Branding was in focus in the cannabis space this week, with a new report showing that work from major players in the industry is perhaps not having the desired effect.

Meanwhile, the question of when institutional investors may enter the marijuana market was in the spotlight in an online discussion.

Read on for a closer look at some of the biggest cannabis news over the last five days.


US Election 2020 and Cannabis

 
Investing in cannabis? Read what experts have to say about cannabis and the US Election!
 

Cannabis branding faces lackluster consumer response

A new report from Brightfield Group shows that cannabis companies’ branding efforts have been less successful than they might have hoped. The market intelligence firm surveyed 3,000 Canadian cannabis users in the first quarter of this year, and found that no brand has more than 41 percent recognition; in fact, most have only between 1 and 15 percent recognition.

According to Brightfield, consumers are more likely to buy based on price and not due to brand name, packaging or other factors like word-of-mouth reviews. 

Click here to skip to the Investing News Network’s overview of the Brightfield report.

Tweed and Aurora (Drift) are the brands with the highest recognition at 41 and 34 percent, respectively. Tweed is owned by Canopy Growth (TSX:WEED,NYSE:CGC) and Aurora (Drift) is owned by Aurora Cannabis (TSX:ACB,NYSE:ACB). In third place at 23 percent is Tokyo Smoke, another Canopy product.

Part of the problem, according to Brightfield, is that Canada’s adult-use market is relatively new, and Cannabis 2.0 products are even newer. As a result, consumers have been inundated with choices, and even when they see a brand they recognize, they may not have a connection to that brand.

“When product options increase and brand awareness remains low, consumers get confused. They can get decision fatigue when they do not see a product that aligns with their complex purchasing decisions,” the firm explains in the document. “This has led to a significant gap between consumers aware of Canadian brands and those that report purchasing them.”

Interestingly, Brightfield notes that the brand recognition metric doesn’t tell the whole story. When it comes to converting awareness to purchases, the leading brands are Edison, Solei and Good Supply. Edison is owned by Organigram Holdings (TSX:OGI,NASDAQ:OGI), while both Solei and Good Supply are Aphria (TSX:APHA,NASDAQ:APHA) products.

“This is a strong indicator that these brands may be able to make gains and attain market leadership in the mid-term,” the report states. Even so, the overall conclusion from Brightfield is that at the moment “it’s anyone’s game” — the firm believes that the market is ready to be disrupted and emphasizes that at least right now, company size bears no relation to consumer awareness, purchasing or satisfaction.

Are institutional investors ever coming to cannabis?

The cannabis industry had a difficult time in 2019 as the industry came down from its previous highs, and 2020 has been marked with its own challenges, largely related to the coronavirus.


US Election 2020 and Cannabis

 
Investing in cannabis? Read what experts have to say about cannabis and the US Election!
 

Access to capital has been a major theme in the space during this time, with one key question being when more institutional money will enter the marijuana space. Speaking in a panel as part of the recent online Prohibition Partners LIVE event, analysts from Jefferies, Credit Suisse (NYSE:CS) and BMO Capital Markets suggested that it’s still too early.

Owen Bennett of Jefferies, for example, said that right now institutional involvement is limited and is coming mainly from hedge funds. In his opinion, the industry’s early reputation for easy money has damaged interest from this class of investor.

“Because money was easy there were a lot of companies in existence, and that still are, that shouldn’t even really be around,” Bennett told the web-based audience. “Those sorts of characteristics make it very difficult for a long-only institution to invest.”

The panelists also brought up the fact that cannabis is still federally illegal in the US, noting that this should not be forgotten. “Unless it’s federally legal, a lot of these institutions can’t invest,” Bennett said.

Cannabis company news

Company news in the cannabis space this week was a mixed bag, from quarterly results to job cuts.

  • Aurora Cannabis announced the retirement of Terry Booth from its board of directors. Booth co-founded the company with Steve Dobler, and was its CEO from December 2014 to February of this year. Dobler also retired from his positions at the company as of the end of June.
  • 1933 Industries (CSE:TGIF,OTCQX:TGIFF) released its latest quarterly results, reporting revenue of C$2.6 million and an adjusted EBITDA loss of C$3 million. The company’s revenue was down 17 percent from the previous quarter, but its adjusted EBITDA loss improved by 45 percent. 1933 Industries cited COVID-19-related shutdowns in Nevada, and particularly the drop in tourism in Las Vegas, as major factors in its revenue decline.
  • Cresco Labs (CSE:CL,OTCQX:CRLBF) closed a sale-and-leaseback agreement with Innovative Industrial Properties for its facility in Fall River, Massachusetts. The deal is Cresco’s fifth with Innovative Industrial Properties, and total consideration was about $29 million, including $21 million in funding for tenant improvements.
  • In a corporate update, Organigram said it is laying off around 25 percent of its workforce, or about 220 employees. CEO Greg Engel said that the company wants to make sure it is appropriately sized for the current market conditions; Organigram also said that for the foreseeable future it will produce less cannabis than targeted at its facility in Moncton, New Brunswick.

Don’t forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce the launch of preclinical research studies using psilocybin and N-Acetylcysteine (“NAC”) for the treatment of mild traumatic brain injuryconcussion (“mTBI”) with post-traumatic stress disorder (“PTSD”). The study is in collaboration with a multidisciplinary team of scientists and physicians at the University of Miami Miller School of Medicine under the lead of Michael E. Hoffer, M.D., professor of otolaryngology and neurological surgery.

NAC has been shown to be safe and efficacious in a phase I human clinical study in treating military personnel who had suffered mTBI. The initial research focus is to demonstrate the safety and efficacy of the combination of psilocybin and NAC using broadly accepted rodent models. Final results are expected in 2021. Once this is established, more specific work can examine dose response, medicine uptake, and medicine levels. The research team at the Miller School of Medicine has conducted prior studies involving NAC with mTBI and has a license from the United States Drug Enforcement Administration to conduct research using Schedule I controlled substances, which includes psilocybin.

Keep reading... Show less

Aphria Inc. (” Aphria “, ” we ” or the ” Company “) (TSX: APHA) (NASDAQ: APHA), a leading global cannabis company inspiring and empowering the worldwide community to live their very best life, announced it has closed the accretive, strategic acquisition (the ” Acquisition “) of  SW Brewing Company, LLC (” SweetWater Brewing Company ” or ” SweetWater “), one of the largest independent craft brewers in the United States (“U.S.”) based on volume. Beginning with the flagship 420 beverage offerings, SweetWater has created an award-winning lineup of year-round, seasonal and specialty beers, a portfolio of brands closely aligned with a cannabis lifestyle.

Keep reading... Show less
  • Distinguished economist and former CEO of Ecopetrol, Colombia’s largest corporation and the fourth largest Latin America oil and gas producer included in the Fortune Global 500
  • Internationally recognized advocate for the cannabis industry as a driver of change for the Latam economy
  • Adds proven economic and international business experience to boost the global growth of the Khiron business model
  • Company to discuss Q3 2020 financials and host webcast on Tuesday, December 1 st

Khiron Life Sciences Corp. (“Khiron” or the “Company”) (TSXV: KHRN ), (OTCQX: KHRNF), ( Frankfurt : A2JMZC), a vertically integrated cannabis leader with core operations in Latin America and Europe announces that Mr. Juan Carlos Echeverry has been appointed to the Board of Directors of the Company, effective immediately. Mr. Echeverry brings extensive corporate, academic and macroeconomic experience, serving as Colombia’s Minister of Finance from 2010 to 2012 and as the CEO and President of Ecopetrol from 2015 to 2017.

Keep reading... Show less

 Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of Aurora Cannabis Inc. (NYSE: ACB) between February 13, 2020 and September 4, 2020, inclusive (the “Class Period”), of the important December 1, 2020 lead plaintiff deadline in the securities class action. The lawsuit seeks to recover damages for Aurora investors under the federal securities laws.

To join the Aurora class action, go to http://www.rosenlegal.com/cases-register-1965.html or call Phillip Kim, Esq. toll-free at 866-767-3653 or email pkim@rosenlegal.com or cases@rosenlegal.com for information on the class action.

Keep reading... Show less

Bronstein, Gewirtz & Grossman, LLC notifies investors that a class action lawsuit has been filed against Aurora Cannabis, Inc. (“Aurora” or the “Company”) (NYSE: ACB) and certain of its officers, on behalf of shareholders who purchased or otherwise acquired Aurora securities between February 13, 2020, and September 4, 2020, inclusive (the “Class Period”). Such investors are encouraged to join this case by visiting the firm’s site: www.bgandg.com/acb .

This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.

Keep reading... Show less