Marijuana Money February 9, 2018

Earlier this week, Treasury Secretary Mnuchin signaled that he wouldn’t remove the FinCEN memo about cannabis banking without something to replace it. When pressed whether this meant he was going to make a positive move regarding marijuana and banking, he was evasive. Yet he did note he didn’t like the idea of bags of cash and specifically noted that effect on the IRS. Bags of cash makes it hard to collect taxes and with all the spending getting approved in Washington, they will need all the additional money they can get.

Before you get too excited that the cannabis industry may finally get some good news from the federal government, the same day Attorney General Sessions continued to say how marijuana was bad and made sure to remind everyone that it is still illegal. Just another day in DC.

Aurora Cannabis (ABCFF) delivered a strong fiscal second quarter of earnings with revenues rising 201% and gross profits increasing a whopping 374%. The company attributed the good results to increasing patient counts, a higher average sales price for dried cannabis in Canada, exports to Germany and the consolidation of three companies. In addition to that, the average price of the product sold increased 40.3% over last year from $5.96 a gram to $8.36, mostly as a result of an increase in sales of cannabis oil in Germany.

Aurora also stated that the total product sold for the period was 1,161,809 grams of dried cannabis and cannabis oils rose 115.9% as compared to 538,045 grams of dried cannabis in the second quarter of 2017, and up 30.5% from 889,965 grams in Q1 2018.

GW Pharmaceuticals (GWPH) also delivered its earnings this week. First, revenue for the first quarter rose 203% to $7.7 million beating estimates by $5.4 million and topping last year’s revenue for the same period. However, losses increased to $63.3 million or 47 million pounds, higher than last years 15.6 million pounds. The earnings per share for the quarter were -$2.44 a miss of 31 cents. The company also announced that the European Medicines Agency (EMA) has decided to accept for review a marketing application seeking approval for Epidiolex.

Canopy Growth (TWMJF) closed on its $200 million bought deal. A total of 5,800,000 common shares in the capital of Canopy Growth were sold at a price of $34.60 per share, for aggregate gross proceeds of $200,680,000. The stock was trading in the low $30’s in January, but later slipped to down to $19 and change on February 2 as cannabis stocks all seemed to correct. It was lately trading in the low $20’s.

In private company news….

A lawsuit was filed against cannabis cryptocurrency company Paragon Coin. The investor, who paid in bitcoins is upset that Paragon’s investments that made millions somehow didn’t include the money from the Paragon ICO that he invested in. They used the money raised to buy real estate. He’s upset. He wants his bitcoins back. The investor is complaining that the financial instrument wasn’t a registered security, however, the SEC hasn’t registered any cryptocurrency products at all.

VividGro lighting company acquired the community app WeGrow.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor 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 Master's degree in Business Journalism from New York University.

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