A New Cannabis Industry Theme Emerges

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We have discussed several themes that we expect to play out in 2020, including improved distribution in Canada and in certain American markets, like California, as well as advancement towards legalization in new states, and these are already showing signs of developing as we expected. At the same time, the negative theme of limited capital availability will persist as well. Today we want to highlight another discouraging theme that has emerged: Litigation.

Over the past six months, we have seen many publicly-traded cannabis companies sued by investors, which isn’t too surprising given the direction of stock prices, but we are starting to see additional types of litigation become more prevalent. This week’s lawsuit filed by Harvest Health against Falcon International certainly isn’t the first of its nature, but, with more than $50 million at stake, it’s certainly one of the most important cases in the cannabis industry to date.

One area that has been particularly litigious has been hemp. A good example of the type of litigation we are seeing is failure to perform. Just this week, a hemp farmer in Oregon sued a company for not harvesting its crop as promised and causing an alleged loss of $11 million. More prevalent has been litigation around seeds that don’t produce the promised yields or that are not “feminized” as promised. Another hemp-related litigation category has been the class-action lawsuits filed against CBD producers for selling products that labeled improperly as dietary supplements.

This week, a new type of lawsuit emerged when Trulieve filed a libel lawsuit against a short-seller. While other companies have been attacked in a similar manner, none of them have fired back so aggressively. While we applaud Trulieve’s efforts to defend itself, we wonder if litigation could backfire. A cogent rebuttal followed by continued robust operational performance seems like the way to go.

The spike in litigation is a symptom of problems in the industry rather than a cause. We look forward to the more positive themes playing out, with investors rather than lawyers making money.

The International Cannabis Business Conference is bringing its unparalleled combination of cannabis industry, policy, advocacy, and networking back to beautiful San Francisco, California February 6-7, 2020.

A VIP reception on February 6th will kick off the networking at ICBC San Francisco, as speakers, sponsors, and attendees gather at the Hilton Union Square Hotel. This will be a stellar opportunity for attendees to make connections with cannabis entrepreneurs and policymakers from all over the globe.

On February 7th the conference curriculum will kick-off. Ticket prices go up on January 22nd, so get your discounted tickets now before early bird pricing expires!

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

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Get ahead of the crowd! If you are a cannabis investor and find value in our Sunday newsletters, subscribe to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013. Gain immediate access to real-time and in-depth information and market intelligence about the publicly traded cannabis sector, including daily videos, weekly chats, model portfolios, a community forum and much more.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue & Income Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than US$7.5M per quarter.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Find your place in the cannabis industry by visiting our Careers and Jobs Page and learn which companies are hiring aggressively.


Alan & Joel

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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