During the past trading week (December 24 to 28), a surprising takeover bid was launched by a US-based multi-state cannabis operator for one of the biggest Canadian producers.

The response from Aphria (NYSE:APHA,TSX:APHA) about the merger possibility also caught the attention of shareholder curious to find out more about this bid. Alongside a new estimation from a cannabis economist for the US sector in 2018.

Here’s a closer look at what some of the biggest news was during last week’s trading period.

 

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Aphria issues response to public bid from GGB

Despite the fewer trading days in Canada due to the holidays the cannabis market continued to offer investors a roller-coaster of announcements, as Green Growth Brands (GGB) (CSE:GGB) launched a public takeover bid for Aphria and pleading to its shareholders to accept.

GGB offered Aphria holders a payment of 1.5714 of its own common shares per Aphria share, valuing the Canadian producer at C$11 per share.

“We are confident that the significant premium we are offering and the opportunity to participate in the growth of a stronger, combined company are so compelling that we are taking our offer directly to Aphria’s shareholders,” Peter Horvath, CEO of GGB said in a statement.

According to GGB the US operator had already secured support from approximately 10 percent of Aphria shareholders.

On Friday (December 28) Aphria responded to GGB by calling out its unsolicited offer due to a low valuation. Aphria said:

Based on the 20-day volume weighted average price of GGB shares and the expressed exchange ratio of 1.5714 common shares of GGB for each Aphria share, the proposed bid would be approximately 23 [percent] below the Company’s average share price over the same period.

“While we appreciate GGB’s interest… their proposal falls short of rewarding our shareholders for participating in such a transaction,” said Irwin Simon, chair of Aphria. “Further, the proposed offer is quite risky given GGB’s condition to complete a brokered financing at a price that is more than double the recent average of their share price, as a key term to the proposal.”

In its statement GGB warned Aphria shareholders declining the offer could lead to the possibility of “further downward share price impact” for the Canadian firm.

US cannabis market gets US$10 billion in 2018

Beau Whitney, vice president and senior economist with cannabis research and data venture New Frontier Data told NBC News investors had participated in the American marijuana space with US$10 billion throughout 2018.

“Investors are getting much savvier when it comes to this space because even just a couple of years ago, you’d throw money at it and hope that something would stick,” Whitney said. “But now investors are much more discerning.”

Whitney said the investment figure seen in 2018 for the US cannabis market topped the amount for the past three years, representing rapidly growing interest in the space.

He expects during 2019 for the total North American cannabis market to attract over US$16 billion.

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

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Green Growth Brands is a client of the Investing News Network. This article is not paid-for content.

 

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** This article is updated each week. Please scroll to the top for the most recent information**

Cannabis Weekly Round-Up: Tilray Gets Partnership with AB InBev

By Bryan Mc Govern, December 21, 2018

During the past trading week (December 17 to 21), Tilray (NASDAQ:TLRY) confirmed a new collaboration partnership with a global alcohol company to develop cannabis-infused beverages.

The decision from a major Canadian bank to participate in cannabis stock deals including mergers and acquisitions (M&A) also made headlines throughout the week, alongside the issuance of new retail licenses in New Jersey and Pennsylvania.

Here’s a closer look at what some of the biggest news was during last week’s trading period.

 

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Royal Bank of Canada (RBC) (TSX:RY) announced it would begin pursuing deals in the Canadian cannabis scene by covering the sector with a dedicated analyst and setting up a division looking to participate in deals within the space.

“We’re going to be selective in our approach, frankly, but within the bank we’ve established a policy that we’re comfortable with,” RBC Capital Markets head Doug McGregor told Bloomberg on Tuesday (December 18).

Tilray obtains two critical deals during the week

Canadian cannabis firm Tilray was able to deliver a packed week of announcements with two key collaborations with the pharmaceutical and alcohol industries.

Tilray confirmed its interest in the infused-beverage market thanks to a new research partnership global leading brewer Anheuser-Busch InBev SA/NV (NYSE:BUD), the company behind Budweiser beer.

The two companies will invest up to US$50 million in a new venture set in London, Ontario tasked with developing these beverages for the Canadian adult-use market. Edibles and infused cannabis items are set to be legalized sometime in 2019.

Additionally, the cannabis company extended a partnership with Sandoz Canada to now include its parent company Sandoz AG, which is part of the Novartis (NYSE:NVS) group.

The purpose of this collaboration is to work on the development of new medical cannabis products. Thanks to the deal, Sandoz has gained options to the cannabis market.

Sandoz may opt to participate in the commercialization of non-smokable medical products. The pharmaceutical company will also gain access to the lineup of products from Tilray and its licenses.

Farm bill opens the doors to CBD derived from hemp industry

Following approvals by the Senate and House of Representatives, on Thursday (December 20) US president Donald Trump signed a US$867 billion farm bill into law, which carries within it the legalization of hemp.

Research from Brightfield Group of Chicago shows the North American CBD from hemp industry could be worth US$22 billion by 2022. With these market projections, a variety of companies have announced plans to pursue this new market.

 

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“Hemp’s removal from the CSA has been a core legal requirement for many national retailers wanting to carry whole-plant hemp extracts,” Hess Moallem, President and CEO of Charlotte’s Web Holdings (CSE:CWEB) said in a statement.

Peter Horvath, CEO of Green Growth Brands (CSE:GGB), said the new bill allows his company to build out “operations and logistics” for its CBD strategy in the US.

Among the companies celebrating the passing of the bill was also Canopy Growth (NYSE:CGC,TSX:WEED), which announced it would “participate in the American market now that there is a clear federally-permissible path to the market.”

New cannabis licenses for New Jersey and Pennsylvania

US states of New Jersey and Pennsylvania issued new cannabis retail license to a variety of companies in the space, including a few public players.

The Pennsylvania Department of Health allowed 23 new retail licenses, each entitling the issuers with the option to build out three medical marijuana dispensaries. These licenses represent the second stage of the dispensary roll-out for the state.

The public companies awarded licenses for Pennsylvania were Cresco Labs (CSE:CL), Harvest Health & Recreation (CSE:HARV), Green Thumb Industries (CSE:GTII) and MedMen Enterprises (CSE:MMEN) by way of its acquisition of PharmaCann.

Meanwhile, for New Jersey only 3 publicly traded companies won licenses during this latest round: GTI, TerrAscend (CSE:TER) and MPX Bioceutical (CSE:MPX), which its US assets are set to be acquired by iAnthus Capital Holdings (CSE:IAN).

New Jersey Health Commissioner Dr. Shereef Elnahal said the state Department of Health will meet with the six applicants “early next year” to hash out the specifics of growing product and when stores would be opening in the designated region.

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

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Green Growth Brands is a client of the Investing News Network. This article is not paid-for content.

 

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Cannabis Market Update: Q3 2020 in Review

Click here to read the previous cannabis update.

During the first few months of investment time in 2021, cannabis faced some volatility alongside optimism about federal changes in the most important market for the drug.

The cannabis business found its stride during Q1 thanks to policy change signals and consolidation.

To find out more, the Investing News Network (INN) asked experts about progress in the market during the first major period of the new year, and which developments investors should watch out for.

 

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Cannabis market update: New York and US potential boost operations

New York state’s legalization of recreational cannabis was a huge Q1 announcement that added pressure to the federal government when it comes to cannabis policy, said George Mancheril, co-founder and CEO of Bespoke Financial, a debt financing business with a particular focus on servicing cannabis businesses.

“It’s going to add to the chorus of voices in the federal scene to basically move sooner rather than later,” he explained to INN.

Following the US election in 2020, the momentum for cannabis businesses went on the upswing, as did company valuations, with the idea of expansion at the heart of it all, according to Mancheril.

Before starting Bespoke Financial, Mancheril learned from traditional investment banks, where he worked on lending, fixed income and debt markets with Goldman Sachs (NYSE:GS) and Guggenheim Partners.

Nawan Butt, portfolio manager with Purpose Investments, agrees with Mancheril. The financial expert told INN the ongoing legalization process seen in the US market is leading to expansion.

“It’s becoming more of a national move, then small pockets of proliferation. That’s very exciting about cannabis right now,” said Butt, who co-manages the Purpose Marijuana Opportunities Fund (NEO:MJJ).

This proliferation effect is causing a change in valuations and enthusiasm for US-based operations. Mancheril told INN that by the end of Q1, multi-state operators (MSOs) had raised approximately US$3.3 billion.

The cannabis lender said he sees the industry as having grown from the woes of 2019; it is now seeing a return to form by way of the excitement for an ongoing opening process in the US.

The expert explained that there is likely to be a windfall of capital in the wake of major federal changes for cannabis policy, although the timeline for these changes is becoming increasingly hard to predict.

Leading up to that capital influx, Mancheril said he wants to see operators really drill down on the value of desired assets and whether they make sense.

 

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“What I’d hope is that we continue to see bullish sentiment, but with some measure of responsibility, and let’s not just get over ahead of ourselves,” Mancheril told INN. “The idea is let’s minimize the volatility and continue growing responsibly.”

As far as struggles go, Butt explained that the cannabis industry has cemented itself as a growth-type sector, and as such there are macro environment pressures affecting the way these assets operate.

“We’ve seen this preference for cash flows at growth in the current or in the near future, rather than in the far future, and that’s what we’re seeing as far as valuations go in the broad market,” Butt said.

Cannabis market update: Volatility continues to rule as industry foundations build

Despite the industry’s current potential and the growing pains it has gone through as a whole in both the US and Canada, volatility remains a key factor in the cannabis investment scene.

Butt explained that the current shareholder base, which is dominated by hedge funds and retail investors, still lacks enough institutional support to avoid the day-to-day volatility cannabis has come to be known for.

These two investor groups, Butt said, can be easily spooked and excited by the news of the day when it comes to their investments.

“A lot of these institutions’ strategies are not about short-term profits, but they’re about long-term sustainability of the businesses themselves,” Butt said.

“That’s why you see a lot of volatility in the space, and that’s essentially what we’ve seen over the past, I’d say, three to two months as well,” he added.

That means investors shouldn’t expect an end to volatility anytime soon.

“It’s not about whether we continue to expect volatility, because we do,” Butt said. “We really think that the volatility will be taken out when the shareholder base becomes more institutional, but it’s really about understanding why there is volatility in the first place.”

Cannabis market update: Canadians talk up US business potential, but questions remain

A surge of mergers and acquisitions has taken over the Canadian cannabis sector recently as more producers see potential in America.

One of the biggest announcements in this regard came when Organigram Holdings (NASDAQ:OGI,TSX:OGI) secured a C$221 million investment deal from British American Tobacco (NYSE:BTI,LSE:BATS).

Using the funds, the two will work in tandem to develop new branded products designed to work on the international stage, including in the US. Organigram CEO Greg Engel previously told INN that the US represents a critical opportunity for Canadian companies, but the entry point isn’t as clean as it could be at the moment.

 

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While the long-term potential may be exciting for investors, Butt told INN he’s still unsure how the approach will work for Canadian companies.

The Purpose Investments expert said there will be plenty of space for the biggest Canadian names to pursue US market entries, beyond the initial hemp-derived CBD moves some operators have mde, since the US represents the biggest market in the world.

“But there’s just way too many unknowns right now to say exactly what that participation is going to look like, or when that participation will happen,” he said.

“What we do know is that currently the US MSOs are in a wonderful sort of position to expand on their market leadership that they have. And it will be tough for Canadians to come in and compete with them,” Butt said.

Canadian players still retain the upper hand at times in terms of valuation, which is confusing for both Butt and Dan Ahrens, chief operating officer and portfolio manager at AdvisorShares.

“The performance in quarterly earnings of US companies has been rather spectacular. They’ve knocked it out of the park in most instances,” Ahrens told INN.

Butt praised the recent performance reports from MSOs across the board, pointing to year-over-year growth lines and projections for continued positive performance.

In his view, share prices still don’t reflect company value. “Those are really being discounted at this point,” Butt told INN.

“We’ve seen the Canadian licensed producers be really hot stock performance-wise, outpacing the US (MSOs), and I’ll say it’s rather nonsensical to me,” said Ahrens, who oversees the AdvisorShares Pure Cannabis ETF (ARCA:YOLO) and the recently launched AdvisorShares Pure US Cannabis ETF (ARCA:MSOS).

Cannabis market update: Investor takeaway

The cannabis investment proposition finds itself at an interesting moment in time, as the entire sector eagerly awaits confirmation in the US at the federal level.

While for the Canadians waiting on the sidelines, this development may feel like a major necessity to address current financial struggles, for US-based operators, the heat around the corner could represent an increase to their already thriving operations.

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 Trulieve Cannabis Corp. (“Trulieve” or the “Company”) (CSE: TRUL) (OTC: TCNNF), a leading and top-performing cannabis company in the United States will release its first quarter 2021 financial results on Thursday, May 13, 2021 before markets open. Following the earnings release, management will host a conference call at 8:30 AM Eastern Time to review the financial results.

All interested parties can join the conference call by dialing 1-888-231-8191 or 1-647-427-7450, conference ID: 4880609. Please dial in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until May 20, 2021 . To access the archived conference call, please dial 1-855-859-2056 and enter the encore code 4880609.

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Appointment of Dr. Kelmendi, Assistant Professor of Psychiatry at Yale University and co-founder of the Yale Psychedelic Science Group, brings another experienced medical professional to Lobe’s advisory team.

 Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce the appointment of Benjamin Kelmendi, MD, Assistant Professor of Psychiatry at Yale University School of Medicine, to its Scientific Advisory Board.

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Ayurcann Holdings Corp. ( CSE: AYUR ) (the “ Company ” or ” Ayurcann “), a Canadian extraction company specializing in the processing of cannabis and hemp for the production of oils and various derivative products, is pleased to unveil further details of its Phase 2 expansion plans.

Ayurcann has commenced trading on the Canadian Securities Exchange (” CSE “) on April 8, 2021 and subsequently announced a private placement of up to $500,000 (” Financing “), as per the Company’s press release dated April 12, 2021. The proceeds of the Financing are intended to be used to further pursue Phase 2 of the expansion of the production capacity of the Company’s Pickering facility.

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