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7 Cannabis Sector Headlines You Need To Know

Apr 12, 2019 • 10:52 AM GMT+0000
14 MIN READ  •  By Anthony Varrell
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The cannabis industry has been one of the most exciting markets to watch and the last week has been quite busy from a company development standpoint.

During the last two years, there has been a significant increase in the number of publicly traded cannabis companies and this has been an exciting trend to watch. Although we are favorable on this increase, investors need to conduct significant due diligence and focus on companies that have an attractive value proposition and are led by a management team that operate in the best interests of shareholders.

Today, we have highlighted 7 cannabis companies that we have been following and that have reported a significant development in the last week.

Green Thumb: A Leading Cannabis Retailer in the US

Earlier this week, Green Thumb Industries Inc. (GTII.CN) (GTBIF) traded higher after it released fourth quarter financial results that showed impressive growth and we have been following the United States cannabis retailer. When it comes to the domestic cannabis market, Green Thumb has been a leader and we are favorable on its growth prospects going forward.

Through a series of organic and inorganic growth initiatives, Green Thumb has significantly advanced its fundamental story and we expect these developments to serve as a major catalyst for growth. During the fourth quarter, the United States cannabis retailer recorded a $3.1 million net loss on $20.8 million in revenue.

One of the primary growth drivers from the fourth quarter was the increase in the number of states that are generating revenue for the business. During the quarter, the number of states increased from two states to five states and the company opened seven new dispensaries in these markets.

After the quarter ended, Green Thumb continued to expand its reach and has increased the number of revenue generating states to a total of nine. We expect fundamentals to significantly strengthen during the first quarter of 2019 as a result of this and this is something to be watching.

Green Thumb is levered to some of the fastest growing cannabis markets and is led by a management team with a proven track record of success. Over the next year, we expect to see the company further expand its position in the United States market and we will be watching how the team continues to execute.

Isodiol International: A CBD Company to be Watching

During the last year, there has been a significant increase in the amount of demand for products that contain cannabidiol (CBD). CBD is breaking into the mainstream market and this is a trend that investors need to be watching. Last month, CVS Health Corporation (CVS) reported that it would start selling CBD products and this was a major milestone for the cannabis industry. The day after this announcement, Walgreens Boots Alliance, Inc. (WBA) also reported that it would start selling CBD products and we are favorable on the change in sentiment.

Isodiol International Inc. (ISOL.CN) (ISOLF) has been capitalizing on the CBD market and was an early mover on this burgeoning opportunity. The CBD company is in the middle of a major strategy change and we find this to be significant. Earlier this year, the company announced plans to refocus its business strategy on core competencies and key market segments. Isodiol has been executing on a strategy that will streamline its business, reduce shareholder dilution, and cut costs while taking advantage of significant new opportunities.

Going forward, Isodiol plans to focus on three primary strategic pillars: technology, branding, and retail. The company plans to divest of its cultivation and non-specialty manufacturing operations, which represents a significant strategy shift. We are favorable on Isodiol’s refined focus and will monitor how the team continues to execute.

Earlier this week, Isodiol announced the commencement of its CBD vending machine program with an initial launch of Iso-Sport products in 20 Powerhouse Gym locations across the United States. The company anticipates its Iso-Sport products will be available in vending machines at select Powerhouse gym locations by mid-April 2019 and we are favorable on the growth prospects associated with this relationship.

Powerhouse is one of the largest health club licensing organizations in the world, with over 1.2 million gym members. We expect to see this relationship result in increased awareness for Isodiol and will monitor how this agreement adds value. If the initial launch is successful, we expect to see more Powerhouse Gyms join the CBD vending machine program and this is an opportunity to watch.

The CBD opportunity represents a multi-billion-dollar market and we will monitor how Isodiol continues to capitalize on this. We believe that the company has significant catalysts for growth and believe that it has been flying under the radar. Isodiol is in the early innings of a major growth cycle and this is a company to watch.

Aurora Cannabis: Continues to Expands its Position in Canada

Aurora Cannabis Inc. (ACB.TO) (ACB) is a global cannabis leader and has been nothing short of an execution story. We have been covering Aurora Cannabis since 2015 and have been impressed with how the company has been able to advance its story during this time. The company has a massive footprint in Canada and in international markets and we find this to be significant.

Earlier this week, the Canadian cannabis producer provided an update on the status of Aurora Sun, which is currently under construction. To support the rapidly growing global demand for medical cannabis, the facility will be expanded to 1.62 million sq. ft. and will be one of the largest cannabis cultivation facilities in the world. The management team expects this state-of-the-art facility to produce more than 230,000 kilograms of high-quality cannabis per year. Aurora Sun Facility highlights include:

  • 37 growing rooms, each at 32,500 square feet
  • At full operation, there will be more than 1,000,000 plants in various stages of growth in the facility at any given time
  • Increased automation through next generation robotic shuttles to mobilize benches, increasing operational speed and facility efficiency, while allowing for multiple product streams simultaneously
  • Expanded and upgraded facility automation systems for cloning and production, further lowering anticipated production costs
  • Next generation, low maintenance climate management system for superior plant health, yield and cannabinoid potency
  • Upgraded weather readiness design to drive even greater operating efficiencies
  • Additional energy efficiency/energy management via improved implementation of thermal screens
  • Improved GMP/GACP segregation between grow, harvest, and post-production to facilitate faster and most efficient work flow
  • Higher throughput post-harvesting systems, including drying systems, to reduce product time to market
  • Ground work at the facility is nearing completion, erection of the steel structure is advancing and installation of the glass at Sun is expected to be completed in May 2019. Like Aurora Sky, Health Canada licensing requests have determined that rooms will be available for planting before the entire facility is completed.

Aurora Cannabis is one of the most exciting opportunities in the cannabis sector and we are monitoring how the team continues to execute. The company has significant catalysts for growth and we are bullish on its growth prospects. Going forward, Aurora Cannabis’ fundamentals are expected to significantly strengthen and this is something we are watching.

WeedMD: Completes Significant Acquisition

In October 2018, Canada legalized recreational cannabis and this has proved to be a significant catalysts for companies that are levered to this market. We have been closely following the Canadian cannabis industry and find this to be one of the most exciting long-term opportunities.

During the last year, there has been a lot of consolidation in the Canadian cannabis industry and this is a trend that we expect to continue. WeedMD Inc. (WMD.V) (WDDMF) is a Canadian cannabis producer that we have been favorable on and believe that this opportunity has been flying under the radar.

Earlier this week, WeedMD further expanded its reach by closing on the acquisition of an additional 60 acres of land located adjacent to its 98-acre property in Strathroy. The company’s outdoor cultivation platform has the potential to increase to more than 100 acres and this represents a significant opportunity.

WeedMD previously applied for an amendment to its Strathroy license to expand beyond its greenhouse cultivation with an initial 25-acre, low-cost, outdoor grow operation in 2019. With this acquisition, the company plans to increase to 75 acres for an overall outdoor cultivation by 2020. We are favorable on this expansion opportunity and will monitor how the team executes on this.

When compared to its peers, WeedMD has an attractive valuation and we are favorable on its state-of-the-art cultivation facility. We believe that the market under-appreciates the company’s growth prospects and believe that this is an opportunity to have on your radar.

High Hampton: A California Cannabis Company

California represents a significant opportunity for cannabis businesses and we have been closely monitoring this burgeoning cannabis market. Following the legalization of recreational cannabis in California, we have seen an increase in the number of companies that are focused on this market and this is a trend that we have been watching.

When it comes to the California cannabis market, it is important to focus on companies that are fully licensed. California’s cannabis market is in the middle of a major transition whereby non-licensed cultivators are being shut down by the state. This makes the opportunity even more attractive for licensed California cannabis businesses and we have been favorable on this.

High Hampton Holdings Corp. (HC.CN) (HHPHF) is California cannabis company that we have been excited and have been closely following. Earlier this week, the company announced that the City Council of West Sacramento unanimously approved the adoption of a development agreement with High Hampton’s wholly owned distribution arm Bravo Distro for a Conditional Use Permit (CUP). The approval permits Bravo and High Hampton to operate a wholesale cannabis distribution facility and we are bullish on the growth prospects associated with this opportunity.

This was a significant development for High Hampton and we will monitor how the team continues to execute. Later this year, the company plans to add the West Sacramento facility to its growing network of operational hubs and we are favorable on how this addition will enhance the business. The facility is ideally suited for distribution and will become a crucial hub when it comes to serving the Northern California market.

High Hampton is focused on the entire state of California and we are bullish on this. Through the company’s Cudahy facility, the company will serve the Southern California market and this represents a significant opportunity. High Hampton is a company that has significant catalysts for growth and 2019 will be all about execution. This opportunity is undervalued when compared to its peers and this is a company to be watching.

Halo Labs: Executing on the California Cannabis Oil Market

One of the most exciting trends in the cannabis industry has been the increasing demand for cannabis oil. Halo Labs (HALO: NEO) (AGEEF: OTC) is a United States cannabis oil company that has been executing flawlessly on a major expansion and we are favorable on the improving revenue numbers.

Earlier this week, the United States cannabis oil company issued a progress update on its California business and we found this to be significant. In addition to providing bulk and white label cannabis oils and concentrates to various customers throughout California, Halo Labs is now also offering its own branded products to dispensaries through C4 Distro in Southern California

In the first two days of launch, C4 Distro has sold Gilt and Hush branded products into 41 dispensaries in Southern California and generated approx. US$105,000 in revenue. Through C4 Distro, the company is executing on a targeted launch strategy with key dispensary partners and expects to expand distribution of its branded products into approximately 200 dispensaries by the end of the second quarter of 2019.

Later this month, C4 Distro expects to launch its Gilt branded DabTabs product line to Southern California dispensaries and this could prove to be a significant catalyst for Halo Labs. We are bullish on the cannabis oil opportunity and are favorable on Halo Labs’ leverage to this market. Over the next year, we expect to see the company significantly advance its business and this is an opportunity to watch.

Chemesis International: A Burgeoning Opportunity

Chemesis International Inc. (CSI.CN) (CADMF) is a company that we have been closely following and are favorable on the leverage to the North and South American cannabis markets. During the last year, the company has been nothing short of an execution story and has significantly improved its leverage to the burgeoning cannabis market.

Earlier this week, Chemesis reported that it will produce and distribute Viverian, its all-natural CBD product line, in Puerto Rico, through its subsidiary Natural Ventures. Viverian is a hemp-derived CBD product line that includes CBD tinctures, as well as capsules that support overall health and wellness.

New regulations from the Puerto Rican Department of Health allow licensed manufacturing facilities to incorporate hemp derived CBD in to its portfolios as long as the products are entered in to the tracking system and tested through licensed labs in Puerto Rico. This is a significant development for Natural Ventures which expects to have products available in dispensaries by the end of the month.

Chemesis International represents a multi-faceted growth opportunity and has attractive leverage to the cannabis opportunity in California and Colombia. We find these markets to be significant and continue to monitor how the team is able to capitalize on these opportunities. We believe that Chemesis has significant catalysts for growth and this is an opportunity to watch.

 

 

 

 

 

Pursuant to an agreement between StoneBridge Partners LLC and Isodiol International (ISOLF) we have been hired for a period of 360 days beginning August 1, 2018 and ending August 1, 2019 to publicly disseminate information about (ISOLF) including on the Website and other media including Facebook and Twitter. We are being paid $5,000 per month (ISOLF) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero shares of (ISOLF), which we purchased in the open market. We plan to sell the “ZERO” shares of (ISOLF) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (ISOLF) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

Pursuant to an agreement between StoneBridge Partners LLC and Chemesis International we have been hired for a period of 365 days beginning July 15, 2018 and ending July 15, 2019 to publicly disseminate information about (CSI) including on the Website and other media including Facebook and Twitter. We are being paid $5,000 per month for a period of 3 months. We own zero shares of (CSI), which we purchased in the open market. We plan to sell the “ZERO” shares of (CSI) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (CSI) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

Pursuant to an agreement between StoneBridge Partners LLC and Halo Labs we have been hired for a period of 180 days beginning December 4, 2018 and ending June 4, 2019 to publicly disseminate information about (HALO) including on the Website and other media including Facebook and Twitter. We are being paid $6,750 per month for a period of 6 months. We own zero shares of (HALO), which we purchased in the open market. We plan to sell the “ZERO” shares of (HALO) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (HALO) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

Pursuant to an agreement between StoneBridge Partners LLC and Chemesis International we have been hired for a period of 365 days beginning July 15, 2018 and ending July 15, 2019 to publicly disseminate information about (CSI) including on the Website and other media including Facebook and Twitter. We are being paid $5,000 per month for a period of 3 months. We own zero shares of (CSI), which we purchased in the open market. We plan to sell the “ZERO” shares of (CSI) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (CSI) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

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Authored By

Anthony Varrell

Anthony Varrell is Managing Director of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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