The North American Marijuana Index gained almost eight percent last week, following a volatile few days on the market as investors panicked, then retreated over White House threats of tariffs and trade wars. The Index closed out the trading week at 271.67.
Of more immediate concern to growers and cultivators was news that the price of a pound of legal marijuana has steadily decreased over the past 18 months, according to analysts at Cannabis Benchmarks, who track the cannabis U.S. spot price index.
Spot prices are the current market value at which a product can be bought or sold for immediate delivery, reports The Cannabist. According to the 2017 Annual Review and Outlook, published by Cannabis Benchmarks, the decline in marijuana prices are part of a three-year trend. The report’s author, Adam Koh, told The Cannabist recently that prices may finally be reaching a bottom.
“It’s anyone’s guess exactly where that is, considering the different market structures in the various states,” he said in an interview. “But I think we’re getting close (to the bottom).”
Because of the state-by-state policies in the U.S., the spot index has various reasons for why prices are dropping. Wildfires in California were a factor, as was a lack of restrictions on Oregon. One thing Koh noted in his interview with The Cannabist that did not affect prices was pressure from the federal government.
“Until there is some sort of concrete (federal) enforcement, all the huffing and puffing really doesn’t affect the market dynamics on the ground,” he remarked. “Businesses… can’t worry about it until something happens. They’ve been living in this gray area for some years, and so they’re just going to continue doing what they’re doing.”
Aurora Cannabis Has Nasdaq Envy
After Cronos Group Inc. (NASDAQ:CRON) (TSX-V:CRON) moved to become the first weed stock to trade in the U.S. publicly, Canada’s second-largest cannabis company, Aurora Cannabis Inc. (TSX:ACB) grabbed headlines last week when they said they might be interested in doing the same. Last Saturday, Aurora Executive Cam Battley took to Twitter, replying to a user’s who asked if the cannabis company would make a move to the Nasdaq.
Well, in Canada we uplisted from CSE to TSXV to TSX. And in the US from OTCQB to OTCQX. So what would be your guess? ;),” wrote Battley.
Canopy Growth Fields Poppies
Canopy Growth Corporation (TSX:WEED) reportedly placed a bid last Tuesday for closely held Spanish firm Alcaliber SA, a morphine and thebaine company. Bloomberg stated that the deal, which was still in the works could be valued at about 200 million euros, or $246 million, to upwards of 275 million euros.
Several companies are said to be bidding on the firm, though Canopy is the frontrunner according to reports. U.K. health-care investor GHO Capital and Spanish investment firm Alantra Partners SA have are also looking into buying the company.
Speaking Of Aurora
Bloomberg also reported that Aurora won the support needed to acquire CanniMed Therapeutics Inc. (TSX:CMED), with 71 percent of issued and outstanding common shares being tendered. According to the report, it will be the largest takeover in the history of the marijuana industry. The deal originally agreed to in January, sees Aurora paying CAD$1.23 billion (US$950 million) for the rights to CanniMed Therapeutics.
News and Notes
CannTrust Holdings Inc. (TSX:TRST), a licensed producer of medical cannabis under the Health Canada Access to Cannabis for Medical Purposes Regulation program, began trading on the Toronto Stock Exchange on March 5… Emerald Health Therapeutics, Inc. (TSXV:EHT) (OTCQX:EMHTF) and Village Farms International, Inc. (TSX:VFF) (OTCQX:VFFIF) received a Cultivation Licence from Health Canada for their Delta 3 greenhouse operation last week… WeedMD Inc. (TSX-V:WMD) (OTC:WDDMF) and Phivida Holdings Inc. (CSE:VIDA) (OTC:PHVAF) signed off a letter of intent, forming a joint venture to develop cannabis-infused beverages.
Federal Cannabis Tax Revenue Could Exceed $105 Billion
New Frontier Data reports that national marijuana legalization under a 15 percent tax rate would be a cash-cow for the federal government. Their report is based on current growth, with sales reaching $48 billion by 2020. The full graphic can be seen below: