Marijuana Investor Roundup: Analysis of the Week’s Most Important Events (Apr 4th, 2020)

The Post-Roll: Which Pot Stock is Going Bust Next (ACB, HARV)

Bottom Line: In this special edition of the Grizzle Post-Roll, we’re using the power of YCharts to screen for distress in the cannabis industry. Even though many stocks are down 75%-90% in the past year, it doesn’t mean they can’t go down 100%.

Read more»

Neuraxpharm Enters European Cannabis Market

Bottom Line:  Neuraxpharm specializes in pharmaceutical products for the central nervous system (CNS), while Panaxia is one of Israel’s largest cannabis producers. This agreement increases competition in medical cannabis markets in Europe which have previously been dominated by Canadian and Dutch firms.

Read more»

Amid Coronavirus, Canadian Cannabis Stores see ‘unprecedented’ Sales Surge

Bottom Line: We previously reported on supply shortages across almost all cannabis dispensaries across the US and Canada and this week we got another report from MJbizdaily.com confirming the massive surge in demand for cannabis and cannabis-related products in Canada, particularly in Ontario and Alberta. Sales on the Ontario Cannabis Store (the government run cannabis store website) are up 80-100% last weekend compared to a typical weekend.

Read more»

CannTrust Is Insolvent – Largest Canadian LP To Restructure

Bottom Line: CannTrust management decided pending lawsuits would bankrupt the company anyway so they’ve filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA). This is the same as a bankruptcy proceeding in America and will most likely result in stockholders being completely wiped out.

Read more»

High Tide Posts Q1 2020 Earnings Beat – Still Burning Hot, But Moving In The Right Direction

Bottom Line: With this quarter, High Tide is finally starting to move in the right direction when it comes to their numbers and if they can keep it up, the company may be profitable soon. They are still burning cash though and operating with a razor-thin margin of error.

Read more»

Village Farms Earnings Disappoint – Still Disrupting The Cannabis Space With Low Growing Costs

Bottom Line: Village Farms posted disappointing sales this quarter but with the industry’s lowest greenhouse growing costs they are set up better than most other producers. Their JV Pure Sunfarms continues to gobble up market share in Ontario, achieving a 13.5% market share by kilograms sold for the first 2 months of 2020.

Read more»

Subscribe Now
Sign up to get Grizzle's latest news and analysis in your inbox!

Sending Message...

Wholesale Marijuana Snapshot: A Review of Prices in Adult-use Markets

Bottom Line: A nice slideshow of how wholesale prices are trending lately across America. Prices look to have bottomed in many states, a good sign for the health of the industry.

Read more»

States Where Marijuana Businesses Remain Open

Bottom Line: A map of the US detailing which states are allowing for dispensaries to stay open despite the shutdown order.

Read more»

Weekly Stock Performance

Overall, it’s been a very rough week for the cannabis sector. Globally, cannabis stocks were down 16.37%. The U.S. cannabis market was down 15.47% and the Canadian sector was down 11.41% since the end of last week.

We’ve been watching the performance of U.S. and Canadian stocks closely and U.S. stocks are still where you want to be invested longer term.

Since the end of September 2019, U.S. cannabis stocks are down 61.5% while the Canadian LPs are down 61.5%.

Investors should BEGIN, begin being the keyword, a long-term position in a basket of the top five U.S. operators, especially with the market weakness we are seeing because of the Coranavirus.

The highly anticipated UN meeting to potentially deschedule cannabis as a schedule 1 drug has unfortunately been delayed until December 2020. With this major catalyst gone in 2020, we don’t see state by state legalization on its own driving the cannabis stocks higher.

Cannabis stocks will have to begin generating profits to bring investors back into the sector and break the downward trend.

YTD in 2020 the Global cannabis sector is underperforming the S&P 500 by 26.3% and the TSX by 25.1%.


Source: newcannabisventures.com

Market Outlook

There are now question marks on whether increased sales from cannabis 2.0 products will lift the stocks. Capital markets are largely shut to cannabis companies right now, which is a problem when the business models are built on rapid expansion and big deficits. Canadian cannabis investors should not be putting more money into the sector until retail prices find a bottom.

Price compression has arrived and will drive cannabis stocks lower over the next 6-12 months in our view without a new regulatory catalyst.

U.S. stocks will continue to outperform Canadian LPs from here in our view with more catalysts potentially on the horizon. At the first whiff of nationwide U.S. legalization, investors should pile into the largest MSOs and hold for the long term.

Canadian LPs are still stuck in a legal market growing slower than investors expected, making it hard to show the revenue growth embedded in their trading multiples. LPs are showing slow growth in 2019 and even with the 2020 rollout of edibles, vapes, and topicals growth is unlikely to exceed 150% in 2020. U.S. operators in comparison are growing revenue 150%-300% in 2019 and at similar rates or better in 2020. With analyst consensus wildly too high for Canada LPs in 2020, there may still be downside in the sector.

Read more»

United States



The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Subscribe Now
Sign up to get Grizzle's latest news and analysis in your inbox!

Sending Message...

Categories: Marijuana News
Andy Zhou: Andy Zhou graduated from the University of Waterloo in Ontario, Canada, in 2019 with an bachelor’s degree in mathematics (honors). Throughout his time at university, he took on various internships at many major Canadian companies, including the Royal Bank of Canada and Loblaw. In October 2016, he enrolled in the university’s official stock simulator game, StockTrak run by the Faculty of Mathematics. By the time of his graduation, Andy ranked fourth out of 535 participants, with a total portfolio net return of 98 percent. In the last year of university prior to his graduation, he founded and led the UW FIRE Club, where he led discussions and debates on all topics related to finance and investing.
Related Post
Disqus Comments Loading...