What Now After Canada Legalized and 12 Stories from New Cannabis Ventures

This is a copy of the October 21st edition of our weekly Newsletter, which we have been publishing since October 2015.

Friends,

This has been a year of tremendous milestones for the cannabis industry, with GW Pharma having the first cannabis-derived pharmaceutical approved by the FDA in June and now Canada becoming the first major nation to legalize cannabis for adult consumers this past Wednesday. Multinational companies from a variety of outside industries are eyeing strategic investments in the industry as well, a new development that indicates the normalization of the industry.

We have long viewed Canadian legalization day as likely to disappoint, as we have pointed to supply constraints, limited distribution and a narrow set of approved products that would make the big day a bit underwhelming, and, indeed, that is how it seems to have played out. In fact, traders dumped Canadian LPs aggressively this week, but we want to point our readers to what the near future may look like in terms of very promising financials, as LPs are likely to report significant revenue from September and on beginning as soon as mid-November, reflecting initial sales into the provinces ahead of retail sales. The following table shows the consensus forecasts from analysts for several of the largest LPs (data source is Sentieo), with all in Canadian dollars except Tilray, which reports in USD:

Canopy Growth, Aphria and Aurora Cannabis are expected to roughly quintuple sales from year ago levels. Tilray apparently won’t be recognizing sales in Q3, as the company recently provided guidance of $10-10.5 million for Q3.

While the Canadian story will play out in the months and years ahead, we continue to suggest that investor focus is shifting to the United States. Canopy Growth’s purchase of the intellectual property of ebbu is a reminder that the U.S. remains a major source of innovation despite federal illegality. Further, legalization day wasn’t even over when two relatively new special purpose acquisition companies out of Canada announced major transactions, as detailed in the articles below. iAnthus and MPX Bioceutical executed the first proposed major combination of public cannabis operators in the U.S., a move that is in line with the major consolidation we expect in the months ahead.

So, while there may have been a “sell-the-news” move this week after Canada’s historical day, we see a lot of positives ahead for both the Canadian LPs as well as the U.S. operators. This week, Aurora Cannabis will begin trading on the NYSE, extending a trend of leading LPs adding major U.S. exchange listings, and we continue to expect a few more there, including Aphria. Despite the market’s muted reaction this week, tailwinds abound for the cannabis sector.


Join The Arcview Group in Las Vegas Nov. 11-13 for the most important cannabis investment event the last 5 years running! Take advantage of an intimate setting right before MJBizCon to meet the most prominent issuers and investors in the cannabis industry. Arcview Las Vegas is THE Forum for serious accredited, institutional, and family office cannabis investors. Listen to talks by industry leaders, hear company pitches and participate in 1-1 meetings with publicly traded and early-stage cannabis companies. Limited availability. Reserve your seat now!


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


To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

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.

View the Public Cannabis Company Revenue Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than $2.5m per quarter.

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

Consider subscribing to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013 for more in-depth information and market intelligence about the publicly traded cannabis sector.

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

Sincerely,

Alan & Joel

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 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

Get Our Sunday Newsletter