U.S. Marijuana Scorecard – Winter 2019
Bottom Line: The scorecard is the most comprehensive resource on the internet for investors thinking of investing in U.S. marijuana growers. The scorecard is full of useful information like which stocks trade at a premium or a discount, who has the largest state footprint, do common shareholders have a say in how the business is run, and much more.
How the Political Winds have Shifted for Cannabis
Bottom Line: “The first states to legalize marijuana, including Colorado, Washington, and California, did it through ballot initiatives. Now, governors and legislatures are making the decision. The politics of marijuana have changed, and lawmakers are increasingly framing legalization as a progressive, good-government policy.”
New U.S. Attorney General an Unlikely Pot Ally
Bottom Line: This attorney general actually seems like an unlikely ally for the marijuana market. He explicitly stated he will not go after states who legalize the drug and supports a well thought out federal legalization strategy.
Source: Fox News
Aurora Pays $35 per gram of Capacity for Whistler Corp.
Bottom Line: Whistler currently is the most expensive brand on offer in BC’s online store ($18/gram), which may explain why Aurora was willing to pay such a high premium. Aurora needs to sell Whistler’s 5,000 kg of capacity for $17/gram for the next 10 years to generate a decent 10% return.
Source: Company Website
CBD Beauty is Big Business
Bottom Line: A new CBD brand, Fleur Marche, started by former GOOP employees is charging $800-$1,500 per gram for CBD-infused beauty patches and creams. CBD oils from hemp cost only $0.08 to produce, giving you a feel for how profitably the CBD market is today.
Source: Fleur Marche
The CBD Marketing Blitz is About to Hit America
Bottom Line: An ad for CBD oil played in Time’s Square on New Year’s Eve. The Farm Bill legalizing hemp has basically opened up the U.S. market to any type of CBD marketing. Expect to see products at your local gas station and ads for CBD products on buses, subways and billboards very soon.
Source: Elixinol
Senior Citizens Fastest Growing Group of Cannabis Users
Bottom Line: Recent studies have shown older Americans use fewer prescription drugs in states that have legalized marijuana. The pharmaceutical industry is no doubt aware they are likely losing business to marijuana, which explains why they are circling growers looking for a way into the market.
Source: The Guardian
A Well Done Deep Dive into Just one of the CBD Players
Source: EastWest Biosciences
Bottom Line: EastWest Biosciences is just one of many companies looking to get into the CBD space, however, this is a well done deep dive to help you understand how the CBD market may develop and the different verticals a company like EastWest is targeting.
Weekly Marijuana Stock Performance
Marijuana stocks took a breather this week with the global index essentially flat. Large-Cap Canadian names outperformed U.S. operators by 6%, up 4% for the week. Mid-cap and small-cap Canadian stocks were up 1% and down 1% respectively. Stocks are still well off their October highs but have rebounded 35% off the lows reached in December.
Market Outlook
Stocks are seeing a bounce back in the first quarter after selling off so heavily in November and December. Sentiment is getting more positive with the overall market so it is hard to see stocks going through another 20%+ selloff in the first quarter without additional negative earnings news or a global recession. A full buyout of a cannabis company by a consumer packaged goods company would be a strong positive catalyst for the entire industry.
From a fundamental perspective, be careful owning cannabis stocks into the next two-quarters of earnings. A supply shortage and a government monopoly do not bode well for licensed producers’ ability to meet or exceed earnings estimates.
Longer term, with the Canadian market legalized we expect retail and wholesale price compression from a legal oversupply by the second half of 2019. Falling cannabis prices will pressure producer stocks later in 2019. After a shakeout, the remaining stocks will be better positioned as long-term buying opportunities.
Source: New Cannabis Ventures
United States
Rhode Island May Be Next to Legalize Marijuana
420 Act: The Newest Federal Marijuana Legislation
New Year, New Proposed Marijuana Laws for Pennsylvania
Canada
Tilray Announces Revenue Share Partnership With Authentic Brands
Aurora Cannabis Announces Acquisition Of Whistler Medical Marijuana Corporation
StatCan Report Reveals Disparity Between Legal vs. Illegal Weed Pricing
International
Erdogan Aims to Make Turkey a World Cannabis Leader
Cannabis Industry Leaders to Gather in Davos for Summit
Sicily to House Europe’s Largest Cannabis Cultivation Site
ICC to Acquire 49.9% of Wayland Group’s International Assets
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