The Morning Blunt

Volume 3| Issue 13

November 13, 2018

“Don’t let yesterday take up too much of today.” –Will Rogers

Stock Market

Canopy Growth Corp. (NYSE: CGC) beat Tilray (NASDAQ: TLRY) in the race for the number one cannabis market cap once again. Canopy’s rise in share price wasn’t what boosted its valuation, rather Constellation closed its $4B equity investment in Canopy bringing the company’s market cap to nearly $15B. Motley Fool’s Sean Williams discusses what Canopy must do to retain the number one title.

Cronos Group Inc. (NASDAQ: CRON) issued its Q3 earnings report Tuesday morning reflecting a net loss of CA$7.04M. The company’s revenue roughly tripled in its latest quarter and sales rose 186% to CA$3.76M. Take a closer look at the Market Watch’s Max A. Cherney’s breakdown of Cronos’ most recent quarter.

Tuesday medical marijuana producer Tilray (NASDAQ: TLRY) reported revenue surged more than 85% last quarter compared to the same period last year, with total revenue coming in at $10M. Tilray shares dropped 1.5% during Tuesday after-hours trading.

Shayne Laidlaw, cannabis analyst at Hedgeye Risk Management warns investors to pump the breaks on their short-term boom expectations for the industry as a whole, considering the rapidly changing global political and regulatory environments, especially in the US.

According to Seeking Alpha’s D. H. Taylor, The Green Organic Dutchman (OTCQX: TGODF) is currently the most undervalued cannabis stock in terms of its production capacity you can buy. The company has a market cap at $900M, however the company should be able to generate earnings and revenue that would value the company at $3B. Though the company is still building out its facility and won’t have product on the shelves until mid-2019, The Green Organic Dutchman’s fundamentals should line up with the company’s stock.

According to Reuters’ David Randall, one of Wall Street’s prominent short sellers Andrew Left of Citron Research (OTC: CTNI) said Tilray (NASDAQ: TLRY) gave his firm the company’s worst day ever in the market on September 19th. Two months ago, Tilray’s shares nearly doubled in one trading session but Left remains bearish on the Canadian cannabis company. On January 15, 2019 Tilray’s stock lockup expires which will flood the market with Tilray shares, which could lead to a potential correction for the company.

Motley Fool’s Sean Williams provides a rundown on Auxly Cannabis Group’s (NASDAQOTH: CBWTF) third quarter financial, who closed out with CA$236.9M in cash and cash equivalents. Although fundamentals are light for the emerging cannabis industry, Auxly was focused on capacity expansion and establishing key partnerships for its third quarter.

Green Thumb Industries (CSE: GTI) (OTCQX: GTBIF) announced that it has signed a definitive agreement to acquire 100% of Integral Associates. The $290M acquisition includes Integral’s retail brand Essence, Desert Grow Farms, genetics library, and Cannabiotix NV, a cultivation and processing facility.

Monday Aurora Cannabis (NYSE: ACB) fell 4.5% to $6.96 during regular trading and remained flat in the extended session. The Canadian based cannabis firm reported fiscal first-quarter earnings that rose to CA$105.5M with total revenue 260% above a year ago. Earnings reports reflect that Aurora’s investments have been the big earners for the company

Global News

Nearly two years after Joaquin “El Chapo” Guzman’s extradition, the long awaited trial began Tuesday in New York amid intensive security measures and public attention. Matt Zapotosky of the Washington Post outlines the details of the case and provides a dramatic look into the case’s opening statements.

Israeli cannabis firm Together (TASE: TGDR) has entered the German medical sector after signing an agreement to acquire a German company with a wholesale trading license for narcotic treatments from Germany’s Ministry of Health. The company estimates it will be able to sell dried flower for €10-12 per gram directly to German pharmacies.

The Israeli Health Ministry announced that on March 31, 2019 doctors and pharmacies certified by the ministry will be authorized to prescribe and fill prescriptions for medicinal cannabis. The Ministry also aims to add an additional 150 certified doctors to the already 100 existing doctors authorized to prescribe cannabis.

Several Asian nations have taken notice of the North American and global trend toward cannabis legalization. Thailand’s National Legislative Assembly submitted a medical marijuana proposal to the country’s Health Ministry, Malaysia abolished the death penalty for drug charges on Tuesday with discussions on the table regarding medicinal cannabis, and Sri Lanka announced this summer that it would begin cultivating medicinal cannabis for export. Take a look at what other countries are considering legalization.

US News

Out of 44 point-of-sale software vendors that Cannabiz Media discovered, Bio Track and Green Bits are the most popular in both medical and recreational markets. Cannabiz surveyed nearly 1,500 cannabis businesses across the US, roughly half of the population of dispensaries, finding that five POS providers account for 80% of the POS segment among dispensaries.

The Texas Republican Party put forward a proposal for statewide decriminalization of cannabis, one of the first cannabis bills proposed Monday, which kicked off the pre-filing period for the 2019 legislative session.

Canadian News

Ontario Cannabis Store, the province’s only legal outlet to purchase cannabis, announced the store has eliminated its backlog of orders. According to the provincial government, after weeks of delays the online company is back on track and resuming deliveries.

Canadian legalization comes with a whole slew of regulations governing how cannabis companies commercialize, market, advertise, promote, package, and label their products. With a ban on promotional advertising, strict branding, packaging, and labeling laws, and logo homogeneity it is likely that laws will evolve over time.

Demand remains strong as retailers struggle to keep their doors open due to severe cannabis supply shortages plaguing Canada. Many retail locations have shortened their hours of operations or closed altogether. Alberta Gaming, Liquor, and Cannabis will be allocating equal amounts of cannabis to retailers to ensure all merchants have an opportunity.

Other News

H2 Talent, a newly launched cannabis executive recruiting firm is specifically tailored for C-suite and executive level personnel. Cannabis firms who are attempting to form their executive panels, committees, and boards can now hire H2 Talent to fill their executive roles.

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