Marijuana stocks weekly investor roundup: Analysis of the week's most important events in the cannabis industry (June 15)
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.
Bottom Line: The rollout of edibles, vape pens, and topicals will likely be just as slow as the rollout of cannabis flower last October. The main difference is these are products that make up 50 percent of demand in other markets and will likely cause cannabis sales to double from $1 billion to $2 billion next year as long as early supply can keep up with demand.
Bottom Line: Recreational legalization in NY seems like a true long shot this late in the legislative session, but the Acreage CEO is very plugged into state politics. Hold your breath for next Wednesday.
Bottom Line: HEXO is competing with Tilray in Portugal, Aurora in Denmark and Canopy in Denmark and Spain to supply the European market from within. Germany is the largest cannabis consuming market in the bloc and is the true target for everyone. Watch to see if Germany allows imports from all these other countries, as that would significantly hurt the value of recently awarded German cultivation licenses.
Bottom Line: Strict regulations mean there are only 57 doctors licensed to prescribe cannabis in the country. Investors should temper their expectations about the growth potential in Australia. Outside of North America, Europe is where true growth lies.
Bottom Line: The medical cannabis market is being left behind by companies in favor of the more lucrative and larger recreational market. We think there is real money to be made providing true medical users with formats they want at prices they can afford. Medical consumption per person is much higher than in the rec market, so volumes would likely offset lower retail prices.
Global pot stocks may have seen the beginning of a capitulation selloff this week with the index down 6 percent. From the peak in March, cannabis stocks are down 25 percent, but still 35 percent above the lows in December 2018. U.S. stocks again underperformed Canadian peers, falling 8 percent. Once stocks rebound, we expect U.S. stocks to outperform Canadian names the rest of the year with better regulatory catalysts and growth prospects. MSOs are up 8 percent year to date while Canadian growers are up 29 percent, but this trend should reverse as we move through the year.
The overall marijuana index underperformed the S&P and the TSX by 6.4 percent.
(Source: New Cannabis Venture)
Stocks will remain seasonally weak as we go into the fall, but U.S. stocks have the benefit of some big regulatory catalysts potentially on the horizon this year.
Canadian LPs are still stuck in a stagnating legal market, making it hard to show the revenue growth investors are expecting. LP's are showing zero growth in 2019, and even with the 2020 rollout of edibles, vapes and topicals growth is unlikely to exceed 150 percent in 2020. US operators in comparison are growing revenue 150 percent-300 percent in 2019 and at similar rates or better in 2020.
Longer term, with the Canadian market legalized, we expect retail and wholesale price compression from a legal oversupply by the second half of 2019. Falling cannabis prices will pressure producer stocks later in 2019 or early 2020. After a shakeout, the remaining stocks will be better positioned as long-term buying opportunities.
- Acreage and Canopy Growth Urge Shareholders to Vote on Acquisition
- MedMen Opens Florida Dispensary, Announces Plans for 12 More
- Oregon Retailers Hail the Passage of Cannabis Export Bill
- Cresco Labs Issues Updates On Vidacann and Origin House Acquisitions
- Alabama Medicinal Cannabis Commission Created
- KushCo Holdings Announces New Senior Management Members
- Cannabis Company Sponsors Major Red Carpet Events
- Canada Can Begin Selling Edibles by December
- Hexo Med Granted Medical Cannabis License in Greece
- Tilray Announces Deal to Take Over Biggest Shareholder
- Brazil Could Begin Cultivating Medical Marijuana in 2019
- 5 Million Brits Identify as Cannabis Users
- Another Prominent Israeli Figure Joins the Cannabis Industry
More on PotNetwork
- Cannabis won’t solve the opioid epidemic and that CBD and heroin use study didn’t find what you think it did
- Allied Corp: A conversation with Calum Hughes about using cannabis to treat PTSD
- How plummeting medical marijuana cardholder rolls are transforming the cannabis industry landscape
- New York state legislature has one week to collect enough votes for legalization
- WeedMD: Cannabis investors don’t want to miss out on this pot stock