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Marijuana stocks weekend investor roundup: Analysis of the week's most important events in the cannabis industry (September 21)

By Scott Willis
Sep 23, 2018
PotNetwork is pleased to bring you our Marijuana Stock Weekend from our partner publication Grizzle. Grizzle journalist and Head of Research Scott Willis covers the marijuana stock market in-depth, with over 12 years of institutional investment management experience in analyzing both debt and equity securities. He has held senior investment research roles at Credit Suisse and TD Asset Management. He’s also a Chartered Financial Analyst and has been featured on BNN Bloomberg and CBC. For more of Scott’s writing check out Grizzle - the language of new money.

Why Tilray went to $300 but is only worth $50

Bottom Line: Not enough shares outstanding and white-hot US investor demand drove Tilray to spike to $300 this week. Looking at fundamentals the stock is not worth more than $50.

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The Structure of a Coca-Cola Deal Will Define Cannabis M&A

Bottom Line: The eventual entrance of a global consumer giant like Coca-Cola into the cannabis market will add an air of legitimacy that even Constellation Brands can’t match. If the deal is done as a JV instead of an equity investment you should expect future deals to follow that model.

[Khiron’s “first-mover advantage” in Colombia lands $3 target price from Canaccord]

If you're a cannabis investor, you want a direct equity investment, not a JV.

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Why We Need Cannabis to Combat the Opioid Epidemic

Bottom Line: Grizzle's chief economist Chris Wood lays out how the opioid crisis will be an important catalyst to drive cannabis legalization in America.

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Alberta Gives us First Look at Wholesale Prices

Bottom Line: Consumers are likely looking at retail prices of $11-$15 for legal cannabis. The ALGC will receive $6.40 which has the licensed producer's revenue built in, but we still have no idea what portion of the $6.40 LPs will be getting. Licensed producers currently make $8 per gram on average selling medical cannabis so revenue per gram will fall until international exports take up a big enough share of the pie.


ALGC

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The Final Look at Legal Cannabis Labeling

Bottom Line: Labeling is extremely restrictive and will make it hard for each brand to stand out when your logo is overshadowed by all kinds of warnings and product information. Brands will have to get creative making retail locations, where some form of advertising may be allowed,  an interesting workaround to build brand awareness.


Source: BNN Bloomberg

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Marijuana Stock Performance for the Week

Global marijuana stocks had a strong week up 7 percent. Large-cap Canadian stocks continue their dominance up 14 percent for the week while mid-caps were up 4 percent and small caps increased 14 percent. The cannabis group broke out to all time highs this week even surpassing peak stock prices in January of this year.

There is a significant M&A premium built into most of the large-cap stocks as investors expect large corporations to enter the market through licensed producer buyouts. If these deals don't occur in the next few months stocks could retrace recent highs.


New Cannabis Ventures

Market Outlook

Stocks have reached all-time highs. The Canopy Constellation deal gave the market some new momentum which should carry stocks higher at least through the end of the year. Until we have 3 to 6 months of data from the legal market in Canada, investor enthusiasm should continue to push cannabis stocks higher.

Once the Canadian market opens, we expect retail and wholesale price compression from a legal oversupply. Falling cannabis prices will pressure producer stocks in the second half of 2019.

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United States

Michigan’s Marijuana Legalization Moves Forward with Ballot Language

New York Likely to Be Added to States Legalizing Marijuana

Marijuana Tops E-Cigarettes in FDA Chief’s Concerns

New Jersey MJ Legalization Legislation Moving Forward with Delivery Options

Canada

Albertans in for a Wait Before Publicly Consuming Cannabis

Legalization to Bring Drastic Changes to Existing Dispensaries in Canada

US Congressman Calls For Clarification On Canadian Border Crossing After Legalization

International

South Africa Legalizes Marijuana for Personal Use

Australian Senate Kills Marijuana Legalization Bill

US Territory Northern Mariana Island Legalizes Marijuana

Denmark’s StenoCare Launches Europe’s First Marijuana IPO

 

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