Canaccord Genuity Archives - Green Market Report

William SumnerWilliam SumnerJuly 10, 2019
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4min4460

It’s time for your Daily Hit of cannabis financial news for July 10, 2019.

On the Site

Canaccord Genuity Increases Its Long-Term Growth Outlook for U.S. Cannabis

Analysts with Canaccord Genuity (CG) have increased their 2019 to 2022 long-term growth outlook for the U.S. cannabis industry from 19% CAGR to 20%. According to the report, the modest increase was attributed primarily to increased expectations for Illinois’ adult-use market, as well as recent positive trends in the Nevada and Massachusetts market.

Gotham Green

Gotham Green Partners, with participation from Wicklow Capital, has agreed to an additional $30 million in an equity commitment to MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF), bringing the total financing commitment to $280 million. To date, Gotham Green Partners has funded $100 million of the total commitment.

KushCo

KushCo Holdings, Inc. (OTCQX: KSHB) announced its financial results for the third quarter ending on May 31, 2019, after the market closed on Tuesday. Net revenue was $41.5 million, representing a quarter-over-quarter increase of 17.9%.On a GAAP basis, gross profit was 17.8%. On a GAAP basis, the net loss was $10.6 million, up from $9.2 million in the same period of the previous year.

Extractors Celebrate Their 710 Holiday – Dab Day

Extractors get their own holiday every year. July 10, also known as 7/10 has been fondly named “Dab Day” within the cannabis community. Spelling “OIL” when flipped upside-down, 7/10 is the day when cannabis concentrates and extracts are celebrated, and sales data is showing that cannabis consumers are eagerly participating in the celebration.

In Other News

GrowGeneration Corp.

GrowGeneration Corp. (OTCQX: GRWG) announced today that former Home Depot CEO, Bob Nardelli, will join the company as a strategic advisor, providing advice to the company’s CEO and Board of Directors on matters related to supply chain, merchandise, branding, distribution, new product introductions, pricing and channel selection. “Bob is a globally recognized business visionary.  He comes with a strong track record of executive operations to generate accelerated, profitable growth and shareholder value across many industry verticals that are of great interest to us,” said GrowGeneration CEO Darren Lampert.

Veritas Pharma

Veritas Pharma Inc. (CSE: VRT) (OTC: VRTHF) (Frankfurt: 2VP) announced that it has sold its 50% interest in 3 Carbon Extractions to Yari Nieken for $375,000. According to interim CEO Peter McFadden, the sale of its interest is part of the company’s wider restructuring efforts. “The sale of our interest in 3 Carbon was taken as part of the restructuring of the Company with aims to consolidate and focus the Company through assets that directly contribute to the advancement of our mission. Currently neither our research nor our operations aligned with our interest in 3 Carbon,” McFadden said.


William SumnerWilliam SumnerJuly 10, 2019
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5min12150

Analysts with Canaccord Genuity (CG) have increased their 2019 to 2022 long-term growth outlook for the U.S. cannabis industry from 19% CAGR to 20%. According to the report, the modest increase was attributed primarily to increased expectations for Illinois’ adult-use market, as well as recent positive trends in the Nevada and Massachusetts market.

Illinois

Earlier this year, the Illinois legislature passed a law legalizing the use and sale of recreational cannabis. Although regulations for the state’s adult-use market have not yet been formed, CG is making a bet that existing operators in the medical market will be among the first to receive licenses and that recreational sales will begin sometime next year.

As a result, analysts are upping their estimates for the Illinois cannabis market from $277 million in 2020 to $488 million. By 2022, that figure is expected to grow to $987 million, up from CG’s initial estimate of $395 million. Acreage Holdings (ACRG.U), Harvest Health & Recreation (HARV) and MedMen (MMEN) are expected to benefit from this market expansion as they already have existing medical cannabis operations in Illinois.

Nevada

Growth estimates for the Nevada market have also been increased. Nevada cannabis sales are expected to reach $745 million in 2019 and grow to nearly $1 billion by 2022. Although there is pending litigation surrounding the state’s 2018 licensing rounds, analysts expect the matter to be resolved in over the next few months, which either will result in additional licenses being issued or a completely new series of licensing applications. This, in turn, will help drive the creation of more cannabis businesses.

Furthermore, several large-scale cultivation operations are expected to become operational in the short term, which should help alleviate supply issues and help drive down cannabis prices. CLS Holdings USA Inc. (CLSH), DionyMed, Green Growth Brands (GGB), Harvest Health, iAnthus, MedMen, Planet 13 (PLTH), Plus Products (PLUS) and 1933 Industries (TGIF) are expected to benefit the most from growth in the Nevada market as they have significant exposure there.

Massachusetts

While Massachusetts’ adult-use market has been incredibly slow in rolling out, CG analysts expect the market to experience accelerated growth in the coming months. In addition to natural growth, they note in the report that a number of operators have secured licenses for retail stores close to population centers, such as the Boston suburbs of Brookline and Newton, which should spur growth.

By the end of 2019, Massachusetts’ cannabis market size is expected to reach $600 million and grow to $1.2 billion by 2022. The companies that are expected to benefit the most from this growth are Acreage Holdings, Columbia Care Inc. (CCHW), DionyMed Brands Inc. (DYME), Harvest Health, iAnthus (IAN), KushCo Holdings Inc. (KSHB), Slang Worldwide Inc. (SLNG), TILT Holdings (TILT) and Trulieve Cannabis Corp. (TCNNF).

New York/New Jersey

Pushing down CG’s overall growth estimate for the cannabis industry were the markets in New York and New Jersey. Despite expectations, New York this year failed to pass legislation that either legalized adult-use cannabis or expanded its existing medical market. Given this legislative failure, it is unlikely that the state will attempt to pass another legalization measure for the next two years.

The most likely scenario is that adult-use cannabis will make it on to the 2020 ballot. Assuming the measure passes, which many expect that it would, New York’s adult-use cannabis market would come online by 2021 at the earliest. Because of this, CG has reduced their 2019 and 2020 New York estimates from $458 million and $604 million to $261 million and $265 million, respectively.

Similarly, New Jersey also failed to pass adult-use cannabis legislation this year, although the expansion of its medical cannabis program remains a possibility. Consequently, CG now estimates that 2019 and 2020 New Jersey medical sales will be approximately $123M and $227M, respectively. Should the state expand its medical program, those figures could change.


StaffStaffDecember 7, 2017
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3min12490

 

DOJA Cannabis Company (CSE: DOJA) announced a C$15 million bought deal private placement of convertible debenture units with Canaccord Genuity as the lead underwriter on behalf of a syndicate of underwriters. The underwriters agreed to purchase 15,000 units of the company priced at $1,000 per unit and the deal is expected to close on or about December 28, 2017.

DOJA is a premium cannabis lifestyle brand that grows high-quality handcrafted flower. The company was founded by the team that started SAXX Underwear. Each convertible debenture will be convertible into common shares at C$1.24 per share for three years following the closing date. The stock was lately trading at C$1.25. The debentures bear an interest rate of 8% per year. The company intends to use the proceed for capital projects and general corporate purposes.

In October, DOJA said it was buying a 22,580 square foot building in Kelowna, British Columbia. The completion of the new facility called “Future Lab” will bring the company’s production capacity to 5,000 kg. per year. It is expected to be ready for its first cultivation prior to July 2018.

Canaccord Leads Deal For Delta 9

Delta 9 Cannabis Inc. (TSXV: NINE) announced that it was also doing a deal with led by Canaccord Genuity for C$20 million. 7,410,000 units at a price of C$2.70 will make up the bought deal with an option for an additional 1,111,500 units at a price of C$2.70. The stock was lately trading at C$2.73.  The proceeds will be used for expansion capital expenditures and general corporate purposes. It, too, is expected to close December 28, 2017.

Delta 9 Cannabis owns Delta 9 Bio-Tech, a licensed producer of medical marijuana in Canada and operates an 80,000 square foot facility in Winnipeg, Manitoba. The company is focused on small batch, hand trimmed medical cannabis. Just a few weeks ago, Canopy Growth announced that it entered into a distribution agreement with Delta to offer their products through the CraftGrow line via Tweed Main Street’s online store.



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