Cannabis Weekly Round-Up: HEXO Gets Partnership with Alcohol Producer

- August 3rd, 2018

The Investing News Network rounds up some of the biggest company and market news in the cannabis market for the past trading week.

This past trading week (July 30 – August 3) the winner of a partnership with a major Canadian beer producer was revealed in the cannabis space.

A closer look at the latest example of consolidation in the space and market updates completes this Cannabis Weekly Round-Up.

The Investing News Network (INN) reported on ABcann Global (TSXV:ABCN; OTCQB:ABCCF) path to acquire B.C. licensed producer (LP) Canna Farms, a company with an initial supply agreement for recreational cannabis product for B.C.

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Two executives from Canna Farms, Ray Laflamme and Daniel Laflamme, will join ABcann’s leadership team as senior vice president of facilities and engineering and president respectively. After the deal is completed the two new executives will each own 16.1 percent of the company’s outstanding shares.

During a conference call with investors Barry Fishman, CEO of ABcann said a rough combination of the two companies Q2 2018 revenues would provide net sales of over C$4 million.

INN had the opportunity to catch up with Damian Kettlewell, CEO of BlissCo Cannabis (CSE:BLIS), following a panel at the Cannabis Trade Show in Vancouver. The top executive spoke about the path for the company and how effective cannabis brands will be constructed and recognized.

“If it wasn’t for the public markets there’s no guarantees that the company would be where it is now,” Kettlewell said, explaining when the company launched on the CSE it was targeting  its licensing and hiring employees.

Molson makes move into cannabis space for infused drinks

Following weeks of speculation Molson Coors Brewing (NYSE:TAP; TSX:TPX) confirmed its entry into the cannabis space with a new partnership with The Hydropothecary Corporation (TSX:HEXO) which will see the two companies work on the development of infused cannabis beverages.

This partnership will exist through the creation of a joint venture. The split between the two companies’ controlling stake in the new venture is 57.5 percent for Molson and the remaining 42.5 percent for Hydropothecary, which has announced its move to change its name to Hexo, the name of its leading consumer brand.

The cannabis producer currently holds a favourable “Moderate Buy” rating on the analyst data aggregator site TipRanks, with the latest report issued on Wednesday from Matt Bottomley at Canaccord Genuity.

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Market updates

On Thursday (August 2) MPX Bioceutical (CSE:MPX) issued its financial report for the fiscal 2018 year, which ended on March 31. “We recorded strong topline year-end results, with revenue increasing $16.9 million year over year, to $21.3 million, fueled primarily by the Health for Life medical cannabis dispensaries in Phoenix, Arizona,” said Scott Boyes, CEO of MPX.

The company’s stock dropped following the results announcement. Since Thursday MPX’s share price declined 6.10 percent, as of 12:00 p.m. on Friday to reach a price point of C$0.78.

“As we look to the remainder of 2018, we are focused on growing our footprint in a highly competitive and fast paced industry,” Beth Stavola, COO of the company said.

Scythian Biosciences (TSXV:SCYB), which recently sold off its Latin American assets to Aphria (TSX:APH), announced the plan to purchase CANNCure Investments, a company working on the acquisition for a stake in Florida licensed producer 3 Boys Farms. Due to the move into the US cannabis market, which remains federally illegal, Scythian will voluntary delist from the TSX Venture Exchange (TSXV) and move into the Canadian Securities Exchange (CSE).

In order for the Scythian-CannCure transaction to complete, the investment company must close its initial 60 percent stake acquisition of 3 Boys Farms before August 31. Scythian is also requiring CannCure to hold an option to acquire the balance of the issued and outstanding shares before the end of 2018.

Don’t forget to watch our July video update to catch up on the latest from the sector and subscribe to our YouTube channel to stay tuned with the rest of our monthly market updates.

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

Weekly Round-Up: Scythian Drops Latin America Holdings

By Bryan Mc Govern – July 20, 2018

This past trading week (July 16 – 20) a cannabis company sold its assets in Latin America to one of the biggest producers in the Canadian market.

A look at the estimation from the federal government on the cannabis retail space and market updates completes this Cannabis Weekly Round-Up.

The Investing News Network (INN) reported on Scythian Biosciences (TSXV:SCYB) selling the entirety of its interest in Latin America through a subsidiary called LATAM Holdings to Aphria (TSX:APH), a large-scale Canadian licensed producer (LP). The acquisition was valued at C$193 million worth in Aphria’s stock issued to Scythian.

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“This timely strategic move allows Aphria to leverage Scythian’s first mover progress in the region while expanding on their own global reach and scope,” Scythian CEO Rob Reid said. Aphria shareholders will obtain direct exposure into the Colombian, Argentinian and Jamaican cannabis market.

As part of INN’s Q2 2018 review of the cannabis sector, Yasmin Gordon, senior investment advisor with Canaccord Genuity, said she has noticed most of the big companies participating in the M&A activity are being clever in the capital raised leading to conscious business decisions in an attempt for these companies to hold their valuations.

Canadian government offers estimation on impact of upcoming adult-use market

A new report from iPolitics indicates the Canadian federal government estimates new recreational cannabis market in Canada, set to open in October 17, will capture a quarter of the total demand during the first month of legalization and close to three quarter by 2021 and 2022. The report spoke with a department of finance official who provided the estimations:

A department of finance official, speaking on background, said the department “assumes” the legal retail market will “capture 25 per cent of total demand as of the first month of legalization.”

Then it expects the share to grow to 40 per cent by August 2019 – about a year after legalizing.

Eventually, finance estimates that number should rise to 75 per cent by 2021-22.

Market updates

Tilray (NASDAQ:TLRY) completed the launch of its heavily anticipated initial public offering (IPO) on the Nasdaq with an offering size of approximately US$153 million. The cannabis producer, which has supply agreements for legal cannabis product with B.C. and Manitoba, upped the size of its stock price from an original range of US$14 and US$16.

At the start of its first trading day on Thursday TLRY was worth US$23.05. As of 12:35 p.m. EST TLRY was priced at US$28.65, representing an 18.14 percent rise from its launch.

On Friday National Access Cannabis (TSXV:META) revealed a new loan deal it had obtained from the Opaskwayak Cree Nation (OCN) worth C$35 million. Mark Goliger, CEO of NAC said the funds would be allocated to the build-out of its network of cannabis retail stores in Western Canada.

“OCN, one of NAC’s shareholders, understands the importance of this timeline and have supported us by extending the capital necessary to start immediate build-out,” Goliger said. “NAC forecasts that the loan will enable NAC to build out up to 100 cannabis retail locations over time, with an initial target of 50-70 stores under development in 2018.”

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Following the deal reversal from Hiku Brands (CSE:HIKU) with WeedMD (TSXV:WMD), Greg McLeish an analyst with Mackie Research Capital issued a new research note to investors retaining his “Buy” rating for WeedMD. The analyst also raised his one-year price target to C$4.

McLeish highlighted the current cash position for WeedMD, after Canopy Growth swooped in to acquire Hiku, WeedMD was awarded a C$10 million termination fee.

“We have a strong balance sheet which allows us to comfortably execute our expansion plans as well as provides us with the flexibility to continue pursuing strategic relationships and partnerships in Canada and internationally,” Keith Merker, CEO of WeedMD said as part of an update following the results of the company’s annual meeting of shareholders.

Ontario’s new leadership evaluating cannabis plan

After the election of new Ontario Premier Doug Ford, members of the cannabis industry kept a close eye on the potential for the new leader to alter the widely panned approach Ontario was taking towards recreational cannabis.

Now Marijuana Business Daily reported the province was placing the development of its Ontario Cannabis Store (OCS), which at the moment included signing leases for new locations.

“It would seem that the Ontario Cannabis Store (OCS) is currently in a holding pattern and is awaiting political direction from the new Ford administration on how to proceed with the rollout,” Rod Elliot, senior vice president for Global Public Affairs and head of their cannabis practice told Marijuana Business Daily.

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 Supreme Cannabis Company, Hiku Brands, Maricann, Beleave and Harvest One are clients of the Investing News Network. This article is not paid-for content.

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