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- Cannabis sales increased in Michigan in January and Canada in December.
- Health Canada added 3 licenses.
- 420 portfolios of investor models have increased by 97.6% to 114.0% since the beginning of the year, while the Global Cannabis Stock Index has increased by 71.4%.
The Delaware legislature introduces a bill to legalize adults. Michigan cannabis sales rose 7% in January from December to $ 108 million. HEXO Corp. announced the share-based acquisition of Zenabis and continued consolidation in Canada.
Statistics Canada data for December showed that Canadian cannabis sales were up 14% from November. Health Canada added three new licenses this week, bringing Ten-10 Ventures’ suspended license to 610. Excluded from this are the revoked licenses from Agrima, Alberta Green Biotech, Bloomera, Hexos 4th location, Maricanns 2nd location and Medican Organics 2nd location location and a small processing plant belonging to Canopy Growth, the revoked licenses from BC Tweed (2) , FV Pharma and Zenalytics Laboratories, the expired licenses of Evergreen Medicinals and Toronto Research Chemicals, two assigned licenses previously held by James Wagner, a license previously owned by Total Cannabis Solutions and the voluntarily canceled license by Avalite Sciences.
During the week, I shared these insights with subscribers of 420 Investor:
- Weigh MSO assessments
- Tilray Q4 earnings preview
- Composition of the model portfolio 02/12/21
- Review of the cannabis sub-sector – 02/12/21
Here are some of this week’s highlights for 420 investor focus list names:
- CRLBF completed the acquisition of 4 medical cannabis dispensaries in Ohio
- FFLWF announced that it has applied for a NASDAQ listing
- GRAMF added a new CFO, Mike Batesole, who was previously CFO for Origin House’s California operations
- GRWG acquired a four story chain of hydroponic businesses in Colorado and Oklahoma
- GTBIF was named by Palestra Capital Management as a 5% stake
- HBORF closed an extended offer of 35.1 million CAD. It also settled its 280E tax issue with the IRS
- KSHB announced the dismissal of a class action lawsuit
- LQSIF continued to monetize non-core assets and sold 19 small-format liquor stores in British Columbia for $ 80.8 million
- The SPRWF has set an offer of CAD 25.9 million at CAD 0.31
- TCNNF announced that registration for S-1 resale is now effective
- TLRY had a solid fourth quarter with revenue that exceeded expectations despite the weakness in the hemp business and slightly positive Adjusted EBITDA
- TRSSF announced fourth quarter revenue of $ 65 million with adjusted EBITDA of $ 26 million, exceeding both expectations, and confirmed its outlook for 2021
- VREOF has completed the expansion of its Arizona facility
The Global Cannabis Stock Index fell slightly in volatile trading, falling 1.1% to 76.07:
The index, which lost 34.1% in 2019 and 54.9% in 2018, after rising 91.8% in 2017 and 88.8% in 2016, rose 5.2% in 2020. The index has gained 71.4% so far in 2021. It currently comprises 38 stocks and ended 2020 at 44.39:
420 investor model portfolios
420 Investor offers three model portfolios for subscribers, including two that are long-term and fully invested to outperform the Global Cannabis Stock Index, 420 Opportunity and 420 Quality. 420 Opportunity ended the week valued at $ 218,414, up 4.3%. The model portfolio, which grew by 107.3% in 2021, increased by 35.6% in 2020 and by 336.8% since April 2014. 420 Quality ended the week at $ 306,346, up 17.3% for the week and up 89.7% in 2021 after up 42.8%. The model was launched in March 2017 and is aimed at long-term investors looking to invest in leading cannabis stocks with low portfolio turnover. Since inception, it is up 512.7% compared to a 4.9% decline in the index. Flying High, which is focused on swing trades, ended the week trading at $ 540,075, up 3.8%. The model portfolio grew by 52.7% in 2020 and increased by 114.0% in 2021. The return since inception at the end of 2013 was 5301%
After a strong rally in early 2019, the cannabis sector saw a sharp decline to unprecedented levels over the next year due to several negative developments including the CannTrust scam, Bruce Linton’s surprise termination as CEO of Canopy Growth, a disappointing introduction of legalization in Canada, the US regulatory confusion over CBD and a slow roll-out of legalization in California, the vaping crisis and then financial turmoil and market disruption due to the COVID-19 pandemic. The sector saw capital available to fund expansion, a situation that continues to challenge negative cash flow companies as availability is limited to stronger operators.
Cannabis stocks overreacted and bottomed in March. You are now benefiting from the perception that the industry has strong growth prospects, which was not clear at the time. One big change was that the pandemic has led many regulators to allow previously banned types of retail activities such as roadside pickup and delivery. The legal market quickly benefits from becoming even more convenient than the illegal market and being able to order online. High unemployment and large deficits are likely to boost government legalization efforts and more favorable regulatory scrutiny at the local level. Access to capital is now improving rapidly.
There are some potential catalysts ahead, including the FDA clearing CBD, advances in Canadian legalization, which began in October 2018 and encompassing a wider range of products, and continued growth in German and Israeli MMJ and other international markets develops slowly. The adult implementations in California and Massachusetts have been slow to adopt, but are starting to show major improvements. Michigan and Illinois were legalized in late 2019, and these markets are experiencing strong growth that could encourage other states to legalize. Voters in Arizona, Montana, South Dakota, and New Jersey approved adult legalization in November.
The big issues that lie ahead are likely to be further cross-industry investment in the sector and greater consolidation in Canada and the US, a possible reform of federal regulation (SAFE Banking Act and other broader legislation) that will remove the 280E taxation and the Trade with higher taxes could enable exchanges for MSOs as well as the widespread use of credit cards for cannabis purchases), steps to enable cannabis research, the introduction of MMJ in Germany, Mexico and Australia, and further advances in South America and possible legalization of adult use in Israel and Mexico , new legal cannabis implementations in AZ, MT, NJ and SD as well as MMJ implementations in Virginia and soon also in Mississippi and West Virginia, possible legalization by legislation in CT, DE, FL, MD, MN, NH, NM, NY , PA, RI and VA and implementation of the commercial VT program in 2022.
Alan is based in Houston and leverages his experience as the founder of the 420 Investor online community, the first and largest due diligence platform focused on publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to seek new ways to connect the industry and fuel its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before focusing on the cannabis industry in early 2013, Alan worked as an independent research analyst in 1986 after having worked in research and portfolio management for over two decades. Alan is a prolific writer with over 650 articles published since 2007 on Seeking Alpha where he has 70,000 followers. He is a frequent speaker at industry conferences and a frequent source for media such as the NY Times, Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | E-mail
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In this article:
Alcanna, cl, cliq, Cresco Labs, CRLBF, FAF, fflwf, Feuer, Feuer und Blume, Gramm, GRAMF, Green Thumb Industries, GrowGeneration, GRWG, gtbif, Gti, gtii, Hafen, hbor, HBORF, kshb, KushCo Holdings, lqsif, SPRWF, supreme cannabis, tcnnf, TER, Terrascend, the parent company, Tilray, TLRY, TPCO Holding Corp., TRSSF, TRUL, Trulieve, Vireo, Vireo stocks, Vreo, Vreof