All the Reasons Why Constellation Brands Won’t Be Buying Out Canopy Growth
Bottom Line: Grizzle has some serious reservations about the stock price of Canopy Growth. In this piece we explain why Constellation Brands will not be the lifeline investors are hoping for and why the valuation is extremely hard to justify. A must read.
Organigram Smashes Expectations but Actual Results Are a House of Cannabis Horrors
Bottom Line: OrganiGram results may have smashed expectations, but dig a little deeper and this quarter was filled with red flags. Is OrganiGram the next Aurora Cannabis or will cannabis 2.0 come to the rescue? See why we are fading last week’s rally.
GW Pharmaceuticals Releases a Q4 Revenue Beat but Will the Rapid Growth Continue
Bottom Line: Cannabinoid prescription medicine company GW Pharmaceuticals (Nasdaq: GWPH) pre-announced revenues for its fourth quarter and full-year beating expectations. The key to this stock will be if they can bring in new patients and keep the growth going. A full rundown of the earnings results.
Aphria (APHA) Earnings – Guidance Cut But Still the Best Game in Town
Bottom Line: This latest earnings report shows that Aphria is the best of a bad bunch. We lay out why the company’s cash pile will be a key competitive advantage in the year to come. The stock also continues to screen cheap as well.
Source: YCharts
BevCanna Acquires Carmanah Craft Corp in Bid to Expand its Cannabis Genetics Program
Bottom Line: BevCanna Enterprises acquired Carmanah Craft to get access to its strains and seeds in an attempt to reach their target outdoor cannabis production on almost 300 acres of land. This acquisition has diluted shareholders since BevCanna issued nearly 9 million new shares for this deal.
Target Yield by Outdoor Grower
Zenabis Gives Itself Some Breathing Room With Partial Conversion of Debt
Bottom Line: Zenabis has come to an agreement with convertible debt holders to convert $6 million of their $17.4 million into shares. Zenabis continues to dilute the living heck out of shareholders, but if it means they can survive long enough to pay off or renegotiate debt, the stock legitimately still has upside. See why the next six months will be key.
Meta Growth’s Sale of Medical Cannabis Clinic Falls Apart, What’s Next?
Bottom Line: Meta Growth’s original plan to sell about $4 million worth of assets has fallen apart. In this report, we look at the company’s cash burn rate and liquidity position so you can decide if Meta is the vehicle to bet on a successful Ontario retail rollout.
Several States Could Legalize Cannabis Sales in 2020 as Marijuana Industry Eyes Lucrative East Coast Market
Bottom Line: A new report from Mjbizdaily.com lays out all the states in 2020 that have a motion to legalize either recreational or medical marijuana in 2020. These new motions prove that 2020 will be a very important year in the status of marijuana in the United States. Among many other governors who have announced their support of cannabis legalization, this week, the governor of New Mexico also added her voice to the crowd.
image source: mjbizdaily.com
More Than a Million Britons Buying Cannabis Illegally to Treat Illness
Bottom Line: A new report suggests that up to 1.4 million Brits are seeking out cannabis illegally to treat a variety of conditions such as depression, anxiety, chronic pain, etc. due to strict regulations in the UK on medical marijuana that does not cover many conditions that people in other countries typically treat with medical marijuana. This report provides one more incentive for the British government to relax its laws on the medical use of marijuana in the coming years.
Cannabis Beverage Market Will Be Worth $2.8 Billion USD By 2025, Says a New Report From Grand View Research
Bottom Line: A new report from Grand View Research Inc. estimates that the cannabis beverage market will reach $2.8 billion USD by 2025 with a compounded annual growth rate of 17.8%. We remain highly skeptical that cannabis beverages will be a hit in Canada seeing as they are an afterthought in U.S. markets.
Image Source: globalnews.ca
A New Bill Would Remove a CBD Roadblock for Marijuana Companies
Bottom Line: A new bipartisan bill in Congress is aiming to make the FDA allow the marketing of CBD. This would be big news for the larger multi-state operators as they have the cash to outspend smaller peers to build brand awareness with consumers.
Image Source: barrons.com
Is Tetra-Bio Pharma’s (TBP) High Valuation Justified?
Bottom Line: Tetra-Bio Pharma (TSX.V: TBP) has received two Drug Identification Numbers (DINs) from Health Canada under its TERPACAN line of products. After this news came out, the share price of TBP skyrocketed 40%. This article explores if the stock has run too much and what needs to go right longer term.
CDC Confirms Black Markets, not “Vaping,” Caused Outbreak
Bottom Line: This is great news for the legal market. They just received free marketing from the government. Now consumers may think twice about saving a few bucks in the black market knowing they may be putting their health at risk.
Weekly Stock Performance
Overall, it’s been a good week for the cannabis sector. Globally, cannabis stocks this week were up 17.8%. The U.S. cannabis market was up 10.4% and the Canadian sector was up 6.7% since the end of last week.
We’ve been watching the performance of the U.S. and Canadian stocks closely and U.S. stocks are definitely where you want to be invested.
Since the end of September, U.S. stocks are down 11.9% while the Canadian LPs are down 29.7%. Investors should begin building a long-term position in a basket of the top five U.S. operators, but save some extra cash to buy on any weakness in 2020.
An upcoming catalyst to watch is a UN meeting in March 2020 to potentially deschedule cannabis as a schedule 1 drug. If this goes through with America’s blessing it could set the wheels in motion for federal legalization sooner than later. Once the recent vaping crisis is resolved we should also see a bounceback in the U.S. MSOs.
YTD in 2020 the Global cannabis sector is outperforming the S&P 500 by 6.4% and the TSX by 6.5%.
Global Cannabis Index Performance This Week
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.
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United States
- Several States Could Legalize Cannabis Sales in 2020 as Marijuana Industry Eyes Lucrative East Coast Market
- GW Pharmaceuticals Releases a Q4 Revenue Beat but Will the Rapid Growth Continue
- Cannabis Beverage Market Will Be Worth $2.8 Billion USD By 2025, Says a New Report From Grand View Research
- A New Bill Would Remove a CBD Roadblock for Marijuana Companies
- CDC Confirms Black Markets, not “Vaping,” Caused Outbreak
Canada
- All the Reasons Why Constellation Brands Won’t Be Buying Out Canopy Growth
- Aphria (APHA) Earnings – Guidance Cut but Still the Best Game in Town
- OGI Smashes Expectations but Actual Results are a House of Cannabis Horrors
- BevCanna Acquires Carmanah Craft Corp in Bid to Expand its Cannabis Genetics Program
- Zenabis Gives Itself Some Breathing Room With Partial Conversion of Debt
- Meta Growth’s Sale of Medical Cannabis Clinic Falls Apart, What’s Next?
International
About Author
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.