The panel centered on recent trends in the public market, and whether or not there are still opportunities in cannabis for new investors.
One topic in focus was recent market activity in terms of short sellers attacking cannabis companies. Gilmer explained that short sellers are nothing new to the public markets, but said their attacks reaching cannabis companies is a first.
In 2018, various new reports appeared and gained prominence against all types of cannabis companies. Most recently, Aphria (NYSE:APHA,TSX:APHA) was targeted by multiple reports from a short seller group.
Since the reports were issued, Aphria has received backing from researchers at financial institutions, alleviating concerns about its recent acquisitions in the Latin American cannabis market.
Gilmer suggested that there could be more short seller attacks in the cannabis space “because it’s attracted so much attention” lately.
“It’s got probably a bit higher profile as far as opportunities for short sellers to target a particular company,” Gilmer said, saying that companies in the space have gained high valuations with promise for growth.
Ducommun added that she feels it’s unfortunate these attacks have come to the industry so quickly.
Volatility could lead to further deal making
Speaking about volatility, Gilmer explained this has led to a wide array of percentage changes in cannabis stock prices and valuations in a short amount of time.
The analyst said he expects to see companies to be “opportunistic” and take advantage of these wide market swings to seek acquisitions.
Gilmer expects M&A activity to continue, and said it should lead to a significant amount of deal making in the cannabis space throughout 2019.
However, when asked if all this expected M&A activity will lead to a market with only a small group of companies owning the space, the analyst said he doesn’t see such a massive reduction coming soon.
Gilmer explained that while he does expect the final number of companies in the market — specifically licensed producers (LPs) — to be less than it is now, he doesn’t believe it will get to only three of four firms controlling the industry.
Marotta added that he doesn’t see a great many bankruptcies coming to the market and reducing the players available.
He hopes the cannabis industry ends up looking like the beer industry, where there are major brands and companies, but also a “long tail of smaller producers that find a way to exist and satisfy their clients.”
Ducommun added that micro-cultivators will spur more M&A activity, as these companies offer boutique aspects to consumers and provide different products from LPs.
Hemp market opening in the US
The panelists were also asked about the passing of a US$867-billion farm bill in the US, which legalized hemp and its derivatives, including CBD.
Gilmer built on his comments from a previous panel at the show, saying he supports the CBD market; but he added it is going to come down to which company has realized products that sell.
Marotta indicated that his company has no interest in jumping into this space at the moment, but said he wants to see unique products that capture the attention of consumers, instead of hemp-growing stories from companies in the space.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: INDIVA is a client of the Investing News Network. This article is not paid-for content.
In the evolving rush of mergers and acquisitions (M&A) in the Canadian cannabis market, Canopy Growth (NASDAQ:CGC,TSX:WEED) announced it will acquire The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) in a deal worth approximately C$435 million.
Meanwhile, a cannabis operator in the US confirmed this week that it will receive a financial boost from a partner to solidify its position in the burgeoning Pennsylvania state market.
The Board of Directors of Aphria Unanimously Recommends Shareholders Vote “For” the Arrangement
Aphria to Host Special Meeting of Shareholders on Wednesday, April 14, 2021 to Approve Proposed Aphria-Tilray Business Combination
Love Hemp Group PLC (AQSE: LIFE) (OTCQB: WRHLF), one of the UK’s leading CBD and Hemp product suppliers, announces that as part of the equity fundraise announced yesterday, Antony Calamita and Andrew Male, Directors of the Company, subscribed for 285,714 Ordinary Shares and 1,428,571 Ordinary Shares respectively. The subscriptions are at a price of 3.5 pence per ordinary share for a total of £60,000. Following these subscriptions, Antony Calamita is now interested in 54,385,714 Ordinary Shares, representing 8.61% of the Company’s share capital as increased by the fundraising, and Andrew Male is now interested in 6,138,196 Ordinary Shares, representing 0.97% of the Company’s issued share capital as increased by the fundraising
Further, the timetable for receipt of applications under the Broker Option, which was also announced yesterday, has been extended until 5:00 pm 9 April 2021 to capture additional interest which was unable to be completed yesterday.
Revive Therapeutics Ltd. (“Revive” or the “Company”) (CSE: RVV, USA: RVVTF), a specialty life sciences company focused on the research and development of therapeutics for medical needs and rare disorders, would like to provide the following dial-in information for the Company’s upcoming Annual and Special Meeting (the “Meeting”) scheduled to be held at 11:00 a.m. Eastern Daylight Time on April 12, 2021. Shareholders and proxyholders may access the Meeting via teleconference by dialing 647-723-3984 or 1-866-365-4406 from Canada or the United States, then entering participation code “8487744” followed by the pound (“#”) sign.
In consideration of the COVID-19 pandemic and the recent restrictions imposed by the Ontario Provincial Government, shareholders and proxyholders will only be able to attend the Meeting via teleconference and will not be permitted to attend the Meeting in person at the address provided on the Notice of Annual and Special Meeting of Shareholders.
Gage Cannabis Announces Exclusive Partnership With Blue River to Bring Award-Winning Cannabis Extracts to Michigan
Gage Growth Corp. (“Gage” or the “Company”) (CSE:GAGE), a leading high-quality craft cannabis brand and operator in Michigan, announced today that it has signed an agreement with Blue River™ Extracts & Terpenes (“Blue River™”) to bring the brand’s award-winning solventless technology and other trademark branded products to the state’s medical patients and cannabis consumers. The Company will have exclusive rights to Blue River™’s premium product offerings in Michigan.