What’s new in Hashish Shares for the Week Ending 12/10/21 – New Hashish Firms

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summary

  • Adult sales in Illinois in November rose 61% year over year.
  • The SAFE Banking Act has been removed from the National Defense Authorization Act.
  • 420 investor model portfolios have returned -15.3% to 26.0% year-to-date, while the Global Cannabis Stock Index has lost 20.7%.

review

Illinois adult revenue increased 2% sequentially and grew 61% year over year to $ 120.8 million in November. When combined with medicinal cannabis, total cannabis sales rose 44% to 152.3 million. The National Defense Authorization Act did not include the SAFE Banking Act as final, something some had hoped would happen. According to Hifyre data, Canadian retail cannabis sales appear to have been pretty weak in November.

Over the week, I shared these insights with subscribers of 420 Investor:

  • Fire & Flower Q3 Financials preview
  • Target prices at the end of 2022 for the leading MSOs
  • Composition of the model portfolio March 12, 21
  • Review of the Cannabis Subsector – 03/12/21

Here are some of this week’s highlights for 420 names on the Investor Focus List:

  • AYRWF received approval to grow at its Phoenix grow and production facility
  • CCHWF has rebranded its Florida stores into Cannabist. closed
  • CRLBF opened its 12th Florida pharmacy and completed its $ 80 million acquisition of Laurel Harvest, Pennsylvania
  • CURLF has launched a new edible, Select X Bites, with a faster onset of action and a longer duration of action.
  • FFLWD announced the upcoming acquisition of the Canadian cannabis delivery and logistics company Pineapple Express Delivery for 5.3 million.
  • GDNSF has launched a new line of edibles in Maryland
  • The GRWG has moved its store in Phoenix to a new location with 25,000 sq. ft. relocated.
  • GTBIF opened a Rise pharmacy in Reno, Nevada
  • TCNNF opened its 111th Florida pharmacy
  • TLRY has issued 11.24 million shares, valued at $ 102.9 million, to help a Colorado-based alcoholic beverage maker, Breckenridge Distillery, with estimated annual sales of $ 20 million and EBITDA of approximately $ 5 million To acquire dollars. IntelGenx filed arbitration against the company for violating its agreement to co-develop and co-commercialize cannabis-infused strips.
  • VLNS began trading on NASDAQ
  • VRNOF opened its 40th Florida pharmacy

Market performance

The Global Cannabis Stock Index hit a new 52-week closing low earlier in the week and then rebounded, rising 1.4% to 35.21 over the course of the week:

The index, which lost 34.1% in 2019 and 54.9% in 2018, after gaining 91.8% in 2017 and 88.8% in 2016, rose 5.2% in 2020. In 2021 it has lost 20.7% so far. It currently consists of 42 stocks and ended 2020 at 44.39:

Model portfolios

420 Investor offers three model portfolios for subscribers, including two that are long-term and fully invested with the aim of beating the Global Cannabis Stock Index, 420 Opportunity and 420 Quality. 420 Opportunity ended the week at $ 99,957, up 1.1%. The model portfolio, which was down 5.1% in 2021, gained 35.6% in 2020 and has risen 99.9% since April 2014 despite the index’s huge loss since then. 420 Quality ended the week at $ 138,418, up 1.4% for the week and is now down 14.3% in 2021, after having gained 42.8% in 2020 and has had low portfolio turnover since inception Up 176.8% compared to the 56.5% decline in the index since then. Flying High, which is focused on swing trades, ended the week at $ 318,142, up 0.6%. The model portfolio grew 52.7% in 2020 and 26.0% in 2021, and the return since inception in late 2013 is 3,171%.

outlook

The cannabis sector has gone through several ups and downs over the past few years. 2021 started with massive gains in the fourth quarter, but hit a wall in mid-February, pushing the year’s balance back after the market overtook itself. The disappointment with the slow pace of federal reform or the move towards legalization was a factor, but declining growth in cannabis sales, regulatory delays in several states, and the implosion of the flower wholesale trade in California also played a role. In Canada, the market continued to grow, but the trend towards derivative products was slow. In addition, the largest LPs have lost market share and so far have not been able to scale.

The bull market, which began in March 2020 following the pandemic and the post-vaping crisis post-vaping crisis in 2019, appears to be intact for American cannabis operators, who, despite sharp declines, continue to trade significantly higher than they did in summer 2020 from the February peak. Looking ahead, the outlook looks good as the leading companies move to positive cash flow from operating activities and increasingly have access to non-dilutive capital, including debt, mortgages and sale-leasebacks. Several states will switch from pure medicine to adult use, including New Jersey, New Mexico, Vermont, and Connecticut in 2022, New York in 2023, and Virginia in 2024. Several other states could also legalize its use by Make adults. including Delaware, Florida, Maryland, Minnesota, New Hampshire, Pennsylvania, and Rhode Island. Several states are also expanding their programs, with additional pharmacies for Illinois. The Medical State of Minnesota will add flowers and edibles in 2022, and Ohio is also expanding its program. The increased competition within certain state markets that is hurting profitability is likely to remain a challenge. Even if many see government legalization as positive, in my opinion it remains a potential risk factor.

While US cannabis company stocks continue to be held primarily by retail investors, institutional investment saw a surge in 2021. Another big development was the growth of the AdvisorShares Pure US Cannabis ETF (MSOS), which expanded access to cannabis companies for investors who don’t trade OTC stocks. In addition, a number of subsidiary companies have gone public and are trading on higher-level exchanges, giving institutional investors an opportunity to invest in the industry. We have seen several investments in American cannabis companies, mostly from Canadian LPs, but looking ahead, strategic investments through creative financial structures are likely to extend to CPG companies in 2022.

At the federal level, the FDA (or Congress) could provide clarity on CBD regulation. When it comes to THC, both Democrats (Cannabis Administration and Opportunity Act) and Republicans (States Reform Act) are promoting laws to legalize cannabis. While I think this will be a long process due to the complexity (different government regulations, role of the FDA, social justice, taxation), this is very different from what the developing cannabis sector was seeing just a few years ago: potential crackdowns on the state legalization. I remain confident that Congress can push small reforms, including expanded research and SAFE banking. Reinforced financial reform that explicitly allows companies operating in government-legal cannabis to trade on higher-level stock exchanges would be extremely positive.

Outside the Americas, cannabis legalization continues to spread. While Canada remains the largest federal cannabis market, many other countries have medical programs including Argentina, Chile, Colombia, Ecuador, Peru, and Uruguay (fully legal) in South America. Mexico has legalized possession but does not yet have a regulated program and could also be legalized for adult use. Australia’s medical program has started slowly but is picking up momentum. New Zealand also has a medical program. In Africa, several countries have legalized medical cannabis. In Europe, medicinal cannabis is of course widespread. Germany has been slow to develop but could legalize it for adult use. Other markets that have medicinal cannabis are Denmark, Greece, Italy, the Netherlands, Poland, and Portugal. The UK and Israel have medicinal cannabis, and Israel could legalize it for adult use. Let’s not forget Jamaica, of course!

Be ahead of the crowd by signing up for 420 Investor, the largest and most comprehensive premium subscription service for cannabis dealers and investors since 2013.

Alan Brochstein, CFA

Alan is based in Houston and leverages his experience as the founder of the online community 420 Investor, the first and still largest due diligence platform focused on publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and enable its sustainable growth. At New Cannabis Ventures he is responsible for content development and strategic alliances. Before Alan, who started his career on Wall Street in 1986, switched his focus to the cannabis industry, he worked as an independent research analyst after over two decades in research and portfolio management. A prolific writer with over 650 articles published on Seeking Alpha since 2007, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source for the media including the NY Times, the Wall Street Journal, Fox Business , and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | E-mail

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In this article:

ayr, ayr wellness, AYRWF, CCHW, CCHWF, cl, Columbia Care, Cresco Labs, CRLBF, cura, Curaleaf, curlf, FAF, fflwd, fflwf, Fire and Flower, GDNS, GDNSF, Goodness Growth, Green Thumb Industries, GrowGeneration, GRWG, gtbif, Gti, gtii, tcnnf, Tilray, TLRY, TRUL, trulieve, Valens, verano, Verano Holdings, vlns, VRNO, vrnof

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