Cannabis Weekly Round-Up: Banking Bill Gets Approval in House Committee

- March 29th, 2019

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 (March 25 to 29), a critical banking protections bill in the US got a vote of support from a House committee.

Projections on the spending from Canadians on marijuana products by 2025 made headlines this week, while the upcoming launch of a brand owned by Canadian actor Seth Rogen also caught the attention of the market.

Here’s a closer look at what some of the biggest news was during last week’s trading period.

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US moves forwards with banking protections for marijuana businesses

On Thursday (March 28), the House Financial Services Committee voted 45 to 15 in approval for the Secure and Fair Enforcement Banking Act of 2019, also known as the SAFE Banking Act.

The bill could grant protections to banking activities and allow cannabis companies to secure credit lines and other banking options previously unavailable due to the federal illegality of marijuana.

Marc Adesso, veteran cannabis attorney with law firm Waller Lansden Dortch & Davis, told the Investing News Network (INN) he still expects there to be a lot of time before any action is taken in Congress.

In response to the SAFE Banking Act vote, Kevin Murphy, CEO of Acreage Holdings (CSE:ACRG.U,OTCQX:ACRGF), said the bipartisan support for this bill shows the US is a “step closer to aligning federal policies” to aid the cannabis industry.

Bloomberg reported that analysts at Cowen and Eight Capital share a bright outlook on the impact of the SAFE Banking Act.

Walgreens plans to sell novelty CBD products in the US

This past week, pharmacy retailer Walgreens confirmed its intention to begin the sale of hemp-derived cannabidiol (CBD) creams, patches and sprays across 1,500 stores in the US.

Walgreens spokesman Brian Faith told CNBC the first states to see the products will be Oregon, Colorado, New Mexico, Kentucky, Tennessee, Vermont, South Carolina, Illinois and Indiana.

The pharmacy, part of Walgreens Boots Alliance (NASDAQ:WBA), did not say which brands will be sold at launch.

The decision by Walgreens is seen as a direct response to its competitor CVS Pharmacy (NYSE:CVS), which confirmed the launch of CBD product sales as well.

“I think that, in anticipation of the farm bill last year, many retailers were trying to come to a strategy for how they were going to address hemp,” Joseph Lusardi, CEO of Curaleaf, said during a call with investors and analysts.

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How much will Canadians spend on marijuana?

Business and research firm EY shared a data set indicating that by 2025 Canadian consumers of legal marijuana, which will be 20 percent of the adult population, will spend C$1,652 per year.

“As the industry matures, access to product eases and higher margin derivatives come online, we’ll see a rise in consumer spending on legal cannabis,” Pendley said in a press release.

The study projects a split in the types of products most desired by consumers in 2025. Dried flower and extracts will lead the pack with a 46 percent and 37 percent market share respectively.

Edibles will be able to secure 12 percent of the spending from Canadians, according to EY.

“As the industry matures, access to product eases and higher margin derivatives come online, we’ll see a rise in consumer spending on legal cannabis,” Zachary Pendley, EY Canada cannabis real estate and valuation leader, said in a press release.

Seth Rogen launches Houseplant with Canopy

Canopy Growth (NYSE:CGC,TSX:WEED) confirmed an investment deal in the cannabis brand Houseplant, which was co-created by Rogen and his creative partner Evan Goldberg.

Canopy will provide Houseplant with “production and distribution capabilities.”

“Canopy Growth has worked closely with Houseplant for almost two years, and the entire Canopy Growth team is deeply impressed by [Houseplant’s] understanding of the cannabis consumer, attention to detail and hands-on approach to this new partnership,” the firm indicated to shareholders.

Market updates

Despite the apparent momentum New Jersey had on its way to a vote for adult-use legalization in the state, during the past week the vote was canceled.

State lawmakers called off the critical vote on Monday (March 25) citing lack of support for the policy at the state Senate, according to a report from NJ.com.

“While we are all disappointed that we did not secure enough votes to ensure legislative approval of the adult use cannabis bill today, we made substantial progress on a plan that would make significant changes in social policy,” State Senate President Stephen Sweeney said in a statement.

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It was the market’s expectation that a New Jersey legalization confirmation would motivate neighboring states to follow suit and open the doors to recreational consumption and sales.

Hemp-derived CBD producer Charlotte’s Web Holdings (CSE:CWEB,OTCQX:CWBHF) informed shareholders that it took in quarter-over-quarter revenue growth of 21 percent, resulting in US$21.5 million during Q4 2018.

“During the fourth quarter we concentrated our efforts on completing the 2018 harvest and building product inventory to support growing consumer demand,” Hess Moallem, president and CEO, said in a press release.

The executive praised the passing of the farm bill, which legalized hemp in the US and had a direct impact on the business of the company.

Shares of the producer shot up on Friday’s trading session following the announcement. The stock reached a price of C$26.55 at 12:05 p.m. EST, representing a 2.32 percent decrease.

CannTrust Holdings (TSX:TRST,NYSE:CTST) also issued its quarterly results for its Q4 2018, disappointing the market by not reaching estimates.

Shares of the Canadian firm plunged in Thursday’s trading session following the announcement and conference call with investors and analysts. CannTrust finished the day with a 18.96 percent decline in Toronto.

The recently launched New York listing experienced a similar plunge with a 19.14 percent decline in value on Thursday, representing a C$1.92 loss per share.

Outdoor growing was a focus of CannTrust in its quarterly report. The company expects its investments in this space to offer leverage via proprietary genetics and provide a speedy path to cheaper production costs in the future.

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: Acreage Holdings is a client of the Investing News Network. This article is not paid-for content.

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** This article is updated each week. Please scroll to the top for the most recent information**

Cannabis Weekly Round-Up: ETF Operators Pursue US Market

By Bryan Mc Govern, March 22, 2019

During the past trading week (March 18 to 22), additional agreements with public marijuana companies to support the setup of dispensaries in Ontario were announced.

A confirmation of interest in the US market from the top marijuana exchange-traded fund (ETF) operator in Canada made headlines this week, while the start of smokeable products sales in Florida also caught the attention of the market.

Here’s a closer look at what some of the biggest news was during last week’s trading period.

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Ontario retail partnerships continue

After an initial batch of agreements between marijuana public companies and winners of a lottery set to determine the first 25 dispensaries to open in Ontario, this past week two new partnerships were confirmed.

High Tide (CSE:HITI,OTC Pink:HTDEF) and Canopy Growth (NYSE:CGC,TSX:WEED) announced new deals with Ontario license holders looking to set up shops in Toronto. Canopy’s deal is being managed by its retail brand Tokyo Smoke.

Both firms already had established partnerships with some retailers in order to participate in the set up of the stores. The new deal represents the third agreement for High Tide and the second publicly revealed deal for Canopy.

“As the realities of a compressed schedule and complex project became clear, the Third Winner realized that they would benefit from our help,” Raj Grover, president and CEO of High Tide, said in a press release.

Additionally, Origin House (CSE:OH,OTCQX:ORHOF) announced its subsidiary Trichome Financial awarded an option of up to C$2 million revolving credit facility and term loan to an Ontario retail operator set to open a shop in Brampton, Ontario.

Afzal Hasan, president and general counsel of Origin House, told the Investing News Network (INN) there are are in active discussions with more operators “looking for either capital or operational support.”

ETF operator in pursuit of US boost

On Thursday (March 21), Steve Hawkins, president and CEO of Horizons ETFs Management, told BNN Bloomberg his company is “actively pursuing” a new fund with only US-based marijuana firms.

With this confirmation Horizons ETFs adds momentum to the shift in interest from investors looking now for gains from the US cannabis market instead.

The first step for any US market share addition for the ETF manager will be the inclusion of Charlotte’s Web Holdings (CSE:CWEB,OTCQX:CWBHF), a hemp-only producer and developer of products, into the Horizons Marijuana Life Sciences Index ETF (HMMJ) (TSX:HMMJ).

During the past week Horizons ETFs also confirmed its quarterly rebalance for HMMJ, which included the addition of the following stocks into the fund:

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Florida players see boost and market welcomes new public competitor

Following the official removal of a ban on smokeable products for the medical-only marijuana market in Florida multi-state operator (MSO) Cresco Labs (CSE:CL,OTCQX:CRLBF) announced its US$120 million purchase for an entry into the market.

This purchase will grant Cresco with seven active dispensaries and and additionally seven set to come online this year.

As part of its fiscal Q4 2018 results conference call, Joseph Lusardi, CEO of fellow MSO Curaleaf (CSE:CURA,OTCQX:CURLF), said the company’s estimations show the Florida cannabis market should double now thanks to the sales of smokable items.

Lusardi added he is also now expecting to see policy on edibles sometime this year.

“Offering these whole flower products to our patients in their purest, most effective form is something we — and patients — have been looking forward to since we opened the doors of the state’s first dispensary,” Kim Rivers, CEO of Trulieve (CSE:TRUL,OTC Pink:TCNNF), said in a press release.

Trulieve, a Florida-based MSO, confirmed the start of sales for these new products across its 26 dispensaries in the state, which led to the company’s stock rising.

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: High Tide, Cannara Biotech, The Floor Corporation, Heritage Cannabis Holdings are clients of the Investing News Network. This article is not paid-for content.

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