Cannabis Weekly Round-Up: US$3 Trillion Stimulus Bill Includes SAFE Act

- May 15th, 2020

The HEROES Act, introduced this week by House Democrats, is not expected to pass in the Republican-controlled Senate.

In the cannabis space this week, potentially big news hit at the end of the five day period when a key piece of marijuana legislation in the US got another chance to take on the Senate. 

Aside from that, an investment firm shared highlights from a cannabis conference that it hosted, and major companies in the industry released their latest quarterly results.

Read on for a closer look at some of the biggest cannabis news over the last five days.

SAFE Act attached to US$3 trillion stimulus bill

As some marijuana market participants had expected, the SAFE Banking Act was included in a new US stimulus bill announced on Tuesday (May 12). The US$3 trillion bill, whose aim is to provide relief for those impacted by COVID-19, was passed by the House of Representatives late on Friday (May 15).

The news has ignited hope that the SAFE Banking Act will finally get through the Senate, where it stalled last year after making it through the House. The act would allow banks to offer loans and other services to cannabis businesses in states where the substance is legal.

“The inclusion of cannabis banking in the HEROES Act is a positive statement from the House and strongly supplements the decision that the majority of states have made by designating cannabis businesses as essential,” David Mangone told Marijuana Business Daily.

Mangone, who lobbies for the National Cannabis Roundtable, is far from the only market watcher to suggest that making cannabis businesses essential may provide regulatory momentum.

“In 28 states, cannabis has been deemed an essential service, providing further validation and legitimacy to the industry,” Charles Taerk, president and CEO of Faircourt Asset Management, said to the Investing News Network (INN) in a recent interview.

Faircourt is the portfolio advisor to the Ninepoint Alternative Health Fund, which Taerk manages with Doug Waterson. The fund’s inception was in March 2017.

Despite that optimism, the HEROES Act is not expected to pass in the Republican-controlled Senate — Senate Majority Leader Mitch McConnell has already described it as a “big laundry list of pet priorities” that has “no chance of becoming law.”

And other cannabis experts have suggested that with the coronavirus still in play, it’s simply not the time for activity around legalization or other efforts in the US. “All timelines are being pushed out as far as legalization in any sort of jurisdiction is concerned. It is not top priority anymore. There are a lot more more important things going on,” Nawan Butt of Purpose Investments told INN.

COVID-19, US market in focus at Canaccord event

This week brought Canaccord Genuity’s fourth annual cannabis conference. Held on Tuesday, the online event brought presentations from around 80 companies to nearly 800 participants.

In a note to clients, Canaccord shared the main highlights of the day, with COVID-19 unsurprisingly being a prominent topic of discussion. Interestingly, the firm said the effects of the disease have been “largely mitigated,” with supply chains seemingly uninterrupted and most operators experiencing demand spikes in March due to social distancing and stay-at-home measures.

Many companies presenting at the conference also reportedly said they see cost-control initiatives taken due to the virus as a silver lining and a chance to rightsize their operations.

Aside from COVID-19, the US market was a key point at the conference. According to Canaccord, it could represent a revenue opportunity worth US$75 billion to US$100 billion over the next decade. This year, the firm expects legal markets in the US to bring in cumulative revenues of about US$18 billion.

More broadly, Canaccord said it expects companies to focus on execution in 2020 as they concentrate on strategic planning and achieving profitability.

“With most of 2019 headlined by getting bigger the fastest, 2020 seems to be more about specific company execution and the ability to deliver on message,” the firm said in its note. As a result, it anticipates that names in the space will stop trading as one large group and start trading “more on their specific fundamentals/performance.”

Cannabis company news

Company news in the cannabis space this week centered heavily on quarterly results, with heavyweights sharing numbers for the period. This slew of reports comes after a previous flurry of reporting in April.

  • Aleafia Health (TSX:ALEF,OTC:ALEAF) reported net revenue of $14.6 million in its quarterly results release this week, plus a net loss of $6.2 million and adjusted EBITDA of $6.4 million. Net revenue was up 143 percent quarter-on-quarter and adjusted EBITDA rose 2,979 percent over the same period. Also last week, Aleafia announced a $13 million bought-deal financing, and received a Health Canada license amendment for its Port Perry facility’s outdoor cultivation expansion.
  • The latest quarterly results for Aurora Cannabis (TSX:ACB,NYSE:ACB) show the company brought in net revenue, excluding provisions, of C$78.4 million for the period; that’s up 18 percent from the previous quarter. Adjusted EBITDA came in at a loss of C$50.9 million, but Michael Singer, chairman and interim CEO at the company, told BNN Bloomberg that the company’s major restructuring effort several months ago is beginning to bear fruit. Investors reacted well to the news — Aurora’s share price rose over 60 percent from Thursday’s close to the end of the day on Friday. 
  • Revenue came in at US$102.6 million in Green Thumb Industries’ (CSE:GTII,OTCQX:GTBIF) most recent quarter, an increase of 35.4 percent quarter-on-quarter — Founder and CEO Ben Kovler described passing US$100 million as “a major milestone.” Meanwhile, adjusted operating EBITDA was US$25.5 million, a rise of 85 percent over the same period. The company’s net loss was US$4.2 million, an improvement on the previous of quarter’s figure of US$14.1 million.
  • The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) also shared its most recent quarterly results this week, reporting net revenue of C$9.7 million, up slightly from the previous quarter, but down marginally year-on-year. Its net loss came in at C$72.3 million, much higher than both the previous quarter and previous year, and its adjusted EBITDA was a loss of C$11.7 million. According to Colin Moore, who recently stepped down from his position as interim president and CEO, Supreme is beginning to see the effects of its rightsizing and revenue-generation impacts.
  • The latest quarter brought revenue of US$52.1 million for Tilray (NASDAQ:TLRY), up by 126.2 percent from the previous year. Its net loss was US$184.1 million versus US$29.4 million a year ago — Tilray cited several reasons for the increase, including impairment charges and a weakening in the Canadian dollar. BNN Bloomberg notes that Tilray gave a “going concern” warning in its Form 10-Q for the period, noting that it will need to obtain more financing over the next 12 months.

Don’t forget to follow us @INN_Cannabis 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.

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