Cannabis stocks posted slight gains for the most part on Friday, as the threat of a government shutdown, which ultimately went into effect at midnight Saturday morning, left otherwise hopeful investors a bit jittery just as marijuana markets began to calm down following a week of volatility. An early week market correction collided head-on with tanking bitcoin prices to leave the marijuana markets in flux throughout most of the week. However, as prices began to settle on Friday, U.S. investors with an eye on Washington pulled back when it became clear that neither political party would succumb to pressure. MJIC’s North American Marijuana Index gained on Friday, even as cannabis stocks in the U.S. fell by day’s end.
Around the broader exchanges, investors worried throughout the day about the shutdown but continued to pour money into the markets, with Wall Street and Toronto both rising. Despite all-day negotiations in the Senate, and “Art of The Deal” style talks between Chuck Schumer (D-NY) and President Trump at the White House, the government shutdown went into effect early Saturday, with both parties laying blame at the feet of the other. Still, both the S&P 500 and the Nasdaq closed at record highs, ending the day at 2,810.30 and 7,336.38 respectively. In Canada, rising financial and industrial shares drove the S&P/TSX Composite Index up to 16,353.46.
Investors in the marijuana markets tried to remain hopeful on Friday following a long week of volatility in the markets. MJIC’s North American Marijuana Index, the sector’s most accurate litmus test rose 2.24 points for a 0.68 percent gain, closing the day at 331.64. Fortunes parted between the U.S. and Canada in the Index, with the former dropping and the latter rising to end the week. The United States Marijuana Index fell 1.77 points or 1.78 percent, closing out the day at 97.86. Meanwhile, the Canadian Index rose 23.84 points for a 2.62 percent gain, closing out the day at 934.28.
Marijuana’s other two indices ended the week on a high note, though they did so limping over the finish line. The Cannabis Stock Index which is overseen by 420 Investor gained 0.59 percent to close out the week at 161.34. Solactive’s North American Medical Marijuana Index saw similar gains on Friday, ending the week up 1.89 percent at 1874.40.
Cannabis funds began to settle in on Friday even as the government shutdown weighed heavily on investors. Horizon’s Marijuana Life Sciences Index ETF posted a slight gain, rising $0.40 per share for a 1.80 percent gain. The fund is up at $22.68 per share. ETFMG’s Alternative Harvest ETF (MJX) also gained on Friday, climbing $0.41 per share for a 1.14 percent increase. The fund closed the week at $36.48 per share.
Marijuana market fundamentals are fighting a slew of outside forces as industry and politics hover over an otherwise sound sector. The current correction is battling a reactive broader market with panicked investors too worried about missing the next big thing. Smart investors would be wise to avoid distraction and let the market settle. Ignore the chorus of amateur analysts and look at what is ahead. The fundamentals of the marijuana market are stronger than they appear.
Meanwhile, Around The Industry...
I can saw a woman in two/ But you won't want to look in the box when I'm through… Joining the crypto-craze is Future Farm Technologies Inc. (CSE:FFT) (OTCQB:FFRMF) who announced on Friday their new 51 percent stake in Flipcoin, a new cryptocurrency application and point of sale platform developed by New England CCS. Using the new application dispensaries ca accept as payment Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. Expected to go live in three weeks, Flipcoin will appear in nine dispensaries owned by News England CCS, with plans for global expansion in the future.
Adding to the potential of Future Farm’s investments, the application will integrate with the popular cryptocurrency platform Coinbase. The move makes Future Farm the latest cannabis company to enter the cryptocurrency and blockchain spaces, as the industry bets on the digital currency’s ability to subvert the banking industry’s marijuana blacklist. Future Farm’s announcement comes as Bitcoin’s prices are tanking and, as some believe, bringing down the cannabis sector with them.
"Under current US Federal law, dispensaries are un-bankable," comments Bill Gildea, CEO of Future Farm. "As the industry has grown, an expensive problem for dispensaries has emerged. We believe the unique nature of cryptocurrencies - based on fast, secure, and proven blockchain technology - has the potential to be a game-changer by solving this multi-billion dollar problem."
Future Farm rose 4.30 percent on Friday on lower than average volume trading, closing out the day at $1.0923 per share.
Quadron’s Rainy Day Fund
How are you gonna make your way in the world, woman / When you weren't cut out for working… Putting away some rainy day funds is Quadron Cannatech Corporation (CSE:QCC) who announced on Friday a small $5 million bought deal financing agreement. Over 7 million units sold to a single underwriter, PI Financial Corp. for $0.70 per share. The proceeds will go towards a few different company projects, as well as to general corporate purchases.
“Quadron's recently unveiled BOSS C02 Extraction System is the most cutting-edge C02 extractor available in the market, highlighted by its simplicity and plug and play design,” remarked Quadron CEO and President Rosy Mondin. “This financing allows us to build out and deliver on the BOSS purchase orders as well as expedite our design and manufacturing of additional equipment to satisfy the demands of our clients who require cannabis extraction and processing laboratories.”
Quadron was up 2.67 percent on Friday, closing the day at $0.77 per share.
Ecodyst Makes A Name
One day I came to a fork in the road / Folks, I just couldn't go where I was told… Making things official is cannabis up-and-comer Ecodyst, who announced last week trademark registration for both their brand and their rotary evaporator known as the EcoChyll. Built as a prototype when company founder George Adjabeng was still in graduate school, the EcoChyll rotary vaporizer hits below 35 degrees Celsius in under a minute. The company hopes to continue enticing laboratories and universities with their cannabis extraction product over the next few years, seeing legal cannabis as a path to profitability.
“It is amazing to see that so many cannabis labs have embraced the EcoChyll technology,” noted Adjabeng in a statement. “We hope to see adoption rates of the EcoChyll continue to rise as more cannabis extraction labs see the dramatic increase in productivity that results from choosing Ecodyst rotovaps. Now that our brands are officially registered trademarks, 2018 is shaping up to be quite a year for Ecodyst.”
Other News and Notes
Just when I thought it was safe to be bored… Building a war chest is Nuuvera Inc. (TSX-V:NUU) who announced on Thursday a bought deal financing agreement to the tune of $35 million. The latest in a string of bought deal financing agreements in the cannabis industry, the deal has Nuuvera selling over 6 million shares to a group of underwriters led by Clarus Securities Inc. and Canaccord Genuity Corp. As is the norm with these deals, the company plans to use the proceeds for “working capital and general corporate purposes.”
I was sitting in the Hollywood Hawaiian Hotel / I was starting into my empty coffee cup… Confusing everyone is CanniMed Therapeutics Inc. (TSX:CMED) who announced on Thursday the postponement of the shareholder vote on the Newstrike Resources Ltd. (TSX-V:HIP) acquisition. According to a statement, the company moved the meeting back two days to open up a dialogue with arch-rival Aurora-Cannabis Inc. (TSX:ACB). The new meeting will be on January 25 at 10 AM.
Darkness in the morning / Shadows on the land / Certain individuals aren't sticking with the plan… Being a follower is Protext Pharma, Inc. (Pinksheets:TXTM) who announced on Friday the acquisition of blockchain and cannabis compliance advisory firm Growprocess, Inc. With another blockchain ledger in the works for the cannabis industry, Growprocess hopes to break out of a crowded pack over the next year. Protext will acquire 60 percent of the company upfront with an option for the other 40 percent within the first six months.
I've got a bitter pot of je ne sais quoi / Guess what? I'm stirring it with a monkey's paw… Tilray Canada Ltd. became yet another on a growing list of medical cannabis suppliers to Shoppers Drug Mart… Canada's Island Garden follows Canopy Growth in supplying cannabis to Prince Edward Island… Nuuvera also made headlines by announcing the acquisition of a license to import cannabis to Italy…