The Gep Report What’s Up Next?

IN RECENT MONTHS, Golden Eagle Partners has been the lead sponsor of some of the most impactful and important global cannabis conferences, including the Benzinga Capital Conference in Miami, FL in April, the Capital Markets Workshop at CannMed23 in Marco Island, FL in May and, most recently, the Global Investment Forum (GIF) that is part of the International Cannabis Business Conference (ICBC) event in Berlin, Germany in late June.

As lead sponsors of the CannMed Capital Markets Workshop and the GIF, we designed the topics and agendas and invited the participants. Both events received overwhelmingly positive feedback for their content and value. Our participation in these events provided us an up-to-date assessment of the global cannabis industry. Here were some major takeaways from our travels this spring.

New Nomenclature Needed

GEP introduced a potential solution to the confusion around cannabis nomenclature in Miami at Benzinga and formally presented it in Berlin at the GlF. A cornerstone of the new nomenclature is the fact that Cannabis is the genus of this amazing plant. From the broad definition of cannabis, the sector is easily broken down into either THC+ companies/products or THCcompanies/ products. From those two categories all other types of subsectors can be defined under delta-8, delta-9, delta-10, delta-11 and THCA on the THC+ side, and molecular and industrial hemp on the THC- side.
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The Regulation Situation

State regulatory authorities have and continue to play a major role in cannabis around the world. Earlier this year, Germany backtracked on their initiative for national adult-use. The U.S. FDA came out with a major ruling on cannabidiol (CBD) to reinforce its stance that it is a drug, impacting use of the molecule in wellness, food supplements and other non-clinically approved applications. Australia’s Therapeutic Goods Administration (TGA) dictated that CBD preparations that clear a pivotal clinical trial performed in Australia will be granted access via a non-prescription, OTC path.

More Than Just THC

In the last five years, the hemp subsector (what we call THC-) had been highly dependent on cannabidiol (CBD). Due to a lack of products with consistent quality and the resulting noise in the market, the THC- subsector took a beating in early 2020 that continued through the pandemic. Today, THC- producers are reinventing their subsector with minor and exotic cannabinoids like delta-8 tetrahyrdocannabinol (delta-8) and hexahydrocannabinol (HHC) and combinations of these molecules. Interestingly, there were different perspectives on these molecules at the three events we sponsored earlier this year. At the Benzinga Capital Conference, there was an attitude of disrespect. At our CannMed investment workshop, there was keen interest in exploiting the potential of cannabinoid molecules for different indications. Participants at our ICBC/GIF events were also accepting of THC- innovation.
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A Tough Time for Banks

The extended overall malaise in the North American cannabis sector has resulted in a tepid environment for transactions, including debt, equity and strategic deals. The lack of significant transactional activity has put pressure on the limited number of investment banks that have been active in the sector. Since the beginning of the year, there have been many investment banks that have indicated they are shutting down their cannabis operations. Some of the more notable ones pulling support of their research and/or investment banking resources are TD Cowen, Cantor Fitzgerald, BTIG and Roth MKM.