5 Key Themes for the Cannabis Industry in the Second Half of 2022

During the last year, the cannabis industry lost more than half of its value (based on the market capitalizations of public companies) and the sector faces uncertainty as interest rates continue to rise. 

Today, we have highlighted what we consider to be 5 important themes for the back half of 2022 and believe our readers need to be aware of these topics. 

Will Canopy Growth Become Profitable?

• 2022 has been a challenging year for Canopy Growth Corporation (Nasdaq: CGC) (TSX: WEED) and the stock has fallen approx. 70% so far this year. The main question that Wall Street has for the Canadian cannabis company is will the business be profitable. Although the management team has cut costs by closing facilities and firing employees, the business has yet to achieve profitability. We believe this is the most important theme for Canopy Growth in the second half of the year and will monitor how the management team is able to execute on its strategy to become profitable. 

Will Tilray Acquire HEXO?

• Last year, there were rumors about Tilray Brands Inc. (Nasdaq: TLRY) (TSX: TLRY) potentially acquiring HEXO Corporation (Nasdaq: HEXO) (TSX: HEXO). We believe Tilray shareholders are glad the acquisition did not come to fruition because HEXO has lost more than 80% of its value from its fourth quarter high in 2021. Earlier this year, the companies formed an agreement where Tilray would provide HEXO with capital and we would not be surprised if an acquisition was announced before the end of the year.

How Does the Real Estate Market Bounce Back?

• During the last year, there has been a significant slowdown on the real estate side of the cannabis industry. As interest rates climb, the real estate slowdown has become more significant and we believe that Innovative Industrial Properties, Inc. (NYSE: IIPR) is a great barometer for this vertical. So far this year, the NYSE traded cannabis real estate investment trust (REIT) reported significantly fewer real estate acquisitions and we will monitor the trend in the back half of the year. 

Will the US Legalize Cannabis?

• Although several members of Congress in the US have supported pro-cannabis legislation, the bills have not been approved by both the Senate and the House of Representatives. With midterm elections around the corner, we expect the cannabis topic to become more significant and will monitor how legislation advances in the back half of the year. 

When Will Recreational Cannabis Sales Commence in Germany?

• Germany is expected to start to allow for the sale of recreational cannabis and we are bullish on this market. We believe the legalization of cannabis in Germany would be a major catalyst for the sector and would create a domino type effect in the European Union (EU). We consider Germany to be an important piece of the global cannabis legalization puzzle and will monitor how the market advances from here. 

If you are interested in learning more about important cannabis themes, please send an email to support@technical420.com with the subject “Key Cannabis Themes For 2022” to be added to our distribution list. 

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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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