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StaffStaffMarch 18, 2020
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5min9500

Editors Note: This is a guest post by Maria Hills. 

The coronavirus has had a big impact on the world’s economy, and even more so on the financial cannabis market. While the S&P Index has seen a 17% drop, various marijuana companies have experienced a drop of 30% and more. Of course, this raises the question of whether it’s a good time to buy cannabis stocks right now, and if there’s any chance of finding a bargain.

Covering Your Concerns

There are a number of different reasons why cannabis stocks have been hit particularly hard due to coronavirus. One of the biggest reasons is because they’re a high stakes investment, to begin with – it’s still rare for a marijuana company to turn a comfortable profit. This is also despite the fact that many American states have legalized cannabis. Another issue around investing in cannabis stocks is financing. No matter what the end of the tunnel looks like with coronavirus, one thing’s for sure is that they’ll be less investment channeled into asset classes like cannabis with a high risk. Cannabis companies were already having issues finding good investment sources before the outbreak hit.

There’s also the concern that the impact that the virus has had on China’s economy so far will spread its reach to the marijuana industry, too. Like many industries, the cannabis industry relies on China as the main manufacturing hub, especially when it comes to vaping products. The last reason why there is concern around an investment like this is consumer spending – or lack thereof. Many people will restrict spending on non-essential goods, which will hit industries like cannabis the hardest.

The Damage is Contained

For the most part, these concerns are so far exaggerated. While the legal environment in America still isn’t where it needs to be, more and more states are moving toward legalization, which is great news for the industry. As for China’s economy, there is more than one way to consume cannabis, so not all companies have to rely on China’s manufacturing facilities to keep producing their products. When thinking about consumer spending, for some purchasing cannabis isn’t a non-essential – it’s an integral part of their medical management plan. The only real valid concern here is financing – there’s every chance that pot companies will continue to struggle to get the funding they need, which most rely heavily upon. If you can get over this little hurdle, though, purchasing cannabis stocks in a dip like this has every chance of paying off.

Investing in the Right Company

It’s not easy finding the right marijuana company to invest in, but one thing that you do want to figure out before you take the leap is that your finances are in order. If you need a bit of a boost to make the most of this opportunistic gap in the market, consider options like personal or title loans. Short-term loans like this are great for initial investments and can be paid back at your leisure. Ignore the fear-mongering in the media, and take the leap into what could end up being one of the most successful alternative medicine industries we’ve seen – ever.


Kaitlin DomangueKaitlin DomangueJanuary 28, 2020
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2min19940

Emerald Health Therapeutics (TSXV: EMH; OTCQX: EMHTF), referred to as “Emerald” for clarity, is a Canadian cannabis company offering wellness-oriented and recreational cannabis products. Emerald provided an update yesterday on their recently announced a shares for debt transaction with Emerald Health Sciences, (“Sciences”) a control person for Emerald. 

Presently, Emerald carries an aggregate debt of $2,816,963. Per a previously disclosed loan agreement between both parties, Emerald will settle $794,182 owed to Sciences, as well as $2,022,781 owed to Sciences pursuant to trades payable. Emerald Health Therapeutics will also issue 9,713,666 common shares of Emerald to Sciences at $0.29 per share in order to fulfill the debt.

Currently, Sciences holds roughly 29,687,942 of Emerald’s issued shares and upon the completion of the debt settlement, Sciences will hold approximately 23.1% of the issued and outstanding shares of Emerald, on an undiluted basis.

Due to Sciences being a control person of Emerald, the settlement is considered to be a “related party transaction”, meaning the companies had a pre-existing connection prior to the transaction.

Emerald is not the only company in a cash crunch, and relying on selling common shares to stay above water. MedMen has also been making the headlines for a similar situation. The company recently sent out emails to their vendors stating they cannot pay them, and are offering shares in their company instead.

Green Market Report talked to Adam Bierman, the CEO of MedMen, about their circumstances. Bierman tells us, “We’ve been very forthright with the public, and with our investment community at large about the fact that at the end of last year we entered into a restructuring in the business, exiting the hyper-growth stage of the business, and getting into sustainability, and with that, there’s a lot of pain. And that pain starts at the employees that were on this mission with us, building this platform with us that we had to part ways with.”


StaffStaffSeptember 4, 2019
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8min7400

Editors Note: Guest post by  Matt McCall, Editor, MoneyWire Aug 29, 2019, 4:45 pm EDT

Let me be clear: I try to limit emotions when it comes to investing. I’m a research fanatic, and I always go first to the big-picture trends, data, and face-to-face conversations.

But I’ve also learned not to ignore my gut feelings, especially when they have data to back them up.

That wasn’t always the case. Like anything else, my “gut” has gotten better the longer I’ve invested. After 20 years in this business, my intuition tends to be correct.

I have a very strong gut feeling right now, and it’s related to the big opportunity in marijuana stocks.

I have been recommending marijuana investments since 2014, well before most analysts. Many of my early recommendations have soared hundreds … even thousands of percent. A colleague of mine even refers to me as “The Original Marijuana Stock Bull.”

Recently, though, some may have questioned my bullish thesis. My long-term view has never wavered, but marijuana stocks have gotten hammered in the last few months. Since hitting a yearly high in March, the ETFMG Alternative Harvest ETF (NYSEARCA: MJ) is down 40%.

The weakness has turned even some of the biggest marijuana bulls into doubters, but I think the current pullback represents one of the best buying opportunities we may see for some time if you want to invest in one of the fastest-growing sectors in the world.

That’s why I tweeted this last week:

“Are we supposed to use our feelings and emotions in investing?” someone replied. “Hope it turns out right for you.”

That’s why I wanted to write about this subject. I was sharing a feeling I had at a moment when I didn’t have a lot of data at my fingertips. But there are strong indicators to back up my gut feeling.

Take a look at the chart of the EFTMG Alternative Harvest ETF below. Notice how the ETF is near a double bottom at its December low just above $23. A double bottom is a bullish pattern and usually signals a reversal to the upside.

Then there’s the relative strength index (RSI), located at the bottom of the chart. The RSI measures overbought and oversold conditions. A reading above 70 indicates a stock is overbought, while a reading below 30 indicates that it is oversold.

You can see how many times MJ has bounced when the RSI got down to 30, and it is now just below 26. That’s a strong signal that the recent selling is overdone.

It also puts the ETF extremely close to an RSI Crossover, which is when the indicator crosses back above 30 into neutral territory. This is one of my favorite technical buy signals. I’ve made good money over the years thanks to it.

The Upside Is Endless

There is so much negativity in the marijuana sector right now that even some of the long-term bulls have joined in on the selling. That short-sightedness costs them. Every high-growth, early-stage investment theme sees times of both parabolic rallies and sizeable pullbacks.

This happened on the internet … biotech … emerging markets … you name it. And it’s what we’re seeing now with marijuana.

But history shows that these are the BEST times to buy.

I’m not trying to call a bottom — that’s not only irresponsible, but it’s also nearly impossible and just plain foolish. But I am saying there is a lot more upside in the best cannabis stocks than downside.

According to Arcview Market Research and BDS Analytics, global sales of legal marijuana will increase from $10.9 billion in 2018 to $40.6 billion in 2024. Where else can you find an industry that is expected to grow 272% in six years?

The majority of those sales will come from North America, but here’s the kicker. Those projections assume that marijuana will remain federally illegal in the U.S. You know that I firmly believe legalization is coming far sooner than most expect, which means those estimates are too low and could, in fact, be closer to $60-$80 billion.

According to Echelon Wealth Partners, the legal cannabis market in the U.S. alone could be worth $60 billion if the federal prohibition is repealed. To put that into perspective, the vitamin/supplement market is worth $28 billion and the beer industry is worth $110 billion.

So don’t get caught in the herd of doubters running for the hills. The long-term story is intact, and today is the day to buy. Not tomorrow … not next month … not next year. By then, the big money will have already been made.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.


Debra BorchardtDebra BorchardtJuly 29, 2019
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5min12600

Nextleaf Solutions

Extraction technology company Nextleaf Solutions Ltd. (CSE: OILS) (OTCQB: OILFF)  said that its common shares will begin trading today on the OTCQB Market. Nextleaf will trade on the OTCQB under the symbol “OILFF” and the company’s common shares will continue to trade on the Canadian Securities Exchange under the symbol “OILS”. Nextleaf owns a portfolio of issued and pending patents pertaining to the company’s unique, industrial-scale process of extraction and purification of cannabinoids.

“We are excited to begin trading on the OTCQB which will improve liquidity and allow us to introduce Nextleaf – the first public company to be issued multiple U.S. patents for the industrial-scale extraction and purification of THC and CBD – to a broader audience of U.S. institutional and retail equity investors,” said Paul Pedersen, CEO and Co-founder of Nextleaf Solutions. “Listing in the United States on the OTCQB is an important step for Nextleaf as we build on our vision to revolutionize extraction and purification with superior throughput, yield, and purity to enhance cannabis oil economics across the globe.”

CannBioRx

Special Purpose Acquisition Company (SPAC) KBL Merger Corp. IV (NASDAQ: KBLM) signed a definitive agreement for the merger of a wholly-owned subsidiary of KBLM with CannBioRx Life Sciences Corp., a drug development company focused on treating inflammatory diseases. It began trading last Friday as a NASDAQ-listed cannabis biotech.

CannBioRx said in a statement that it has three synergistic programs that operate at the intersection of the biotech and cannabis industries:

  • A clinical-stage program focused on the discovery and development of novel therapies to treat fibrosis. This fully enrolled Phase 2b program expects results in Dupuytren’s disease during the fourth quarter of 2020.
  • A preclinical cannabinoid program focused on the development and commercialization of unique pharmaceutical-grade cannabinoids for arthritis, pain, diabetes, and obesity.
  • A preclinical program developing innovative, orally available therapies harnessing the brain’s nicotinic receptors to treat inflammatory diseases, such as ulcerative colitis, gout, and multiple sclerosis.

“These three unique programs will enable us to efficiently target several key pathways in inflammation and capitalize on two decades of extensive scientific research on the relationship between cannabinoids and inflammation,” said Prof. Sir Marc Feldmann, Founder, and Co-Chairman of CannBioRx. “We believe that the use of synergistic combination therapies across our programs could be important for providing cost-effective healthcare in the future. We also believe that creating an entity and robust pipeline in each of its programs diversifies our risk. We are a global company comprised of senior scientists affiliated with OxfordStanford and Hebrew Universities. We intend to not only advance drug development and clinical trials for existing programs but also to identify new patent-protected compounds, including novel cannabinoids that expand our therapeutic impact in the industry.”

“Upon the completion of the transaction, we expect to be one of a limited number of NASDAQ-listed companies developing non-plant-touching, pharmaceutical-grade, non-psychoactive cannabinoids. These drugs are intended to provide safer, uniform dosing, according to regulatory agency standards,” added Dr. Marlene Krauss, CEO of KBLM, who will also assume the role of CEO of the combined company. “We believe that CannBioRx’s distinctive position is enhanced by the fact that the cannabinoid program is being developed in tandem with its other novel drug development programs that are also focused on inflammation. The programs range from pre-clinical programs to a program in a Phase 2b clinical trial. This could potentially provide us with a pipeline of drug candidates in sequential stages of development and addresses what we believe to be large untapped markets.”


StaffStaffMay 24, 2019
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10min13320

Although an unconvincing earnings season has clouded the picture, marijuana stocks still enjoy strong fundamental catalysts

By Josh Enomoto, InvestorPlace Contributor May 16, 2019, 1:00 pm EDT

Since their inception, marijuana stocks attracted significant attention. Due to both investment sentiment – and let’s face it, raw emotions – the cannabis sector absolutely skyrocketed. But now, the segment is attracting attention for failing to live up to analysts’ expectations. Is the honeymoon phase over for weed?

Hardly! While cannabis firms have produced some disappointing results during earnings season, that’s no reason to abandon them. For one thing, the resurgent U.S.-China trade war is incredibly favorable for marijuana stocks to buy. Prolonged tensions will almost surely cause us economic damage. An easy fix here is to legalize weed and fully open the door to a multi-billion dollar industry.

Another reason to stay the course with marijuana stocks to buy is the medicinal-cannabis market. Currently, 33 states have legalized medical marijuana, which is indirectly an indictment against the pharmaceutical industry. As I’ve argued many times before, pharmaceuticals must take at least some responsibility for the opioid crisis. This story alone has converted many people who have realized the benefits of all-natural treatments.

Moreover, medical marijuana is becoming a popular and potentially profitable exported good. We all know that progressive Europe is receptive to cannabis-based therapies. But more shocking is that conservative Asian countries notorious for their draconian anti-drug policies have demonstrated tolerance. Thailand became the first Southeast Asian country to legalize medical marijuana, while South Korea is the first East Asian country to jump onboard.

No matter how you look at it, this development strongly benefits the “botanical” industry. Here are the best three marijuana stocks to buy right now:

Aurora Cannabis (ACB)

Aurora Cannabis (NYSE:ACB) recently issued its earnings results for the first quarter of 2019. Let’s just say the print wasn’t exactly great for ACB stock. Although Aurora Cannabis’ net-revenue haul of 65.2 million CAD exceeded the year-ago quarter’s tally by a country mile, it missed analysts’ consensus target of 67.6 million CAD.

Also, a miss was earnings per share. Wall Street expected a loss of 4 cents per share, but Aurora instead delivered a loss of 16 cents. With such a wide gap, conventional wisdom dictates that you should avoid ACB stock.

Actually, though, even if Aurora Cannabis hit its metrics with flying colors, I wouldn’t pay much attention. Why? Because this is a marathon investment toward an unprecedented sector. As such, you’ll find nearer-term noise. Ignore it.

The key here is that the management is positioning itself for dominance in the lucrative medical-marijuana market. Its acquisition of Whistler Medical Marijuana indicates that the focus is on quality, not quantity. When weak marijuana stocks get flushed out, ACB will remain standing.

Canopy Growth (CGC)

Undeniably, a motivating factor to buy shares of Canopy Growth (NYSE:CGC) is the company’s international presence. Primarily, it puts up a strong showing in the European mainland. Currently, Canopy is pushing both westward and eastward in the region. However, the ultimate prize for CGC stock and others is the U.S. market.

Of course, this is seemingly a pipe dream due to our country’s (misguided) Schedule I classification of marijuana. Still, CGC stock jumped mid-April when Canopy announced a contingent offer to buy out Acreage Holdings (OTCMKTS:ACRGF). Canopy will pay $300 million upfront if the U.S. legalizes marijuana.

Many botanical advocates argue that Schedule I is a relic of the ignorant and racist past. However, it’s still federal law, which means cannabis firms in green-friendly states are still technically at risk.

But thanks to the U.S.-China trade war, I genuinely believe that full legalization is nearing reality. A prolonged conflict with the world’s second-biggest economy will invariably hurt our own fiscal health. That’s why the U.S. has to explore marijuana if they insist on playing hardball with China. If so, look for CGC stock to soar.

Hexo (HEXO)

If you’re like most folks who learned about marijuana stocks to buy late in the game, you’re probably hesitant on exposing yourself to the top-tier names. After all, we see them splattered on investment headlines all over the internet. If that’s you, you might want to check out Hexo (NYSE:HEXO).

For starters, Hexo is an understated name. It generates interest, of course, but not nearly as much as the top dogs. I believe that benefits HEXO stock and is partially the reason why shares have steadily made robust gains. Year-to-date, the cannabis firm’s equity is up over 113%.

That said, HEXO stock has much more upside remaining over the long term. Renowned alcoholic beverage-maker Molson Coors Brewing (NYSE:TAP) has a partnership with Hexo to develop cannabidiol (CBD) infused, non-alcoholic drinks.

CBD recently gained mainstream recognition because it offers the cannabis plant’s health benefits but without levering a negative psychoactive effect. In other words, the compound is a perfect gateway for consumers to try other cannabis-based products.

This is a partnership that provides multiple natural synergies. Even though it’s not quite a household name, you should put Hexo on your list of marijuana stocks to buy.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

 


AxisWireAxisWireMay 22, 2019
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5min8760

Cannabis Stocks Opened on a High Note First Quarter With 40% Index Growth

New York City – May 22, 2018 /AxisWire/ The Green Market Report (GMR), the cannabis industry’s most trusted source for credible in-depth financial and economic reporting, today released its 2019 Cannabis Company Index Q1 Summary Report. The report can be downloaded at GreenMarketReport.com/Reports.

The GMR Index follows the trading activity of 30 selected public cannabis companies that denote market dominance. The Company Index started 2019 on a high note as the first quarter jumped 40% and essentially recovering from the dismal fourth quarter of 2018. The broader stock market sold off at the end of the year and it took cannabis stocks along for the ride into the red territory. While the Farm Bill passage in December set the stage for stocks in the first quarter, Congress wasn’t through waving a green flag for the cannabis industry. . At the end of March, The House Financial Services Committee voted 45 to 15 to advance the Secure and Fair Enforcement (SAFE) Banking Act.

Despite all the positive news flowing through the cannabis industry, high profile lawsuits also reminded investors that the cannabis industry isn’t as mature as others. International markets are opening up to import and export. And U.S. exchanges are playing with Canadian companies while avoiding American ones.

“2019 is off to a good start for cannabis companies. Many stock valuations have recovered from the late 2018 selloff as the government seemed to soften its approach towards cannabis ,” stated Debra Borchardt, CEO of Green Market Report.

The best performing stock in the GMR Index was Origin House followed by The Green Organic Dutchman, who was the biggest loser last quarter. The biggest loser in the GMR Index was AeroGrow International.

The Index decided to add SLANG Worldwide Inc. and TILT Holdings Inc. While the Index was sad to let AeroGrow go, although it is the smallest of the publicly traded companies, as well as MedMen amid all of their legal woes.

“SLANG Worldwide has so many positives going for it. This was an easy name to add to the Index,” added Borchardt. “TILT Holdings though surprised the market with a large write down shortly after being added to the Index. We’ll monitor the stock closely.  .”

About Green Market Report:

The Green Market Report (GMR) is headquartered in New York City with an office in Los Angeles. GMR is poised to be the center for trustworthy business, financial and economic news and intelligence. The site offers coverage on financial matters including news briefs on business, cultivation, and extraction, cannabis company stock prices, and wholesale cannabis pricing. For more information, please visit www.greenmarketreport.com or email info@greenmarketreport.com. Follow us on Facebook, Instagram and Twitter @GreenMarketRpt.

Communications Contact:

Cynthia Salarizadeh

Green Market Report

856-425-6160

cynthia@salarmediagroup.com

 


StaffStaffMay 22, 2019
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7min9050

This is a guest post by Katrina Hatchett.

The role of marijuana in society, and more lately in business, has never been simple, but in recent times this natural product has stepped more and more into the mainstream. Now, in the United States, more than half of the 50 states recognize marijuana for medical purposes, and there is a growing acceptance of its recreational use too (marijuana is now legal in 10 States, as well as DC). In Canada, marijuana has actually been legalized for recreational use as well as for medical purposes. In the rest of the world, there are countries which have legalized marijuana, decriminalized it, or have relaxed rules with regards to personal use and cultivation. Medical usage is now accepted in about a quarter of the world’s countries, with many more having legalization on the agenda.

What does that mean? As well as advances in the treatment of pain relief and other medical symptoms, and the cultural aspects which surround recreational use, there is now a growing investment industry around marijuana. In fact, investing in marijuana stocks represents a great opportunity for even the greenest (pun intended) investor. Here are all the things that potential investors need to know.

Not all stocks are the same, so choose one that suits your strategy

Every potential investor must, first of all, think about exactly what they want for their investment: this is true no matter you are looking to invest in. Are you looking for a quick pay-day, or are you more concerned with stable growth over a longer period? Investing in marijuana stocks offers all sorts of potential returns, so conduct immaculate research first.

The cannabis industry has grown to such an extent that it now includes a wide-ranging and eclectic assortment of businesses: from hospitals and pharmaceutical companies to concrete manufacturers, believe it or not. Many of these businesses are looking for investment capital, but as you can see they may all share a reliance on one particular product, but that is where the similarities end, so this is far from a catch-all topic.

Use an investment broker and a legal expert

The decision to go with a professional broker may depend entirely on the strategy you wish to employ, plus the size of the investment you want to make. If you are considering putting a major chunk of your capital into marijuana stocks, it is definitely worth getting professional advice, which may also include legal advice on the various regulations which exist. Remember that the US Federal Government still identifies marijuana as an illegal substance, so you need to understand very well what you can and cannot do.

Pay close attention to the market

This is a piece of advice that rings true once more for whatever you may be investing in, but with it being such a delicate subject, you really must keep your ear to the ground with regards legal updates and changes in regulations. Of course, it’s good news for investments if more countries decide to legalize cannabis for both medical and recreational purposes, so you will need to ascertain what the likelihood of that happening is in different territories.

Then there are huge market players who are looking at new ways to use cannabis. For example, drinks giant Coca Cola is examining ways to produce marijuana-infused drinks, so stock prices are sure to been affected by such a move.

“A great piece of advice is to look at the marijuana companies that major companies are investing in because that is usually a sign of a solid investment,” points our Eve Stoddart, a marketer at Write My X and NextCoursework.

Never forget the golden rule

No matter what you are investing in, the golden rule is always to diversify your portfolio. The oft-quoted golden rule is 10%: never have more than 10% of your capital invested in one stock. The same rule applies here.

“The danger with investing in marijuana stocks, a little like cryptocurrencies, is that investors will somehow treat it as ‘different’ due to all the noise that surrounds it. That is a mistake. Look at any investment with the same, objective eye as you would when entering any market,” urges Terry McNeil, a project manager at BritStudent and Australia2write.

Katrina Hatchett is a lifestyle blogger at Academic Brits with a particular interest in the art of communication: a field in which she has cooperated on many projects. She is a regular contributor at Origin Writings, as well as a blogger at PhDKingdom.

 


StaffStaffMarch 26, 2019
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8min13570

Under-the-radar U.S. MSOs are the best cannabis stocks to invest in

By WAYNE DUGGAN, InvestorPlace Contributor

Cannabis stocks have gotten a lot of attention on Wall Street in the past year after a handful of popular Canadian growers started hitting the U.S. markets. U.S.-listed names like Canopy Growth Corp (NYSE: CGC), Tilray (NASDAQ: TLRY) and Aurora Cannabis (NYSE: ACB) get most of the publicity.

However, OTC-traded stocks Curaleaf Holdings(OTC: CURL), Medmen Enterprises (OTC: MMNFF) and Green Thumb Industries (OTC: GTBIF) could be the best cannabis stocks to invest in.

Path To Legalization

In a new report, Roth Capital Partners analyst Scott Fortune says the cannabis industry has major long-term potential for investors. However, given the massive gains in the most popular stocks in the past year, near-term upside may be limited. Instead, Fortune says the best risk-reward skew in the cannabis space is with U.S. multi-state operators.

“In our view, the most promising public companies — i.e., those whose stocks possess the most attractive risk/reward profiles — are the U.S.-based MSOs — which are assembling dominant positions in the most lucrative U.S. states,” Fortune says.

Today, these operators are technically violating federal law, which classifies marijuana as a Schedule 1 drug. That classification also keeps these cannabis stocks from listing on the NYSE or Nasdaq exchange. However, Fortune says the STATES Act could be a game-changer for MSOs. The STATES Act wouldn’t legalize cannabis on a national level. However, it would exempt companies and individuals from federal enforcement of marijuana laws when inside states with conflicting laws.

This legislation would continue the U.S. along the path toward federal legalization and would embolden MSOs to continue to expand their operations. Fortune says once the legalization damn breaks, the financing flood waters will rush in.

“Federal protection, albeit illegal, has allowed creative risk-taking entrepreneurs (MSOs) to quickly gather valuable assets ahead of an eventual large influx of capital investments,” he says.

Huge Opportunity for Cannabis Stocks

Roth estimates the $11 billion U.S. cannabis market will more than double in size — to $23.4 billion — by 2022. Ultimately, federal legalization will expand that market to at least $59 billion in size, Fortune says.

In the long term, Fortune says the social stigma of cannabis will wear off. Eventually, the drug could have a market penetration similar to alcohol today. Roughly half the adult population in the U.S. drinks alcohol. At that penetration rate, the U.S. cannabis market could eventually approach $200 billion. As of early 2019, the top 10 MSOs had a combined market capitalization of around $20 billion. Fortune says that combined market cap could balloon to around $911 billion by 2023.

Best Cannabis Stocks to Invest In

Fortune says the STATES Act will not only help eliminate cannabis marginalization, but it will also be a huge catalyst for MSOs. Banks located in states where cannabis is legal could be emboldened by the STATES Act and begin to finance cannabis ventures more freely. Investors will certainly see this access to capital as a bullish development. Fortune says MSO valuations could get a big boost as a result.

The largest MSO in the U.S. today is Curaleaf, which operates in 12 different states. Curaleaf has a market cap of around $4.6 billion. CURL operates 35 dispensaries, 10 processing operations, and 12 cultivation sites.

The next largest U.S. cannabis MSO is Green Thumb Industries. Green Thumb operates in 9 states and has 9 manufacturing locations and 61 retail stores. GTBIF’s market cap is around $3.1 billion.

Finally, the third largest MSO stock is MedMen, which also operates in 12 states. MMNFF has roughly a $1.6 billion market cap. The company has licenses for 76 retail operations and 16 cultivation and processing sites.

In addition to the potential for organic growth among MSO cannabis stocks, the industry is consolidating at a rapid pace. Any of these three stocks could be big buyers or even targets for larger companies in the years ahead.

There’s certainly a lot to like about cannabis stocks and the cannabis industry. But investors should be careful about the buying frenzy that has taken place among the most popular names. While U.S.-listed stocks get all the publicity, CURL stock, MMNFF stock and GTBIF stock may be the cannabis stocks with the most upside.

As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities.

 


William SumnerWilliam SumnerFebruary 22, 2019
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3min13300

The cannabis industry continues to catch the attention of institutional investors in the United States. Earlier this week, Seaport Global, released a lengthy report analyzing the global cannabis market and initiating coverage on over a dozen of the industry’s leading cannabis firms.

With offices in both New Orleans and New York, Seaport Global is a full-service investment bank that offers capital markets advisory and research services.

“We are formally launching coverage of the global cannabis space. This exciting market area is evolving quickly, with hundreds of public companies coming to market in recent years. There is clear momentum behind the legalization of cannabis, around the world. We expect many countries, including the US, to go legal within the next handful of years, and we think that this will create a considerable forward opportunity for the burgeoning industry that is regulated, legal cannabis,” reads the report.  “From a little over $12B in global value today, we see the market ultimately evolving to almost $630B in due time.”

Looking forward, the report projects that the cannabis market will diverge into two distinct markets, a retail dispensary model centered around the adult use market and a medicinal model offered through traditional channels.

Seaport is initiating coverage on Canopy Growth Corp. (NYSE: CGC), Tilray (NASDAQ: TLRY), and Aurora Cannabis (TSX: ACB) with a neutral rating. Curaleaf Holdings (CSE: CURA), Green Thumb Industries (OTC: GTBIF), iAnthus Capital (OTC: ITHUF), KushCo Holdings (OTC: KSHB), and MedMen Enterprises (OTCL MMNFF) were given Buy ratings. Seaport’s top picks were Hexo Corp. (NYSE: HEXO), Aphria Inc. (NYSE: APHA), Acreage Holdings (OTC: ACRGF), and Green Organic Dutchman (OTC: TGODF).

In addition to initiating coverage on the leading cannabis companies, the report also provides an in-depth analysis of the global cannabis market; including market size, legal status, a supply chain diagnostic, regulatory information, projected market size for 106 countries, and an examination of the market dynamics between the U.S. and Canadian market.

The report also provides a 50-state profile which includes political and regulatory information, a breakdown between the medical and adult use market, weekly spot margin calculations, an examination of the hemp-CBD market, and a segmented rundown of over 100 public cannabis companies.

The 208-page report is available online to clients of Seaport Global.


StaffStaffFebruary 8, 2019
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7min14590

A number of cannabis companies have gone public over the last several years, with the majority listed on a small exchange in Canada called the Canadian Securities Exchange (“CSE”). Many have done so via reverse takeover — a merger transaction in which a private company acquires a public shell company, merges into it, and then takes it over and changes its name — rather than resorting to an initial public offering, a more common practice in which a private company sells shares to the public and is then listed on a public exchange.

There are a number of reasons why companies choose to go public, including:

Fundraising: It enables companies to raise large(r) amounts of capital from external investors.

Publicity: Going public is a watershed moment, raising a company’s profile among investors, customers, competitors, and the general public.

Credibility: Becoming and being a public company is somewhat of a status symbol. It shows that you’ve “made it” and can handle the rigorous disclosures and transparency required by investors and regulators.

Liquidity: It allows longtime employees and investors to “take some chips off the table” by monetizing some or all of their holdings.

Currency: Public stock can more easily be utilized for acquisitions.

These last two aspects, liquidity, and currency were analyzed for the 30 largest CSE-listed companies with U.S. operations (and compared against a group of 30 U.S.-listed micro-cap biotech, brewing, vitamins/supplements, and natural food companies) to assess the benefits of these listings.

As you can see in the chart below, there is a meaningful lack of liquidity for the CSE-listed companies. The comparable stocks have nearly three times the average daily trading volume of the CSE-listed cannabis companies. Also, there is a long “tail” with the CSE-listed stocks. The overwhelming majority have extremely thin volume — some had days where literally zero shares were traded — with just a handful garnering meaningful volume.

When a company is doing a follow-on equity offering, the sizing is important. If a company sells too much stock relative to daily trading volume, it risks flooding the market and driving down the stock price. A sanity check also occurs, looking at how many days of trading it would take for all the newly sold shares to trade. Five to 10 percent is the norm, though higher levels are also possible. Given the thin trading, the ability to do a block trade (selling a large lot of shares to a third party) is also limited. In an M&A situation, this matters a great deal – the seller becomes largely “stuck” in the company and can’t easily monetize their holdings. In fact, when one looks at several of the recent all-stock acquisitions, it appears as if it will take years for the sellers to convert their shares into cash.

Any company contemplating listing on the CSE or another foreign exchange should consider pursuing status as a “foreign private issuer” and how that may impact liquidity. There are some substantial potential benefits to being a foreign private issuer, including faster market access and less onerous reporting requirements. But maintaining foreign private issuer status can create additional liquidity concerns for some shareholders.

A foreign private issuer must either have the majority of its voting stock held by non-U.S. residents or operate outside the U.S. The only option for U.S.-based cannabis companies is to ensure the majority of voting stock is held by non-U.S. residents. Determination of what the majority of voting stock means can be based on either voting power or a quantitative number of shares.

Companies often create a class of super-voting, super-conversion compressed preferred stock that is exchangeable into publicly traded common shares. The preferred stock class — sometimes called Class A stock, but naming conventions vary from company to company — can be set up so that, on a converted basis, the holders of the preferred stock have the same economic and voting rights they would have had if they held common stock instead. But a company must usually impose conversion restrictions to ensure foreign private issuer status is maintained. If too many people convert at the wrong time a company can lose its foreign private issuer status.

Anyone receiving compressed shares should carefully review the terms of such stock so they can be aware of when and how they can convert into freely trading common stock. It may not always be possible to freely convert such preferred stock and the preferred stock may not be as easy to sell as the common stock, creating another potential liquidity issue that should be managed up front.

David Lechner is a Chief Financial Officer with $25 billion of M&A and capital markets work. He consults with clients on due diligence, acquisitions, integrations, financial reporting, and operational improvements. Originally from Toronto, he now resides in Denver with his family.

Charles Alovisetti is a partner and chair of the corporate practice group at Vicente Sederberg LLC based in Denver. He assists licensed and ancillary cannabis businesses with corporate legal matters, and he has experience working with clients on a broad range of transactions.



About Us

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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