Cannabis Stock Report: CanniMed Cries Foul
Embattled medical cannabis company CanniMed Therapeutics (TSX:CMED) announced on Monday the formal launch of the proxy for the acquisition of Newstrike Resources (TSXV: HIP). Included in the proxy launch is Newstrike’s licensed producer unit Up Cannabis. A vote in which Newstrike shareholders would receive .033 shares of CanniMed for each share of Newstrike will occur on January 23.
Adding to the drama this week was the announcement that CanniMed took legal action against rival cannabis company Aurora Cannabis (TSX:ACB). CanniMed is contesting Aurora’s hostile takeover attempt both through a war of words in the press as well as in the courts. This week, the company’s CEO, Brent Zettl went on record as saying that the takeover attempt by Aurora was the product of secret, back-door dealings by two long-term CanniMed shareholders.
"When we started doing some digging, you could start to see that this is akin to financial guerrilla tactics. We're saying there's enough information there that we have to bring attention to all the different parts … before the securities commissions, because this is very, very unusual," Zettl said in an interview. "We're very, very concerned about the manner in which this was done and the legality surrounding it."
On Monday morning the companies appeared before the Ontario Securities Commission to plead their respective cases. For its part, Aurora seeks to subvert CanniMed’s shareholder rights plan through a reduction of the 105-day period for which an unsolicited bid must remain open. Under the current plan, the deadline for Aurora’s bid is March 9, about six weeks after the Newstrike vote.
Bobby Fuller died for your sins… Aphria Inc.’s (TSX:APH), run of good fortune may be coming to an end this week. On Monday the company announced they would begin to reduce their exposure to medical-cannabis interests in the United States. The move comes as the company is under review for delisting by the group that runs the TSX, the result of a new rule that penalizes cannabis companies operating in regions where prohibition is still in effect. Under U.S. federal law, cannabis is illegal.
In 2016 Aphria moved into the U.S. market through investment in Arizona-based medical marijuana producer Copperstate Farms, LLC. The company expanded its U.S. strategy this past April when it invested in an entity renamed Liberty Health Sciences Inc. CEO Vic Neufeld is in talks with the TMX group now, as the company moves to shift its stakes in the U.S. to indirect investments.
“We are trying to endeavour as best as possible, as expeditiously as possible, to divest from Aphria any direct involvement in any medical cannabis that we have in the U.S.,” remarked Neufeld in a recent interview. “We’re going to try to purify as much as possible... as long as the Aphria shareholders are not damaged in any which way.”
I can feel it coming in the air tonight… AdvisorShares announced on Monday the start of the new AdvisorShares Vice ETF (Ticker:ACT), which will begin trading on Tuesday, December 12. It claims to be the first ETF to provide concentrated exposure to companies dealing with “sin” products such as tobacco, alcohol, and cannabis. Included in the ETF’s portfolio management team is the Vice Fund mutual fund’s (VICEX) founder and original portfolio manager.
The ETF will pursue long-term capital appreciation via U.S. equities investments as well as through American depositary receipts (ADRs) of companies related to alcohol, cannabis, and tobacco in the international market. Believing that alcohol and tobacco are recession-proof industries and that cannabis is now more socially acceptable, the portfolio manager argues the new fund taps an emerging growth opportunity. Cannabis-related equities in the fund will comply with U.S. federal regulations.
"We're pleased to leverage a unique area of our investment expertise and deliver a fully-transparent Vice ETF never before seen in the marketplace," said ACT’s portfolio manager Dan Ahrens. “We believe cannabis-related equities – which span across multiple industries – maintain an enormous upside as both society and regulations continue to evolve.”
Around The Globe
You did it! Congratulations! World's best cup of coffee! Great job, everybody… On Monday the Board of Queensland Bauxite (ASX:QBL) announced that medicinal company Vitacann, part of the company’s subsidiary Medical Cannabis Ltd. signed an LOI with an Israeli-recommended group of North American chemists. The Australian company claims the team achieved a new first in the medical cannabis field, pain pills derived from the cannabis plant. The medicine is awaiting human clinical trials, to take place in Australia shortly.
Más contento que policía estrenando bolillo… Global oil extract processor PharmaCielo Ltd. announced on Monday that subsidiary PharmaCielo Colombia Holdings S.A.S and its partner Cooperativa Caucannabis acquired a cultivation license for psychoactive cannabis from the Ministry of Justice. Located in Colombia, the Cauca-based Cooperativa Caucannabis will use the license to begin cultivation immediately. “We...express our sincere gratitude to the Colombian government for its commitment to the people working to rebuild their lives and transition into profitable entrepreneurs in this post-conflict region," said Colombia Holdings CEO Federico Cock-Correa.
News and Notes
The NASDAQ goes by dips and starts like Macgillycuddy's Reeks… On Tuesday MMJ PhytoTech Limited (ASX:MMJ) announced an investment of CAD $2 million in Toronto company Weed Me Inc., a late-stage ACMPR applicant. MMJ proposed subscription in secured convertible debentures, which are convertible into shares and warrants in Weed Me, to the tune of a CAD$10 million pre-money valuation. The deal will assist Weed Me in completing the construction of a cannabis facility in Pickering Ontario that is still in the proposal stage.
The present is theirs; the future, for which I have really worked, is mine… Medical Marijuana, Inc. (OTC:MJNA) has something to boast about this week. On Monday, the company announced that subsidiary Kannaway had the company’s most massive revenue month in history in November. Some significant milestones made November the most successful month on record for the first ever publicly traded cannabis company in the United States.
Oh, and when you held my hand I knew that it was now or never… Supreme Pharmaceuticals Inc. (CVE:FIRE) finalized a deal with the Alliance of Beverage Licensees of British Columbia to be the first licensed supplier and producer of cannabis products for their retail members.
School’s out for summer… Cannabis Science Inc. (OTCMKTS:CBIS) agreed to a Research Collaboration Agreement with South African school Stellenbosch University. Together they will perform research into the use of cannabinoids for chronic pelvic pain.