Cannabis Weekly Round-Up: CIBC Predicts Sales Potential for Cannabis

During the last trading week (May 7 to 11), one of the major Canadian banks issued a report predicting the reach of the cannabis market in the country.

A look into the potential for another stock rush in the cannabis public market and an update from the US market complete this Cannabis Weekly Round-Up.

The Investing News Network (INN) reported on a new study from CIBC looking ahead and projecting the reach of the cannabis market in Canada.

“We believe that by 2020, the legal market for adult-use cannabis will approach C$6.5 billion in retail sales,” the report states. “For context, this is greater than the amount of spirits sold in this country, and approaches wine in scale.”

Is another cannabis rush coming this year?

As investors await the date of legalization in Canada, a common notion has taken ahold of the industry at large: the stock market will see a ramp up once legalization is officially dated. With this in mind, INN asked cannabis analysts for their take on this idea.

“I don’t expect a rally following June 7. In fact, if I were to place a bet we would probably see a little bit of weakness after,” said Jason Zandberg, an analyst covering the cannabis space for PI Financial. “I don’t think it’s a selloff, but I just think it’s a bit of a lull after that happens.”

On June 7, the Canadian Senate is expected to hold a third reading for Bill C-45, the cannabis act, and many investors await the bill to obtain royal assent and become law.

Russell Stanley, cannabis analyst with Echelon Wealth, told INN he sees potential for cannabis stocks and the sentiment on them to improve “once the doors are open and people come to understand how much product is in demand.”

Marijuana legalization bill picks up support in the US

Last week it was announced that Senator Kamala Harris of California is supporting a cannabis decriminalization bill put forth by Senator Cory Booker last year. The Marijuana Justice Act seeks to remove marijuana’s status as a Schedule 1 drug under the Controlled Substance Act.

“It’s the right thing to do. And I know this as a former prosecutor. I know it as a senator,” Harris, a Democrat, said.

Harris has been rumored as a potential presidential candidate for the Democratic party for the 2020 race. Booker, the author of the bill, is also speculated to attempt a run for the Democratic bid.

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.

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

Cannabis Weekly Round-Up: New Rumors of More M&A Activity Between LPs

By Bryan Mc Govern – May 4, 2018

Over the last trading week (April 30 to May 4), rumors grew about another major acquisition between premier licensed producers (LP) in the Canadian market.

A recap of the quarterly updates this week and an update on the California market complete this Cannabis Weekly Round-Up.

As predicted by experts, consolidation is taking ahold of the entire cannabis market. Last week, the Globe and Mail reported that MedReleaf (TSX:LEAF) has indicated it is up for the taking from the top LPs. Aurora Cannabis (TSX:ACB) was immediately linked, as it has made a variety of acquisitions this year, including the saga with CanniMed Therapeutics (TSX:CMED).

Both companies initially declined to comment publicly, but after the Investment Industry Regulatory Organization of Canada (IIROC) halted both MedReleaf and Aurora from trading on Thursday (May 3), MedReleaf issued a statement on the same day vaguely confirming discussions had taken place with other cannabis companies:

In response to a request by Investment Industry Regulatory Organization of Canada, the Company confirms that it engages from time to time in discussions with other industry players, including Aurora Cannabis, regarding various alternatives. The Company has not entered into an agreement to effect any particular transaction, and there can be no assurance that such discussions will result in any such agreement.

Aurora also gave an uncertain statement confirming it engages in “discussions with industry participants from time to time, including MedReleaf.” Both stocks resumed trading at 1:45 p.m. EST on Thursday.

Quarterly updates for cannabis shareholders

Last week saw quarterly updates from a variety of companies in the cannabis space, including Cronos Group (NASDAQ:CRON,TSXV:CRON), which released its Q4 and 2017 fiscal financial results for the period ended on December 31, 2017.

Cronos reported C$1.6 million in sales during Q4 and total 2017 fiscal year sales of C$4.1 million thanks to bigger production capacities and a rise in cannabis oils demand.

Sunniva (CSE:SNN,OTCQX:SNNVF) shared its financial and operational results for 2017, highlighting the development of planned facilities in Canada and California. The company saw a boost in its results thanks to the acquisition of vaporizer company Full Scale Distributors and Natural Health Services, a network of Canadian clinics connecting patients with medical cannabis products from LPs.

Hiku Brands (CSE:HIKU) also provided its shareholders with an update on performance for its fiscal year.

“With our recently announced merger with WeedMD (TSXV:WMD,OTCMKTS:WDDMF), Hiku will immediately add 1,500 kg of indoor annual cannabis production capacity, fully funded production expansion capacity of more than 50,000 kg/yr and a well known, highly regarded medicinal brand,” Alan Gertner, CEO of Hiku Brands, said in a statement.

iAnthus Capital Holdings (CSE:IAN,OTCQB:ITHUF) released its financial results for Q4 and entire fiscal 2017 year last Monday (April 30). Since then, the company’s stock value on the Canadian Securities Exchange has increased 0.48 percent.

Cannabis testing facility provides update on upcoming California change in regulations

Last week, EVIO Labs (OTCQB:EVIO) announced the acquisition of Leaf Detective, a cannabis testing lab with one of the 28 testing facility licenses from the Bureau of Cannabis Control in California.

This is a key acquisition for the company since, starting July 1, all legal cannabis products sold in the state must obtain a certificate of analysis confirming testing. William Waldrop, CEO of EVIO, told the Investing News Network he sees a US$200-million opportunity just in California for testing.

“In California right now there is about a $2.5-billion medical economy … testing will be about [a] $100-million opportunity just in California just for the medical side,” he said.

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: Hiku Brands and WeedMD are clients of the Investing News Network. This article is not paid-for content.