The North American Marijuana Index regressed on Tuesday, following Monday’s minor rally on the backs of positive financial reports from some of the more significant names in the pot stock sector. Tuesday’s pullback came as the Trump administration reversed course on recent progress on what was seen by many as positive first steps towards federal legalization. Word surfaced on Tuesday that the U.S. Small Business Administration released a clarifying statement last month that marijuana businesses, including ancillary operations that do not touch the plant, cannot receive federally backed loans. Issued by SBA Administrator Linda E. McMahon, the ruling dashed cannabis stock investor hopes in the post-Boehner era.
“Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity,” read the memo, which was released on April 3. “Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.”
Meanwhile, Wall Street ended the day mixed on Tuesday, with the S&P 500 Index paring earlier losses on positive sentiments regarding trade with China and renegotiation possibilities with Mexico on NAFTA. Mexican Economy Minister Ildefonso Guajardo said U.S. automobile rules under the trade agreement would receive a response and that negotiations could result in a deal should they show enough flexibility.
"There is a certain level of fear that has seeped into this market," said Tim Ghriskey, chief investment strategist at Inverness Counsel in an interview with Reuters. "But there are positive outlooks out there on trade."
The Dow Jones Industrial Average lost 64.1 points, falling 0.27 percent, to end the day at 24,099.05, while the S&P 500 recovered to gain 6.75 points, or 0.25 percent, to close out the day at 2,654.8. Similarly, the Nasdaq Composite climbed 64.44 points, a gain of 0.91 percent, to end Tuesday at 7,130.70.
The Horizons Marijuana Life Sciences ETF (HMMJ.TO) fell CAD$0.18 per share, a loss of 1.09 percent, to close out the day at CAD$16.30, while the Evolve Marijuana ETF (SEED.TO) lost CAD$0.51 per share, or 3.00 percent, to close out the day at CAD$16.50.
The Green Organic Dutchman Readies For IPO
Going public is The Green Organic Dutchman (TGOD) whose stock will premier on the Toronto Stock Exchange on May 2. Planning to issue around 30 million shares, the company’s IPO has been priced at $3.65 per share. According to a report in Seeking Alpha, proceeds from the IPO expect to be between $102 and $115 million.
“By 2022, the Company expects to have a production capacity of approximately 116,000 kg per year of premium organic cannabis between the Hamilton Facility and Québec Facility,” noted the company’s prospectus. They plan to accomplish this through their facilities which total 970,000 square feet as never generated sales revenue according to the Financial Post. Most of the recent interest in the company comes from their ability to secure key strategic partnerships, such as their much-touted deal with Aurora Cannabis (TSX:ACB), who invested $55 million for a 17 percent stake.
Cannabis’ longest-running soap-opera ended as Aurora Cannabis (TSX:WEED) finished acquiring CanniMed Therapeutics (TSX:CMED)... CannTrust Holdings (TSX:TRST) signed a five-year deal with NEXGENRX INC. (TSX-V: NXG).
PotNetwork made its way through the Champs trade show in Las Vegas recently to learn more about the latest from the small business side of pot. Check out one of our highlights below: