What’s new in cannabis stocks?
Cannabis stocks got off to a bumpy start to the week as they approached the mid-week trading week. There were both higher highs and lower lows with the biggest drops being seen in the Canadian stocks. The Canadian Marijuana Producer Index dropped 4.5% on the week but still managed to remain in positive territory.
This week, I will be focusing on three companies that I believe are on the brink of taking over the cannabis industry.. Read more about nici stock price 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.
- Cannabis sales in Michigan were weak in May, while sales in Canada were up in April.
- Health Canada has added 10 licences, bringing the total number of licences to 710.
- Over the past year, 420 Investor’s model portfolios have increased 48.1% to 89.0%, while the Global Cannabis Stock Index has increased 29.9%.
Michigan cannabis sales fell 3 percent month-over-month in May, and the year-over-year growth rate dropped significantly to 76 percent. Revenue of $149 million was impacted by lower medicinal cannabis sales and declining flower prices.
Cannabis sales in Canada increased 4% month-over-month and 74% year-over-year to $310 million in April. Health Canada added 10 licences, bringing the total number of licences to 710, including 3 expired, revoked or suspended licences. Data for March shows that inventories remain high in all product categories.
I shared this information with 420 subscribers of Investor this week:
- Composition of the model portfolio 18/06/21
- Cannabis Subsector Review – 18/06/21
- Agrify’s cultivation technology addresses a major gap in the cannabis industry.
- Changes to the Global Cannabis Value Index for July 2021
Here are some of the most notable names on this week’s 420 Investor Focus list:
- CGC completes acquisition of Supreme Cannabis
- CURLF opens its second pharmacy in New Jersey
- FFLWF received notification from Couche-Tard of the exercise of 10.5 million warrants.
- HRVSF announced the end of the waiting period for HSR’s acquisition of Trulieve.
- LQSIF announced a regular issuer offer to repurchase up to 10% of its outstanding shares
- OGI has filed a preliminary base application to raise up to C$500 million.
- PLNHF has announced the opening of a supermarket in California that will include Select and STIIZY stores.
- TCNNF announced the expiration of the waiting period for HSR’s acquisition of Harvest Health and Recreation. The company opened its 85th branch. Pharmacy in Florida.
Despite the lack of news, the global cannabis stock index caught up last week, rising 4.6% to 57.68 :
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 is up 29.9%. 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 $167,094, up 2.9%. The model portfolio, which grew 58.6% in 2021, grew 35.6% in 2020 and 234.2% since April 2014. 420 Quality ended the week at $239,184, up 2.9% for the week, and is now up 48.1% in 2021 after being 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 378.4%, compared to the index’s 28.7% decline. Flying High, which focuses on swing trading, ended the week at $477,140, up 5.0%. The model portfolio is up 52.7% in 2020 and 89.0% in 2021, a return of 4671% since inception at the end of 2013.
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, the disappointing start to legalization in Canada, confusion over CBD regulation in the US and the slow start to legalization in California, the vaping crisis, and then the financial turmoil and market disruption caused by 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 shares overreacted and reached their lowest level 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 well as 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 lift 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.
After bottoming out in March 2020, a new bull market has begun in the cannabis sector. Many companies are generating significant revenues, some even profits, and liquidity has improved significantly. The sector has evolved from a host of old penny stocks that never proved their viability, to better capitalized companies, many of which have strong management teams and significant activity. The investor base has also changed and is becoming more institutionalized.
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Based in Houston, Alan draws on his experience as founder of the 420 Investor online community, the first and still largest integrated analytics 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:
Alcanna, Canopy Growth, CGC, cliq, cura, Curaleaf, curlf, FAF, fflwf, Fire and Flower, HARV, Harvest Health and Recreation, HRVSF, lqsif, OGI, Organigram, Planet 13, PLNHF, PLTH, tcnnf, TRUL, trulieve, WEED
Canadian cannabis sales increased 74% in April to $309.7 million
Couche-Tard increases its participation in Fire & Flower by exercising awarrant
Canopy Growth issues 9 million shares to complete acquisition of Supreme Cannabis
Australian cannabis producer buys Danish company Canopy Growth for $20 million
The cannabis stock market has been on fire since mid-May, as it has been on a tear since the beginning of the year. In the last few years, the industry has been experiencing a renaissance, as more and more states are legalizing medical and recreational use of the drug. Naturally, as cannabis becomes more mainstream, more and more companies are being created, and they have been going public at an impressive rate.. Read more about canopy growth stock and let us know what you think.
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