It’s no secret that marijuana stocks have seen a broad range of price action in recent weeks. The bearish trend that began in mid-April is showing no signs of abating, with the overall decline in the sector trending nearly 30% over the past two weeks. On April 21, it seemed like investors had completely changed their tune on the sector, as a series of high-profile hedge fund managers and other Wall Street experts all came out to say that it was a good time to buy marijuana stocks.
You have to almost completely ignore the many factors that disappear when it comes to the stock market to see the bigger picture. While it’s true that the stock market has been moving in one direction for many years, there are some critical factors that can often fly under the radar for investors.
In the past week, there were no major changes in the stocks of the big marijuana companies.. Read more about global cannabinoids stock and let us know what you think.
Navigate the evolving cannabis industry with 420 Investor, a premium service that sends you real-time alerts and explanations of the news below and more.
- Adult drug sales in Illinois reached a record high in May, up 163%.
- Amazon has supported MORE legislation.
- Health Canada has added 4 licenses, bringing the total number of licenses to 681.
- Over the past year, 420 Investor’s model portfolios have increased 55.7% to 89.6%, while the Global Cannabis Stock Index has increased 33.2%.
Overview Amazon has announced its support for the legalization of cannabis by agreeing to the MORE Act and changing some of its internal rules regarding cannabis use by employees. Adult drug sales in Illinois increased 163% year-over-year to $116.4 million. BDSA data for April showed record sales in several markets, with California coming out on top with a 42% year-over-year increase. Health Canada added 4 licences, bringing the total number of licences to 681, including 2 expired, revoked or suspended licences. I shared this information with 420 subscribers of Investor this week:
- Cannabis Subsector Overview – 28/05/21
- Composition of sample portfolio 28.05.21
I was also interviewed by Cannabis Investing Network. Here are some of the most notable names on this week’s 420 Investor Focus List:
- ACB paid the full amount of the $89 million debt.
- CGC Fourth Quarter Revenue The third quarter was lower than the third quarter. EBITDA decreased slightly in the third quarter and increased 38% year-on-year to CAD 148.4 million, with adjusted EBITDA of CAD -90 million.
- CRON amended the agreement with Gingko Bioworks and began commercial production of biosynthetic CBG.
- The CWBHF announced a collaboration with the University of Colorado Boulder to study CBD and CBN to improve sleep. It has filed a preliminary ATM prospectus for C$60 million.
- GRAMF announced its first investment in social capital
- GRWG has a revamped e-commerce site, and some stores offer online shopping and in-store pickup.
- GTBIF announced the acquisition of Massachusetts-based cannabis operator Liberty Compassion, which operates medical cannabis dispensaries in Boston and Springfield.
- HBORF reported first quarter net income of $12.4 million and slightly positive adjusted EBITDA. The company announced the upcoming acquisition of California-based Sublime for $43.8 million in shares, or 1.8 times its projected 2021 revenue. It also bought the 47-acre manufacturing campus for $10.84 million.
- LQSIF said its company, Nova Cannabis, will open at least 30 Value Buds in Ontario by 2021.
- OGI appoints new VP of Marketing and announces up to 75 new positions
- The PLNHF plans to complete construction of its consumer hall in Las Vegas as soon as the legislation is passed.
- SHWZ announced the upcoming acquisition of Southern Colorado Growers for $11.3 million, which will expand access to the highest quality flowers.
- SMG again raised its outlook for FY2021, with total revenue up 17-19%, supported by Hawthorne’s revenue increase to 40-45% from 30-40% previously. The company now expects earnings per share of $9.00-9.30, up from $8.60-9.00.
The global cannabis stocks index interrupted its two-week winning streak with a small loss, down 0.8% to 59.11 : Theindex, which lost 34.1 percent in 2019 and 54.9 percent in 2018 after rising 91.8 percent in 2017 and 88.8 percent in 2016, rose 5.2 percent in 2020. For 2021, it has increased by 33.2%. It currently has 46 shares and ended 2020 at 44.39 : Examples of portfolios 420 Investor offers subscribers three model portfolios, two of which are long-term and fully invested to beat the Global Cannabis Stock Index, 420 Opportunity and 420 Quality. 420 Opportunity ended the week with an estimate of $175,354, down 0.8%. The model portfolio increased 66.4% in 2021, 35.6% in 2020 and 250.7% since April 2014. 420 Quality ended the week at $251,478, down 1.8% for the week and now up 55.7% in 2021 after up 42.8% in 2020. Launched in March 2017, the model is designed for long-term investors looking to invest in leading cannabis stocks with low portfolio turnover. Since its inception, it has gained 403.0%, compared to an index decline of 26.9%. Flying High, which focuses on swing trading, ended the week at $478.498, up 0.8%. The model portfolio is up 52.7% in 2020 and 89.6% in 2021, a 4685% return since inception in late 2013. Outlook After a strong recovery in early 2019, the cannabis sector fell sharply to unprecedented levels the following year due to several negative events, including the CannTrust scam, the unexpected resignation of Bruce Linton as CEO of Canopy Growth, a disappointing start to legalization in Canada, regulatory confusion in the US regarding CBD and a slow start to legalization in California, the vaping crisis, and then financial turmoil and market disruption due to the COVID-19 pandemic. In the industry, the capital available to fund expansion has dried up, a situation that continues to put heavy pressure on companies with negative cash flow, as the availability of capital is constrained by stronger market participants. Cannabis stocks overreacted and reached their bottom in March 2020. Today they benefit from the perception that the sector offers good growth prospects, which was not the case then. One important change is that the pandemic has forced many regulators to allow previously prohibited retail activities, such as takeout and delivery. The legal market is growing rapidly and is becoming even more convenient than the illegal market because orders can be placed online. High unemployment and large deficits have fueled states’ legalization efforts, as have more favorable regulatory controls at the local level. Access to capital has improved dramatically and large companies are generating significant and rapidly growing revenues and profits. There are several potential catalysts, including the FDA providing clarity on CBD regulation, the progress of legalization in Canada that began in October 2018 and is gradually covering a wider range of products, and the continued growth of German and Israeli MMJ and other international markets that have been slow to develop. Implementation in California and Massachusetts for adults has been slow, but there are already significant improvements. Michigan and Illinois legalized adult-use drugs in late 2019, and those markets are showing strong growth that could prompt other states to legalize. Voters in Arizona, Montana, South Dakota and New Jersey approved adult drug legalization in November, and New Mexico, New York and Virginia introduced legalization in the legislature in 2021. Key issues for the future are likely to include continued cross-sector investment in the sector and further consolidation in Canada and the US, potential reform of federal regulations (SAFE Banking Act and other broader legislation that could eliminate the 280E tax and allow OMCs to trade on higher exchanges, as well as the widespread use of credit cards to purchase cannabis), measures to enable cannabis research, the introduction of MMJ in Germany, Mexico and Australia, and continued progress in South America and the potential of the cannabis industry. Stay ahead of the crowd by subscribing to 420 Investor, the largest and most comprehensive subscription service for cannabis dealers and investors since 2013. Based in Houston, Alan draws on his experience as founder of the 420 Investor online community, the first and still largest integrated analysis platform focused on publicly traded cannabis stocks. Through his many connections in the cannabis community, Alan continues to find new ways to bring the industry together and promote sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Until early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent analyst and then for more than two decades in research and portfolio management. Alan is a prolific writer with over 650 articles published on Seeking Alpha since 2007, where he has 70,000 subscribers. He is a frequent speaker at industry conferences and appears regularly in the media, including the NY Times, Wall Street Journal, Fox Business and Bloomberg TV. Get in touch with Alan: Twitter | Facebook | LinkedIn | E-mail
In this section:
ACB, Alcanna, Aurora Cannabis, Canopy Growth, CGC, Charlotte’s Web, cliq, CRON, Cronos Group, cwbhf, CWEB, gram, GRAMF, Green Thumb Industries, GrowGeneration, GRWG, gtbif, Gti, gtii, Harborside, hbor, HBORF, lqsif, OGI, Organigram, Planet 13, PLNHF, PLTH, schwazze, Scotts Miracle-Gro, SHWZ, smg, The Parent Company, TPCO Holding, WEED
Charlotte’s Web files prospectus for C$60 million equity program
First quarter earnings reports show strong and improving performance in US cannabis sector
Parent company announces first equity investment in Josephine & Billie
Charlotte’s Web and the University of Colorado Boulder team up to study sleep and anxiety
A few weeks ago, we reported that Nevada governor Brian Sandoval signed a bill to legalize recreational cannabis. This has created quite a stir in the cannabis industry, and has some folks claiming that Nevada has become the next California, where cannabis is legal for recreational use. Legalization of cannabis for recreational purposes is a big step toward making cannabis a legal commodity. As with all things, it is important to learn from the best, and learn from the mistakes, so we can avoid them.. Read more about verano ipo date and let us know what you think.
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