In the cannabis space this week, anonymous sources revealed that two major names in the industry recently contemplated joining forces in what would have been a blockbuster deal. 

Meanwhile, the Canadian province of Ontario shared an update on the COVID-19 rules marijuana stores need to follow, and a top company made more staff cuts as part of its restructuring plan.

Read on for a closer look at some of the biggest cannabis news over the last five days.

Aphria and Aurora’s merger that wasn’t

News hit that Aphria (TSX:APHA,NASDAQ:APHA) and Aurora Cannabis (TSX:ACB,NYSE:ACB) were reportedly in talks to merge, but their discussions broke down last week.

Two unnamed sources familiar with the matter told BNN Bloomberg that the companies were not able to agree on board composition and compensation for some senior executives.

The cannabis powerhouses were able to reach a consensus on other terms, however — the transaction would have been completed via a share swap, according to the sources, and control of the new entity would have been split 51 percent for Aphria shareholders and 49 percent for Aurora shareholders.

Click here to skip to the Investing News Network’s overview of the Aphria/Aurora situation.

Estimates indicate that if the combination had gone through, the resulting company would be valued at $3.5 billion, with Aphria CEO Simon Irwin at the helm. Around $200 million in savings had been identified, and the marijuana mega-producer would have had operations across 25 countries.

It’s worth noting that while the merger between Aphria and Aurora appears to be out of the running, experts do agree that M&A activity is likely to be a trend in the sector moving forward.

“A significant consolidation is currently underway in Canada with a handful of bankruptcies already accounted for and many licensed producers (LPs) running on fumes,” Nawan Butt and Greg Taylor of Purpose Investments said in their cannabis market commentary for the month of July.

Separately, Butt told INN that he sees the production cuts and temporary layoffs implemented by many LPs due to COVID-19 as positive. “We … view this as a rightsizing for the industry and ultimately a net positive as production moves down towards actual industry demand,” he commented.

Ontario flip flops on delivery and curbside pickup

Ontario was in the spotlight last week when it said that starting on July 22, customers would no longer be able to receive delivery or curbside pickup services from privately run cannabis stores in Ontario.

They had been allowed to do so since April due to a temporary emergency order from the provincial government. With the new measures in place, the province-run Ontario Cannabis Store would be the only entity able to offer delivery.

The news was not well received by operators of private cannabis stores in the province, largely because they believe taking these services away makes retailers less competitive with the black market.

These private stores got a brief reprieve on Thursday (July 16), when Ontario extended its emergency order until July 29. But there’s still uncertainty beyond that date.

“The toughest part from our perspective is keeping the resources in place as the emergency order keeps getting extended and extended, right?” Badyr Valcarcel of Ontario cannabis retailer Shiny Bud told Marijuana Business Daily. “It’s hard for retailers to plan accordingly without any clear direction, or clear decisions at this point, from the government.”

This isn’t the first time the Ontario government has made a coronavirus-related decision on cannabis retailers only to change its mind soon after.

Earlier this year, when coronavirus prevention measures were just beginning to be put in place, the province gave cannabis businesses essential status before removing it shortly after. Ontario then quickly changed its mind again, allowing marijuana stores in the province to keep operating.

Cannabis company news

• Canopy Growth (TSX:WEED,NYSE:CGC) laid off an unspecified number of workers as it continues to complete a strategic shift. The operational changes began in mid-April, and at the time the company said its goals included optimizing production and improving efficiencies. Canopy has reportedly let go of over 800 staff members since then.

• Flower One Holdings (CSE:FONE,OTCQX:FLOOF) shared its latest quarterly results, saying its revenue came in at US$8.8 million, up 52 percent from the previous quarter. However, the company noted that it expects revenue of just US$3.8 million for the upcoming quarter due to a “notable constriction” of Nevada’s cannabis market in April and May.

• iAnthus Capital Holdings (CSE:IAN,OTCQX:ITHUF) entered into a restructuring support agreement geared at completing a proposed recaptalization transaction and securing interim financing. If completed, it would bring the company’s debt down from US$168.7 million to US$101.4 million, and would provide iAnthus with interim financing worth US$14 million.

• The Valens Company (TSX:VLNS,OTCQX:VLNCF) released results for its second fiscal quarter, reporting revenue of C$17.6 million — that’s up 100.3 percent year-on-year, but down 45 percent from the previous quarter. In a note to clients, analysts at Raymond James said they anticipated the drop and noted that a similar decline was seen when competitor MediPharm Labs (TSX:LABS,OTCQX:MEDIF) released its latest quarterly results.

• Also releasing quarterly results was WeedMD (TSXV:WMD,OTCQX:WDDMF), which brought in net revenue of C$12.2 million, up 327 percent from the prior quarter; the company attributed the increase in part to a “substantial outdoor biomass sale.” It also reported an adjusted EBITDA loss of C$5.1 million due to higher costs associated with selling, general and administrative expenses.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.