The manager of two cannabis-centric Canadian exchange-traded funds (ETFs) added 18 new cannabis stocks into the two indexes.
On Wednesday (September 26), Horizons ETFs Management completed a quarterly rebalance of the holdings in its two cannabis ETFs— the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) and the Horizons Emerging Marijuana Growers Index ETF (NEO:HMJR).
The Horizons Marijuana Life Sciences Index ETF now holds close to 50 cannabis stocks, while the other index carries 38 stocks.
Cannabis ETFs offer investors a chance to gain a measured exposure into the sector through variety of companies as opposed to picking individual stocks. With the growth of the overall cannabis sector, these offerings have increased as well.
Steve Hawkins, president and CEO of Horizons ETFs, said these rebalances come at a “significant time” for the industry as legalization of recreational cannabis in Canada is scheduled for October 17.
“With recreational sales starting soon, investors will get a better idea of what companies are poised to become leaders in the recreational cannabis space and are able to generate real sales,” Hawkins said in the company’s press release.
The ETF management company has made HMMJ its premier offering while its second cannabis ETF, which launched in February, is solely focussed on smaller market cap North American companies.
“As they grow, these budding marijuana companies have the opportunity to graduate into HMMJ’s index, allowing investors to participate in the full growth cycle of these businesses through our two marijuana based ETFs,” Hawkins explained.
Here’s a list of the stocks HMJR added:
- Alefia Health (TSXV:ALEF)
- Ascent Industries (CSE:ASNT)
- Choom Holdings (CSE:CHOO)
- Chemesis International (CSE:CSI)
- James E. Wagner Cultivation (TSXV:JWCA)
- Khiron Life Sciences (TSXV:KHRN)
- Maple Leaf Green World (AQN:MGW)
- 48North Cannabis (TSXV:NRTH)
- Planet 13 Holdings (CSE:PLTH)
- Sunniva (CSE:SNN)
- Sproutly Canada (CSE:SPR)
- Wildflower Brands (CSE:SUN)
The rise of HMMJ is related to the growth of the holdings it has. The index’s top weighed holdings as of Tuesday (September 25) were: Aurora Cannabis (TSX:ACB), Canopy Growth (NYSE:CGC,TSX:WEED), Aphria (TSX:APH) and GW Pharmaceuticals (NASDAQ:GWPH).
The three Canadian producers have a combined market cap of over C$32 billion, while the pharmaceutical company has raised its profile after obtaining a critical approval in the US for a cannabidiol-based (CBD) medicine.
Here’s all the stocks added to the holdings of HMMJ:
- Alefia Health
- Choom Holdings
- Eve & Co. (TSXV:EVE)
- GTEC Holdings (TSXV:GTEC)
- FSD Pharma (CSE:HUGE)
- James E. Wagner Cultivation
- Namaste Technologies (TSXV:N)
- INDIVA (TSXV:NDVA)
- Tilray (NASDAQ:TLRY)
Tilray’s inclusion should add even more value to the index as the Canadian company has enjoyed a substantial rush in the public markets for the past two months.
These scheduled quarterly rebalances for the two ETFs offer investors a chance to see which companies have gained the attention from the market and a chance to gain exposure into emerging cannabis industry.
Both HMMJ and HMJR have taken the ups and downs of the cannabis sector volatility but have seen gains so far in 2018. HMMJ raised in value 16.65 percent, over a year-to-date period. As the markets closed on Wednesday’s trading session, HMMJ reached a price of C$24.35.
Since its launch, HMJR has seen an uptick in value thanks to the growth of its holdings. Despite trading on the lesser known Aequitas NEO Exchange, as of 2:30 p.m. EST on Wednesday the holds a price of C$9.27. HMJR has seen a 52-week high price of C$10.48.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Editor’s Note: The headline of this article was changed since it incorrectly stated 17 cannabis stocks were added to the Horizons ETFs.
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Ascent Industries, Chemisis International, James E. Wagner Cultivation, Khiron Life Sciences, Maple Leaf Green World, GTEC Holdings, FSD Pharma and INDIVA are clients of the Investing News Network. This article is not paid-for content.
Aion Therapeutic Inc. (CSE: AION) (” Aion Therapeutic ” or the ” Company “) announced today that its proprietary and patented combinatorial mushroom preparations AION F7 and AION F8 (collectively, the ” Aion Mushroom Preparations ” or ” Preparations “) showed high efficacy in killing HER2+ breast cancer cells, ER+PR+ breast cancer cells, and triple-negative breast cancer cells by direct cytotoxicity.
As shown in recently completed third-party independent and carefully controlled 3D-spheroid cell culture studies performed at BIOENSIS laboratories, these cytotoxicity studies demonstrated direct killing of the breast cancer cells by the Aion Mushroom Preparations, which suggests such preparations may be effective in treating HER2+ breast cancer, ER+/PR+ breast cancer, and the very difficult to treat triple-negative breast cancer, with each of these types of breast cancers tested independently.
In separate independent studies at BIOENSIS laboratories using the Antibody-Dependent Cellular Cytotoxicity (ADCC) assay and the Antibody-Dependent Cellular Phagocytosis (ADCP) assay, the Aion Mushroom Preparations also demonstrated enhanced cell killing of HER2+ breast cancer cells via stimulation of the immune system. The Preparations showed similar effectiveness as trastuzumab, a monoclonal antibody treatment sold under the brand name Herceptin, manufactured by Roche and is a US FDA approved medication useful for treating HER2+ breast cancer that is either early-stage or advanced-stage/metastatic. Herceptin (trastuzumab) is the leading breast cancer drug with annual global sales of around $7 billion . 1 Other FDA approved biosimilar trastuzumab products include: Trazimera (Pfizer), Kanjinti (Amgen), Ontruzant (Merck), Herzuma (Teva), and Ogivri (Mylan). When Aion Mushroom Preparations were combined with Trastuzumab, there was a greater than 60% increase in the killing of HER2+ breast cancer cells when compared to Trastuzumab used alone.
Based on these results, Dr. Herbert A. Fritsche , Chief Science Officer of Aion Therapeutic and former Professor and Director of Clinical Chemistry at the University of Texas , MD Anderson Cancer Center, stated, “The extremely exciting results obtained from these independent 3D cell culture studies suggests that when appropriate Aion Mushroom Preparations are used together, they may offer a dual approach to the killing of HER2+ breast cancer cells through two separate and distinct pathways (direct cytotoxicity and antibody dependent cytotoxicity). The significant improvement in cancer cell cytotoxicity that was observed when the Preparations were combined with Trastuzumab warrants immediate further investigation in breast cancer patients.” Dr. Fritsche continued, “We look forward to the next step of initiating clinical trials of the Aion Mushroom Preparations with and without Herceptin (and other trastuzumab biosimilars) for the treatment of HER2+ breast cancer patients as well as the Aion Mushroom Preparations alone in ER+/PR+ breast cancer and triple-negative breast cancer patients.”
“Each year more than 1.6 million new cases of breast cancer are diagnosed globally, making it the most common cancer among women, and more than 500,000 women will die of the disease,” said Graham Simmonds , Executive Vice Chair and CEO of Aion Therapeutic. He added, “We are excited that these Aion Mushroom Preparations that have shown very encouraging initial test results will be developed to be transformative in how women are treated globally.”
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.
BIOENSIS is the solution of choice of predictive pharmacology needs led by a scientific team with more than 40 years of combined experience in preclinical pharmacology, BIOENSIS is the premiere innovator of 3D pharmacology technologies that more accurately recapitulate the microenvironment of human tissues and tumors. Their cutting-edge technology has been validated and optimized in more than 130+ cell lines and primary tissues, and their flexible technology enables assay customization and optimization for additional cell lines and organ tissues. They have a demonstrated track record of unparalleled commitment to and collaboration with customers to achieve their predictive pharmacology objectives.
About Aion Therapeutic Inc.
Aion Therapeutic Inc. through its wholly-owned subsidiary, AI Pharmaceuticals Jamaica Limited, is in the business of research and development, treatment, data mining and state-of-the-art artificial intelligence (machine learning) techniques, focused on the development of combinatorial pharmaceuticals, nutraceuticals and cosmeceuticals utilizing compounds from cannabis (cannabinoids), psychedelic mushrooms (psilocybin), fungi (edible mushroom), natural psychedelic formulations (Ayahuasca), and other medicinal plants in a legal environment for this type of discovery. In addition, Aion Therapeutic is creating a strong international intellectual property portfolio related to its discoveries.
DISCLAIMER & READER ADVISORY
Certain statements contained in this press release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “may”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company’s current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to the business of the Company and the commercialization and use of the Aion Mushroom Preperations. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the parties. The material factors and assumptions include regulatory and other third-party approvals; licensing and other risks. The forward-looking information contained in this release is made as of the date hereof and the parties are not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.
1 Forbes: Can Roche’s Blockbuster Drug Herceptin’s Sales Grow?
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Nextleaf Solutions Ltd. (CSE: OILS) (OTCQB: OILFF) (FSE: L0MA) (“Nextleaf”, “OILS”, or the “Company”) , the world’s most innovative cannabis processor, is pleased to announce that its wholly-owned subsidiary Nextleaf Labs Ltd. (“Nextleaf Labs” or “Labs”) has completed an inaugural bulk CBD distillate delivery to a U.S.-listed, Canadian-based global cannabis company. The Company anticipates similar orders on an ongoing basis.
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While the Canadian cannabis sector continues to mature as the world’s largest federally legal cannabis jurisdiction, the global demand and acceptance of CBD-based products continues to increase. In December 2020, Israel signed a regulatory amendment permitting the use of CBD in cosmetics and food products, and in February 2021 plant-derived CBD was added as a legal ingredient in cosmetics by a key market regulator for trade in the European Union. According to New Frontier Data, U.S. consumer spending on CBD reached $3.8 billion USD in 2020 and the demand is expected to reach as high as $8 billion USD by 2025. In a separate report from New Frontier Data titled “2021 U.S. Cannabis Consumer Evolution: Archetypes, Preferences, and Behaviors,” 54% of consumers say they have tried a CBD-only product in 2021, compared to 33% in 2018.
“Amidst the global acceptance of CBD as a therapeutic drug, Health Canada has begun the process of reviewing CBD and regulating it differently than THC,” said Paul Pedersen, CEO of Nextleaf Solutions. “Based on this, we believe the CBD market in Canada is at a fraction of its potential, particularly if CBD products are made available in your local grocers, gas stations, and other traditional points of retail, once the review is complete. We plan on our CBD segment being a major revenue source for Nextleaf thanks to the competitive advantage of our technology and our ability to produce high purity CBD oils at a low cost per molecule. Completing and delivering the first order with a premium partner is a major milestone for OILS. Working with a partner of this magnitude is further validation of our technology and we are ecstatic to power their CBD-focused brands with OILS’ high purity, low-cost CBD ingredients,” said Pedersen. “We believe this is the beginning of a long-term relationship and we look forward to updating our stakeholders and the broader market as we progress.”
Nextleaf is an innovative cannabis processor that owns one of the largest portfolios of U.S. patents for the extraction, distillation, and delivery of cannabinoids. Through its wholly-owned subsidiary Nextleaf Labs Ltd, a licensed processor, the Company is a low-cost producer of cannabis distillate and private label THC & CBD oils. Nextleaf’s proprietary closed-loop automated extraction plant in Metro Vancouver has a design capacity to process 600 kilos of dried cannabis into oil per day. The Company owns 13 U.S. patents and has been issued over 70 patents globally. Nextleaf is developing delivery technology through its Health Canada Research Licence with sensory evaluation of cannabis via human testing. The Company’s patent pending RAPID Emulsion Technology by OILS™ powers differentiated ingestible cannabis products.
For more information please contact:
604-283-2301 (ext. 219)
On behalf of the Board of Directors of the Company,
Paul Pedersen, CEO
Certain statements contained in this press release constitute “forward-looking statements”. All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company’s ability to capitalize on its IP portfolio, the Company’s strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words “believe”, “expect”, “aim”, “intend”, “plan”, “continue”, “will”, “may”, “would”, “anticipate”, “estimate”, “forecast”, “predict”, “project”, “seek”, “should” or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company’s expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to the risk factors discussed in the Company’s MD&A for the most recent fiscal period. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law. The CSE has not reviewed or approved the contents of this press release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/81142
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Canopy Growth Signs U.S. Distribution Agreement with Southern Glazer’s Wine & Spirits for CBD Beverage Portfolio
The Company Will Tap into Southern Glazer’s Established Distribution Network to Bring Quatreau, its CBD-Infused Sparkling Water, to U.S. Retailers
Canopy Growth Corporation (“Canopy Growth”) (TSX: WEED) (NASDAQ: CGC), a world-leading diversified cannabis, CBD and vaporization device company, today announced Southern Glazer’s Wine & Spirits (“Southern Glazer’s”), the world’s pre-eminent distributor of beverage alcohol, as the distribution partner for its U.S. portfolio of CBD-infused beverages. This partnership announcement follows the recent launch of Quatreau Canopy’s first line of CBD-infused beverages sold in the U.S market.
“Through this groundbreaking partnership, we will leverage Southern Glazer’s established distribution network to bring our CBD beverage portfolio to retailers and consumers across the U.S. market,” said Julious Grant , Chief Commercial Officer, Canopy Growth. “The leadership team at Southern Glazer’s shares our values, priorities, and future-forward view of the category. Together, we are committed to creating an immediate strategic route to market for Canopy’s premium CBD beverages.”
Southern Glazer’s will distribute Canopy Growth’s CBD beverages, beginning with its CBD-infused sparkling water brand Quatreau™, across seven states, with additional states in the months to come. Southern Glazer’s will be selling Quatreau™ through its existing commercial infrastructure, including its industry-leading Proof ® e-commerce platform at sgproof.com . Canopy Growth is one of the first U.S. CBD beverage producers to access the nationwide network of a large-scale alcohol distributor to reach consumers across the U.S. at mainstream retail stores. The agreement also showcases the benefits of the company’s strategic relationship with Constellation Brands, the global beverage leader.
“This agreement reinforces our consumer-focused approach to identifying emerging growth areas where we can add value for our customers,” said David Chaplin , Chief Growth Officer, Southern Glazer’s Wine & Spirits. “There is strong consumer interest in the CBD-infused beverage category and our distribution network is uniquely positioned to deliver the most efficient and effective route-to-market for CBD suppliers and retail customers. We’re proud to align with Canopy Growth, a company well-positioned to lead this product category with a portfolio of premium, highly desirable consumer brands.”
“Innovation in the beverage industry like we are seeing from Canopy Growth brings new energy to the marketplace and increases the level of consumer interest in all our products,” added John Wittig , Chief Commercial Officer, Southern Glazer’s Wine & Spirits. “We are excited to be adding Quatreau as the first CBD-infused beverage in our portfolio.”
Quatreau sparkling water contains 20 mg of premium, U.S. grown hemp-based CBD, in four refreshing flavors: Cucumber + Mint, Passion Fruit + Guava, Blueberry + Acai, and Ginger + Lime. With an MSRP of $3.99 per 12-ounce can, Quatreau is a functional zero-sugar drink that delivers a natural, low calorie beverage alternative. The stateside launch follows the successful 2020 rollout of Quatreau in Canada , where it is now the top-selling ready-to-drink CBD beverage.
For more information about Canopy Growth, visit www.canopygrowth.com .
About Canopy Growth Corporation
Canopy Growth (TSX:WEED, NASDAQ:CGC) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high quality dried flower, oil, soft gel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its color-coded classification system and is a market leader in both Canada and Germany . Through our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada , the United States , and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit www.canopygrowth.com .
About Southern Glazer’s Wine & Spirits
Southern Glazer’s Wine & Spirits is the world’s pre-eminent distributor of beverage alcohol, and proud to be a multi-generational, family-owned company. The company has operations in 44 U.S. states, the District of Columbia and Canada . Southern Glazer’s urges all retail customers and adult consumers to market, sell, serve and enjoy its products responsibly. For more information visit www.southernglazers.com . Follow us on Twitter and Instagram @sgwinespirits and on Facebook at Facebook.com/SouthernGlazers .
Notice Regarding Forward-Looking Statements
This press release contains “forward-looking statements” and “forward-looking information” within the meaning of applicable U.S. and Canadian securities laws (collectively, “forward-looking statements”), which involve certain known and unknown risks and uncertainties. Forward-looking statements predict or describe our future operations, business plans, business and investment strategies and the performance of our investments. These forward-looking statements are generally identified by their use of such terms and phrases as “intend,” “goal,” “strategy,” “estimate,” “expect,” “project,” “projections,” “forecasts,” “plans,” “seeks,” “anticipates,” “potential,” “proposed,” “will,” “should,” “could,” “would,” “may,” “likely,” “designed to,” “foreseeable future,” “believe,” “scheduled” and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive risks, financial results, results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. A discussion of some of the material factors applicable to Canopy Growth Corporation (“Canopy”) can be found under the section entitled “Risk Factors” in Canopy’s Annual Report on Form 10-K for the year ended March 31, 2020 , filed with the Securities and Exchange Commission and with applicable Canadian securities regulators, as such factors may be further updated from time to time in its periodic filings with the Securities and Exchange Commission and with applicable Canadian securities regulators, which can be accessed at www.sec.gov/edgar and www.sedar.com , respectively. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the filings. Any forward-looking statement included in this press release is made as of the date of this press release and, except as required by law, Canopy disclaims any obligation to update or revise any forward-looking statement. Readers are cautioned not to put undue reliance on any forward-looking statement. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
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Canbud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“Canbud” or the “Corporation”) announces its subsidiary Empathy Plant Co. has completed the full development of its vegan multivitamin formula exclusively for women.
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This formula was developed to provide the market with a daily female specific multivitamin offering in 100% compostable packaging. The multivitamin will work synergistically with Empathy Plant Co’s. Green Energy and Complete Plant Protein products and will be sold as a plant-based health system. It will be available in vegetable capsules and will provide the following benefits:
1. Promotes overall health
2. Supports hormone balance
3. Supports hair, skin, and nail health
4. Supports metabolism
5. Increased energy
6. Immune function
7. Bone health
8. Eye health
9. Muscle function
10. Source of antioxidants
Canbud’s CEO, Steve Singh, comments: “We continue to add products that support our health and wellness theme. As we near commercialization I’m very excited to see our innovation pipeline strengthen and believe it will give us a great competitive advantage in a highly coveted consumer demographic.”
The time of market release will be announced at a further date once production timelines are finalized.
Canbud Distribution Corporation is a science and technology health and wellness company that encompasses plant based, psychedelic pharmaceutical and non-psychedelic nutraceutical, and hemp cannabinoids (CBD) verticals.
For further information, please contact:
Robert Tjandra, President and COO
Tel: 1 416 847 7312
Notice Regarding Forward Looking Information
This news release is not an offer to sell, or a solicitation of an offer to buy or sell, any securities of the Corporation and may not be relied upon in connection with the purchase or sale of any such security.
This news release contains “forward-looking information” within the meaning of Canadian securities legislation. The forward-looking information contained in this news release represents the expectations of the Corporation as of the date of this news release and, accordingly, is subject to change after such date. Forward-looking information includes information including statements with respect to the future exploration performance of the Corporation. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by the Corporation at the date the forward-looking information is provided, are inherently subject to significant risks, uncertainties, contingencies, and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information. The risks, uncertainties, contingencies and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information may include, but are not limited to (i) adverse market conditions; (ii) risks inherent in the CBD, psychedelics and vegan protein industries in general or (iii) risks generally associated with the Corporation’s business, as described in the Corporation’s public filings on SEDAR, which readers are encouraged to review in detail prior to any transaction involving the securities of the Corporation. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Corporation does not intend to update these forward-looking statements. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date.
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Click here to read the previous cannabis market update.
During the first few months of investment time in 2021, cannabis faced some volatility alongside optimism about federal changes in the most important market for the drug.
The cannabis business found its stride during Q1 thanks to policy change signals and consolidation.
To find out more, the Investing News Network (INN) asked experts about progress in the market during the first major period of the new year, and which developments investors should watch out for.
Cannabis market update: New York and US potential boost operations
New York state’s legalization of recreational cannabis was a huge Q1 announcement that added pressure to the US federal government when it comes to cannabis policy, said George Mancheril, co-founder and CEO of Bespoke Financial, a debt financing business with a particular focus on servicing cannabis businesses.
“It’s going to add to the chorus of voices in the federal scene to basically move sooner rather than later,” he explained to INN.
Following the US election in 2020, the momentum for cannabis businesses went on the upswing, as did company valuations, with the idea of expansion at the heart of it all, according to Mancheril.
Before starting Bespoke Financial, Mancheril learned from traditional investment banks, working in the lending, fixed income and debt markets with Goldman Sachs (NYSE:GS) and Guggenheim Partners.
Nawan Butt, portfolio manager with Purpose Investments, agrees with Mancheril. The financial expert told INN the ongoing legalization process seen in the US market is leading to expansion.
“It’s becoming more of a national move, then small pockets of proliferation. That’s very exciting about cannabis right now,” said Butt, who co-manages the Purpose Marijuana Opportunities Fund (NEO:MJJ).
This proliferation effect is causing a change in valuations and enthusiasm for US-based operations. Mancheril told INN that by the end of Q1, multi-state operators (MSOs) had raised approximately US$3.3 billion.
The cannabis lender said he sees the industry as having grown from the woes of 2019; it is now undergoing a return to form as excitement about the US opening up increases.
The expert explained that there is likely to be a windfall of capital in the wake of major federal changes in US cannabis policy, although the timeline for these changes is becoming increasingly hard to predict.
Leading up to that capital influx, Mancheril said he wants to see operators really drill down on the value of desired assets and whether they make sense.
“What I’d hope is that we continue to see bullish sentiment, but with some measure of responsibility, and let’s not just get over ahead of ourselves,” Mancheril told INN. “The idea is let’s minimize the volatility and continue growing responsibly.”
As far as struggles go, Butt explained that the cannabis industry has cemented itself as a growth-type sector, and as such there are macro pressures affecting the way these assets operate.
“We’ve seen this preference for cash flows at growth in the current or in the near future, rather than in the far future, and that’s what we’re seeing as far as valuations go in the broad market,” Butt said.
Cannabis market update: Volatility continues to rule as industry foundations build
Despite the industry’s potential and the growing pains it has gone through as a whole in both the US and Canada, volatility remains a key factor in the cannabis investment scene.
Butt explained that the current shareholder base, which is dominated by hedge funds and retail investors, still lacks enough institutional support to avoid the day-to-day volatility cannabis has come to be known for.
These two investor groups, Butt said, can be easily spooked and excited by the news of the day when it comes to their investments.
“A lot of these institutions’ strategies are not about short-term profits, but they’re about long-term sustainability of the businesses themselves,” Butt said.
“That’s why you see a lot of volatility in the space, and that’s essentially what we’ve seen over the past, I’d say, three to two months as well,” he added.
That means investors shouldn’t expect an end to volatility anytime soon.
“It’s not about whether we continue to expect volatility, because we do,” Butt said. “We really think that the volatility will be taken out when the shareholder base becomes more institutional, but it’s really about understanding why there is volatility in the first place.”
Cannabis market update: Canadians talk up US business, but questions remain
A surge of mergers and acquisitions has taken over the Canadian cannabis sector recently as more producers see potential in America.
Using the funds, the two will work in tandem to develop new branded products designed for the international stage, including in the US. Organigram CEO Greg Engel previously told INN that the US represents a critical opportunity for Canadian companies, but the entry point isn’t as clean as it could be.
While the long-term potential may be exciting for investors, Butt told INN he’s still unsure how the approach will work for Canadian companies.
The Purpose Investments expert said there will be plenty of space for the biggest Canadian names to pursue US market entries, beyond the initial hemp-derived CBD moves some operators have mde, since the US represents the biggest market in the world.
“But there’s just way too many unknowns right now to say exactly what that participation is going to look like, or when that participation will happen,” he said.
“What we do know is that currently the US MSOs are in a wonderful sort of position to expand on their market leadership that they have. And it will be tough for Canadians to come in and compete with them,” Butt said.
Canadian players still retain the upper hand at times in terms of valuation, which is confusing for both Butt and Dan Ahrens, chief operating officer and portfolio manager at AdvisorShares.
“The performance in quarterly earnings of US companies has been rather spectacular. They’ve knocked it out of the park in most instances,” Ahrens told INN.
Butt praised the recent performance reports from MSOs across the board, pointing to year-over-year growth lines and projections for continued positive performance. In his view, share prices still don’t reflect company value. “Those are really being discounted at this point,” Butt told INN.
“We’ve seen the Canadian licensed producers be really hot stock performance-wise, outpacing the US (MSOs), and I’ll say it’s rather nonsensical to me,” said Ahrens, who oversees the AdvisorShares Pure Cannabis ETF (ARCA:YOLO) and the recently launched AdvisorShares Pure US Cannabis ETF (ARCA:MSOS).
Cannabis market update: Investor takeaway
The cannabis investment proposition finds itself at an interesting moment in time, as the entire sector eagerly awaits confirmation in the US at the federal level.
While for the Canadian companies waiting on the sidelines, this development may feel like a major necessity to address current financial struggles, for US-based operators, the heat around the corner could represent future positivity for already thriving operations.
Want more details? Check out these articles for more INNdepth coverage:
- Cannabis Investment: Canadian Cannabis Stocks
- Invest in Cannabis: TSX Cannabis Stocks
- Cannabis Companies: Stocks on the TSXV
- CSE Marijuana Stocks
Want an overview of investing in cannabis stocks? Check out Investing in the Cannabis Industry.