The Morning Blunt

Volume 2| Issue 30

October 30, 2018

“Attitude is equally as important as ability.“ –Walter Scott

Stock Market

Pot stocks were down across the board on Monday as the canna bubble let out more air. Aurora fell 12%, Tilray plummeted 16.1%, and Canopy Growth dropped 14.6%. Trading for India Globalization Capital Inc. was halted for delisting proceedings due to the company has substantially discontinued the business that it conducted at the time of listing.

The US vertically integrated cannabis company Curaleaf Holdings Inc announced Monday that effective immediately it would begin trading on the Canadian Securities Exchange as CURA after raising CA$520M in a private placement offering. The offering signifies the largest cannabis reverse takeover completed to date.

Cannabis stocks and ETFs plummeted 10-30% into correction territory across global markets. Seeking Alpha’s Cornerstone Investments advises investors to be patient and to avoid catching a falling knife as attractive offers will present themselves.

Radient Technologies Inc. announced it has filed 18 provisional patent applications with the US Patent and Trademark Office for developments related to methods, systems, and apparatus for improving efficiency, purity, quality, and yield of cannabis biomass extraction. The company also announced its approval of Tier 1 Issuer by the TSX Venture Exchange effective Monday.

Origin House, previously known as CannaRoyalty, has updated its business model to make it one of the most effective cannabis stocks in the sector, trouncing Aurora and Canopy in realistic valuation, US market, and long-term speculation.

With a market cap of $1.1B, a $1B supply agreement with Quebec, and a contract with Molson Coors, Hexo Corp. is set to begin trading on the New York Stock Exchange beginning in December. Seeing itself as a potential acquisition target, Hexo is looking to boost its value by gaining investors on the NYSE and cultivate partnerships with food and cosmetic firms.

National Access Cannabis Corp. announced that it closed financing of an initial tranche of $20M with Aphria Inc., CannTrust Inc., VIVO Cannabis Inc., and Zenabis Ltd. with signed commitments for up to an additional $35M. NAC intends to use the funding for an aggressive expansion, with the goal of opening 200 retail locations over the next 18 months.

Check out why Gary Bourgeault of Seeking Alpha believes that this temporary price correction of Aurora Cannabis is a great buying opportunity for investors. According to Bourgeault fundamentals remain strong for Aurora and the cannabis sector and it’s a great time to buy in for the long term.

Spiking as much as 14.8% on Monday, MariMed Inc announced that it has finalized the acquisition of New Jersey’s cannabis firm BSC Group. The acquisition is a strategic maneuver by the company to establish itself early to a possible adult use recreational market. New Jersey is currently considering a bill that would legalize recreational cannabis.

Global News

BLOCKStrain’s genome-to-sale tracking addresses cannabis inversion (when black market cannabis is sold on the legal market) and diversion (when legal cannabis is sold on the black market) challenges faced by the industry as well as tracks genetic factors from potency to potential contamination. Producers can also safeguard their intellectual property when licensing strains.

Though there is a large demand for banking services in the cannabis industry, financiers have their attention on ancillary support industries. According to Geoff Zochodne of the Financial Post, Ratings agency DBRS Ltd reported with cannabis now legalized in Canada and many of the major cultivation firms emerging, the next big pot plays will be in support industries like packaging, shipping, marketing, retail stores, cafes, and cosmetics companies, thus there will be an increased need for financial services as distribution expands.

GMP Securities analyst Martin Landry noted that limited distribution networks in most provinces, fulfillment challenges in Ontario, excise stamp shortages throughout the country, and the inventory shortages of Quebec indicate that 2018 cannabis sales will be much lower than originally predicted. Check out his analysis for his predictions about 2018’s close out.

It can be easy for businesses to get lost in the crowd, these strategies can help your brand stay visible during this time of growth: focus on the health benefits of your product, be educational but not condescending, embrace vibrant and trend setting designs, and have an authentic mission

US News

The Flowering HOPE Foundation filed petition for review challenging the DEA’s classification of hemp oil and CBD as a schedule 1 narcotic in the agency’s Marihuana Extract Rule.

While Canada is experiencing shortages and store closures, some of the United States cannabis industry is experiencing an oversupply issue driving prices to historic lows. Wholesale cannabis prices are down 50% in Oregon and Washington compared to October of 2017.

On Friday the agency that over sees cultivators, California Department of Food and Agriculture, announced due to the large number of applications for temporary cultivation licenses, the deadline for applicants is now December 1st, 2018. Hilary Bricken of the Canna Law Blog has more on the stipulations surrounding licensure and the backlog of applicants expected.

Organic farmers in Southern Oregon are concerned that under-regulated cannabis farms may have poisoned farm land, killing hawks and straining the local water supplies. Insufficient regulation has resulted in careless farming tactics that are hazardous to the environment.

Pierre Lemieux of the the Library of Economics and Liberty explains an example by Paul Samuelson which discusses the theory of how production competition and complementation ultimately still result in scarcity for talent, resources, land, capital, and contracts. Lemieux translates this concept to the Northern California cannabis markets who are competing with wine producers for seasonal labor, land, and capital.

Canada News

BNN Bloomberg’s David George-Cosh reports Health Canada has issued warnings to seven cannabis producers for violating federal rules against the promotion of marijuana since October 17th.

Dozens of Ontarians have begun filing formal complaints against the Ontario Cannabis Store with the provincial ombudsman detailing their frustrations with cannabis supply issues and back logged deliveries that are now two weeks late.

Though cannabis is legal in Canada the black market hasn’t exactly gone out of business. With more illegal cannabis shops than Starbucks in Vancouver British Columbia, it may take years for officials to shut down illicit businesses.

Science

The world’s first clinical study on the effects of medicinal cannabis on Australian patients with malignant brain tumors will be conducted by Endeavour College of Natural Health investigating whether patients with glioma can tolerate a high dosage of THC. They will also monitor if the high dosage of THC will affect tumor growth when taken with a standard treatment.

Cannabis cultivation and R&D firm MedPharm announced that it received Colorado’s first cannabis research license after a lengthy approval process where the state analyzed the company’s ability to successfully develop and conduct research.

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