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Last week, cannabis stocks rallied off their lows and this comes as companies continue to execute and advance. Over the last quarter, the cannabis sector has been trading lower and we are monitoring the recent price movements.
Although this weakness is concerning, we remain bullish on the long-term outlook and are monitoring how these companies continue to execute. Today, we highlighted three important company updates that we believe investors need to be aware of.
Aphria: An Execution Story
Last week was a big week for Canadian cannabis producer Aphria (APH.TO) (APHQF) and we are favorable on the continued execution. During this time, Aphria signed an agreement with Great North Distributors, a wholly-owned Canadian subsidiary of Southern Glazer's Wine & Spirits, to serve as exclusive manufacturer's representative for Aphria's recreational cannabis products throughout Canada. Last week, the company’s subsidiary, Nuuvera Deutschland GmbH, also acquired a 25.1% interest in Berlin-based Schöneberg Hospital
Although these are two major developments, the shares traded mixed following these announcements and we are monitoring price movements from here. The agreement with Great North Distributors will be Aphria's exclusive cannabis representative in Canada. The first-of-its kind deal gives Aphria 100% coverage of all cannabis retailers, whether provincially or privately operated, across Canada from the first day of legal adult-use sales.
Great North Distributors will establish a dedicated cannabis sales team that will be responsible for acting as the selling agent of Aphria's recreational cannabis brands and products to provincial retailers throughout Canada. Southern Glazer's will apply their industry-leading data analytics capabilities to provide Aphria with a powerful data-driven approach to cannabis sales.
The hospital acquisition facilitates Deutschland's long-term strategy to educate German physicians and patients and advance evidence that supports the effectiveness of medical cannabinoids. It is also the first step in Deutschland's plans to build and operate pain treatment centers throughout Germany.
We are bullish on Aphria and consider the marijuana producer to be a long-term opportunity. The company has been nothing short of an execution story and we are monitoring how Aphria continues to create value for shareholders.
EVIO: Trades Lower on Earnings but Well Positioned
The cannabis lab testing market represents an exciting opportunity as it is poised to benefit from continued demand for marijuana. One of the companies that is a leader in this space is EVIO Inc. (EVIO).
Last week, EVIO reported second quarter financial results and the shares traded lower on these numbers. While the weakness is concerning, it creates opportunity for new and existing investors and we are monitoring the shares closely. EVIO has been in the middle of a major growth cycle and is focused on a coast-to-coast expansion.
We believe that the shares were under pressure due to the lower revenue on a year-over-year basis. We consider this drop in revenue to be transitory as EVIO continues to focus on increasing market share throughout North America. According to CEO William Waldrop, the decrease in testing revenue was due to some softness in Oregon as well as the non-mandated testing grace period in California. We are not concerned by this softness as California’s July 1st testing deadline will mandate licensed retailers to sell only lab tested product. EVIO is well positioned to capitalize on this opportunity and we are bullish on this moving forward.
Choom: A Licensing and Retail Opportunity
Last week, Choom (CHOO.CN) (CHOOF) announced several strategic additions to the Board of Advisors to help steer the brand into Canada's emerging recreational marijuana market. We have been monitoring Choom closely as the company continues to execute and are favorable on this opportunity.
These additions are significant as Choom has established an advisory team with extensive experience in consumer branding, retail supply chain, government relations, entrepreneurship, operations, and financial services to provide guidance during the next phase of growth.
Over the last year, Choom has been nothing short of an execution story and has acquired two ACMPR applicants and has agreements in place to acquire two additional ACMPR applicants. The company is looking to become a vertically integrated opportunity and is planning to open branded dispensaries across Canada.
Choom is laser focused on the retail opportunity and has applied for retail outlets in British Columbia, Alberta, and Saskatchewan. Choom is well positioned to receive a license for the recreational market and we view this as a major opportunity. Based on some of previous responses we have seen from the market, we view the retail and licensing opportunity as very significant. Choom possess several catalysts for growth on account of its retail license applications, its ACMPR applications, and its current expansion.