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- NJ introduced the first rules for adult use.
- Canadian retail sales rose 59% in June to a record $ 319 million.
- Health Canada did not add any new licenses, so the total now stands at 744.
- 420 investor model portfolios are up 20.5-55.2% since the start of the year, while the Global Cannabis Stock Index is up 15.4%.
New Jersey has released its first draft of rules for use by adults
Statistics Canada data for June showed that cannabis sales for the country rose 59% year over year from $ 319 million. Health Canada has not added any new licenses, leaving the total at 744, including 6 that have expired, revoked, or suspended.
Over the week, I shared these insights with subscribers of 420 Investor:
- Composition of the model portfolio 13.08.21
- Review of the Cannabis Subsector – 08/13/21
- Previews for Greenlane Lowell Farms, Schwazze, TerrAscend and TPCO Holding Corp
Here are some of this week’s highlights for 420 names on the Investor Focus List:
- CCHWF opened its second pharmacy in New Jersey
- CRLBF opened its 9th Florida pharmacy and acquired a Maryland pharmacy
- GDNSF opened two more NM pharmacies, bringing the number of pharmacies to a total of 4 in the state.
- GNLN revenue for the second quarter increased 7% to $ 34.5 million on an adjusted EBITDA of $ -3.7 million.
- GRAMF reported first quarter revenues of $ 54.2 million with adjusted EBITDA of $ -10.4 million. The company named Clorox veteran Troy Datcher as its new CEO.
- HRVSF completed a sale / leaseback of its Maryland facility for a total of $ 29.5 million with Innovative Industrial Properties. His merger plans moved forward when the BC Supreme Court approved the deal. It opened its 11th PA pharmacy.
- LOWLF’s revenue for the second quarter rose 53% to $ 15.2 million, with adjusted EBITDA of $ 740,000
- LQSIF’s revenue for the second quarter was $ 159 million, with liquor sales in the same store increasing 10.6%
- OGI presents JOLTZ lozenges
- SHWZ’s revenue for the second quarter was $ 30.7 million and Adjusted EBITDA was $ 10 million. It announced a home delivery service.
- SMG bought a nutrients company for $ 33.5 million, about four times its sales
- TCNNF saw its CEO and CFO buy the stock in the open market. She appoints a new chief technology officer. It started clone sales in Massachusetts.
- TLLTF began trading on the NEO Exchange in Canada after previously trading on the CSE. It expanded its relationship with Old Pal to bring its brand to Pennsylvania.
- TLRY announced the upcoming acquisition of convertible bonds and warrants to MedMen that could earn it 20% of the ownership and payment of 9 million shares. The company has again postponed its shareholders’ meeting to approve an increase in authorized shares.
- TRSSF missed expectations as it reported second quarter revenue of $ 58.7 million and adjusted EBITDA of $ 24.3 million. Problems in PA and NJ offset strength in CA and Canada. The company withdrew its guidance for 2021 and also reported some management departures. It received the exclusive distribution rights to the Cookies brand in New Jersey, where it also increased its stake from 75% to 87.5% for $ 25 million in cash and an additional $ 25 million in cash and shares by Dec. 31.
- VFF announced a $ 75 million acquisition ($ 30 million in cash and 4.7 million shares) of US CBD company Balanced Health Botanicals
- VLNCF has improved its testing capabilities. The market entry in Quebec was getting closer. It will introduce CBD products to Japan.
The Global Cannabis Stock Index was knocked down after four consecutive weekly gains, declining 8.4% to 51.23:
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 increased by 15.4% so far. It currently includes 44 stocks and ended 2020 at 44.39:
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 $ 137,991, down 7.9%. The model portfolio increased by 31.0% in 2021, increased by 35.6% in 2020 and has increased by 176.0% since April 2014% in 2020. The model was introduced in March 2017 and is aimed at long-term Investors looking to invest in leading cannabis stocks with low portfolio turnover and has gained 289.3% since its inception, compared to the index’s 36.6% decline. Flying High, which is focused on swing trades, ended the week at $ 391,718, down 9.0%. The model portfolio grew 52.7% in 2020 and 55.2% in 2021, and the return since inception in late 2013 was 3817%.
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, 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 the capital available to fund expansion run out, a situation that continues to pose major challenges for companies with negative cash flow as availability is limited to stronger operators.
Overreacted, cannabis stocks bottomed in March 2020, benefiting from a perception that the industry has strong growth prospects, which was not clear at the time. One big change was that the pandemic led many regulators to allow previously banned types of retail activities such as roadside pickup and delivery. The legal market quickly benefited from the fact that the ability to order online made it even more convenient than the illegal market. States and communities have sought to expand adult use and medical access. Access to capital improved dramatically, and the leading companies began to generate large and rapidly growing sales and profits.
The strong end of 2020 continued through 2021 after the Democrats took control of the Senate in early January, but stocks overtook themselves and have been consolidating since then. Aside from concerns that state legalization will take longer than many expected, there have been some tough comparisons with last year’s sales. While several institutions took up the sector earlier in the year, the additional interest has waned.
There are several potential catalysts ahead of us, including the FDA (or Congress) clarifying CBD regulation, advances in Canadian legalization, which began in October 2018 and encompasses a wider range of products, and continued growth in German and Israeli MMJ and other international markets that have developed slowly. The adult implementations for adult use in California and Massachusetts have been slowly adopted, but are gradually showing great improvements. Michigan and Illinois were legalized for adult use in late 2019, and these markets are showing strong growth that could encourage other states to legalize. Voters in Arizona, Montana, South Dakota, and New Jersey all passed adult legalization legalization in November, and Connecticut, New Mexico, New York, and Virginia passed legalization legalization in 2021.
The big issues that lie ahead are likely to be continued cross-industry investment in the sector and greater consolidation in Canada and the US, potential federal regulatory reform (SAFE Banking Act and other broader laws that abolish 280E taxation and the Trading at higher prices) 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 and MMJ implementations in AL, WV and VA, possible legalization by lawmakers in DE, FL, MD, MN, NH, PA and RI and implementation of the CT, NM, NY, and VT commercial programs in 2022 and VA in 2024.
After bottoming out in March 2020, the cannabis sector is in a new bull market. Many companies have substantial sales, some even make a profit, and the liquidity is much better. The sector has moved from many old penny stocks that never proved they had a profitable business to better capitalized companies, many of which have strong management teams and big business. The investor base has also changed and is becoming increasingly institutional.
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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:
Alcanna, CCHW, CCHWF, cl, cliq, Columbia Care, Cresco Labs, CRLBF, GDNS, GDNSF, gnln, Goodness Growth, Gramm, GRAMF, greenlane, HARV, crop health and recovery, HRVSF, Lowell Farms, LOWL, LOWLF, lqsif, OGI, Organigram, schwazze, Scotts Miracle-Gro, SHWZ, smg, tcnnf, TER, Terrascend, The Parent Company, Tilray, TILT, Tilt Holdings, TLLTF, TLRY, TPCO Holding, trrsf, TRUL, trulieve, Valens, VFF, village farms , vlncf, vlns