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Cannabis Summary for Feb. 22, 2021

2021-02-22 20:02 ET - Market Summary

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by Stockwatch Business Reporter

The S&P/TSX Cannabis Index lost 13.15 to 281.08, while the CSE Composite Index lost 8.99 to 991.02. Canadian cannabis retailer Fire & Flower Holdings Corp. (FAF) edged up six cents to $1.45 on 3.59 million shares, after planting its first seeds in the U.S. market. It has entered a licensing agreement with the private American Acres Managers. American Acres will license the Fire & Flower brand, store operating system and proprietary digital sales platform (Hifyre) for dispensaries in California, Arizona and Nevada. Fire & Flower will also receive an option to buy American Acres once the United States legalizes cannabis at the federal level.

Fire & Flower was beside itself about this "transformative" arrangement, marvelling at its ability to "drive global retail expansion" and its destiny as a "key player in the U.S. cannabis industry." It trotted out the word "strategic" about a dozen times. Yet it was considerably more tight-lipped about how it expects to make money from the deal. There was no mention of physical product (something that would trigger close hovering from regulators on both sides of the border). The licensing agreement is also royalty-free, and usually royalty-free agreements come with some other element -- a one-time licensing fee, say, or an equity investment in the licensor -- but Fire & Flower mentioned none of those. It simply referred to an option to buy American Acres "at a discount to fair market value." With no details provided about the market value or the size of the discount, this was not especially informative.

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