Cannabis Stock Report: Mixed Day On Marijuana Markets As Panicked Selling Dries Up

Cannabis stocks had a mixed day on Tuesday as U.S. marijuana markets shook off last week’s bottom and panicked selling dried up despite a poor showing in the Canadian sector. MJIC’s North American Marijuana Index posted significant gains on the strength of the U.S. market following Monday’s day off for the Martin Luther King Jr. holiday. Other cannabis indices showed marked increases, as well as the presumed market correction, began to shake out as investors showed confidence in the industry. Cannabis stocks did well on Tuesday in spite of a down day on Wall Street and the Canadian exchanges, with the broader markets falling for the first time in days.

Energy and materials sectors took a hit on Tuesday as Wall Street posted early gains before retreating late in the afternoon. Still, as oil prices declined, the healthcare sector rose to keep the market from a complete tumble. The Dow Jones Industrial Average fell 0.04 percent, dipping back below 26,000 and the Nasdaq and the S&P 500 posted similar losses. Up north Canada’s S&P/TSX composite index fell 72.93 points to close the day at 16,298.88 as eight of the Index’s main groups posted losses.

In the marijuana markets, cannabis stocks were still shaking out following last week’s dip, with the U.S. posting huge gains while the Canadian sector fell slightly. The marijuana market correction continued, as The North American Marijuana Index gained 25.00 points, climbing 8.17 percent. Splitting the day the U.S Index rose 7.28 percent while across the border the Index dropped .79 percent.

Signals were more stable on cannabis’ other indices as The Cannabis Stock Index climbed 11.94 points, or 7.82 percent to close out the day at 164.61. Meanwhile, Solactive’s North American Medical Marijuana Index climbed 130.77 points, or 7.86 percent to close out the trading day at 1794.73.

The mixed pattern held on marijuana’s two most significant funds, with Horizon’s Marijuana Life Sciences Index ETF, which is based mostly on Canadian stocks, falling $0.35 per share for a 1.59 percent loss. The fund ended the trading day at $21.64 per share on a trading volume of 2634953. On the other hand, the ETFMG Alternative Harvest ETF jumped up $1.65 per share for a 4.91 percent gain to close the day at $35.23 per share.

The fundamentals of the marijuana markets are shaking up to be stronger than expected following last week’s considerable downturn as a predictable correction appears to have bottomed out, at least for the meantime. Investors look more comfortable, and sell-offs seem to have halted for the time being. The market is still volatile, with a big industry consolidation on the horizon, but investors should feel safer this week. The introduction of Representative Barbara Lee’s (D-CA), Restraining Excessive Federal Enforcement and Regulations of Cannabis Act (REFER), should start to gain some traction in the markets as well.

Meanwhile, Around The Industry...

To inspire himself, he lit up a marijuana cigarette, excellent Land-O-Smiles brand… Raising capital is The Green Organic Dutchman Holdings Ltd. who announced on Tuesday the closing of over $100 million in financing and an additional $55 million strategic investment from Aurora Cannabis Inc. (TSX:ACB). In regards to the funding, the company issued 67 million shares at a price of $1.65 per unit, with each unit comprising one common share and one-half common share purchase warrant. Similarly, Aurora purchased around 33 million shares of the company also at a price of $q.65 per unit.

Green Organic plans to use the funds for an expansion project for their greenhouse facilities in Ontario and Quebec. Moreover, the agreement with Aurora calls for the two companies to enter into a supply agreement whereby Aurora may exercise an option to buy up to 20 percent of Green Organics cannabis output every year. In return, Aurora subsidiary Aurora Larssen Projects Inc. will lend their expertise to the Green Organic’s greenhouse expansion project.

"Teaming up with Aurora, the industry's innovation leader, provides us with a stable, supportive shareholder, through whom we have access to best-in-class technologies and industry know-how, “remarked Green Organic President Csaba Reider. “This will significantly accelerate our time to market and establish TGOD as the world's leading provider of premium organic cannabis.”

Aurora Cannabis was up 15.91 percent on higher than average trading volume on Tuesday, closing the day at $9.62 per share.

Kush Bottles Pops

I was embarrassed. What do you mean, "didn't inhale?" What the hell do you think we smoke it for… Producing results is overlooked stock pick Kush Bottles, Inc. (OTCQB: KSHB) who announced on Tuesday a 258 percent year-over-year revenue increase in their first quarter 2018 financial results. The results, which were for the period ending November 30, showed increased gains in cash balance and working capital since the previous quarter which ended August 31. Gross margins were reported down 4 percent but attributed to increased business in the vaporizer sector which the company claims has lower margins.

“During the first fiscal quarter of 2018, we saw the release of California's new temporary regulations for medical and adult-use cannabis sales, which took effect on January 1, 2018,” commented company chairman and CEO Nick Kovacevich. “We consider the legalization of adult-use cannabis sales to be a major opportunity to scale the business throughout 2018 and beyond, and we have made significant headway to establish the Company as a leader in this market.”

Kush Bottles was up 26.72 percent on higher than average trading volume on Tuesday, closing out the day at $8.30 per share.

Friday Night’s Alright For Fighting

And I will raise up for them a plant of renown, and they shall be no more consumed with hunger in the land… Going fishing is Friday Night Inc. (CNSX:TGIF) (OTCQB:TGIFF) who announced on Tuesday a letter of intent to acquire in whole cannabis cultivation facility Harvest Foundation LLC. Currently licensed for medical and recreational cannabis cultivation in Nevada, Harvest Foundation’s 10,000 square foot facility sits adjoining to Friday Night’s Alternative Medicine Association. A purchase price of $1 million and 10 million common shares of stock was agreed upon by the two companies.

"Integrating the Harvest Foundation license and facility into our business is a huge milestone and this facility effectively doubles our current cultivation capacity," said Friday Night President and CEO Brayden Sutton in a statement released Monday.

Friday Night shares were up 2.04 percent on Tuesday to close out the day at $1.00 per share.

Other News and Notes

There was no such thing as chances anyway, in the distorted perspective of the weed fumes… Doing paperwork is Harvest One Cannabis Inc. (TSX-V:HVST) who announced on Tuesday the filing of a short form prospectus as part of a $35 million bought deal. Filed in every province save for Quebec, the preliminary prospectus valued at $1.82 per unit. In addition to the bought deal, Harvest One announced the appointment of former Advanced Nutrients Ltd. COO Nick Maltchev as interim COO.

By comparison, it is physically impossible to eat enough marijuana to induce death… Always closing is Anandia Laboratories Inc. who announced on Monday a private placement financing deal worth $13.4 million. The company, a licensed dealer in Canada, plans to use the funds for expansion of their testing and research and development facilities. “A partnership with Anandia was important to us given they are the gold standard in quality assurance testing for licensed producers,” commented Tyler Stuart, the Managing Director of the lead investor in the deal Green Acre Capital.

Quick Bites

I am convinced that there are genuine and valid levels of perception available with cannabis… Tetra Bio-Pharma (TSX-V:TBP)(OTCQB:TBPMF) received approval from Health Canada to proceed with phase 1 clinical trials of cannabis oil PPP005... MyDx, Inc. (OTCQB: MYDX) will begin clinical trials on a pain management formula derived from data points tracked by its handheld cannabis tester...CanniMed Therapeutics Inc. (TSX:CMED) board member Doug Banzet resigned effective January 15

Until tomorrow…

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