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Share consolidation sweeps marijuana industry as stock prices flop

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In the face of slumping marijuana stock prices, publicly traded Canadian cannabis producers and U.S. ancillary companies are increasingly turning to share consolidations to maintain their listings on the Nasdaq exchange.

Canadian grower Canopy Growth Corp. is the latest to announce plans for a share consolidation after the company ran afoul of the Nasdaq’s minimum bid-price requirement.

Nasdaq-listed cannabis companies that have completed share consolidations include Canadian producer Hexo Corp. – now part of Tilray Brands – which consolidated shares in December 2022, and fellow Canadian grower Organigram Holdings, which consolidated shares in early July.

Massachusetts-based marijuana ancillary company Agrify Corp. also consolidated shares in July.

Although negative sentiment surrounding cannabis stocks could potentially change because of external factors, all signs suggest more share consolidations to come: Several cannabis producers and ancillary firms are under Nasdaq warnings regarding their low share prices, and share consolidations are a possible solution.

High-profile examples include Canadian producer Aurora Cannabis and Village Farms International, the British Columbia-headquartered parent company of cultivator Pure Sunfarms.

Equity analyst Nadine Sarwat, the London-based director of North American cannabis with Bernstein Research, said she wouldn’t be surprised to see the share-consolidation trend continue.

“Because we aren’t seeing any indication that the problems that are causing these issues are being solved,” she said.

For example, the Canadian government’s review of its cannabis legalization law is running late, Sarwat observed.

“And unless you believe that there is going to be a meaningful change there, that then becomes really difficult to say (that) a lot of these companies are going to see a far rosier future,” she said.

“And then in the U.S., we’re still seeing meaningful price compression in cannabis – there’s a lot of excess supply, depending on the state, federal (reform) isn’t very clear yet,” Sarwat continued.

“That’s not to say that the industry cannot be successful in 10 years, but there is more to suggest that the pain is going to continue before it gets better.”

Equity analyst Jesse Redmond, head of cannabis at Florida-based Water Tower Research, explained that in bullish times, when certain equities have gained significant value, companies have chosen to split their shares in order to lower the price of each share.

Such share splits make the stock “more accessible to investors. … You’d wake up the next day with four times as many shares at a quarter of the price,” he said.

“Traders figured out that once companies announce stock splits – and especially the day after they happen – typically the shares rally, because people like getting more shares, and the lower stock price sometimes opens up a name to more retail investors.”

Share consolidations, also called reverse share splits, are the opposite: Outstanding shares are combined, increasing the value of each share.

“Mathematically, they’re both a zero-sum game,” Redmond said.

A company’s market capitalization is not affected by either a share split or a share consolidation.

However, share consolidations can help a company keep their listing on a major exchange such as the Nasdaq.

Such listings are particularly important at a time when funding remains in short supply for cannabis operators.

Nasdaq share-price warnings

The latest wave of high-profile cannabis share consolidations has been driven by the listing requirements of the Nasdaq stock exchange, which requires stocks to maintain a $1 minimum closing bid price.

If a stock trades below that $1 minimum for 30 consecutive business days, the Nasdaq issues a warning and grants a 180-day period for the company to regain compliance.

A second 180-day period might be granted to companies trading on the Nasdaq Capital Market, one of the exchange’s three tiers.

Cannabis companies are listed on all three tiers, which also include the Nasdaq Global Select Market and the Nasdaq Global Market.

Staying above that $1 minimum is clearly presenting a challenge for several Nasdaq-traded cannabis producers – a distinctly Canadian and international group, since U.S. plant-touching companies can’t list on the Nasdaq because marijuana remains illegal under federal law.

“On one hand, what you’re seeing is continued challenges in the fundamentals of these companies,” Bernstein analyst Sarwat said.

Those challenges aren’t all the companies’ fault, she added: Canada’s cannabis excise tax structure presents an obstacle to profitability, and restrictions on cannabis marketing make it “difficult to bring up brand equity, which is how you justify charging the higher price.”

But Sarwat said some companies do bear responsibility for their own woes, such as overbuilt production capacity.

“And now you’re seeing those companies having to significantly pare back capacity, and it has impacted their financial performance, and that’s now being reflected in lower share prices,” she said.

Until recently, Sarwat added, higher marijuana equity valuations were maintained somewhat on hopes for U.S. federal legalization and an accompanying inflow of capital from major institutional investors.

“And now you’re having a realization that that federal change is probably not going to happen anytime soon, and that’s also depressing the stock prices.”

In addition to Aurora and Village Farms, international cannabis companies Akanda Corp. and Clever Leaves Holdings have been given share-price warnings, Nasdaq’s noncompliance list shows.

Several U.S. ancillary cannabis companies have made the Nasdaq’s naughty list for the same reason:

‘Uncertain time for cannabis’

Consolidating shares doesn’t guarantee a permanent solution to the Nasdaq’s minimum bid-price requirement, since equity valuations are at the whim of market forces.

Even after Organigram consolidated its stock, for example, its Nasdaq-traded shares declined to less than $1.50 after the company reported third-quarter earnings.

Cannabis equity analyst Redmond believes marijuana investors are increasingly focused on profitable companies, moving away from metrics including adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and toward metrics such as operational cash flow and free cash flow.

“During this uncertain time for cannabis, I think people are starting to gravitate toward the less speculative businesses that are less reliant on the debt markets,” he said.

Redmond anticipates that cannabis businesses with trouble generating cash flow will see their share prices continue to drop.

“And, in some cases, those will drop below $1 and then we’ll find ourselves needing to do more of these reverse (share) splits,” he said.

However, Redmond added that positive U.S. political progress, including cannabis banking reform and the potential for rescheduling or even descheduling marijuana, could improve the MJ sector’s fortunes.

If such political progress causes U.S. cannabis stocks to rally, he expects that would affect American ancillary MJ companies and Canadian cannabis producers as well.

“When people get bullish on cannabis, or they see positive headlines about cannabis, a lot of the big players still can’t invest in the (over-the-counter-traded) and the (Canadian Securities Exchange-traded) names,” Redmon said.

“… I think you’ll see money come into those Nasdaq-listed names because they tend to have better liquidity, and they’re more accessible to the bigger, institutional-type investors, especially the ones with the quantitative programs that might be trading off of the headlines.”

Source: https://mjbizdaily.com/share-consolidation-sweeps-cannabis-industry-as-stock-prices-flop/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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