A renowned global bank with wealth management options has elected to block some cannabis trades from clients as part of its de-risking efforts after recent issues.

Also this week, a Canadian cannabis producer announced its intention to buy a retail operator managing nearly 100 stores in the country.

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The company behind Marlboro cigarettes told the market this week that it has a particular interest in the cannabis industry. 

Meanwhile, a Canadian cannabis company confirmed an entry point for the US market via a stock uplisting on the NASDAQ.

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Click here to read the previous top cannabis stocks year-to-date list.

Cannabis investments have seen an upswing in momentum to start 2021. As the first quarter wraps up, the Investing News Network looks at the top cannabis stocks in terms of share price performance and what their activity says about the space as a whole at the moment.

Despite the current positivity, the cannabis sector has shown its fair share of volatility, a trait experts have said will likely not go away anytime soon. So far this year, key mergers and acquisitions have affected the performance of some names, while steady results have helped boost others.

Data for this top cannabis stocks article was collected on April 23, 2021, and the companies included had to meet a minimum market cap requirement of C$10 million. Cannabis companies on the NYSE, NASDAQ, TSX, TSXV and CSE were considered.

 

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1. GTEC Holdings (TSXV:GTEC,OTCQB:GGTTF)

Year-to-date gain: 484.62 percent; current market cap: C$149.28 million; current share price: C$0.75

GTEC Holdings is a Canadian operator of cannabis facilities and branded products. This year, the company has cleaned house with a convertible debt repayment and a new C$23 million bought deal.

In terms of upside for this financial period, the company announced a new export agreement with Focus Medical Herbs, an Israeli medical cannabis company that holds a partnership with IM Cannabis (NASDAQ:IMCC).

“With the signing of this deal, GTEC will become an up-and-coming player within the global cannabis market, while continuing to drive significant incremental revenues and gross margin,” Michael Blady, co-founder and vice president of GTEC, told investors.

2. Experion Holdings (TSXV:EXP,OTCQB:EXPFF)

Year-to-date gain: 244.44 percent; current market cap: C$35.29 million; current share price: C$0.36

This company manages Experion Biotechnologies, a licensed cannabis producer based in BC that produces the popular Citizen Stash line of products.

As part of its 2021 outlook notice to investors, the company said it believes its flagship brand plays well with current consumer demand for low-cost products while retaining a premium brand appeal.

In mid-March, Experion secured its first end-to-end pre-roll manufacturing and product distribution services manufacturing agreement with the Valens Company (TSX:VLNS,OTCQX:VLNCF).

Jarrett Malnarich, CEO of Experion, said the new two year business partnership will help the company expand customer access to Citizen Stash.

3. The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF)

Year-to-date gain: 129.41 percent; current market cap: C$278.54 million; current share price: C$0.37

The Supreme Cannabis Company celebrated one last push of gains as it begins to head into the sunset. In early April, it was announced that Canopy Growth (NASDAQ:CGC,TSX:WEED) will be stepping in to acquire Supreme Cannabis entirely.

“Combining Supreme Cannabis with Canopy — a Canadian market leader with exposure to the United States — presents a significant value creation opportunity for both companies,” Beena Goldenberg, president and CEO of Supreme, said in a statement to investors.

The deal is expected to embolden the brand catalogue for Canopy Growth and should offer a significant bonus to the trading activity of Supreme holders. The company saw a double-digit boost in the wake of the acquisition deal announcement.

The other major spike for Supreme this year was seen leading up to the release of the firm’s financial report for the period ended on December 31, 2020.

 

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4. Next Green Wave Holdings (CSE:NGW,OTCQX:NXGWF)

Year-to-date gain: 108.11 percent; current market cap: C$128.91 million; current share price: C$0.72

Amid all the volatility present in the cannabis industry, Next Green Wave Holdings has shown its investors a steady growth path.

During the Q1 period, the company celebrated 12 consecutive months of profitability and was included in the OTCQX Best 50 list, showing its track record against all companies on OTC exchanges.

As part of its Q4 2020 report, shared in January, CEO Michael Jennings said 2020 was a transformational year for the company with a consistent performance.

“Moving into 2021, we want to build on that momentum through expansion,” Jennings said as Next Green Wave announced the buildout of an additional 50,000 square foot indoor cultivation facility within its existing Coalinga campus. The firm expects it to be active later in the year.

5. Aphria (NASDAQ:APHA,TSX:APHA)

Year-to-date gain: 93.70 percent; current market cap: C$5.81 billion; current share price: C$18.11

Aphria has had a busy 2021 so far. After announcing a blockbuster merger transaction with fellow cannabis producer Tilray (NASDAQ:TLRY) in December 2020, the firm has been racing towards finishing the transaction.

In mid-April, Aphria holders voted in favor of the overall deal with Tilray.

“We appreciate their support, as we believe the business combination will create a Combined Company with a strong financial profile, low-cost production, market share leading brands, distribution network and unique partnerships,” Irwin Simon, Aphria chairman and CEO, said.

During this period, shareholders of Aphria have had the chance to take a closer look at the finances of the company on two separate occasions — the firm released Q2 and Q3 results for the 2021 fiscal year in January and April, respectively.

Investor takeaway

Cannabis companies have been able to weather the turbulent difficulties of 2020 and have now set a course for expansion and steady growth thanks to the projections attached to the US marketplace and its potential regulation efforts.

So far in 2021, cannabis investments have still shown vulnerability to volatility, but at the same time investors will have to remember that more often than not, that is par for the course with this sector.

Looking ahead, investors will need to look at how US plans may alter the performance of the entire cannabis stock space and produce the next batch of top cannabis stocks for the year.

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One major cannabis analyst gave her top stock pick this week as industry attention continues to converge on the path ahead for the US market.

Also this week, the CEO of Aphria (NASDAQ:APHA,TSX:APHA) gave an update on a critical merger and spoke about who holds the edge in the US in terms of American and Canadian cannabis operators.

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US-based multi-state operators (MSOs) performed well during Q1, but one fund manager believes that hasn’t been reflected in their share prices.

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Click here to read the previous cannabis market update.

During the first few months of investment time in 2021, cannabis faced some volatility alongside optimism about federal changes in the most important market for the drug.

The cannabis business found its stride during Q1 thanks to policy change signals and consolidation.

To find out more, the Investing News Network (INN) asked experts about progress in the market during the first major period of the new year, and which developments investors should watch out for.

 

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Cannabis market update: New York and US potential boost operations

New York state’s legalization of recreational cannabis was a huge Q1 announcement that added pressure to the US federal government when it comes to cannabis policy, said George Mancheril, co-founder and CEO of Bespoke Financial, a debt financing business with a particular focus on servicing cannabis businesses.

“It’s going to add to the chorus of voices in the federal scene to basically move sooner rather than later,” he explained to INN.

Following the US election in 2020, the momentum for cannabis businesses went on the upswing, as did company valuations, with the idea of expansion at the heart of it all, according to Mancheril.

Before starting Bespoke Financial, Mancheril learned from traditional investment banks, working in the lending, fixed income and debt markets with Goldman Sachs (NYSE:GS) and Guggenheim Partners.

Nawan Butt, portfolio manager with Purpose Investments, agrees with Mancheril. The financial expert told INN the ongoing legalization process seen in the US market is leading to expansion.

“It’s becoming more of a national move, then small pockets of proliferation. That’s very exciting about cannabis right now,” said Butt, who co-manages the Purpose Marijuana Opportunities Fund (NEO:MJJ).

This proliferation effect is causing a change in valuations and enthusiasm for US-based operations. Mancheril told INN that by the end of Q1, multi-state operators (MSOs) had raised approximately US$3.3 billion.

The cannabis lender said he sees the industry as having grown from the woes of 2019; it is now undergoing a return to form as excitement about the US opening up increases.

The expert explained that there is likely to be a windfall of capital in the wake of major federal changes in US cannabis policy, although the timeline for these changes is becoming increasingly hard to predict.

Leading up to that capital influx, Mancheril said he wants to see operators really drill down on the value of desired assets and whether they make sense.

“What I’d hope is that we continue to see bullish sentiment, but with some measure of responsibility, and let’s not just get over ahead of ourselves,” Mancheril told INN. “The idea is let’s minimize the volatility and continue growing responsibly.”

 

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As far as struggles go, Butt explained that the cannabis industry has cemented itself as a growth-type sector, and as such there are macro pressures affecting the way these assets operate.

“We’ve seen this preference for cash flows at growth in the current or in the near future, rather than in the far future, and that’s what we’re seeing as far as valuations go in the broad market,” Butt said.

Cannabis market update: Volatility continues to rule as industry foundations build

Despite the industry’s potential and the growing pains it has gone through as a whole in both the US and Canada, volatility remains a key factor in the cannabis investment scene.

Butt explained that the current shareholder base, which is dominated by hedge funds and retail investors, still lacks enough institutional support to avoid the day-to-day volatility cannabis has come to be known for.

These two investor groups, Butt said, can be easily spooked and excited by the news of the day when it comes to their investments.

“A lot of these institutions’ strategies are not about short-term profits, but they’re about long-term sustainability of the businesses themselves,” Butt said.

“That’s why you see a lot of volatility in the space, and that’s essentially what we’ve seen over the past, I’d say, three to two months as well,” he added.

That means investors shouldn’t expect an end to volatility anytime soon.

“It’s not about whether we continue to expect volatility, because we do,” Butt said. “We really think that the volatility will be taken out when the shareholder base becomes more institutional, but it’s really about understanding why there is volatility in the first place.”

Cannabis market update: Canadians talk up US business, but questions remain

A surge of mergers and acquisitions has taken over the Canadian cannabis sector recently as more producers see potential in America.

One of the biggest announcements in this regard came when Organigram Holdings (NASDAQ:OGI,TSX:OGI) secured a C$221 million investment deal from British American Tobacco (NYSE:BTI,LSE:BATS).

Using the funds, the two will work in tandem to develop new branded products designed for the international stage, including in the US. Organigram CEO Greg Engel previously told INN that the US represents a critical opportunity for Canadian companies, but the entry point isn’t as clean as it could be.

 

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While the long-term potential may be exciting for investors, Butt told INN he’s still unsure how the approach will work for Canadian companies.

The Purpose Investments expert said there will be plenty of space for the biggest Canadian names to pursue US market entries, beyond the initial hemp-derived CBD moves some operators have mde, since the US represents the biggest market in the world.

“But there’s just way too many unknowns right now to say exactly what that participation is going to look like, or when that participation will happen,” he said.

“What we do know is that currently the US MSOs are in a wonderful sort of position to expand on their market leadership that they have. And it will be tough for Canadians to come in and compete with them,” Butt said.

Canadian players still retain the upper hand at times in terms of valuation, which is confusing for both Butt and Dan Ahrens, chief operating officer and portfolio manager at AdvisorShares.

“The performance in quarterly earnings of US companies has been rather spectacular. They’ve knocked it out of the park in most instances,” Ahrens told INN.

Butt praised the recent performance reports from MSOs across the board, pointing to year-over-year growth lines and projections for continued positive performance. In his view, share prices still don’t reflect company value. “Those are really being discounted at this point,” Butt told INN.

“We’ve seen the Canadian licensed producers be really hot stock performance-wise, outpacing the US (MSOs), and I’ll say it’s rather nonsensical to me,” said Ahrens, who oversees the AdvisorShares Pure Cannabis ETF (ARCA:YOLO) and the recently launched AdvisorShares Pure US Cannabis ETF (ARCA:MSOS).

Cannabis market update: Investor takeaway

The cannabis investment proposition finds itself at an interesting moment in time, as the entire sector eagerly awaits confirmation in the US at the federal level.

While for the Canadian companies waiting on the sidelines, this development may feel like a major necessity to address current financial struggles, for US-based operators, the heat around the corner could represent future positivity for already thriving operations.

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