What’s Up With Cannabis Stocks For The Week Ending 4/22/22 – New Cannabis Ventures
Here are some of this week’s highlights for 420 names on the Investor Guidance List:
- AAWH has launched adult sales at the Rochelle Park Dispensary in New Jersey.
- AYRWF announced the launch of the premium flower Kynd in Florida.
- CCHWF has launched adult use at its two New Jersey locations under the Cannabist brand.
- CURLF began serving its first adult clients at its Bellmawr clinic. The company’s Edgewater Park and Bordentown locations are expected to follow soon.
- FFLWF Couche-Tard increased its stake in Fire & Flower to 35% with the exercise of their warrants.
- GTBIF has been discovered to be part of a new federal lawsuit filed by True Social Equity, along with Akerna, Verano and Surterra, according to reporter Tom Angell.
- GNLN has filed a prospectus supplement for its market offering program of up to $50 million. As of April 14, the company has sold approximately $11.3 million with $38.7 million remaining according to filing 424B2.
- LOWLF is now the exclusive distributor of Zippo products for California cannabis dispensaries.
- TRSSF has received an amended Cannabis Cultivation and Manufacturing License from the New Jersey Cannabis Regulatory Commission and is now authorized to cultivate, produce and sell cannabis products for adult use in New Jersey. The company’s stores are the Apothecarium in Maplewood and Phillipsburg.
- TLLTF announced that it is filing its registration statement on Form 10 to align with US reporting standards and provide greater transparency to shareholders.
- TCNNF has announced the opening of a new medical cannabis dispensary in Zephyrhills, Florida.
- VLNS has entered into an agreement with Signifi Solutions to place cloud-managed Green Roads smart kiosks in high-end shopping centers in the United States
The global cannabis stock index fell for the fourth consecutive week, falling 6.84% to 23.94:
The index, which lost 26% in 2021 after a 5.2% gain in 2020, is down 27.12% in 2022. It currently comprises 38 stocks and ended 2021 at 32.85:
The cannabis industry has continued to evolve through several ups and downs over the past few years. 2021 started off with massive gains in the fourth quarter, but hit a wall in mid-February, dragging the balance of the year after the market got ahead of itself. Disappointment with the slow pace of federal reform or the move toward legalization has been a factor, but declining cannabis sales growth, regulatory delays in several states, and the implosion of the wholesale flower market in California also played a role. In Canada, while the market has continued to grow, the shift to derivatives has been slow. In addition, the biggest LPs have lost market share and have not been able to scale so far.
The bull market that began in March 2020 after the pandemic and the capital crisis that followed the vaping crisis in 2019 appears to be intact for US cannabis operators, who continue to trade significantly higher than in the summer. 2020 despite steep declines since February’s peak. Looking ahead, the outlook looks strong, with major companies moving to positive operating cash flow and having increasing access to non-dilutive capital, including debt, mortgages and leasebacks. Several states will transition from medical-only to adult use, including New Mexico, Vermont, and Connecticut in 2022, New York in 2023, and Virginia in 2024. New Jersey went into service in April. Several other states could also proceed with legalization for adult use, including Delaware, Florida, Maryland, Minnesota, New Hampshire, Pennsylvania and Rhode Island. Several states are also expanding their programs, with additional dispensaries coming to Illinois. The medical-only state of Minnesota will add flowers and edibles in 2022, and Ohio is also expanding its program. Increasing competition in some state markets that weighs on profitability is likely to remain a challenge. Also, while many see federal legalization as a positive, it remains a potential risk factor in my opinion.
While stocks of US cannabis companies continue to be held primarily by retail investors, 2021 has seen an increase in institutional investment. Another significant development has been the growth of AdvisorShares Pure US Cannabis ETF (MSOS), which has broadened access to cannabis companies for investors who do not trade stocks OTC. Additionally, a number of ancillary companies have gone public and trade on higher exchanges, providing institutional investors with a way to invest in the industry. We have seen several investments in US cannabis companies, primarily by Canadian LPs, but, going forward, strategic investments through creative financial structures will likely extend to CPG companies in 2022.
At the federal level, the FDA (or Congress) could provide some clarification on the regulation of CBD. When it comes to THC, Democrats (Cannabis Administration and Opportunity Act) and Republicans (States Reform Act) are proposing legislation to legalize cannabis. While this is going to be a long process in my opinion due to the complexity (variable state regulations, role of the FDA, social equity, taxation), it is very different from what the developing cannabis industry was facing. just a few years ago: potential crackdowns on state legalization. I remain hopeful that Congress can push through small reforms, including expanded research and SAFE Banking. Enhanced financial reform that would explicitly allow companies operating in state-legal cannabis to trade on higher exchanges would be hugely positive.
Beyond America, cannabis legalization continues to proliferate. Although Canada remains the largest market for federally legal cannabis, 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 it may also legalize adult use. Australia’s medical program was slow to get going but has gained ground. New Zealand also has a medical program. In Africa, several countries have legalized medical cannabis. Europe, of course, has seen the widespread adoption of medical cannabis. Germany has been slow to develop but could move to legalization for adult use. Other markets where there is medical cannabis are Denmark, Greece, Italy, the Netherlands, Poland and Portugal. Both the UK and Israel have medical cannabis, and Israel could move to legalizing it for adult use. Of course, let’s not forget Jamaica!
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