Cannabis Weekly Round-Up: Banking Bill Approved in House

The Investing News Network rounds up some of the biggest company and market news in the cannabis market for the past trading week.



During the past trading week (September 23 to 27), a beneficial bill for the marijuana industry became the first approved cannabis-related legislation in US Congress.

Also making headlines was a cannabis producer that may be gaining following the biggest scandal in the Canadian market, as well as highlights from the recent MoneyShow event in Toronto.

Here’s a closer look at some of the biggest cannabis news over the last week.

SAFE Act gains House support, now faces Senate

After months of political process, on Wednesday (September 25) the US House of Representatives approved the Secure and Fair Enforcement Banking Act of 2019, known as the SAFE Banking Act.

This vote has moved the bill to the Senate, where it is expected to face a steep battle towards approval.

“I think the market realizes that one of the biggest hurdles remains — the Senate — and there’s nothing really concrete there yet,” Matthew Pallotta, equity research analyst at Echelon Wealth Partners, told the Investing News Network (INN).

MoneyShow highlights

The latest edition of the MoneyShow conference in Toronto gave investors a chance to take stock of the landscape for cannabis, as a variety of critical developments loom in the horizon. Investors who missed the event can catch up with our dispatch on the talks from the show.

A joint talk between CIBC Capital Markets’ John Zamparo and Horizons ETFs Management (Canada) CEO Steve Hawkins explored the relationship between the Canadian and US cannabis investment markets.

Zamparo identified the upcoming legalization of edibles and infused products in Canada as a potential driver for the market, while in the US, the catalysts for the stock market are attached to the development of critical bills that would help the overall industry.

Pitfalls open the doors for other producers in Canada

Canadian cannabis producer Aleafia Health (TSX:ALEF,OTCQX:ALEAF) recently announced it has reached 10,000 active patients. The firm told INN it has been able to take advantage of the failings of its peers.

“We’re extremely focused on our patients and making sure that they get the product that they deserve, so if another (licensed producer) is not able to deliver that to them, we want to make sure that we give them the opportunity to continue their care, and we’re well positioned for that,” said Benjamin Ferdinand, CFO of Aleafia Health.

Cannabis patients in Canada were rocked when CannTrust Holdings (NYSE:CTST,TSX:TRST) admitted to unlicensed growing in July. The firm served 68,000 patients in the country.

Aleafia Health told INN it has experienced exponential growth in its patient count during August and September.

Skateboarding retailer embraces CBD products

This past week, the acceptance of CBD products for consumers in the US increased thanks to a new partnership between 1933 Industries (CSE:TGIF,OTCQX:TGIFF) and Zumiez (NASDAQ:ZUMZ), a specialty retailer selling clothing and skateboards.

The partnership will bring the introduction of Canna Hemp X, a CBD sports recovery cream. More products will be made available later on, according to the two companies.

In a statement, Paul Kobriger, brand manager for Canna Hemp X, said Zumiez has a special approach to the marketing of products for customers interested in action sports.

“Zumiez offers unique, emerging and trending brands that reflect a passion for an active lifestyle.”

Market updates

Multi-state operator Ayr Strategies (CSE:AYR.A,OTCQX:AYRSF) announced it will buy back a portion of its public shares as a way to take advantage of its current valuation.

“We think … (Ayr) should be trading at a much higher multiple relative to the comparables, and so, given the price action, we think this is a great time to be buying back what we think is one of the cheapest stocks in the sector,” Jennifer Drake, Ayr’s chief operating officer, told INN.

According to Jonathan Sandelman, CEO of Ayr, the firm will be able to conduct this purchase thanks to a recent uptick in cash flow generated from operations.

A company planning a future public listing announced the launch of a new credit card program for US cannabis consumers. Thomas Gavin IV, CEO of CannaCard, told INN his company aims to offer some relief to the cash-only options available to dispensaries and consumers.

The card is only available in Colorado, but the firm is planning a national expansion starting in October.

CIBC Capital Markets issued new research notes for players of the Canadian marijuana industry. On Monday (September 23), the bank kicked off its coverage of Aurora Cannabis (NYSE:ACB,TSX:ACB), The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) and Organigram Holdings (NASDAQ:OGI,TSXV:OGI).

The firm awarded Supreme Cannabis and Organigram “outperformer” ratings, while Aurora obtained a “neutral” rating for its stock.

The marijuana market was well represented as part of a new best-performing stocks list from the Toronto Stock Exchange (TSX). The TSX30 list was designed to highlight companies with the best stock performance over the past three years. Below are the cannabis-related stocks that made it and their rankings on the list:

  • Canopy Growth (NYSE:CGC,TSX:WEED) — First place
  • Shopify (NYSE:SHOP,TSX:SHOP) — Second place
  • Village Farms International (NASDAQ:VFF,TSX:VFF) — Third place
  • Aphria (NYSE:APHA,TSX:APHA) — Sixth place
  • Neptune Wellness Solutions (NASDAQ:NEPT,TSX:NEPT) — Eighth place

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

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

Editorial Disclosure: 1933 Industries is a client of the Investing News Network. This article is not paid-for content.

Featured
WHY: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Cronos Group Inc. resulting from allegations that Cronos may have issued materially misleading business information to the investing public. SO WHAT: If you purchased Cronos securities you may be entitled to compensation without payment of any out of pocket fees or costs ...

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WHY: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Cronos Group Inc. (NASDAQ: CRON) resulting from allegations that Cronos may have issued materially misleading business information to the investing public.

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Cresco Labs a vertically integrated multistate operator and the number one U.S. wholesaler of branded cannabis products, announced today the closing of the Company’s previously announced acquisition of Bay, LLC dba Cure Pennsylvania . This press release features multimedia. View the full release here: Cresco Labs closes acquisition of three Cure Penn dispensaries in Pennsylvania Transaction Highlights Three ...

Cresco Labs (CSE:CL) (OTCQX:CRLBF) ("Cresco Labs" or "the Company"), a vertically integrated multistate operator and the number one U.S. wholesaler of branded cannabis products, announced today the closing of the Company's previously announced acquisition of Bay, LLC d/b/a Cure Pennsylvania ("Cure Penn" or the "Transaction").

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211125005708/en/

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Company's 38th dispensary in Florida is its first location in Hernando County Curaleaf Holdings, Inc. a leading international provider of consumer products in cannabis, today announced the opening of Curaleaf Spring Hill, the Company's 113th dispensary nationwide and its 38 th in the sunshine state. The new Spring Hill location at 4287 Mariner Blvd. is the Company's fifth dispensary to open in Florida in ...

Company's 38th dispensary in Florida is its first location in Hernando County

Curaleaf Holdings, Inc. (CSE: CURA OTCQX: CURLF) ("Curaleaf" or the "Company"), a leading international provider of consumer products in cannabis, today announced the opening of Curaleaf Spring Hill, the Company's 113th dispensary nationwide and its 38 th in the sunshine state.

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Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.

Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be

We're back after a break last week with quite a bit to cover in the gold space.

After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.

Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.


If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.

Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group

It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.

In his opinion, the solution is to get out of the stock market early and transfer money into gold.

Here's how Nick explained it:

"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group

With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.

Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.

"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares

Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.

Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.

"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, 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.

gold bars

2020 was a banner year for gold-backed ETF inflows, but interest has lagged this year as investors become more comfortable taking risks.

In 2020, gold-backed exchange-traded fund (ETF) inflows ballooned to an impressive 877 tonnes, marking the largest one year intake in ETF history.

Investor appetite was fueled by economic stimulus mixed with concerns about COVID-19 closures, which together brought risk-averse buyers to the yellow metal in droves, propelling investment demand.

"Over the first three quarters of 2020, gold ETFs accounted for almost two-thirds of total investment demand," notes a monthly ETF report released by the World Gold Council (WGC) in January.


"This is significantly higher than any previous full year. Gold ETF demand was also equivalent to a quarter of the average annual gold mine production over the past five years."

Since then, gold ETF demand has waned as investors become more comfortable taking risks. So far, 2021 has seen outflows of 269.1 tonnes compared to 87.6 tonnes of inflows. Of the first 10 months of the year, six registered net outflows from the ETF segment.

In fact, a large part of gold's muted Q3 price performance has been attributed to a 7 percent decline in demand coming largely from the ETF segment. This trend continued in October, when gold ETF holdings shed 25.5 tonnes.

"Global gold ETF holdings fell to 3,567 tonnes (US$203 billion) during the month — notching year-to-date low levels — as investor appetite for gold diminished in the ETF space following price declines in August and September," an October WGC gold ETF report states.

After two months of pressure pushed the gold price to a six month low at the end of September, October saw the metal begin to rebound from the US$1,750 per ounce range to US$1,819.

Adam Perlaky, senior analyst at the WGC, told the Investing News Network (INN) that gold's price positivity in October was largely driven by growing inflationary tones.

"In recent years, gold has been inversely correlated with nominal interest rates, and yet gold strengthened during the month despite higher nominal rates," he said via email. "This is likely a result of rising inflation expectations, though changes in the relative move in interest rates may have had an impact."

He added, "Though higher rates could be a headwind for gold, broader concerns of inflation and a potential recession highlight gold's value as an effective portfolio hedge."

The role of gold amid uncertainty

Gold's use as a hedge against inflation is likely to come into focus in the coming months, a sentiment that was echoed by Juan Carlos Artigas, head of research at the WGC.

Artigas explained that while some are of the belief that the "elements of high inflation we've seen so far are transitory" and will dissipate, there will be longer-term reverberations from the current inflation, and potential secondary effects from the fiscal and monetary policies that were put in place to restart the economy.

In mid-November, JP Morgan (NYSE:JPM) said it anticipates that the US Federal Reserve will raise rates in September 2022 by 0.25 percent, followed by 25 basis point increases on a quarterly basis until real rates hit zero.

"Gold still can face headwinds from potentially higher interest rates," said Artigas.

"(The) opportunity cost of holding gold is one of the drivers of performance, and especially in the short and the medium term, interest rates tend to influence gold's behavior significantly, especially in a period where investors are looking to understand how central banks will behave."

However, as the head of research at the WGC pointed out, there are also some tailwinds that could move gold higher, including inflation that may not be transient, but more structural.

He also pointed out that interest rates are still historically very low, which has pushed investors to make their portfolios more risky. Hedging against this type of exposure is positive for gold's investment side. Additionally, on the consumer side, US infrastructure spending could also serve as a catalyst to more gold upside.

"What we know historically is that better economic growth tends to support consumption of gold, whether it is in the form of jewelry or technology, and 2021 is a good example of that, where you saw the contraction in gold-backed ETF holdings, you (also) saw an increase in demand coming from jewelry, technology and even bar and coin investment," Artigas commented to INN.

Another factor the researcher is watching is central bank gold holdings, which are on track for a 12th consecutive year of inflows. Artigas noted that a 2021 survey of central bankers conducted by the WGC found that the monetary institutes are interested in "expanding the role that gold has in foreign reserves."

"We do expect central banks to continue to be net buyers," he said, adding, "We have seen investors, especially more strategic longer-term investors, taking advantage of the price pullback that we saw in previous months as an opportunity to add gold to their portfolios."

For investors wanting to look at the strategic role gold has played throughout history, the WGC recently released a five part documentary series titled The Golden Thread.

The price of gold was at the US$1,790 level on November 25.

Don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Georgia Williams, 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.

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