Cannabis Weekly Round-Up: Short Sellers Turn a Profit

- October 26th, 2018

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 (October 22 to 26), short sellers made substantial gains thanks to the dive cannabis stocks are experiencing in the markets.

A new report issued on Tuesday (October 23) showed short sellers of cannabis stocks are enjoying gains thanks to the pullback on these securities. On Monday (October 23) and Tuesday shorts made US$450 million from all pot stocks.

Following the legalization of adult-use sales in Canada, cannabis shares have taken a turn with the market taking in a sell off in the leading stocks and exchange-traded funds (ETFs).

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The report from research firm S3 Partners indicated shorting cannabis stocks, while providing results now, has become an expensive move for investors. The firm explained shorting is expensive in due to limited institutional investors in the space.

“Once institutional ownership increases in the sector we can expect stock borrow costs to decline significantly,” the report said.

Multi-state play in the US gains attention

In an exclusive interview with the Investing News Network (INN) George Scorsis, CEO of Liberty Health Sciences, explained how he separates multi-state operations in the US.

The business strategy has piqued the interest of cannabis interest and thanks to listings on the Canadian Securities Exchange (CSE) these companies are able to raise capital and expand operations.

Scorsis said he understands why investors are bullish on multi-state operators that buy assets across legal states, but views them as operations with a a high chaos potential.

“I think those, although quite appealing from a capital market standpoint, are going to be challenged in terms of operational effectiveness, as we take a look long term,” he said.

Scorsis said Liberty has planned its facilities with a vision of what may take place in the political conversation surrounding the cannabis industry. The executive expects cannabis legalization to become a hot topic in the upcoming presidential elections in the US.

Cannabis market updates

As US cannabis investors continue to gain options for exposure in the market, Aphria (TSX:APH) received approval from the New York Stock Exchange (NYSE) to list its shares on the exchange.

The approval of the Canadian licensed producer (LP) follows in the approval and debut of Aurora Cannabis (NYSE:ACB,TSX:ACB) on the NYSE as well.

Aphria would join Aurora and Canopy Growth (NYSE,CGC,TSX:WEED) as the only pure cannabis plays on the American exchange.

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Currently Aphria holds a listing on the OTC Markets under the ticker symbol “APPHQF.” It is expected for Aphria to delist this stock as it moves towards the NYSE.

This past trading week National Access Cannabis (TSXV:META) announced a unique investment deal in which three Canadian LPs would be subscribing to a purchasing option of stock on the company for the next two years.

One of those LPs, VIVO Cannabis (TSXV:VIVO), announced an initial C$5 million commitment. NAC is raising this capital to continue its business plan of setting up cannabis retail shops across Canada.

The second and third tranches of the investment will activate once the company gets approval for 50 and 100 cannabis retail stores in Canada, respectively.

Finance exec chooses long-term play on cannabis market

An exclusive video interview with a finance executive on the cannabis public market and general market updates complete this cannabis weekly round-up.

INN had the chance to catch up with Charles Taerk, president and CEO of Faircourt Asset Management for an overall conversation on the cannabis public markets

Taerk, who also serves as the sub-advisor to the Ninepoint Alternative Health Fund, told INN in the next couple of quarters investors will gain a real sense of the separation between cannabis companies ready to compete and those missing elements.

“We are starting to see a real separation. Those companies that do have inventory and do have efficient production are going to start to move to the fore. People are going to realize that there’s going to be certain companies that have strong and positive cash flow and others that are still behind the eight ball,” Taerk said.

Watch both parts of our conversation for more on what Taerk had to say.

Part one:

Part two:

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: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. 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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** This article is updated each week. Please scroll to the top for the most recent information**

Cannabis Weekly Round-Up: Legalization Kicks Off

By Bryan Mc Govern, October 19, 2018

During the past trading week (October 15 to 19) legalization arrived and Canadians got the chance to buy legal adult-use product for the first time.

A closer look at the impact legalization had on the stocks in this sector and general market updates complete this Cannabis Weekly Round-Up.

After much anticipation the date finally arrived for the cannabis market. The Cannabis Act came into effect on Wednesday (October 17) and led to the start of adult-use sales of marijuana across the country both in physical stores and online.

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Impact of legalization

A lot had been said about how exactly the markets would react to the critical change in the Canadian law. Pot stocks kicked off the week with gains by the time legalization rolled around the market was taking in some selloffs.

On Wednesday, leading stocks such as Canopy Growth (NYSE:CGC,TSX:WEED) and and Aurora Cannabis (TSX:ACB) took in losses.

Marijuana exchange-traded funds (ETFs) such as The Horizons Marijuana Life Science Index ETF (TSX:HMMJ) and the Evolve Marijuana ETF (TSX:SEED) also noticed declines in value.

This decrease had been predicted by a variety of financial experts to the Investing News Network (INN). “It almost feels like we got that euphoric move already, it almost feels like [October] 17th is going to be more of a non-event,” Greg Taylor, portfolio manager with Purpose Investments, said about the anticipation to legalization.

Everett Knight, portfolio manager with Matco Financial, told INN despite expecting retail money selling cannabis stocks on legalization day, the cannabis play is still in the early stages of growth.

Aurora headed to the NYSE

After a long process, including the launch of spin off Australis Capital (CSE:AUSA), Aurora Cannabis confirmed the approval from the New York Stock Exchange (NYSE) regulators to begin listing its stock in the premier US exchange.

Shares of Aurora will begin trading on the NYSE on October 23 under the ticker symbol “ACB.”

Terry Booth, CEO of Aurora, said the listing is indicative of the domestic and international growth initiatives from the company, including expanding its “base of global institutional and retail investors.”

Market update

Despite all the attention in the Canadian cannabis market, the US offered a few updates for investors to keep in mind over the week.

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Acreage Holdings, a private company that has announced a reverse takeover to launch its stock on the Canadian Securities Exchange (CSE), added former Canadian Prime Minister Brian Mulroney to its board of directors.

“As Acreage continues to grow, I hope my background will prove helpful in its mission of ensuring all Americans who need it can safely and legally use cannabis,” Mulroney said in a statement.

Acreage had previously added another notorious political figure in former Speaker of the United States House of Representatives John Boehner.

In a surprising move this past week, iAnthus Capital Holdings (CSE:IAN) announced an all-stock merger with fellow US cannabis multi-state operator MPX Bioceutical (CSE:MPX).

MPX shareholders gaining a C$1.28 consideration per MPX share, resulting in 0.1673 common shares of iAnthus, with a total transaction value of C$835 million.

Hadley Ford, CEO of iAnthus, said this was a “watershed” moment for the company and would double the footprint of the company in the fractured US market. The resulting company will hold a presence in 10 states.

The combination of assets is meant for the US cannabis businesses only, a new company named MPX International will be created as way of the merger to manage international cannabis ventures.

Closing of the transaction will require the approval of MPX shareholders. No details were immediately given on the special meeting needed for the approval.

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.

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