The panel centered on recent trends in the public market, and whether or not there are still opportunities in cannabis for new investors.
One topic in focus was recent market activity in terms of short sellers attacking cannabis companies. Gilmer explained that short sellers are nothing new to the public markets, but said their attacks reaching cannabis companies is a first.
In 2018, various new reports appeared and gained prominence against all types of cannabis companies. Most recently, Aphria (NYSE:APHA,TSX:APHA) was targeted by multiple reports from a short seller group.
Since the reports were issued, Aphria has received backing from researchers at financial institutions, alleviating concerns about its recent acquisitions in the Latin American cannabis market.
Gilmer suggested that there could be more short seller attacks in the cannabis space “because it’s attracted so much attention” lately.
“It’s got probably a bit higher profile as far as opportunities for short sellers to target a particular company,” Gilmer said, saying that companies in the space have gained high valuations with promise for growth.
Ducommun added that she feels it’s unfortunate these attacks have come to the industry so quickly.
Volatility could lead to further deal making
Speaking about volatility, Gilmer explained this has led to a wide array of percentage changes in cannabis stock prices and valuations in a short amount of time.
The analyst said he expects to see companies to be “opportunistic” and take advantage of these wide market swings to seek acquisitions.
Gilmer expects M&A activity to continue, and said it should lead to a significant amount of deal making in the cannabis space throughout 2019.
However, when asked if all this expected M&A activity will lead to a market with only a small group of companies owning the space, the analyst said he doesn’t see such a massive reduction coming soon.
Gilmer explained that while he does expect the final number of companies in the market — specifically licensed producers (LPs) — to be less than it is now, he doesn’t believe it will get to only three of four firms controlling the industry.
Marotta added that he doesn’t see a great many bankruptcies coming to the market and reducing the players available.
He hopes the cannabis industry ends up looking like the beer industry, where there are major brands and companies, but also a “long tail of smaller producers that find a way to exist and satisfy their clients.”
Ducommun added that micro-cultivators will spur more M&A activity, as these companies offer boutique aspects to consumers and provide different products from LPs.
Hemp market opening in the US
The panelists were also asked about the passing of a US$867-billion farm bill in the US, which legalized hemp and its derivatives, including CBD.
Gilmer built on his comments from a previous panel at the show, saying he supports the CBD market; but he added it is going to come down to which company has realized products that sell.
Marotta indicated that his company has no interest in jumping into this space at the moment, but said he wants to see unique products that capture the attention of consumers, instead of hemp-growing stories from companies in the space.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: INDIVA is a client of the Investing News Network. This article is not paid-for content.
American cannabis sales hit US$17.5 billion in 2020, a research group’s new study shows.
Meanwhile, a Canadian cannabis producer began offering CBD beverages in the US, another move that shows how interested Canadians are in the overall US cannabis market at the moment.
Some pretty important news out of health and wellness; beverage and natural products company BevCanna Enterprises Inc. (CSE:BEV, Q:BVNNF, FSE:7BC) this week. For those of you following the Company with us, stay tuned.
As investors continue to prioritize cannabis opportunities in the US, market watchers expect mergers and acquisitions (M&A) to play a role in the future for Canadian companies.
A consolidation trend has been expected in the Canadian cannabis space for some time now based on the size of the market compared to the number of operations in the country.
BioHarvest Sciences Inc. Unveils the Unique Polyphenolic Content of Its Upcoming Olive-Based Nutraceutical
The product will include polyphenols known to have significant health benefits.
BioHarvest Sciences Inc. (CSE: BHSC) (“BioHarvest” or the “Company”) has reached an important milestone in its development program of additional Nutraceuticals. The olive-based Nutraceutical product scheduled for market availability in the second half of 2022 will contain the following unique matrix of polyphenols: hydroxytyrosol, trosol, and verbascoside. These compounds are the major polyphenols in naturally grown olives and are responsible for the high antioxidant activity of olives and olive oil. Importantly, the BioHarvest olive-based Nutraceutical product will provide all the benefits of olives and olive oil with a low calorie count per serving.
Cresco Labs (CSE:CL) (OTCQX:CRLBF) (“Cresco” or the “Company”), one of the largest vertically integrated multistate cannabis operators in the United States, announced today that it will report financial results for the fourth quarter and full year ended December 31 st , 2020 on Thursday March 25 th , 2021 before the market opens.
The Company will host a conference call and webcast to discuss its financial results and provide investors with key business highlights on Thursday March 25 th , 2021 at 8:30am Eastern Time (7:30am Central Time).