BlackRock Increases Its Cannabis Investing

Asset manager BlackRock Inc. is now the biggest institutional holder of 22nd Century Group Inc. (XXII), a company that claims to be specializing in cannabis, but is really only a producer of tobacco products.
BlackRock Inc. filed a 13F-HR form disclosing ownership of 7,361,866 shares of 22nd Century with total holdings valued at $18,110,000 USD as of June 30, 2018. BlackRock Inc. had filed a previous 13F-HR on May 09, 2018 disclosing 2,809,955 shares of 22nd Century Group, Inc. at a value of $6,602,000 USD. This represents a change in shares of 161.99 percent and a change in value of 174% during the quarter.
22nd Century Group Top Holders 
According to 22nd Century Group, institutional investors currently hold around $61 million or 24.3% in XXII stock. The top holders include Blackrock Inc. which owns $17.74 million in 22nd Century Group and represents roughly 6.42% of the company’s market cap and approximately 29.09% of the institutional ownership. The second largest owner, Vanguard Group Inc, owns 5,285,583 shares of the stock which are valued at $12.74 million. The third largest holder is Etf Managers Group, Llc, which currently holds $6.88 million worth of this stock and that ownership represents nearly 2.49% of its market capitalization.
 
22nd Century Group Sells Only Tobacco
22nd Century plans to mass produce a very low nicotine tobacco that will be available in cigarettes and smoking cessation products. The company claims to be the only company that holds the research and application patents worldwide for low nicotine tobacco, although these products have been in existence for some time such as the Next cigarette from Philip Morris in 1989 and the Quest cigarette from Vector Tobacco in 2003.
XXII says it owns exclusive rights to the patents to that will reduce exposure to smoke toxins. A company statement said that “The tobacco will address unmet needs of smokers: for those people that want to quit, as an innovative smoking cessation aid, and for those who continue to smoke, a product that has reduced levels of nicotine.”
At this time 22nd Century Group only sells high-level nicotine cigarettes call Red Sun and normal level nicotine cigarettes called Moonlight (sold in the Asian markets). There is a low nicotine cigarette product called Magic.
22nd Century says it holds 4 patents that give the tobacco company a new monopoly on the entire scientific concept, process, and method as they relate to numerous plants.  It says it can “produce a THC free hemp that is void of the hallucinogenic properties that has made cannabis illegal in most states.”
Anandia Laboratories Investment
22nd Century had invested in research partner, Anandia Laboratories in Canada, but that cannabis company has agreed to be acquired by Aurora Cannabis Inc. (ACBFF)  22nd Century will now receive shares of Aurora Cannabis in return for its approximately 14.8% equity ownership of Anandia. So, in a way 22nd Century Group will have some investment into a real cannabis company by owning shares of Aurora Cannabis.
Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


9 comments

  • Dennis Bruns

    September 19, 2018 at 8:20 am

    Debra Borchardt, Thank you for XXII article. Could you elaborate anyon this line: “XXII says it owns exclusive rights to the patents to that will reduce exposure to smoke toxins.” Are we talking about safer conventional combustible cigarettes as an option for person who chooses to continue smoking? The prevailing thought is that this company’s main contribution is nicotine reduction. Thanks for any clarification.

    Reply

    • Debra Borchardt
      Debra Borchardt

      September 19, 2018 at 8:50 am

      That is what they are claiming, although low-toxin cigarettes have existed for years. The company actually makes most of its revenue from cigarettes with the highest levels of nicotine.

      Reply

      • Dennis Bruns

        September 19, 2018 at 10:09 am

        I thought they might be inferring to being able to reduce or remove known toxins or known carcinogens from the tobacco leaf itself with gene manipulation protected by their patents. Is this their implication?

        Reply

      • Sean

        September 19, 2018 at 11:15 am

        XXII was granted a patent this past fall that involves methods for reducing harmful tobacco-specific nitrosamines (TSNAs), which are known carcinogens. This is done at the genetic level and not removed via nicotine stripping methods from other companies. Any other lower-toxicity claims are from cig filters I believe, and I’d be curious to see the science backing those claims.

        Reply

      • Sean

        September 19, 2018 at 11:16 am

        Also, the high-nic cigarettes you refrenced, Red Suns, have been discontinued as of this past year.

        Reply

  • Dennis Bruns

    September 19, 2018 at 10:26 am

    Have you ever investigated the market affects of XXII’s ongoing legal issues with Crede? Terren Peizer still owns a lot of shares and in his latest deposition promised to cause a lot of problems to XXII’s share price. He seems to be very vindictive.

    Reply

  • Dennis Bruns

    September 19, 2018 at 10:47 am

    Debra Borchardt ; Since XXII had a stake of Ananda which Aurora purchased, XXII owns an interest in Aurora. Since we have heard nothing from management, would you look into our value aquired and what it means for XXII.

    Reply

  • Dennis Bruns

    September 19, 2018 at 11:09 am

    I know some of my questions are a little off base and probably on the wrong venue here but I can’t go through your company contact as captcha does not work. Dabruns513@gmail.com

    Reply

    • Debra Borchardt
      Debra Borchardt

      September 19, 2018 at 5:35 pm

      Hi Dennis,
      I just don’t have the bandwidth to do a deep dive into XXII. It isn’t a “true” cannabis company, it really is a tobacco company. I need to put my time into cannabis companies. We just don’t have the staff to do this.
      Debra

      Reply

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