What Stocks Worked and Why and 16 Stories from New Cannabis Ventures

This is a copy of the December 9th edition of our weekly Newsletter, which we have been publishing since October 2015.


As we head into the final weeks of 2018, cannabis stocks are setting new lows for the year as measured by the Global Cannabis Stock Index, which has lost over 47%  this year thus far. To put the decline into perspective, it follows gains of over 92% in 2017 and 89% in 2016, leaving the index, despite the correction this year, up 91% since the end of 2015:

The poor returns for the sector can be attributed to many factors, but perhaps the simplest explanation is that the market got way ahead of itself a year ago following the first investment by Constellation into Canopy Growth and going into California’s legalization. Weakness in the overall market, disappointment over Canada’s legalization and lots of capital raising in both Canada and the U.S. have played a role as well.

Despite the rough year for the market, a few stocks currently in the index that were trading a year ago have advanced substantially in 2018, reminding investors that not all stocks in a sector move the same. Bucking the trend  in Canada have been TerrAscend (111%), Cronos Group (75%), Canopy Growth (40%), Neptune Wellness Solutions (36%), HEXO Corp (27%) and Organigram (18%). TerrAscend benefited from the closing of its recapitalization by Canopy Growth, Canopy Rivers and JW Asset Management, which moved the stock up more than 100% last November when it was announced. Cronos Group and Canopy Growth both advanced on the back of massive strategic investments. Neptune repositioned the company to capitalize on extraction. HEXO and Organigram both emerged as regional players well prepared for the adult consumer market and as potential acquisition candidates.

In the U.S., the big winners include CV Sciences (713%), Marimed (474%), iAnthus Capital (116%), CannaRoyalty, which is doing business as Origin House (63%), Innovative Industrial Properties (55%) and KushCo Holdings, formerly Kush Bottles (42%). CV Sciences not only experienced explosive growth, but it also worked through a legal situation with the SEC. Marimed, which reported 98% sales growth last quarter, was under the radar and benefited from investment by Navy Capital. iAnthus Capital bounced back sharply from pressure in Q4 last year due to a capital raise, and entered Florida and New York markets after backing from Gotham Green Partners. Origin House closed some key acquisitions and repositioned itself as an operator focused on  California and Canada. Innovative Industrial Properties was successful raising and deploying capital, with revenue in Q3 rising 152%. KushCo Holdings generated sales growth of 177% in the fiscal year ending in August and provided guidance for sales to more than double organically in the year ahead.

The weakness in stock prices in Q4 has left many stocks at levels that likely offer investors the opportunity to experience better performance in 2019. Most of the winners, in fact, have given up a lot of their gains. The pattern of early-in-the-year gains followed by weak prices over the balance of the year has created powerful incentives to sell losers to offset those gains, pressuring the stocks with substantial losses further. At the same time, with abundant losses, taxable investors are also able to sell some winners without having to worry about the burden of taxes. This process will end soon, and investors would be wise to position themselves for better times, in our view. We have been focused on the tremendous growth in revenue this year, but next year will see an acceleration for many names.

Green Peak Innovations is a vertically integrated medical cannabis company that is expanding in Michigan. On December 7th, the company announced it has approval for all 12 medical cannabis cultivation licenses in the state and plans to complete the licensing process early 2019. To learn more about our client, visit the company’s page on NCV and click the green Get More Info button.

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

After the tremendous success of the first Cannabis Capital Conference in Toronto this summer, we are excited to be working with Benzinga again for its next event that is designed for North American cannabis investors and entrepreneurs, which will take place next month in sunny Miami Beach.

Get your ticket and be sure to use code “420ALAN”

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 as well as the American Cannabis Operator Index.

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.


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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