transaction by selling 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 were cancelled and Lotus was delisted from the Canadian Securities Exchange and OTC markets on August 20, 2024The company will also cease trading in Alberta, British Columbia and Ontario.
2024: The year to change things?
So far, 2024 has proven to be a challenging year for the cannabis industry, although it appears to be better than last year in terms of exchange delistings and overall financial health of the market.
While some companies, such as Aurora, managed to weather the storm by implementing internal reorganizations, others, such as Heritage and Bright Green, were not so lucky. Many of the financial problems facing the cannabis industry are linked to federal prohibition in the United States and delays in the long-awaited rescheduling.
In this context, many in the industry continue to search for new strategies to maintain financial health in an increasingly competitive market.
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