Click here to read the latest cannabis outlook.

With a new year for the cannabis market drawing closer, the Investing News Network (INN) turned to experts in the space to see what investors should keep an eye out for in 2020.


Companies in the sector are up against the possibility of a shrinking landscape as some players emerge on top while others begin to fall further behind.

On the other hand, in the US there’s also the chance that the historic Secure and Fair Enforcement (SAFE) Banking Act and the Strengthening the 10th Amendment Through Entrusting States (STATES) Act could open the doors for cannabis in the country and shorten the valuation gap between American cannabis firms and their Canadian counterparts.

Moving into 2020, big legislative moves in the US and the possible consolidation of the market could prove to be some of the most critical drivers of growth for the marijuana space.

Read on to learn what investors can look forward to — and what they should look out for — in 2020.

Cannabis outlook 2020: Passing of SAFE and STATES acts

Perhaps the biggest news to come out of the cannabis space in the US has been the possibility of federal cannabis legalization. Cannabis remains a delicate topic in the country since the drug is still listed as a Schedule I substance, along with heroin and ecstasy.

But in September, the SAFE Banking Act was passed in the US House of Representatives in a historic vote as the first cannabis-related legislation to work its way through US Congress.

If passed by the Senate, the act would protect financial institutions working with legal cannabis companies from federal interference.

The vote was followed by the passing of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act in November by the House Judiciary Committee, which seeks to deschedule cannabis as an illicit substance, effectively making it legal.

Rishi Malkani, cannabis leader and partner at financial services firm Deloitte, told INN that the SAFE Banking Act would allow cannabis companies to list on senior exchanges in the US, shifting the financial center of marijuana away from Canada and fueling American firms with financing.

The sentiment was echoed by Charles Taerk and Doug Waterson, executives at Faircourt Asset Management. Currently, Faircourt acts as a sub-advisor to Ninepoint Partners’ cannabis-focused fund, the Ninepoint Alternative Health Fund.

Taerk and Waterson said increased flexibility for banking options coming from the legislative side would make acquiring capital much easier for US marijuana businesses.

“Having access to increased sources of capital will enable (multi-state operators) to grow without having to be involved in complicated cross-border financings,” the pair said, mentioning that the SAFE Banking Act could go into effect by early 2020.

Some experts, however, said legislative moves in the US might be a lengthier process than expected.

“From a political standpoint, there is still a long road ahead for this bill to become law,” said Mark Noble, senior vice president of exchange-traded fund (ETF) strategy at Horizons ETFs, since the SAFE Banking Act still needs approval from the Senate. Noble also said, though, that the passing of the various cannabis laws making their way through the legal system in the US could even out the playing field for business in Canada and the US when it comes to value assessments.

“The biggest catalyst of the movement going forward is US legalization, or at the least liberalization of marijuana laws at the federal level,” Noble told INN. “Given the discrepancy in the potential size of the Canadian and US markets, the multi-state operators seem quite undervalued, relative to Canada.”

Richard Carleton, CEO of the Canadian Securities Exchange, agreed and said the exchange is looking forward to “a decoupling of valuations between US multi-state operators and Canadian licensed producers” in 2020.

Cannabis outlook 2020: Consolidation to rule the sector

Apart from the ongoing legislative debates in the US, the overall marijuana space could see a fair bit of shrinking, some experts say, as continued merger and acquisition (M&A) activity could lead to larger, more established companies absorbing smaller firms with little capital or a weak internal structures.

Russell Stanley, an analyst with Beacon Securities, said he expects to see more M&A “as asset-heavy/cash-poor companies may need marriage partners in order to survive.”

And in a sector that has fallen victim to guidance withdrawals and less-than-stellar results from industry heavyweights like Aurora Cannabis (NYSE:ACB,TSX:ACB) and Canopy Growth (NYSE:CGC,TSX:WEED), experts have cautioned that the gap between companies that have firmly established themselves and those that haven’t will widen.

“We could see some of the companies dying on the vine if they can’t raise capital through the equity market. The only alternative is very expensive debt financing,” Noble noted. He said the issue may be felt most acutely in the US due to a dearth of involvement from American investors and financial institutions.

“I am worried that the growth of marijuana companies could be stifled, even though demand for marijuana and (cannabidiol)-related products will probably only increase over the next few years.”

In a previous interview with INN, MJBiz’s investor intelligence analysts, Craig Behnke and Mike Regan, agreed that the sector will see not only an M&A uptick, but full industry departures moving into 2020.

“I would suspect that we continue to see more companies either reducing their guidance, perhaps even running out of cash, maybe even a bankruptcy or two,” Behnke said.

Both Behnke and Regan said they expect to see companies getting scooped up at a massive discount because of the volatility that cannabis market has faced as of late.

Cannabis outlook 2020: Possible concerns to consider

Since the cannabis market is in a bit of a transitional stage, there are certain aspects that investors should be on the lookout for.

For one, investor attitudes continue to be king for now. But the blanket sentiment that has covered the entire cannabis sector has some experts concerned that investors are allowing singular developments to radiate out across the industry.

“On most days, it looks like the vast majority of cannabis stocks are still moving in unison, in either direction,” Stanley said. “There will be winners and losers, but it looks like the market is still challenged to distinguish one stock from another.”

But as investors begin to see firms as discrete entities, the sector could see a diversification in operations as well, where marijuana businesses move away from the vertically integrated structures that have been popular thus far.

EY’s cannabis strategic growth and risk leader, Ashley Chiu, told INN that already established cultivation and processing infrastructure could bring about the rise of contract cultivation and other specialized companies.

Malkani is of two minds on the phenomenon, however. He said the space could see new extractors coming to the market, but some companies may look to bring these kinds of services in house and actually increase their vertical integration. He added that the industry could also see more disruptive entries from outside industries.

Canada has its own unique problems to overcome, one being the regulatory headwinds that experts noted have suffocated the market.

It’s a concern for Taerk and Waterson, who said a slow retail store rollout in key provinces like Ontario and Quebec could make it difficult to gain traction with consumers, especially as new edible products are sent to shelves.

“Some of the restrictions surrounding Cannabis 2.0 products, particularly the dosage limit of 10 milligrams per package, may also impede sales,” the pair said, mentioning that without a fleshed out retail segment, Canadian licensed producers will be “challenged to grow top-line revenue in any meaningful way.”

Cannabis outlook 2020: Investor takeaway

Despite all of the issues facing the marijuana sector, some industry professionals remain hopeful about the future of cannabis.

“My guess is that the pendulum has swung too far in the negative direction, and 2020 will be a nice buying opportunity to build a reasonable exposure to the cannabis markets,” said Kip Meadows, CEO and founder of fund administration company Nottingham.

Meadows added that investors should move into the space with the understanding that short-term investments are no longer the way to go.

“Think longer term, pick a percentage of your investing portfolio you feel comfortable putting in a slightly riskier industry, and stick it in a drawer. Think long term. It works for the Warren Buffetts of the world,” Meadows told INN.

This is especially pertinent since the next few years could bear the fruits of the market’s labor. Noble said that more revenue from investments on the part of cannabis companies could come online in 2020 and 2021, which could attract equity investors back to the industry.

Obstacles facing the cannabis sector will continue to strain certain parts of the industry, but a more open regulatory framework in both Canada and the US and further growth by some of the larger marijuana firms could open up the chance for increased stability and returns on investment in 2020.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

Progressive Planet Solutions Inc. (TSXV: PLAN) (“PLAN” or “Progressive Planet”), announces that, further to its news releases dated December 22, 2020 and January 7, 2021 the Company has closed its non-brokered private placement financing comprising of 7,500,000 units, at $0.10 per unit, for total gross proceeds of $750,000 .

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 Revive Therapeutics Ltd. (” Revive ” or the ” Company “) (CSE: RVV) ( USA : RVVTF), a specialty life sciences company focused on the research and development of therapeutics for medical needs and rare disorders, is pleased to announce that is has entered into an agreement with Canaccord Genuity Corp. and Leede Jones Gable Inc. as the co-lead underwriters (collectively, the ” Underwriters “), pursuant to which the Underwriters have agreed to purchase, on a bought-deal basis, 20,000,000 units (the ” Equity Units “) at a price of $0.50 per Equity Unit for gross proceeds to the Company of $10,000,000 (the ” Offering “).

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The Australian cannabis market has been maturing since medical marijuana was federally legalised in 2016.

The next year, Food Standards Australia New Zealand legalised low-THC hemp food for human consumption in Australia. The country went on to legalise medical marijuana exports in 2018, allowing medicinal marijuana products developed in Australia to be exported to licenced recipients in countries where the drug is legal.

Recreational cannabis remains federally illegal in the country, but recent legislation shows the door may be opening. In 2019, the Australian Capital Territory passed a bill allowing for the possession and growth of small amounts of cannabis for personal use. The law went into effect on January 31, 2020.

More recently, in late 2020, the Therapeutic Goods Administration greenlit the sale of low-dose cannabidiol (CBD) through over-the-counter methods without a prescription. The ruling from the Australian regulatory agency is expected to officially come into effect in February 2021.

With these and other changes in the works, Australia’s cannabis industry is projected to have long-term potential. The legal cannabis market in Oceania is expected to be worth US$1.55 billion by 2024, with Australia accounting for 79 percent of the region’s market, Prohibition Partners forecasts.

According to a study from FreshLeaf Analytics, the value of the medical market in Australia reached AU$95 million in 2020, and the firm expects revenue to jump again to over AU$150 million in 2021. In short, Australia’s role in the global cannabis industry will certainly continue to grow.

Here the Investing News Network profiles 10 ASX cannabis stocks with market caps between AU$30 million and AU$225 million. All ASX cannabis stocks below are listed in order of market capitalization from largest to smallest, with data compiled using TradingView’s stock screener on January 12, 2021.

1. Creso Pharma (ASX:CPH)

Market cap: AU$209.83 million

Creso Pharma was the first company to import medical cannabis into Australia and the first to launch these products in Switzerland for people, as well as animals. The cannabis company’s anibidiol product was the first hemp CBD complementary feed in animal health thanks to a partnership with Virbac Switzerland. Creso Pharma has also launched cannaQIX in Switzerland; it was the first CBD nutraceutical in human health.

The company’s medicinal cannabis product lines cover therapeutics, nutraceuticals, animal health, lifestyle and topicals.

2. Cann Group (ASX:CAN)

Market cap: AU$176.84 million

Cann Group provides a range of medicinal cannabis products for patients in Australia and globally. In 2017, the company was granted Australia’s first cannabis research licence, as well as the first medicinal marijuana cultivation licence. Cann Group partners with leading medical scientists in Australia to research and harness the therapeutic potential of cannabinoids, terpenes and other bioactive constituents of cannabis.

The company has secured supply agreements in global cannabis markets, including the UK, Germany and other European segments.

3. Incannex Healthcare (ASX:IHL)

Market cap: AU$166.42 million

Incannex Healthcare is a clinical-stage cannabinoid medicine company with global export capacity. It has four clinical programs underway for the development of a variety of cannabis medicinal products aimed at major unmet medical needs, including obstructive sleep apnea, traumatic brain injury/concussion, sepsis-associated acute respiratory distress syndrome and temporomandibular joint disorder.

In 2020, the company worked to advance its clinical trials. By the second half of the year, cannabinoid products accounted for Incannex’s entire revenue stream.

4. Botanix Pharmaceuticals (ASX:BOT)

Market cap: AU$131.37 million

Botanix Pharmaceuticals has a product pipeline that includes three advanced clinical programs using synthetic cannabidiol for the topical treatment of serious skin diseases and for antimicrobial applications. The company also has an exclusive licence to use a proprietary drug-delivery system called Permetrex for direct skin delivery of pharmaceuticals.

Botanix Pharmaceuticals’ programs are focused on treating acne, rosacea, atopic dermatitis and microbial infection. The company secured a clear development path for its BTX 1801 synthetic cannabidiol antimicrobial product after the successful completion of a pre-investigational new drug meeting with the US Food and Drug Administration.

5. Althea Group Holdings (ASX:AGH)

Market cap: AU$114.2 million

Althea Group Holdings takes the concept of medical cannabis a step further with its work as a pharmaceutical-grade cannabis supplier. In addition to offering relief through accessible medical cannabis, the company is implementing components of the plant in its research on advanced drugs.

Althea has successfully expanded into the global cannabis market with a wholesale supply agreement to import a range of Althea-branded finished products for sale and distribution in South Africa beginning in Q2 2021. This agreement came on the heels of the news that the company is slated to become the first commercial supplier of Australian medicinal cannabis extract products to the German market, with all necessary licences for sale and distribution granted by the German government.

6. Zelira Therapeutics (ASX:ZLD)

Market cap: AU$113.79 million

Zelira Therapeutics’ efforts are on unmet clinical needs and on using medicinal cannabis to treat a range of diseases and disorders. Its most common target areas include pain, anxiety and sleep.

Zelira is largely focused on developing treatment options using plant-based medicinal marijuana, and currently has three clinical-stage programs with a focus on insomnia, autism and opioid reduction. The company is also conducting a pre-clinical research program to test cannabinoids in breast, brain and pancreatic cancer.

7. Medlab Clinical (ASX:MDC)

Market cap: AU$75.51 million

Medlab Clinical is a medical research and development company focused on novel biotherapeutics such as nutraceuticals and pharmaceuticals. The company is also developing pharmaceutical cannabis products.

In early 2020, Medlab Clinical launched the NanaBis Observation Study in Australia. NanaBis is a cannabis-based pain treatment drug that may prove useful as an alternative to opioid medication. It is also being used to investigate cancer pain management.

8. BOD Australia (ASX:BDA)

Market cap: AU$49.25 million

BOD Australia is focused on cannabis and hemp-related products. It develops, distributes and markets health and skincare products created using plant-based extracts in Australia. The company secured a foothold in the European cannabis market in 2020 with a AU$200,000 purchase order for four Swiss-branded hemp seed oil products to be sold in France, the Netherlands and the UK.

BOD Australia’s reach in Australia ranges from selling prescription and over-the-counter products to more than 1,000 outlets, such as pharmacies, retail stores and healthcare chains. It also has distribution agreements with two pharmacy wholesalers in Australia.

9. IDT Australia (ASX:IDT)

Market cap: AU$42.47 million

One of Australia’s oldest listed life science companies, IDT Australia is a pharmaceutical manufacturing company with extensive experience in the development and production of pharmaceutical products. Through its GMP-compliant facilities, the company provides full-scale services for new drug development, plus scale-up and commercial active drug manufacturing for local and international clients.

IDT Australia’s clients include Cann Group; IDT Australia is the manufacturer of the medical cannabis products that are a part of two of Cann Group’s export supply agreements with European and UK partners.

10. MMJ Group Holdings (ASX:MMJ)

Market cap: AU$31.04 million

MMJ Group Holdings has a wide range of cannabis investments, including healthcare products, technology, infrastructure, logistics, processing, cultivation, equipment, retail and research and development.

Among other companies, it has invested in Harvest One Cannabis (TSXV:HVT,OTCQB:HRVOF), which develops health and wellness products; Fire & Flower Holdings (TSXV:FAF,OTCQX:FFLWF), a recreational cannabis retailer that’s developed a variety of cannabis products and accessories; and MediPharm Labs (TSXV:LABS,OTQQX:MEDIF), a cannabis extraction company that received its cannabis oil production licence from Health Canada in 2018. MediPharm Labs has launched cannabis extraction services in Australia.

Investor takeaway

The presence of these ASX-listed cannabis companies shows that the cannabis industry in Australia is undoubtedly growing, as are investment opportunities in Australia’s cannabis industry. While recreational marijuana remains illegal in the land down under, the medical cannabis industry is thriving, making that side of the sector worth considering.

So far, Australia has no timeline attached to the legality of recreational use of marijuana, but it will be a story to watch over the coming years for those interested in the space.

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Legal cannabis is spreading. According to a new report by Grand View Research, the global legal marijuana market is expected to reach US$73.6 billion by 2027 with a compound annual growth rate of 18.1 percent.

A survey of over 1,000 US consumers found that the modern cannabis user is largely representative of the general population. Moreover, cannabis consumption today blurs the lines between strictly recreational or medical. In fact, more than 50 percent of consumers report using cannabis for both purposes. As THC and CBD products make their way into an even wider array of product categories, our frame of reference for the modern cannabis user will continue to evolve.

In 2019, the medical cannabis market took home a leading revenue share of 71 percent, driven by the widespread adoption of cannabis as a pharmaceutical alternative for a wide range of conditions, including cancer, arthritis, Parkinson’s disease and more. A growing need for effective pain management therapies is expected to boost product demand even further.

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Khiron Life Sciences Corp. (TSXV:KHRN) is a vertically-integrated medical cannabis company fully licensed to conduct its core operations in Colombia.Send me an Investor Kit

Major telehealth platforms in the medical cannabis industry

Telehealth represents the intersection between innovative technology and the forefront of medical science. While remote medical practice saw its beginnings more than half a century ago, recent technological advancements have connected more patients to physicians than ever before.

In the US, platforms like NuggMD and IndicaMD provide patients with an online medical cannabis card that enables remote purchase of the drug. Patients can meet with physicians over secure video chat and can be approved to access cannabis within minutes. Physicians typically follow-up with patients by email, recommending the types of cannabis that would best alleviate their ailments and ensuring that they don’t purchase the wrong products. Other platforms exist to oversee the rapid delivery of cannabis and hemp products to patients across participating states.

Other parts of the world are undergoing the same transition. It has been more than eight years since Colombia — a country that represents more than a quarter of the world’s total export quotas — decriminalized the possession of small amounts of the drug, and roughly four years since the country legalized medical cannabis. In 2019, Colombia’s Constitutional Court overruled a ban on the public consumption of cannabis, which many considered a stepping stone toward full legalization. Recently, Colombia became one of the first countries in the world to extend national health insurance for patients requiring medical cannabis as a first-line therapy.

Khiron Life Sciences (TSXV:KHRN) was the first firm in Colombia authorized to sell both high and low THC formulations of medical cannabis. The company owns a telehealth platform that has accounted for over 5,600 medical cannabis prescriptions issued to date. Additionally, in June 2020 the company’s Doctor Zerenia telehealth platform was responsible for 14 percent of Khiron’s total medical consultations.

Since becoming the first company to fill medical cannabis prescriptions in Colombia, Khiron reports that 92 percent of its patients have experienced a marked improvement in their primary condition after four months of treatment. In light of these results, the Government of Colombia issued a directive that Khiron’s medical cannabis products and clinic services be covered by the country’s major health insurance providers. While countries such as Germany and the Czech Republic have taken similar legislative actions, a key difference in Colombia is that cannabis is considered a first line therapy with a vast array of applicable medical conditions. With more than 94 percent of Colombia’s population carrying health insurance policies, Colombia is quickly becoming one of the most favourable jurisdictions in the world for patient access; moreover, it has been shown that patient uptake is significantly increased by insurance coverage.

The next step forward for telehealth platforms includes opportunities such as virtual patient education and the fast, reliable delivery of essential drugs such as medical marijuana. Virtual care is also expected to expand across different types of patients, including those requiring intensive care. In the wake of the COVID-19 pandemic, many long-term care facilities have already adapted remote patient monitoring to maintain the safety of staff and patients.

The focus: Accessibility and improving patient outcomes

Medical marijuana has the power to improve patient outcomes across demographics. In the wake of groundbreaking research, patients, physicians and retailers are working together to increase the drug’s accessibility for patients who require relief from a range of health conditions. Telehealth platforms have been instrumental in not only increasing accessibility to medical marijuana, but also in improving quality of life across diverse populations of people.

A recent study completed by Canopy Growth (NASDAQ:CGC,TSX:WEED) in November 2020 found the absence of long-term toxicity despite long-term usage of CBD in a preclinical model, supporting the advancement of recent initiatives aimed at discovering CBD’s full range of therapeutic benefits. While CBD and tetrahydrocannabinol (THC) offer many of the same benefits, high levels of THC are responsible for most of cannabis’s psychoactive effects.

While the chronic pain segment dominated the medical cannabis market in 2019, application toward mental illness is expected to witness the fastest growth over the seven-year forecast period. Worldwide, a growing number of people suffer from depression, anxiety and other debilitating mental conditions with few low-risk pharmaceutical alternatives.

Medical cannabis is also becoming more popular among older adults. A recent study highlighted that cannabis use among individuals aged 65 and older has been steadily increasing, a trend that is consistent with reports from physicians who recommend cannabis in their daily practices. In the face of growing public acceptance and reduced stigma, we are beginning to see an increasing number of older adults rely on cannabis for relief against chronic pain, insomnia, neuropathy, anxiety and other conditions that traditionally call upon pharmaceuticals.

Much of the momentum in the medical cannabis market can be owed to the rise of telehealth platforms and health digitization efforts, increasing ease of access and promoting transparency. Over the next decade, legalization, increased awareness and the rise of remote medicine are expected to facilitate growth, creating lucrative opportunities for market stakeholders.

Takeaway

Telehealth platforms represent one of the easiest ways for patients, providers and retailers to collaborate remotely and fulfill needs faster. As more physicians and policymakers begin to recognize digital health tools as an advantage for maximizing efficiency and safety in health care, existing medical cannabis platforms are well-positioned to take advantage of a large-scale digital transition.

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 BioHarvest Sciences Inc. (CSE: BHSC) (the “Company” or “BioHarvest”) invites its shareholders and the general public to join a Live Video Conference (“Webinar”) on Thursday, January 21st, 2021 at 2:00 PM Eastern Standard Time (11:00 AM Pacific Standard Time). Ilan Sobel, CEO of BHSC, will host the event and discuss progress on Bioharvest’s Growth Plan, which will include highlights of the 2020 milestones achieved, key business capabilities built, and will provide an important overview of 2021 Priorities.

The presentation will be approximately 35 minutes, followed by a live question and answer session.

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