What’s new with cannabis stocks for the week ending 8/27/21 – New Cannabis Ventures

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Navigate the rapidly evolving cannabis industry with 420 Investor, a premium service that sends out real-time alerts and explanations on the news below and much more.

Summary

  • Stocks advanced in a quiet week as far as news goes.
  • Health Canada added 5 new licenses, leaving the total now at 754.
  • 420 model investor portfolios have gained 25.3 to 57.5% year-to-date, while the Global Cannabis Stock index has gained 16.3%.

Review

Stocks rose modestly due to a slight flow of information.

Health Canada added 5 licenses, leaving the total at 754, of which 7 are expired, revoked or suspended.

Over the week, I shared this information with 420 Investor subscribers:

  • Composition of the model portfolio 08/20/21
  • Cannabis Sub-Sector Review – 08/20/21
  • Snapshots of Harborside, Planet 13 and TILT Holdings Financial Reports
  • Ayr is no longer too thin

Here are some of this week’s highlights for 420 names on the Focus Investor List:

  • ACB made its first shipment to France from its Danish facility
  • CRON issued 1.5 million shares to Gingko after reaching milestone related to production of CBDA by biosynthesis
  • CURLF has opened its third NJ dispensary
  • FFLWF to pay $ 8.5 million to buy PotGuide, expanding digital strategy
  • GNLN shareholders approved the merger with KushCo Holdings
  • GRMF has introduced a range of wellness products
  • GRWG acquired a store in Washington and one in Los Angeles County
  • KSHB shareholders approved merger with Greenlane
  • OGI has launched a line of value-priced gummy candies under its SHRED brand, SHRED’ems.
  • PLNHF Tripled Second Quarter Revenue to $ 32.8 Million, With Adjusted EBITDA Of $ 7.2 Million
  • SHWZ to Acquire Indoor Grower in Colorado for $ 6.7 Million
  • TCNNF opened its 101st dispensary in total, adding three dispensaries in Florida, where it now operates 91.
  • TLLTF has signed a partnership with the Shinnecock Nation to fund and manage its vertically integrated cannabis operations on Long Island. Second quarter revenues increased 33% to $ 48.5 million, with adjusted EBITDA of $ 6.5 million.
  • VRNOF has opened its 37th dispensary in Florida

The Global Cannabis Stock Index recovered some of the big losses from the past week, rising 0.9% to 51.64:

The index, which lost 34.1% in 2019 and 54.9% in 2018 after gaining 91.8% in 2017 and 88.8% in 2016, rose 5.2% in 2020. It gained 16.3% in 2021 so far. It currently includes 44 stocks and ended 2020 at 44.39:

Model wallets

420 Investor offers three model portfolios to underwriters, two of which are long-term focused and fully invested with the goal of beating the Global Cannabis Stock Index, 420 Opportunity and 420 Quality. Opportunity 420 ended the week at $ 142,928, up 3.6%. The model portfolio, up 35.6% in 2021, gained 35.6% in 2020 and increased 185.9% since April 2014. 420 Quality ended the week at $ 202,290, up 3. 9% for the week, and is now up 25.3% in 2021 after gaining 42.8% in 2020. The model was launched in March 2017 targeting long-term investors looking to invest in major stocks in the cannabis low turnover in the portfolio and has gained 304.6% since inception compared to the index’s 36.1% decline. Flying High, which focuses on swing trades, ended the week at $ 397,553, up 1.5%. The model portfolio gained 52.7% in 2020 and is up 57.5% in 2021, and the return since its inception in late 2013 has been 3876%.

Outlook

After a strong recovery in early 2019, the cannabis industry fell sharply over the following year to unprecedented levels due to several negative developments including the CannTrust fraud, the surprise termination of Bruce Linton in as CEO of Canopy Growth, a disappointing rollout. legalization in Canada, regulatory confusion in the United States regarding CBD and the slow rollout of legalization in California, the vaping crisis and then financial turmoil and market disruption due to the COVID-19 pandemic. The industry has seen capital available to fund expansion dry up, a situation that continues to challenge companies operating with negative cash flow as availability is limited to stronger operators.

Cannabis stocks overreacted and hit a low in March 2020, and benefited from the perception that the industry has strong growth prospects, which was unclear at the time. One big change has been that the pandemic has caused many regulators to allow previously prohibited types of retail activity, such as curbside pickup and delivery. The legal market quickly capitalized to become even more convenient than the illicit market, with the ability to order online. States and municipalities have decided to expand adult use and medical access. Access to capital improved dramatically and major companies began to generate large and rapidly growing income and profits.

The good end of 2020 continued into 2021 after Democrats took control of the Senate in early January, but actions have gained traction and have consolidated since then. In addition to fears that federal legalization is taking longer than expected, there have been difficult comparisons to last year’s sales levels. Additionally, as several institutions embraced the sector earlier this year, there was a lull in further interest.

There are several potential catalysts ahead, including the FDA (or Congress) providing clarification on the regulation of CBD, the progress of Canadian legalization which began in October 2018 and which begins to include a broader set of products. and the continued growth of the German and Israeli MMJ. and other international markets which have been slow to develop. Adult implementations in California and Massachusetts have been slow to roll out, but are starting to show big improvements. Michigan and Illinois legalized adult use at the end of 2019, and these markets are showing strong growth that may prompt other states to legalize. Voters in Arizona, Montana, South Dakota, and New Jersey all approved legalization of adult use in November, and Connecticut, New Mexico, New York and Virginia passed the legalization through the legislative process in 2021.

The major themes to come are probably continued cross-sector investment in the sector and further consolidation in Canada and the United States, possible reform of federal regulations (SAFE Banking Act and other more comprehensive laws, which could eliminate the ‘280E taxation and allow trading in higher markets exchanges for MSOs as well as the widespread use of credit cards for cannabis purchases), measures to enable cannabis research, deployment of MMJs in Germany , Mexico and Australia as well as continued progress in South America and the potential legalization of adult use in Israel and Mexico, new legal cannabis implementations in AZ, MT, NJ and SD, and MMJ implementations in AL, WV and VA, legalization possible through legislatures in DE, FL, MD, MN, NH, PA and RI and implementation of the Commercial Programs CT, NM, NY and VT in 2022 and VA in 2024.

After hitting a low in March 2020, the cannabis industry is in a new bull market. Many companies generate substantial income and some even make a profit, and the liquidity is much better. The industry has moved away from many legacy penny stocks that never proved they had viable businesses to better capitalized companies, many of which have strong management teams and substantial businesses. The investor base has also evolved, becoming more and more institutional.

Alan Brochstein, CFA

Based in Houston, Alan draws on his experience as the founder of the 420 Investor online community, the first and still the largest publicly traded equity-focused due diligence platform in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Prior to focusing on the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as a freelance research analyst after more than two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 on Seeking Alpha, where he has 70,000 subscribers, Alan is a frequent speaker at industry conferences and a frequent source for the media including the NY Times, Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alain: Twitter | Facebook | LinkedIn | E-mail

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