Cannabis Company Index Archives - Green Market Report

Debra BorchardtNovember 8, 2021
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6min17200

Green Market Report has published its third quarter recap for the Cannabis Company Index. The report can be located under the tab titled “Reports.”

Changes to The Index

The Index made the following changes at the end of the third quarter. KushCo Holdings was removed to reflect the acquisition by Greenlane. It is being replaced by WM technology Inc. (NASDAQ: MAPS) better known as WeedMaps. Gage Cannabis was removed due to its pending acquisition by TerrAscend, which is being added to the Index. 

Greenlane has certainly seen its fair share of challenges as we noted above. On a positive note, the equity research arm of Jefferies initiated coverage of the company with a buy rating and a price target of $6.30. “As an ancillary product/service provider with a critical role in the cannabis ecosystem, it has exposure to U.S. growth, is accessible for all investors (not doing anything federally illegal) and is unique (less risky) among ancillary peers,” analyst Owen Bennett said. Unfortunately, the company announced in October that it was buying the vape company DaVinci for an undisclosed amount and investors sent the stock tumbling. With the problems regarding shipping vapes, this seemed to be an unwise move even if the price was a steal.

In August WeedMaps reported that its revenue increased to $46.9 million in the second quarter of 2021, up 21% from the second quarter of 2020. WeedMaps also reported a net income of $16.8 million versus $9.4 million from the prior-year period. WeedMaps said that monthly active users (“MAUs”) increased to 12.3 million at the end of June or 75% compared to the prior-year period (or 56% when adjusting the current period to exclude the MAUs attributed to the Learn section of weedmaps.com that we were not able to track during the prior period). Average monthly revenue per paying client increased to $3,706 or 24% compared to the prior-year period (or 21% when excluding revenue from Canada-based retail operators who failed to provide valid license information from the prior-year period). The company said it expects total revenue and adjusted EBITDA of $205 million and $50 million for 2021.

In August, TerrAscend Corp. (OTCQX: TRSSF) reported its financial results for the second quarter period ending June 30, 2021, as revenues increased 72% to $58.7 million over last year’s $32.4 million. Sales grew 10% sequentially over the first-quarter sales of $53.4 million. Even though TerrAscend withdrew its previous 2021 guidance due to temporary yield declines of quality flower in Pennsylvania related to ongoing construction and expansion, the company’s potential made it a perfect candidate for the Index.  Last quarter the company had raised its full-year guidance to $300 million versus the previous guidance of $290 million and Adjusted EBITDA was expected to exceed $128 million versus the previous guidance of $122 million. So despite pulling the guidance, the numbers are still pretty impressive. In addition to that, the company has decided to increase its allocation of the company’s branded products to its own Apothecarium dispensaries in New Jersey. TerrAscend said that while it’s more profitable in the long run, retail sales take longer to sell through when compared to wholesale sales. The company said in a statement that when evaluating the potential of its dispensaries in an adult-use environment, management believes prioritizing the company’s retail channel in a supply-constrained market is the best path for building shareholder value.

In Closing

So far, October has not seen any big moves in a positive way for cannabis stocks. While the industry did see a return of the massive MJBiz Con cannabis conference in Las Vegas, attendance wasn’t at the same levels as the last in-person event in 2019. It was certainly well-attended, considering COVID concerns were still an issue and the event took place during harvest season. Other conferences quickly began populating the calendars, and it seems there is a real return to in-person events for the industry.  

Still, the fourth quarter got off to a rocky start. MedMen’s trial with its former CFO James Parker began giving the industry its own episodic drama to follow. Turning Point Brands disappointed investors and reduced its guidance. Curaleaf faced consumer lawsuits over CBD products that turned out to have THC in them, and the SPAC Ceres Acquisition Corp. called off its investment in Parallel.

Against this backdrop, there were some glimmers of hope. New York state began allowing the sale of flower in the medical dispensaries. A new cannabis ETF was launched. Nevada became the latest state to record $1 billion in cannabis sales. On the financial side, Pelorus upsized its offering to $1 billion. 

Thus, good things continue to happen in the cannabis industry, but the question remains – when will it bring back the buyers of cannabis stocks?


William SumnerOctober 26, 2018
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On October 26, 2018, The Green Market Report released its Cannabis Company Index 2018 Third Quarter Summary. After a rocky start this year, the Index has started to pick up steam and is continuing to build up momentum. During the third quarter, the Index rose by 56%; and with the commencement of adult-use cannabis sales in Canada at the start of the fourth quarter, the Index could rise even higher.

After a quarter filled with mergers, acquisitions, and buyouts; several cannabis companies have added to the Index and several more have been removed. Here are the cannabis companies that made the cut this quarter, as well as the ones that didn’t.

Additions

Charlotte’s Web (CWEB.CN) – Best known for the creation of a low-THC, CBD-dominate cannabis strain of the same name, Charlotte’s Web has enjoyed considerable success recently. Last year the company took in $40 million in revenue with a 35% EBITDA margin. During the third quarter the company went public on the Canadian Securities Exchange, and since then has seen its stock double in value; making its addition to the Index an easy choice to make.

Tilray (NASDAQ: TLRY) – Ever since going public on the NASDAQ, Tilray has seen an explosion in revenue and its stock value. Initially trading at $17 a share, Tilray is now trading at around $100. Additionally, the company has signed adult-use cannabis supply agreements with seven Canadian provinces and has also signed a deal with Canada’s largest Pharmacy Chain, Shoppers Drug Mart Inc.

Green Thumb Industries (GTII.CN) – It has been a good year for GTI. In June the company went public through a reverse takeover of Bayswater Uranium Corporation, raising CAD$87 million (USD$67 million). Revenue for the company rose by 25% over the last quarter, from $10.9 million to $13.6 million; thanks mainly to its chain of retail stores and wholesale cannabis distribution. The company’s debt is low, approximately $7.9 million, and its assets are high, roughly $230 million (which includes $112.7 million in cash or cash equivalents). All of this combined makes GTI a reasonable addition to the Index.

Sunniva Inc. (OTC: SNNVF) – Although the company’s stock has underperformed this year, in the long run, Sunniva looks like a good bargain. The company owns and operates seven clinics in Canada the specialize in medical cannabis, offers software solutions to customers, and sells vaporizers and related accessories. By the Fourth Quarter, Phase 1 of the company’s cannabis cultivation facility is expected to become operational and will carry the distinction of becoming the first large-scale facility that produces cannabis without the use of pesticides and other contaminants.

Aleafia Health Inc. (OTC: ALEAF)Aleafia Health has flown under most analysts radar this quarter, but there are several good reasons why the company has been added to the Index. With 22 clinics nationwide, Aleafia owns the most extensive medical cannabis clinic network in Canada; touting over 50,000 patients. The company is also working with Cronos Group (CRON) in a cannabis sleep study and has plans to list its stock on the NASDAQ in the near future.

Removals

MedReleaf – After merging with Aurora Cannabis (NYSE: ACB), MedReleaf quit trading its stock; and as such, has been removed from the Index.

Hiku Brands – Likewise, after being acquired by Canopy Growth (NYSE: CGC), Hiku also ceased trading and has been removed from the Index.

Axim Biotechnologies (OTC: AXIM) – So far this year, Axim has performed poorly, and there is little indication that there will be any improvements. Revenue is down, losses are up, and the company has very few products coming down the pipeline. Should conditions change, Axim may make it back on the Index, but for now, it has been removed.

Terra Tech (TRTC) – Unlike Axim, Terra Tech has performed reasonably well this year. However, several lawsuits against the company have curtailed those successes. In a fast-growing industry like cannabis, where more and more companies are going public every day, the Index can take its pick of well-performing companies that don’t have to contend with a slew of litigation.

Namaste Technologies (NXTTF) – Similarly, Namaste has performed admirably over the last quarter, has a robust platform behind it, and was even added to Horizons ETF. Unfortunately, the company has suffered from negative press surrounding accusations that the company is not disclosing related party transactions, and when combined with poor marketing decisions made by the company, removing Namaste from the Index became the right choice to make.

Q3 Recap

July 1 kicked off the quarter with new regulations on products for sale in the adult-use cannabis market in California. Many brands in California either weren’t ready or decided the new rules were too onerous and left the business. Several dispensaries staged fire sales to clear the shelves ahead of the new rules and producers had to destroy inventory that didn’t meet the new regulations.

There were two other big events that shifted the market into high gear. An almost $5 billion investment by alcohol company Constellation Brands (NYSE: STZ) into Canopy Growth (NYSE: CGC) excited almost everyone in the cannabis industry. Constellation had made an earlier investment in the company late last year and this recent move brings its total ownership up to 38%.

In other beverage news, Bloomberg reported that Coca-Cola (NYSE: KO) was considering doing a beverage deal with Aurora Cannabis. Both firms denied they were in talks but left some wiggle room saying they always look at various deals. Still, the market went nuts about Coca-Cola making a CBD drink.

During the quarter, Tilray priced its $153 million IPO at $17 a share, above its estimated $14-16 range. The stock was listed on the NASDAQ and immediately traded higher, to over $23 a share for a gain of 35%. The stock got as high as $300 (recently trading around $120) and has joined a list of richly valued cannabis stocks.

Other big events during the quarter included the DEA rescheduling the GW Pharmaceutical (NASDAQ: GWPH) drug Epidiolex to a schedule 5 drug. Schedule 5 drugs are considered to have a low level of abuse and include substances like Robitussin cough syrup or Lomotil diarrhea medicine. While the cannabis industry had been excitedly anticipating the rescheduling, it had no larger effect on cannabis products.

 


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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