Cannabis Weekly Round-Up: Analyst Gives US Cannabis Thumbs Up

A financial analyst has issued a new report full of excitement about the US cannabis marketplace and its current players.

Also this week, a Canadian exchange-traded fund (ETF) operator completed its quarterly rebalancing of two cannabis funds, meaning new names were added.

Keep reading to find out more cannabis highlights from the past five days.

Analyst voices vote of confidence for US cannabis stocks

This past week, Jefferies analyst Owen Bennett began his coverage of seven US-based cannabis operators. As part of the launch of his coverage, the analyst described US cannabis investments as potentially a massive opportunity for investors.

“We believe this is a generational wealth opportunity, (with) potential average expected 12-month gains across our coverage to be over 100 per cent,” Bennett wrote, according to a report from Yahoo Finance.

Bennett said there were reservations when his firm began covering Canadian names two years ago, but that’s not the case now considering the operations and numbers of US companies today.

The analyst expects to see sales in the US cannabis market reach US$64 billion by 2030.

“Given the current federal illegality of cannabis, most institutions are unable to get involved for one reason or another,” said Bennett. “With near-term developments expected very soon (next 12 months) that will provide protection to capital market activity and allow institutions to invest, we see this as a key catalyst to a flood of new money and sector re-rating.”

Like many other cannabis stock observers, Bennett also pointed out that even though the Canadian market has fallen out of favor, companies in the country tend to have higher valuations than their American counterparts.

“Despite Canadian cannabis industry growth disappointing to date, Canada itself being smaller than California, and the companies all generally struggling to make money, valuations are at a significant premium to US cannabis,” Bennett said in his note to investors.

ETF operator adds cannabis stocks to cannabis funds

Horizons ETFs Management (Canada) announced the quarterly rebalancing of its cannabis funds. As part of this process, the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) added the shares of Inner Spirit Holdings (CSE:ISH,OTCQB:INSHF), Tetra Bio-Pharma (TSX:TBP,OTCQB:TBPMF) and Jazz Pharmaceuticals (NASDAQ:JAZZ).

“The recent pullback in valuations seems to have sparked a new round of mergers, consolidations and partnerships in the sector as more publically listed companies look to increase their scale in order to compete in the growing global market,” Steve Hawkins, president and CEO of Horizons ETFs, said.

At the end of June, HMMJ was up 34.62 percent in its price point year-to-date.

On the other hand, Horizons’ US-focused cannabis fund, the Horizons US Marijuana Index ETF (NEO:HMUS), added the following nine companies as part of its rebalance:

• Ascend Wellness Holdings (CSE:AAWH.U,OTCQX:AWWH)
• AFC Gamma (NASDAQ:AFCG)
• Chalice Brands (CSE:CHAL,OTCQB:CHALF)
• Captor Capital (CSE:CPTR)
• Flora Growth (NASDAQ:FLGC)
• Gage Growth (CSE:GAGE)
• Hollister Biosciences (CSE:HOLL,OTC Pink:HSTRF)
• Lowell Farms (CSE:LOWL,OTCQX:LOWLF)
• Verano Holdings (CSE:VRNO,OTCQX:VRNOF)

“Halfway into 2021, we’re seeing increased momentum in the US for marijuana liberalization, both from a grassroots level and recently, from major companies and policy influencers,” Hawkins said.

Cannabis company news

• Gage Growth confirmed a partnership deal with Wiz Khalifa’s cannabis brand to act as an exclusive producer, processor and retailer of these products in the state of Michigan. “We are confident that this partnership will allow Michigan to become a unique cannabis destination in the near future,” Fabian Monaco, CEO of Gage, said.

• High Tide (NASDAQ:HITI,TSXV:HITI)announced the completion of an acquisition plan for Daily High Club, an online retailer of cannabis-related accessories. The entire transaction was valued at US$6.75 million.

• Glass House Brands (NEO:GLAS.A.U)completed its public debut on the NEO Exchange as a new vertically integrated cannabis and hemp company based in the US.”This marks a significant turning point for our business and I’d like to thank our dedicated team for their hard work in helping to make this happen,” Kyle Kazan, Glass House Chairman and CEO, said.

• Harborside (CSE:HBOR,OTCQX:HBORF)closed an acquisition plan for Sublimation, a pre-roll cannabis brand from Oakland, California, in a deal worth US$43.8 million. “Together, we can leverage our vast production and retail capabilities to further expand the distribution of our suite of branded products,” Ahmer Iqbal, CEO of Sublime, said.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Gage Growth is a client of the Investing News Network. This article is not paid-for content.