What’s new with cannabis stocks for the week ending 11/26/21 – New Cannabis Ventures
Navigate the rapidly evolving cannabis industry with 420 Investor, a premium service that sends out real-time alerts and explanations on the news below and much more.
- The German leadership coalition has confirmed its intention to legalize adult use.
- The South Dakota Supreme Court overturned last year’s ballot legalization initiative.
- Pennsylvania requires cannabis operators to disclose the ingredients in vape pens.
- 420 model investor portfolios have returned -4.5% to 39.6% year-to-date, while the Global Cannabis Stock Index has lost 12.8%.
The new ruling coalition in Germany has confirmed its intention to legalize cannabis for adult use. Pennsylvania regulators require operators to submit ingredients for vape products. The South Dakota Supreme Court overturned the ballot legalization initiative a year ago.
Over the week, I shared this information with 420 Investor subscribers:
- Composition of the model portfolio 11/19/21
- Cannabis Sub-Sector Review – 11/19/21
- Approaching the Priority List from an Investing in Value Perspective
Here are some of this week’s highlights for 420 names on the Focus Investor List:
- CRLBF has completed the $ 90 million acquisition of 3 dispensaries in Pennsylvania.
- CURLF opened its 9th dispensary in Arizona and its 38th in Florida.
- GDNSF completed the divestiture of its dispensary license in Arizona for $ 15 million and completed the acquisition for $ 8 million of a dispensary in Maryland.
- GRAMF has extended its line of valuable vape cartridges with four new flavors.
- OGI released its financial results for the fourth quarter of the fiscal year, with revenue of C $ 24.9 million, up 22% from a year ago and sequentially, ahead of expectations .
- PLNHF’s third quarter revenue and Adjusted EBITDA were both lower than expected due to operations in California, with revenue increasing slightly sequentially to $ 33 million and Adjusted EBITDA down to 3. $ 5 million.
- TCNNF introduced Bhang chocolate products and an edible drink mix, TruTonic, in Florida. It also opened its 109th dispensary there.
- The executive chairman of TRSSF and a director bought a significant number of shares on the open market.
- VLNCD has expanded its manufacturing platform to Ontario as the Pommies plant received its microprocessing licenses from Health Canada.
- VRNOF has opened its 39th dispensary in Florida.
The Global Cannabis Stock Index took off from a new 2021 closing low on Monday, but still fell during the week, falling 2.8% over the week to 38.70:
The index, which lost 34.1% in 2019 and 54.9% in 2018 after gaining 91.8% in 2017 and 88.8% in 2016, is up 5.2% in 2020. It has lost 12.8% in 2021 so far. It currently includes 42 stocks and ended 2020 at 44.39:
420 Investor offers three model portfolios to underwriters, two of which are long-term focused and fully invested with the goal of beating the Global Cannabis Stock Index, 420 Opportunity and 420 Quality. Opportunity 420 ended the week at $ 111,381, down 3.0%. The model portfolio, up 5.7% in 2021, gained 35.6% in 2020 and increased 122.8% since April 2014 despite the index’s sharp loss since then. 420 Quality ended the week at $ 154,171, down 3.0% for the week, and is now down 4.5% in 2021 after gaining 42.8% in 2020. The model was launched in March 2017 targeting long-term investors looking to invest in major cannabis stocks with low portfolio turnover and has gained 208.3% since inception compared to the index’s 52.1% decline since then. Flying High, which focuses on swing trades, ended the week at $ 352,453, down 4.4%. The model portfolio gained 52.7% in 2020 and is up 39.6% in 2021, and the return since its inception in late 2013 has been 3425%.
After a strong recovery in early 2019, the cannabis industry fell sharply over the following year to unprecedented levels due to several negative developments including the CannTrust fraud, the surprise termination of Bruce Linton in as CEO of Canopy Growth, a disappointing rollout. legalization in Canada, regulatory confusion in the United States regarding CBD and the slow rollout of legalization in California, the vaping crisis and then financial turmoil and market disruption due to the COVID-19 pandemic. The industry has seen capital available to fund expansion dry up, a situation that continues to challenge companies operating with negative cash flow as availability is limited to the strongest operators.
Cannabis stocks overreacted and hit a low in March 2020, and benefited from the perception that the industry has strong growth prospects, which was unclear at the time. One big change has been that the pandemic has caused many regulators to allow previously prohibited types of retail activity, such as curbside pickup and delivery. The legal market quickly capitalized to become even more convenient than the illicit market, with the ability to order online. States and municipalities have decided to expand adult use and medical access. Access to capital improved dramatically and major companies began to generate large and rapidly growing income and profits.
The good end of 2020 continued into 2021 after Democrats took control of the Senate in early January, but actions have gained traction and have consolidated since then. In addition to concerns that federal legalization will take longer than many anticipated, there have been some tough comparisons to last year’s sales levels. Additionally, as several institutions embraced the sector earlier this year, there was a lull in further interest.
There are several potential catalysts ahead, including the FDA (or Congress) providing clarification on the regulation of CBD, the progress of Canadian legalization which began in October 2018 and which begins to include a broader set of products. and the continued growth of the German and Israeli MMJ. and other international markets which have been slow to develop. Adult implementations in California and Massachusetts have been slow to roll out, but are starting to show big improvements. Michigan and Illinois legalized adult use at the end of 2019, and these markets are showing strong growth that may prompt other states to legalize. Voters in Arizona, Montana, South Dakota, and New Jersey all approved legalization of adult use in November, and Connecticut, New Mexico, New York and Virginia passed the legalization through the legislative process in 2021.
The major themes to come are probably continued cross-sector investment in the sector and further consolidation in Canada and the United States, possible reform of federal regulations (SAFE Banking Act and other more comprehensive laws, which could eliminate the ‘280E taxation and allow trading in higher markets exchanges for MSOs as well as the widespread use of credit cards for cannabis purchases), measures to enable cannabis research, deployment of MMJs in Germany , Mexico and Australia as well as continued progress in South America and the potential legalization of adult use in Germany, Israel and Mexico, new legal cannabis implementations in AZ, MT, NJ and SD, and MMJ implementations in AL, WV and VA, legalization possible through legislatures in DE, FL, MD, MN, NH, PA and RI and implementation of commercial programs CT, NM, NY and VT in 2022 and VA in 20 24. It is interesting to see both sides pass legislation to legalize cannabis at the federal level, including the Republican Bill, States Ref orm Act, and Democratic Bill, Cannabis Administration and Opportunity Act.
After hitting a low in March 2020, the cannabis industry has entered a new bull market. Many companies generate substantial income and some even make a profit, and the liquidity is much better. The industry has moved away from many legacy penny stocks that never proved they had viable businesses to better capitalized companies, many of which have strong management teams and substantial businesses. The investor base has also evolved, becoming more and more institutional.
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