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Business

Now That We Have a Cannabis Bottom… What to Do? (CGC, ACB, GDET, CURLF)

So, after much ado and bloodletting, the formerly high flying cannabis space – now humbled and begging forgiveness for its second derivative sins – is ready for some browsing speculation once again. Let us be your guide – your Sherpa – as we mount an expedition for value, momentum, and fresh green profits.

Today, we take a glance at Canopy Growth Corp (NYSE:CGC), Aurora Cannabis Inc (NYSE:ACB), GD Entertainment & Technology Inc. (OTCMKTS:GDET), and Curaleaf Holdings Inc (OTCMKTS:CURLF).

Canopy Growth Corp (NYSE:CGC) engages in growing, possession, and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, softgel capsules, and hemps.

It’s perhaps the biggest overall name in the space when it comes to a combination of producing and investing in the space, so it has to be near the top of any measure as far as benefitting from a shift whereby full-scale legalization in the US market is concerned.

Canopy Growth Corp (NYSE:CGC) generated sales of $76.6M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter “growth” rate of -15.3% on the top line. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($2.8B against $425.8M).

According to its own materials, the company offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, and Foria brand names. It also offers its products through Tweed Main Street, a single online platform that enables registered patients to purchase medicinal cannabis from various producers across various brands.

In the company’s words, “Canopy Growth is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time.”

This is also one of the most geographically diversified players in the cannabis space, with operations in 12 countries across five continents.

And there has been plenty of PR work here. The Company is proudly dedicated to educating healthcare practitioners, conducting robust clinical research, and furthering the public’s understanding of cannabis, and through its partly owned subsidiary, Canopy Health Innovations, has devoted millions of dollars toward cutting edge, commercializable research and IP development. Through partly owned subsidiary Canopy Rivers Corporation, the Company is providing resources and investment to new market entrants and building a portfolio of stable investments in the sector.

One of its most important divestitures and strategic interests is Canopy Rivers Inc., a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. The company works collaboratively with Canopy Growth to identify strategic counterparties seeking financial and/or operating support. 

The company has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth and collaborate among themselves, which the company believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem.

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.

Aurora Cannabis Inc (NYSE:ACB) is one of the most widely diversified players in the cannabis space due to its powerful strategic investments, and it clearly also deserves to be at or near the top of this list.

In addition, the company has demonstrated rapid organic growth and strong execution on strategic M&A, which to date includes 15 companies – MedReleaf, CanvasRX, Peloton Pharmaceutical,  Aurora Deutschland (formerly Pedanios), H2 Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia Labs, HotHouse Consulting, Agropro, Borela, and the pending acquisition of ICC Labs.

We would also note that the company has invested in and established strategic partnerships with a range of leading innovators, including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).

However, just drilling down into its core cannabis production operations, Aurora Cannabis Enterprises Inc, trumpets itself as “one of the world’s largest and leading cannabis companies” and a licensed producer of medical cannabis pursuant to ACMPR.

We would expect expansion on the way given the inflow of investment capital. But, at present, the Company operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta, known as Aurora Mountain, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island.

And the stock has been acting well over recent days, up something like 14% in that time.

Aurora Cannabis Inc (NYSE:ACB) managed to rope in revenues totaling $75.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 153.6%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($236.9M against $464.6M, respectively).

GD Entertainment & Technology Inc. (OTCMKTS:GDET) is another stock that continues to look extremely cheap relative to the strong pace being set by the company in its core strategy, especially on the CBD side.

The company recently opened a store for its CBD-based products subsidiary, The Greenery. The store, which is located at Palisades Center in West Nyack, New York, the second-largest shopping mall in the New York metropolitan area and the eighth-largest in the United States, was opened three weeks in time for Black Friday and the holiday shopping season.

Now it is coming out and already talking about expansion in that space. Specifically, according to its most recent release, the company is entertaining a tangible offer to expand its “The Greenery” (TheGreeneryCo.com) CBD products physical retail exposure to a second, and larger, mall-based physical store location following positive branding and customer traffic data for its first mall-based physical store location.

“Following an extremely positive experience at the kiosk level at Palisades Center, we have been approached by management at that location and given a priority access option to expand to an additional and larger space in another similar mall,” noted Anil Idnani, CEO of GDET. “The vast bulk of the potential market for CBD products has no idea that they need to navigate to some backwater ecommerce portal to buy CBD-based products. Instead, they are walking around popular shopping areas, browsing for something new and interesting to try – and CBD is that new and interesting possibility. The only way capture any piece of that market is to be in front of them, out in the world.”

This is spectacular reasoning, and why we felt compelled to include the stock on this list.

One other dimension that differentiates GDET in this list is diversification: it is also a fully-active and operating blockchain play. There are many potential synergies between these segments. But there is also the advantage of diversification of revenue streams, which may provide some cover if there is a further capitulatory washout in the hemp, cannabis, and CBD complex before the next leg higher in the space gets fully underway.

We would also note that the company just announced a substantial reduction in its outstanding share count to lighten the load and send a shareholder-friendly signal to the market.

“If we move forward with this second location, it will be because we have run the numbers and the store will more than pay for itself,” continued Idnani. “At this point, we believe we can be selective and expand as the right opportunities come along. But we also believe that this approach to distribution is on target for this market because we gain an edge in brand exposure that will pay priceless dividends down the road as this marketplace continues to go mainstream over coming quarters.”

Curaleaf Holdings Inc (OTCMKTS:CURLF) is a vertically integrated cannabis player that has started to move into the hemp-based CBD space in an aggressive fashion. The stock has been outperforming the broader hemp-cannabis-cbd complex in recent action, which is notable.

The company just announced that it has opened its 27th dispensary in Florida at 3631 NW Federal Highway in Jensen Beach on Friday, November 15th. 

According to the release, “Curaleaf has the largest cannabis dispensary footprint in the US with 50 dispensaries across the country and continues to execute on its strategy of rapid expansion in Florida. The new 4,500 square foot location is accessible to patients from the Jensen Beach area, including the communities of Jupiter, Port St. Lucie, Stuart, Port Salerno and Palm City, and will offer a full range of premium quality medical cannabis products and private consultations by meticulously trained staff.”

Curaleaf Holdings Inc (OTCMKTS:CURLF) operates a large number of dispensaries, 12 cultivation sites and 9 processing sites with a focus on highly populated, limited license states, including Florida, Massachusetts, New Jersey and New York. Curaleaf, Inc. leverages its extensive research and development capabilities to distribute cannabis products in multiple formats with the highest standard for safety, effectiveness, consistent quality and customer care. Curaleaf is committed to being the industry’s leading resource in education and advancement through research and advocacy. 

Curaleaf Inc.’s Florida operations were the first in the cannabis industry to receive the Safe Quality Food certification under the Global Food Safety Initiative, setting a new standard of excellence.

It cultivates, processes, markets, and/or dispenses a range of cannabis products in various operating markets, including flower, pre-rolls and flower pods, dry-herb vaporizer cartridges, concentrates for vaporizing, concentrates for dabbing, tinctures, lozenges, capsules, and edibles. 

And the stock has been acting well over recent days, up something like 11% in that time. 

“We have been hearing from patients about the need for a full-service medical cannabis center along the Martin County and St. Lucie County coast,” said Joe Lusardi, Curaleaf CEO. “Curaleaf is proud to be the first dispensary in Jensen Beach, and we look forward to serving this community.”

Curaleaf Holdings Inc (OTCMKTS:CURLF) managed to rope in revenues totaling $64.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 0%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($140.3M against $64.1M).

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Marijuana

Acreage Holdings Inc (OTCMKTS:ACRGF) Gets Significant Advantage In The US Market On Acquisition Plans By Canopy Growth Corp (NYSE:CGC)

Canopy Growth Corp (NYSE:CGC)’s planned takeover provides an immediate and significant advantage in the competitive market of the US to Acreage Holdings Inc (OTCMKTS:ACRGF). As per the previously agreed acquisition plan, both the firms have submitted the management circulars under the approved arrangement by the court under the Business Corporations Act.

The transaction is subject to the waiver of changes in the federal law of the US to allow distribution, cultivation, and possession of marijuana. The deal is also subject to the approval of the Toronto Stock Exchange and New York Stock Exchange. It is also subject to the approval of the shareholders in a meeting scheduled on June 19, 2019.

Cash consideration

Following the deal, the shareholders of Acreage will receive upfront cash for each share up to $2.63. Each share of Acreage will be converted to 0.5818 share of Canopy. It is at a premium of 40% to the subordinate voting shares 30-day volume weighted average trading price on April 17, 2019, on the CSE. The shareholders of Acreage will also benefit from its ability to meet the set growth with reduced capital. The shareholders of Canopy will benefit from turnkey and accelerated access to the cannabis market in the US. This, together with the expertise of Canopy, will propel the growth.

Board approval

The board of directors of both the companies has unanimously supported the deal. Management circulars of both Canopy and Acreage outline the benefits and risks that arise from the transaction to the shareholders. The shareholders will receive the circulars by mail.

If the transaction is implemented, the combined entity will benefit from the improved product line, distribution networks, and complementary assets. Acreage will get access to the trademarks, operational expertise, and intellectual property of Canopy.

Canopy Stock surges

The stock of Canopy has surged on May 23, 2019, following the news of the acquisition of a This Works, skin Care Company based in the UK. The deal is valued at $54 million in cash. The product line of This Works comprises sleep aid products and skin care products. This is a crucial deal for Canopy since it banks on CBD and hemp strategy for integrated manufacturer/ marketing platform.

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Marijuana

Canopy Growth Corp (NYSE:CGC) Unveils Spectrum Therapeutics

Canopy Growth Corp (NYSE:CGC), a company specializing in the production and distribution of cannabis, hemp and cannabis devices today unveiled Spectrum Therapeutics. The business guru says Spectrum Therapeutics will be a global brand.

The purpose of Spectrum Therapeutics

The company has over the recent years directed resources towards clinical and medical research operations. These include the Canopy Health Innovations (CHI), Spectrum Cannabis, and C3 Cannabinoid Compound Company. The purpose for the formation of C3 Cannabinoid Compound Company was to develop cannabinoid-based medical therapies. Spectrum Therapeutics is set to encompass all these.

Analysts support the move to incorporate all these entities into a single unified ecosystem. According to them, this will help a huge deal in integrating the organization’s medical efforts. It is about establishing one diversified global healthcare enterprise.

Spectrum Therapeutics hopes is looking to focus in the production and the supply of the single and the full-spectrum cannabinoid medical products. Asides from that, it will promote education among patients and give them support they need. The healthcare practitioners also won’t be left behind in these efforts.

A lot of resources will be directed towards the pre-clinical and clinical research. Most importantly, the business hopes to succeed on its quest to develop leading cannabinoid-based medicines.

A focus into the future

Analysts have applauded Spectrum Therapeutics for the recent acquisition of C3.   They think it is at the brink of taking over market leadership in the medical cannabis on a global scale. Spectrum Therapeutics will dedicate resources and efforts empowering physicians in Europe and the world at large.

The goal will be to educate them on the wide range of therapies drawn from the various cannabinoid-based medicines. Dronabinol, which happens to be C3‘s cannabinoid pharmaceutical drug can now be traced in stores in Switzerland, Germany, Austria, and Denmark. Dronabinol is going to be markete4d under the Bionorica Ethics branding.

The Canopy Growth Chief Medical Officer Dr. Mark Ware opines, “We also offer education for patients and healthcare professionals and are engaged in research to define the safety and efficacy of cannabinoid medicines and the development of new cannabinoid-based treatments.”

Spectrum Therapeutics says it will confirm that countries seeking to benefit from its medical cannabis education fall within the legal regulatory frameworks.

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Marijuana

Canopy Growth Corp (NYSE:CGC) Gets Its Food Into The European Market Through Cafina Acquisition

Canopy Growth Corp (NYSE:CGC) recently announced that it finalized its acquisition of Cafina, a licensed cannabis producer that is based in Spain in an all-cash deal.

The acquisition marks a key milestone for Canopy Growth because it represents an opportunity to tap into the European cannabis market. Cafina which also goes by the name Cáñamo y Fibras Naturales, S.L is one of Europe’s companies that have acquired a license to produce cannabis. Cannabis Growth will use the European firm to expand its marijuana production activities in a region that is considered among the best for cannabis growth.

Canopy Growth acquires Cafina

Cafina is based in Spain where it is licensed to cultivate and distribute cannabis that contains over 0.2% of the 0.2% of tetrahydrocannabinol (THC) chemical. The firm’s products are mainly used for research and medical purposes and are even exported to other countries and it also has a license to. Cafina runs its production activities in a greenhouse that measures 1,600 sq. ft. Canopy Growth has also secured a supply agreement with another Spanish-company that produces cannabis flowers.

Cafina came into existence in 2014 and its operations are based in the Alicante province in Spain. It has a strong team that is focused on crop R&D, hemp seed sales and cannabis production. It received its research and general license for cannabis from the Spanish Agency for Medicines and Health Products (AEMPS) in November last year.

“Operating multiple production assets within Europe will allow us to increase revenue in the EU free of supply constraints,” stated Canopy Growth CEO, Mark Zekulin.

The CEO also noted that his company is investing in low-cost and scalable production facilities of the two European countries. According to Zekulin’s announcement, it is a strategic acquisition because it aligns with the strategy that the company uses in Canada where it has cannabis production facilities distributed across seven different provinces.

Canopy Growth is one of the most successful companies in the cannabis and hemp industry. Its stock grew by 79% in 2018 and the announcement about the Cafina acquisition influenced the stock to surge by more than 4%.

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Business

Cannabis Stocks are Smokin’ Again (CGC, NWGFF, ACB)

The much-anticipated Canadian cannabis legalization move has come and gone. Stocks in the space went through a widely expected sell-the-news reaction in the aftermath of the announcement. However, now that we are weeding out the riff raff and separating the wheat from the chaff, it’s time to identify the winners around the next corner.

There are a number of stocks that may present interesting opportunities at this point, and we want to focus on three of the most interesting right now: Canopy Growth Corp (NYSE:CGC), New Age Farm Inc (OTCMKTS:NWGFF), and Aurora Cannabis Inc (NYSE:ACB).

 

Canopy Growth Corp (NYSE:CGC) is one of the bigger growers in the industry. The company produces and sells medical marijuana in Canada. It offers dry cannabis and oil products primarily under the Tweed and Bedrocan brands. It also sells its products online.

According to company materials, “Tweed is the most recognized marijuana production brand in the world. It has built a large and loyal following by focusing on quality products and meaningful customer relationships. Tweed doesn’t just sell marijuana, it facilitates a conversation about a product we’ve all heard about but haven’t met intimately yet. It is approachable and friendly, yet reliable and trusted. As marijuana laws liberalize around the world, Tweed will expand its leading Canadian position around the globe.”

Also from their materials, “Bedrocan is the epitome of medical-grade cannabis. Bedrocan BV pioneered medical cannabis in Holland through decades of selection and refinement, leading to standardized, whole bud cannabis strains that patients can rely on. Bedrocan Canada supplies the same standardized strains to the Canadian market through exclusive licensing rights to the American continents, an arrangement it will also enjoy for all future genetic advancements. Due to its consistency over time, Bedrocan’s strains have been used in clinical research in seven European countries. That commitment to research didn’t stay on the east side of the Atlantic – Bedrocan Canada recently launched one of the largest clinical cannabis studies in the world, the EQUAL Study, to evaluate quality of life before and after medical cannabis use.”

CGC shares pulled back to test key support right at the 200-day simple moving average, and have bounced sharply since.

 

New Age Farm Inc (OTCMKTS:NWGFF) trumpets itself as an agricultural services company that offers turnkey growing infrastructure and services for the licensed growers and processors of luxury marijuana crops at its agri-campuses in Washington State. The company also, through its subsidiary, Kured, LLC, operates as an online CBD and lifestyle company. New Age Farm Inc. is headquartered in North Vancouver, Canada.

New Age Farm is an agricultural services company offering unique turnkey growing infrastructure and services for licensed growers and processors of luxury marijuana crops at its agri-campuses in Washington State. In November 2012, the Washington State Liquor and Cannabis Board passed Initiative 502 (“I-502”).

I-502 authorized the WSLCB to regulate and tax recreational marijuana products for persons over twenty-one years of age and thereby created a new industry for the growing, processing and selling of Washington State-regulated recreational marijuana products. New Age Farm provides innovative solutions for growers and processors in this burgeoning industry.

Kured is a wholly owned subsidiary of New Age Farm, acquired in December 2017. Kured is building an innovative online CBD and lifestyle company. Kured has partnered with best in class hemp cultivators, edible manufacturers, cutting edge product formulators to develop, market and distribute multiple lines of CBD products including, but not limited to, CBD vaporizer pens, topicals, gel capsules and more.

All of Kured’s products are 100% THC free and will be available for purchase internationally. THC, or tetrahydrocannabinol, is the primary active ingredient in cannabis.

New Age Farm Inc (OTCMKTS:NWGFF) pulled in sales of $88K in its last reported quarterly financials, representing top line growth of 1003.7%.

 

Aurora Cannabis Inc (NYSE:ACB), through Aurora Cannabis Enterprises Inc, trumpets itself as “one of the world’s largest and leading cannabis companies” and a licensed producer of medical cannabis pursuant to Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR).

The Company operates a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta, known as Aurora Mountain, is currently constructing a second 800,000 square foot production facility, known as “Aurora Sky”, at the Edmonton International Airport, and has acquired, and is undertaking completion of a third 40,000 square foot production facility in Pointe-Claire, Quebec, on Montreal’s West Island.

In addition to the Company’s rapid organic growth and strong execution on strategic M&A, which to date includes 15 companies – MedReleaf, CanvasRX, Peloton Pharmaceutical,  Aurora Deutschland (formerly Pedanios), H2 Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia Labs, HotHouse Consulting, Agropro, Borela, and the pending acquisition of ICC Labs – Aurora is distinguished by its reputation as a partner of choice and employer of choice in the global cannabis sector.

The company has invested in and established strategic partnerships with a range of leading innovators, including: The Green Organic Dutchman Holdings Ltd. (TSX: TGOD), Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), Namaste Technologies Inc. (TSXV: N), Evio Beauty Group (private), Wagner Dimas (private), CTT Pharmaceuticals (OTCC: CTTH), and Alcanna Inc. (TSX: CLIQ).

This massive list of strategic investments has caused some to call it the Berkshire Hathaway of the cannabis space.

 

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Marijuana

Canopy Growth Corp (NYSE:CGC) To Acquire Hiku Brands Co.; CEO Linton Confident Of Making Money Even If Pot Prices Drop

Canopy Growth Corp (NYSE:CGC) recently struck a fully diluted deal worth $350 million with Hiku Brands Co. Ltd. the owner of cannabis clothing and accessories selling Tokyo Smoke chain of coffee shops. With this deal that also includes options and warrants, the Ontario-based cannabis producer will gain 100% acquisition of the retailer.

Hiku is a budding company with all its attention focused on retail and its early steps have helped it create a brand identity among the clients by giving them an exclusive experience at its stores. The Chief Executive Officer at Canopy, Bruce Linton said that the retailer is thinking about products, brands, and alcoholic customer loyalty in a very smart way. Going forward, Hiku will sell recreational cannabis through its stores once it becomes legal from October 17, 2018.

The retailer has also applied for licenses in Alberta and will use the strategy in every province where private ownership is allowed. It seems that there will be a give and take relationship between Canopy and Hiku. According to Linton, “They need product to fill the stores. And we want to be able to have more and more stores. The reason Apple and Lululemon do well is they don’t sell you a computer or a workout outfit; they give an education platform and an experience. I think when you exit prohibition, you want to do that.”

The deal between Canopy and Hiku will be sealed only after two-thirds of shareholders of the retailer approves of it. The meeting for approval is expected to take place in August.

Drop in price will not affect Canopy, says Linton

 The CEO of Canopy, the largest marijuana company in the world is dreaming big as very shortly recreational cannabis will be legalized in Canada. The company has already started planning beyond dried bud and is aiming to get pharmaceutical patents and a big slice of the future marijuana beverage industry. According to Linton, even if the price of cannabis and related products comes down to zero, his company will still continue to make money.

The current month has been quite a busy one for Canopy as it acquired a medical marijuana company from Columbia, launched a Latin American subsidiary and then now has struck a deal with Hiku, the retail cannabis chain.

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