Cannabis Weekly Round-Up: Sessions Rocks Cannabis Stocks

INN rounds some of the biggest news in the cannabis market for the past trading week

cannabis-leaf

This past trading week (January 2-5) had a day less of trading, still, the cannabis market was rocked on Thursday after a report on U.S. Attorney General Jeff Sessions pointed to a change in policy creating uncertainty in the market. A response from this report and market news complete this week’s Cannabis Weekly Round-Up.

Attorney General goes against cannabis, causes severe decline in the market

The uncertainty of the cannabis market grew this past week as U.S. Attorney General Jeff Sessions sent marijuana stocks into a day of public losses after a report from the AP, indicated he would be rescinding Obama era policy letting states regulate cannabis without federal interference. This distinction of government powers is crucial, as several states have legalized marijuana, however on a federal level the drug is still illegal.

This week the Investing News Network (INN) reported on the memorandum from Sessions rescinding the Cole Memo, policy from the Obama administration protecting states where cannabis is legal from federal enforcement and its effect on the public market for cannabis investors.

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Companies respond to the Sessions memo

The wide-ranging effect of this decline was so severe several cannabis players made statements to express their response to the report of the Attorney General. While a group of major Licensed Producers (LPs) like Canopy Growth (TSX:WEED) and MedRelead (TSX:LEAF) reassured shareholders their business had no connection to the interests below the border, other more involved companies had to respond more directly.

“It is our belief that this Memorandum has more to do with the DOJ’s desire to ensure its ability to continue to enforce federal law without specific enforcement priorities regarding cannabis, than it does to disrupting ongoing state-legal cannabis activity,” Marc Lusting, CEO of CannaRoyalty (CSE:CRZ; OTCQX:CNNRF) said in a statement. “While the release of the Memorandum may mean some volatility for U.S. players over the short-term, we see significant opportunity for growth over the coming year and will continue to work to drive value for our shareholders.”

Another operator with significant interest in the U.S. market is Liberty Health Sciences (CSE:LHS; OTCQX:LHSIF), in their statement to shareholders, the company said it was entirely focused on the medical cannabis market, not the recreational one, which in their eyes was one of the driving forces behind the new Sessions policy. The company cited other legislative protections for their business and stated figures on the support for the legalization of cannabis.

“It is our interpretation that the memorandum… is largely in response to the recreational cannabis marketplace in California becoming effective on January 1, 2018. It does not affect the medical cannabis marketplace,” Liberty Health Sciences wrote.

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Bruce Linton, CEO of Canopy told shareholders in a statement the management team of his company see the “confusion” in the U.S. market as an advantage for the company.

iAnthus Capital Holdings (CSE:IAN; OTCQB:ITHUF), another U.S. focused operator offered to investors, who may be nervous after yesterday’s decline that president Trump has voiced support for cannabis in the past. However, on Thursday (January 4) Press Secretary Sarah Huckabee Sanders told reporters, Trump “believes in enforcing federal law… whether it’s marijuana or whether it’s immigration.”

“There is no new policy that directs or demands the U.S. Attorneys to prosecute individuals in states where marijuana programs are legal. U.S. Attorneys will continue to have the same wide prosecutorial discretion that they had prior to today,” the company said.

Market News

Newstrike Resources’ (TSXV:HIP) stock rose on Friday after it received a license amendment from Health Canada for its subsidiary Up Cannabis. The change will now allow the producer to sell cannabis in dried marijuana form.

“We have been confident throughout our process that we would receive the regulatory approvals we require to access the exciting opportunities that Canada’s adult-use cannabis market will present,” Jay Wilgar, CEO of Newstrike and Up Cannabis said in a statement to investors. “With this approval in hand, we have all of the key strategic elements in place to move forward successfully.”

Thanks to the Friday announcement Newstrike’s stock had 38.89 percent boost. This past week Newstrike has increased its share price 66.13 percent.

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During this trading week, the Australian government declared its intentions to become the “world’s leading exporter of medicinal cannabis” according to a report from the BBC.

The plan from the Australian administration is to change national regulations and join countries like Canada with the policy allowing the sale of products besides from the national market.

“Our goal is very clear: to give Australian farmers and manufacturers the best shot at being the world’s number one exporter of medicinal cannabis,” Health Minister Greg Hunt told the BBC.

INN offered investors with a recap of the battle between CanniMed Therapeutics (TSX:CMED) and Aurora Cannabis (TSX:ACB), as the latter tries to acquire its fellow LP. The aggressive strategy from Aurora was aggravated by CanniMed’s intention to conduct a poison pill business move by acquiring Newstrike Resources. After regulators got involved the situation is on hold until all the parties hold shareholder meetings.

However, this past week CanniMed announced a partnership with Newstrike outside of the proposed acquisition, a deal that Aurora has called into question in a public statement. Cam Battley, Executive Vice President of Aurora said if CanniMed needed to buy cannabis from another producer, “they could easily have signed a supply agreement with any number of producers currently licensed to sell.”

Aurora demanded to know the exact terms of the deal and confidently stated if its acquisition of CanniMed goes through it would review this transaction.

After suffering the decline from Thursday, the Marijuana Life Sciences Index ETF (TSX:HMMJ) recovered on Friday, seeing a 3.85 percent increase in value, while over the trading week the ETF had a 39.97 percent rise. As of 1:09 p.m. EST on Friday, the ETF traded at $22.11. Since its inception earlier this year, the index has gone up 115.9 percent.

Don’t forget to follow us @INN_LifeScience and @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**

Cannabis Weekly Round-Up: Manitoba Set to Pick 4 Retail Leaders for Recreational Business

By Bryan Mc Govern – Dec. 31, 2017

With Christmas and Boxing Day in Canada, this past trading week (Dec. 26-29) saw a reduction of trading days. However, there were still some developments to look over in the Investing News Network’s (INN) cannabis weekly round-up.

The race for retail space in Manitoba is gaining steam, as the province announced it would pick four marijuana retail proposals from, according to the Canadian Press over 100 applications now. The applicants that earn one of the coveted spots will be made aware in February, said Blaine Pedersen, Manitoba’s minister of growth, enterprise, and trade.

The report singled Delta 9 (TSXV:NINE) as one of the public applicants for the option to sell recreational cannabis-based products. The company brings to the table a Licensed Producer (LP) status on a federal level and a partnership with Canopy Growth (TSX:WEED) for its claim. John Arbuthnot, CEO of Delta 9, said obtaining one of the four retail licenses in Manitoba could lead to operating dozens of retail locations.

Amid no apparent news or transactions Canopy’s (TSX:WEED) stock saw a 20.11 percent increase on Wednesday (Dec. 27) and continued into Thursday (Dec. 28), closing that day up an extra 9.51 percent. Paul Taylor, chief investment officer of asset allocation at BMO Global Asset Management told Business News Network on Thursday this kind of market movement is something that couldn’t be ignored anymore.

“If you’re a Canadian equity manager running a serious portfolio you now have to have a view,” Taylor said. This recognition serves as another reminder of the maturity the cannabis industry is starting to reach.

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Company News

As the business of marijuana continues to expand into novel areas, the medical side hasn’t stayed behind and this past week GW Pharmaceuticals plc (NASDAQ:GWPH) announced the US Food and Drug Administration (FDA) has approved their Priority Review application for their NDA candidate Epidiolex. This candidate is based in the company’s lead cannabidiol (CBD) product treating seizures associated with Lennox-Gastaut syndrome (LGS) and Dravet syndrome.

“We look forward to working with the FDA during the review process to support the case for approval of Epidiolex,” Justin Gover, CEO of GW said. The company expects the FDA to complete its review by next June.

Despite fewer days of trading, the Canadian marijuana ETF still managed to get some growth this past trading week. Over the three-day trading period, the Marijuana Life Sciences Index ETF (TSX:HMMJ) enjoyed a 15.31 percent increase. As of 1:18 p.m. EST on Friday, the ETF traded at $18.23. Since its inception earlier this year, the index has gone up 77.85 percent.

Don’t forget to follow us @INN_LifeScience and @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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