Cannabis stock report: Cronos Group sees more money to come into industry after landmark deal with Altria
The North American Marijuana Index fell flat on Monday, as Cronos Group Inc. (NASDAQ:CRON) CEO Mike Gorenstein reveled in his company’s latest deal with legacy tobacco company Altria Group, maker of Marlboro brand cigarettes, calling it the first of many such deals for both Cronos and the industry to come in next few months.
“I’m still running on adrenaline,” Gorenstein said in an interview, according to MarketWatch. “We just got a new partner and now resources — but beyond that, the network and support [Altria] can offer — being able to have that experience. It’s an alignment and a partnership, but it’s not like the deal is over. We’re all very, very excited about the beginning, and we can now go and do the things we want to do.”
The deal made between the two companies last week was nothing short of dynamic, with Altria putting down a $1.8 billion investment in Cronos for a 45 percent stake. Moreover, the tobacco giant has an option to go all-in with full ownership should it choose to do so down the line.
— Cronos Group (@CronosGroupMJN) December 7, 2018
Cannabis hasn’t seen a deal this big since Constellation Brands bought into Canopy Growth Corp. (TSX:WEED) (NYSE:CGC).
Already the deal has been positive for investors, with PI Financial analyst Jason Zandberg calling the investment a “significant vote of confidence” for Cronos executives, according to MarketWatch. He raised his target price to CA$24 ($17.91).
“We believe Altria provides many benefits to Cronos Group including their experience in regulatory, compliance and government relations as well as their expertise in device technology, supply chain management, and marketing,” Zandberg wrote in a note to clients. “We also believe the Altria benefits from Cronos’ expertise in cannabinoid-based products and is an immediate channel for product development in the Canadian marketplace.”
The Index fell .01 points, essentially staying flat for the day on Monday, ending the day at 237.27, while the United States Marijuana Index gained .79 points or .77 percent to end the day at 102.90. The Canadian Index dropped 2.67 points, or .52 percent to finish the day at 510.07.
The Benchmark Horizon’s Marijuana Life Sciences ETF (HMMJ) fell CA$0.09 ($0.067) per share, ending the day at CA$16.72 ($12.48), and the ETFMG Alternative Harvest ETF (MJ) fell $0.32 per share, a decline of 1.11 percent to finish the day at $28.60.
Meanwhile in the markets...
It was another day of up-and-down stock prices on Monday as early morning lows led to another late-day recovery, a sign that most experts agree on means the market is in a downtrend.
David Woo, a credit strategist at Bank of America Merrill Lynch, told Yahoo Finance that trade was the issue du jour that dominated all investments, stating it was an “issue that won’t go away anytime soon.” Woo added: “The only thing I’m confident in is volatility will be high next year.”
Oliver Jones, a markets economist at Capital Economics, told Yahoo Finance: “We think that [last] week’s turbulence provides a reasonable guide to the trends to watch for in markets next year. In particular, while both the S&P 500 and U.S. Treasury yields have started to drop a little sooner than we had previously anticipated, we still suspect that both have much further to fall in 2019.”
As the bell rang on Monday, the Dow gained 34 points or 0.14 percent, the S&P 500 added four points, or 0.18 percent, while the Nasdaq gained 51 points or 0.74 percent.
Canopy’s Linton named to Bloomberg’s top 50 of 2018
Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) CEO Bruce Linton made Bloomberg’s top 50 of 2018, as he’s crowned with the title “The marijuana CEO.” Fresh of the company’s multibillion-dollar deal with Constellation brands this year, the company told the world that cannabis was shedding its stigma. That one deal helped the industry pull out of an eight-month downturn earlier this year, sending pot stock soaring for a short period.
Linton also believes that one Google-sized company will eventually dominate the cannabis industry and that Canopy growth could do it. “We’ve got the right culture” to be it, he told reporters earlier this year. The only way that can happen, however, is if Canopy can own the medical market according to Linton.
MPX Bioceutical awarded Nevada retail licenses
MPX Bioceutical Corporation (CSE:MPX) (OTC:MPXEF) announced on Monday that they were awarded four conditional retail marijuana store licenses in Nevada via their subsidiary GreenMart NLV, LLC. According to a statement released the jurisdictions granted by the state include the City of Las Vegas, Unincorporated Clark County, Reno, and Henderson.
"We are excited to be able to execute on our growth strategy by adding to our market share in Nevada," said Beth Stavola, COO of MPX in a statement. "Opening dispensaries is the final step towards becoming a full, vertically integrated cannabis company in the state. These four licenses add incredible scale to an already strong foothold."
Who’s up and who’s down?
Isodiol International Inc. (ISOL:CNX) shot up $0.29 per share or 21.48 percent to finish the day at $1.64… Cannex Capital Holdings Inc. (CNzz NX:CNX) gained $0.07 per share an increase of 8.75 percent to end the day at $0.87… Aphria Inc. (APHA:CA) gained $0.60 per share or 8.66 percent to finish the day at $7.53.
MariMed Inc. (MRMD) fell $0.235 per share or 5.93 percent to end the day at $3.725 per share… Newstrike Brands Ltd. (HIP:CA) fell $0.025 per share a decline of 5.88 percent to end the day at $0.40… Sunniva Inc. (SNN:CNX) fell $0.16 per share or 4.94 percent to end the day at $3.08