Canopy Growth buys land in Colombia to make it a growing, processing, and distribution hub for South America. We think this is just the beginning of a deal stampede into South America. Khiron Life Sciences (CVE: KHRN) is our top pick as a takeout candidate for Canadian players.
Marijuana tax revenues in Nevada are already 110% higher than the yearly forecast and the data only goes through April. Nevada shows what can happen if you get the taxation right. Nevada taxes top out at 25% compared to 45% in California.
Imperial Brands (LON: IMB), A UK-based tobacco giant, bought a stake in Oxford Cannabinoid Technologies. Oxford is licensed by the UK Home Office to conduct research and development of cannabis-based therapies. In this analysis we look at Big Tobacco’s strategy and which licensed producer could be a target.
Canopy reported earnings through March that were disappointing to the market and dragged down pot stocks across the board. Management will no longer report growing costs, decreasing transparency for investors, not a good sign. The company also wrote off inventory worth 10% of sales for the year, leading us to question if profitability can be trusted.
Together Pharma, one of the newest cultivators in Israel, has decided to build their greenhouses outside of the country due to political and regulatory red tape. The government continues to drag its feet on exports by failing to create regulations that growers can follow. Other local growers may follow Together Pharma’s lead if regulations aren’t established soon.
Professor Dame Sally Davies, who was commissioned by the home secretary to look into the medical benefits of cannabis, gave her opinion that medical cannabis has proven therapeutic benefits and should be decriminalized. This is the first time the government has acknowledged the health benefits of cannabis.
Marijuana stocks were up slightly less than 1% for the week, driven by expansion news from Canopy Growth and an overall risk on mood in the market after trade war jitters subsided for now.
However, even with all of the positive momentum on legalization, the stocks are only up 3% since the recent bottom in April. The market is splitting apart into two groups of stocks, Canopy Growth and everyone else. As an example, Canopy is up 32% year to date while smaller producers are down 21% over the same period. The market seems to be slowly admitting that growing marijuana is a commodity business and only those who create value-added products will survive in coming years.
READ THE MARIJUANA EXPORT MIRAGE FOR AN IN-DEPTH REPORT ON THE STATE OF DEMAND FOR MEDICAL MARIJUANA OUTSIDE OF CANADA