Short selling has gained renewed steam in 2021 as online traders join forces, but the cannabis industry has had its fair share of dealings with short sellers in the past.
Taking a bearish posture on particular names in the cannabis space is a viable and at times very profitable way to play the odds in the emerging sector.
With targeted short selling now seeing traction once again, the Investing News Network offers a look back at several instances of short selling attacks in the cannabis industry.
Short selling can be profitable, but potentially dangerous
Short selling is an investment tactic in which an investor borrows shares of a company from a broker with the expectation that they will decline in value. In a successful short sale, the investor will sell the borrowed shares, then buy them back at a lower price before they must be returned.
According to a report from S3 Partners, a research firm dedicated to evaluating short selling moves, cannabis short selling netted almost US$1 billion in 2019.
S3 Partners’ analysis shows that shorting Aurora Cannabis (NASDAQ:ACB,TSX:ACB), Cronos Group (NASDAQ:CRON,TSX:CRON) and Tilray (NASDAQ:TLRY) proved to be the most effective moves that year. The spate of short selling in 2019 was driven by lackluster results from these companies contrasted with the level of valuation placed on the entire cannabis sector.
During a cannabis conference in early 2019, one analyst suggested that the reason cannabis stocks had attracted short sellers was due to the high level of attention the industry was receiving overall.
Neal Gilmer, an analyst with Haywood Securities, said the increasing speed at which cannabis companies were reaching considerable valuations had most likely intrigued short sellers.
Of course, while shorting cannabis stocks can be beneficial, there is a substantial amount of risk in using this strategy. As Investopedia explains, it leaves investors open to “unlimited losses”:
If you short a stock at $50, the most you could ever make on the transaction is $50. But if the stock goes up to $100, you’ll have to pay $100 to close out the position. There’s no limit on how much money you could lose on a short sale. Should the price rise to $1,000, you’d have to pay $1,000 to close out a $50 investment position. This imbalance helps to explain why short selling isn’t more popular than it is. Wise investors are aware of this possibility.
Aphria faces questions over Latin America assets
As the statistics above show, there have been many incidents of short selling in the cannabis industry despite the potential pitfalls. One of the most explosive attacks took place when Aphria (NASDAQ:APHA,TSX:APHA) was accused of negligence in regards to its Latin American assets.
In December 2018, a coalition of investment market researchers, Quintessential Capital Management and Hindenburg Research, went public with accusations against Aphria for what they deemed to be overvalued assets across Colombia, Argentina, Jamaica and Brazil.
From the get-go, Aphria defended itself from the attack, but the company’s stock still took a hit amid all the speculation. Eventually doubtful sentiment surrounding the company’s management took over as a shared perspective in the cannabis analyst community.
“We believe that management’s credibility may have been impacted by the allegations raised in this report. It is unclear at this point how the company will re-establish trust with investors,” BNN Bloomberg quoted GMP analyst Martin Landry as saying at the time.
Following the creation of a special independent committee to review its business operations surrounding the short seller claims, Aphria made the stunning decision in January 2019 to announce the transition of co-founders Cole Cacciavillani and then-CEO Vic Neufeld.
The company never tied the retirement of Cacciavillani and Neufeld to the short seller claims.
Irwin D. Simon took over as CEO of the cannabis producer, a role he holds to this day.
Gabriel Grego, managing partner at Quintessential Capital Management, spoke to Bloomberg at an investment conference in May 2019 to reaffirm the stance held in his research. He had previously called for the stock price of Aphria to go down to $0.
A Bloomberg report from June 2019 claims to have found the cannabis operating assets called into question by Quintessential Capital Management and Hindenburg Research. In its most recent quarterly report, Aphria confirmed it still retains these Latin American assets.
Cronos disputes short seller report
Another key cannabis short selling event came in August 2018, when Cronos became the target of notorious short seller Andrew Left of Citron Research, who published a report condemning the company.
Left was one of the first short sellers to go against cannabis names like Tilray and Canopy Growth (NASDAQ:CGC,TSX:WEED). When the Cronos report came out, he already had a reputation as an advocate for short selling, giving severe stances on companies he deemed weren’t up to snuff.
“Why would I not short the stock? It’s a very competitive industry. I think they are a subpar player. I think they have a lot of issues,” Left said about Cronos during an appearance on CNBC’s Fast Money.
He called into question the provincial agreements for cannabis distribution in Canada that Cronos had signed, like many of its peers at the time. Left’s main line of criticism came by way of a lack of disclosure on how much product would arrive to the company’s provincial partners.
Left also spent some time critiquing the rate of cannabis investments, calling into question valuation sizes and the overall speed of the “green rush,” which ultimately ended up causing severe reductions in operations for the biggest cannabis names in Canada.
A report from the Globe and Mail indicates that research firm PI Financial called into question the claims from Left in his report on Cronos.
“We felt the (Citron) report was light on meaningful content and had numerous red herrings,” Jeremiah Katz, managing director at PI Financial, said.
While debate ensued about the claims made by Left, Cronos shareholders took a hit as the company declined nearly 30 percent in value after the report was published.
Cronos’ share price is currently above its mid-2018 levels. For his part, Left made headlines earlier this year after he announced Citron Research would no longer publish short selling reports. This decision was made in the wake of the recent GameStop (NYSE:GME) stock saga.
Short selling can be profitable, but the tactic is also sometimes frowned upon in the investment community — after all, not everyone agrees with betting against a company.
However, short selling has also undeniably led to critical changes in the cannabis space. In the case of Aphria, for example, the cannabis producer was forced to adjust its public image and undergo executive changes after it was attacked. While the dispute about its assets was eventually cleared in favor of the producer, the firm did have to do damage control.
Other corporations, such as Cronos, have faced similar public short attacks or have received attention from short sellers, but have instead carried on with little to no fanfare in response.
Each case is different, but with short selling in the cannabis arena unlikely to let up, market participants should be prepared to consider how the companies they have invested in may react in the face of an attack, and what that may mean for their investment.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Ayurcann Holdings Corp. (CSE: AYUR) (the “Company” or “Ayurcann”) an integrated Canadian extraction company specializing in the processing of cannabis and hemp for the production of oils and various derivative products, announces the granting of stock options and restricted share units.
The Company has announced that it has granted incentive stock options to directors, officers, employees and consultants of the Company to purchase an aggregate of 1,000,100 common shares under the Company’s Stock Option Plan. Each option is exercisable at a price of $0.16 per common share, expires three years from the date of grant and vest six months from the date of the grant.
The Company has also granted restricted share unit grants, pursuant to the Company’s Restricted Share Unit plan, dated April 1, 2021, totaling 1,548,875 to certain eligible participants.
For further information, please contact:
Igal Sudman, Chairman, Chief Executive Officer and Corporate Secretary
Ayurcann Holdings Corp.
About Ayurcann Holdings Corp.:
Ayurcann is a leading post-harvest solution provider with a focus on providing and creating custom processes and pharma grade products for the adult use and medical cannabis industry in Canada. Ayurcann is focused on becoming the partner of choice for leading Canadian cannabis brands by providing best-in-class, proprietary services including ethanol extraction, formulation, product development and custom manufacturing.
Neither the Canadian Securities Exchange nor its Regulation Services Provider have reviewed or accept responsibility for the adequacy or accuracy of this release.
News Provided by GlobeNewswire via QuoteMedia
A planned business merger between two leading cannabis producers hit a small delay this week as a critical vote got moved.
Keep reading to find out more cannabis highlights from the past five days.
Tilray delays critical shareholder meeting
On Thursday (April 15), Tilray (NASDAQ:TLRY) announced it will be postponing its shareholder vote on the fate of its merger with Aphria (NASDAQ:APHA,TSX:APHA). It will take place on April 30 instead of April 16.
Neither cannabis company offered an explanation for the change. Tilray has asked shareholders to participate in this vote regardless of how many shares they may hold. “Tilray stockholders who have not already voted, or wish to change their vote, are strongly encouraged to do so,” the company said.
This news came days after Aphria shareholders overwhelmingly voted in favor of the business transaction, with a total of 99.38 percent of shareholders voting for the deal to continue. Confirmation from Aphria Chairman and CEO Irwin Simon indicated the partnership was en route to being complete.
This past week Aphria also released financial results for the third quarter of its 2021 fiscal year, in which the firm highlights the overall direction of the company with the Tilray deal.
“We expect to have a tremendous runway for long-term sustainable growth as we build upon our existing foundation in Canada and internationally by increasing the scale of our global operations,” Simon said in a statement.
Cannabis retailer celebrates digital trend
Bidding for the piece, named “Non-Fungible Toke“ started at a price of C$4.20. The retailer plans to donate the proceeds to two charities, Second Harvest and Less.
The latter is designed to counter the carbon footprint of blockchain technology, a common criticism drawn against the rise of NFTs and other novel technologies.
As of 11:00 a.m. EST on Friday (April 16), the NFT bid was up to C$169.11.
Cannabis company news
- The Valens Company (TSX:VLNS,OTCQX:VLNCF) issued its financial report for the first quarter of its 2021 fiscal year. In its results, the company highlights a net revenue uptick of 24.7 percent from the previous quarter, resulting in C$20 million for the period.
- Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF) closed a public offering of 5 million subordinate voting shares at a price of C$50 each for total gross proceeds of C$287.5 million. The company celebrated its financial position after an offering in January, which will lead to the pursuit of merger and acquisition targets.
- Australis Capital (CSE:AUSA,OTCQB:AUSAF) appointed Jason Dyck as its new chief science officer and chairman of the firm’s scientific advisory board. Dyck previously served as an executive at Aurora Cannabis (NASDAQ:ACB,TSX:ACB), leading the scientific efforts for the cannabis producer. “I look forward to providing AUSA with advice and direction in its scientific efforts towards bringing innovations to market with immediate and significant commercial appeal,” Dyck said.
- Truss Beverage, a cannabis drinks venture co-owned by Molson Coors Beverage Company (NYSE:TAP,TSX:TPX) and HEXO (NYSE:HEXO,TSX:HEXO), released the details of its new lineup of infused beverages. Six new drinks will become available around the summer and are intended to pair with the season.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Partnerships with Minardi Law , Minorities for Medical Marijuana, CultivatED, and the Georgia Justice Project will include clinics and virtual events across Florida , Georgia , and Massachusetts
Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) (“Trulieve” or “the Company”), a leading and top-performing cannabis company based in the United States announced today a series of expungment clinics located throughout south and central Florida as well as virtual events in Georgia and Massachusetts . The clinics are part of the Company’s celebration of the 50 th anniversary of 420.
During the month of April, Minardi Law has hosted expungment clinics and will be hosting two more as follows:
- Releaf Patient Appreciation Day, April 17 th ( Valrico )
- First Annual 4/20 Event ( St. Petersburg Beach )
At these clinics, an attorney will be present to review records and see if someone is eligible for a sealing or expungment of their records. As part of the events, Trulieve will be helping cover the costs for finger prints, legal fees, and court costs.
Trulieve is working with Minorities for Medical Marijuana (“M4MM”) to host a 4/20 Expungement Clinic, part of M4MM’s Project Clean Slate. This event will take place on Saturday, April 24, 2021 , from 9:30am – 4:30pm at Riviera Beach City Hall. Anyone seeking to take place in this event is required to register in advance at http://trulieve.cc/expungementpreregistration .
In addition, Trulieve is sponsoring the First Friday Series , a weekly virtual event from the Georgia Justice Project to help Georgia citizens with record restrictions, and is also sponsoring the Fellowship Presentation and Expungement Clinic being offered through CultivateEd and GBLS on Friday, April 23 from 3:00pm – 4:00pm . You can register for the Massachusetts expungement clinic in advance here: HTTPS://BIT.LY/2Q655KK
“Our mission as a company has always been to improve people’s lives,” said Trulieve CEO Kim Rivers . “We’ve always been dedicated to improving the communities we call home. Partnering with Minardi Law , Minorities for Medical Marijuana, Georgia Justice Project and CultivatED on these clinics was a simple decision for us; we encourage anyone seeking help with the expungement process to attend one of these clinics in your own state to start the process.”
For more information about Trulieve and the April expungment clinics, please visit www.Trulieve.com .
Trulieve is primarily a vertically integrated “seed-to-sale” company in the U.S. and is the first and largest fully licensed medical cannabis company in the State of Florida . Trulieve cultivates and produces all of its products in-house and distributes those products to Trulieve-branded stores (dispensaries) throughout the State of Florida , as well as directly to patients via home delivery. Trulieve also has operations in California , Massachusetts , Connecticut and Pennsylvania. Trulieve is listed on the Canadian Securities Exchange under the symbol TRUL and trades on the OTCQX market under the symbol TCNNF.
To learn more about Trulieve, visit www.Trulieve.com .
SOURCE Trulieve Cannabis Corp.
News Provided by PR Newswire via QuoteMedia
Seth Rogen’s New Cannabis Brand are Now Available at Apothecarium Dispensaries in San Francisco , Berkeley and Capitola
The Apothecarium is offering cannabis from Houseplant, the cannabis lifestyle brand founded by Seth Rogen and Evan Goldberg at its five California dispensaries. The Apothecarium has three San Francisco locations (Castro, SOMA and Marina ) and one each in Berkeley and Capitola (outside of Santa Cruz ).
“With the vast number of dispensaries in California , we put a lot of effort into identifying the right ones that align with Houseplant’s values,” said Seth Rogen , Co-Founder of Houseplant. “The Apothecarium shares the same commitment to creating a strong consumer experience that we pride ourselves on and we are thrilled to bring our three initial strains to their stores in the Bay Area.”
Houseplant is launching with three flower strains, all of which will be available at The Apothecarium, including: Diablo Wind (sativa), Pancake Ice (sativa) and Pink Moon (indica). Like their founder’s groundbreaking film “Pineapple Express”, Houseplant strains are named after weather phenomena. Each strain will be sold in a custom tin.
“We are so proud to be one of the very first dispensaries in California to offer Houseplant to our customers,” said Ryan Hudson , CEO and co-founder of The Apothecarium. “Seth, Evan and everyone at Houseplant love and respect cannabis as much as we do. We simply cannot wait to share their beautiful and delicious flowers with our guests.”
“We’ve been working with the Houseplant team for more than a year and are grateful to have a partner that shares so many of our values, including an emphasis on cannabis education, quality, reform of cannabis laws and beautifully designed, recyclable packaging.”
“Seth has been hands-on during the process, spending time with our store managers to make sure they know the products and how much care has gone into vetting and selecting the best strains. We think our guests are going to love Houseplant.”
About The Apothecarium
The Apothecarium is recognized as one of the nation’s premier cannabis dispensaries, with an emphasis on education via in-depth one-on-one consultations from highly trained cannabis consultants. The company was founded by three first cousins and two family friends in 2011. Our dispensaries are known for providing educational events that are open to the public at no cost — and for welcoming seniors, first-time dispensary visitors, and people with serious medical conditions. The Apothecarium’s flagship San Francisco dispensary was named the best-designed dispensary in the country by Architectural Digest . Patients and customers may order at our dispensaries or online for pickup or delivery at apothecarium.com [apothecarium.com] .
The Apothecarium is committed to giving back to the communities we serve. We have donated more than $400,000 in cash to community groups and nonprofits — plus more than $300,000 worth of in-kind donations.
All Apothecarium dispensaries continue to implement safety measures to protect guests and team members. Protocols include strict social distancing inside and outside the dispensaries, a mask requirement for everyone inside the dispensaries, no contact check-in procedures and ongoing sanitizing throughout the day.
CA Licenses: C10-0000523-LIC; C10-0000522-LIC; C10-0000515-LIC, C10-0000738-LIC, C10-0000706-LIC
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MISSISSAUGA, Ontario TheNewswire – April 16, 2021 Sire Bioscience Inc. (CSE:SIRE) (OTC:BLLXF) (FSE:BR1B) (CNSX:SIRE.CN) (“SIRE” or the “Company”) announces that Brian Nugent has resigned as a member of the Company’s board of directors (the “ Board ”). It has been a pleasure and a blessing to have worked with Brian Nugent over the past few years, his business acumen and tremendous experience will certainly be missed, SIRE wishes him nothing but the best in all his future endeavors.
About Sire Bioscience
SIRE is headquartered in Mississauga, Ontario with its wholly owned subsidiary PLANTFUEL® based in Denver, Colorado. SIRE is managed by a group of successful entrepreneurs who have extensive experience in the areas of consumer-packaged goods, manufacturing, logistics, and distribution. SIRE is a CPG life science company focused on the plant-based foods and supplements industry.
For additional information contact:
Sire Bioscience Inc.
Copyright (c) 2021 TheNewswire – All rights reserved.
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