3 Canadian Cannabis Stock Trends Investors Need to Know

The cannabis sector continues to see mixed movements and Canadian stocks levered to the cannabis industry have been under pressure during this time.

Canada’s federal government has announced that in early 2017 it will introduce legislation to legalize the recreational use of marijuana in the country. By 2018, the legal recreational cannabis market should be generating over $10 billion a year as it is expected to be serving over 3 million people at that time.

This is a significant development and it has created a great opportunity for companies as well as investors. To put it into perspective, although the population of Canada and California are close in number, Canada has only 36 licenses while California has more than 3,000.

Canada has a well-developed and rapidly growing national medical cannabis system that has more than 125,000 registered patients. The number of medical cannabis patients in Canada continues to grow at double digit rates every month and we remain favorable on the Canadian cannabis industry.

We want to provide updates on three recent developments within the Canadian cannabis industry:

Canopy Growth (CGC.TO) (TWMJF) has fallen more than 10% in the last week

Canopy Growth was one of the weakest performers yesterday as the shares fell more than 7%. We continue to view the company as one of the best long-term cannabis investment opportunities and we will continue to monitor the shares closely. We are favorable on Canopy’s acquisition of Mettrum for a number of reasons. We believe that the deal will immediately prove to be accretive as the combined company will bring together the Mettrum Spectrum brand with the medically-focused brand of Bedrocan Canada and the lifestyle-focused brand of Tweed.

Mettrum (MT.V) (MQTRF) is trading at 20% discount to Canopy’s proposed acquisition price

The shares plunged more than 8% yesterday and MT.V is trading at a more than 20% discount to Canopy Growth’s proposed acquisition price of $8.42 a share. We have been watching this sell-off closely as Mettrum Health has seen significant weakness after its initial rally following the acquisition announcement. The recent weakness is creating a potential arbitrage opportunity for investors and we are monitoring the shares for a botom.

Tetra Bio-Pharma Inc. (TBP.CN) (GRPOF) jumps 17% on Aphria’s investment

Yesterday, Tetra Bio rallied more than 17% yesterday after it announced a $1 million investment from Aphria (APH.V) (APHQF). The shares jumped immediately off the open before giving up some its gains. GRPOF rallied in the last hour of trading and we are monitoring from the shares from the sidelines. Aphria Inc. (APH.V) (APHQF) saw weakness on relatively strong volume and we continue to monitor the shares as they trend lower.

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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