The Morning Blunt

Volume 2| Issue 29

October 29, 2018

“The most difficult thing is the decision to act, the rest is merely tenacity. “ –Amelia Earhart

Stock Market

The Telegraph’s Garry White reports Canadian cannabis related equities have run into a bear market after the pre-legalization stock frenzy. The cannabis equities implosion is the second bubble to pop this year after cryptocurrency. It will likely take years for the market to stabilize, until then it’s advisable to shift focus from cultivation to value added products, security companies, equipment manufacturers, logistics companies, transportation companies, and other support industries related to the cannabis industry. Check out how to spot a bubble market and some of the highs and lows of investing in a rapidly evolving industry.

Market Watch’s Ciara Linnsane reports out of the last 9 trading sessions the sector has fallen 8 as investors took profits on the outsized gains posted before Canada’s legalization day. She predicts Monday will be another sharp loss after last week’s selloffs. Take a look how cannabis stocks closed out last week.

Organigram Holdings Inc announced it has signed a supply agreement with the Province of British Columbia, making BC the eighth province the company has secured distribution agreements with. As the sole wholesaler of non-medical cannabis for the province, the company will operate retail locations and provide online sales.

Valued at $4B before the initial financing, Massachusetts based cannabis firm Curaleaf sold $400M of stock in a private placement before listing on the CSE Monday. New York based Acreage Holdings raised $350M and Arizona based Harvest Enterprises Inc raised $200M before going public on the CSE. All three companies are listing via reverse takeovers.

California based cannabis firm Plus Products raised CA$20M in initial public offering. The offered shares were listed on the Canadian Securities Exchange on Thursday October 25, 2018 and will begin trading Monday October 29th under the ticker “PLUS”.

Global News

Consolidation is inevitable in the cannabis industry, however having strong talent, branding, and the ability to collaborate with your competition could minimize the damage, protect your brand, and help your business thrive through the consolidation storm.

Executive chairman of MJardin and CEO of Growforce Rishi Gautam discusses Growforce’s choice to expand globally rather than taking a multi-state approach. MJardin offers staffing and a turnkey solution to cannabis cultivation and processing.

Support and technology industries tailored for cannabis businesses are increasingly relying on innovation to simplify the consumer and supplier processes. Check out some advancements such as compliance and transparency software, advertising platforms, and business acceleration companies offering their services.

As Latin and South American markets are beginning to legalize medical and recreational cannabis, Canadian companies have been scooping up Latin American assets at a fast pace. Seeking Alpha’s Cornerstone Investments speculates Khiron Life Sciences of Columbia will be the next bet for Canadian M&As.

New Frontier Data released an analysis which looked at illicit usage rates and global regulated industries to model what legal cannabis would look like for Australia. According to the report the Australian market would be worth $5.5B annually.

US News

The deadline for temporary California cannabis cultivation license applications and is December 31st, 2018. All paperwork and payments must be submitted before the deadline to receive an extension of your existing temporary cannabis cultivation license.

Following Canada’s lead in legalization, several new initiatives have been implemented attempting to legalize cannabis in the US nation-wide. Currently voting on cannabis measures are Michigan, North Dakota, and Nebraska voting on adult use recreational marijuana, while Utah and Missouri are weighing in on medical cannabis.

According to Canna Law Blog, due to federal prohibition on cannabis contracts relating to or involving cannabis in any way can be found as invalid documents to the courts. While this is likely to change in the future, cannabis companies have little recourse in contract enforcement.

Now that cannabis is legal San Francisco will be voting how much those businesses will be taxed. Prop D would be a municipal tax on businesses with revenues exceeding $500K annually on top of the regular 8.75% sales tax. Though the tax would be the lowest in the state, critics of the tax believe that more taxation will run prices up forcing consumers to resort to black market goods.

According to Marijuana Venture’s Michael Vacchio legalization has allowed more effective government crackdowns on zoning and compliance issues as well as on black market industries, which has produced a better product for the consumer and better environmental standards for the industry. Check out what states like California are doing to mount cannabis environmental clean-up efforts.

The numbers for Nevada’s marijuana sales are in showing cannabis sales surpassed $525M from July 2017 to July 2018. According to experts behind the report, the economic benefit of marijuana sales totaled nearly $1B. Cannabis related jobs surged with an additional 8,300 full time positions to the state.

Canada News

Quebec Cannabis Corp. says its 12 stores will remain closed Monday through Wednesday until supply shortages have been resolved. Limiting store hours to Thursday and Sunday will help reduce supply outages but will not guarantee supplies will last.

Science

Researchers conducting studies on sex hormones found estradiol regulates the female endocannabinoid response to cannabinoids. These receptors were found to be more sensitive in female mice and experienced significant changes during menstrual cycles. According to the conclusion of the study, the interaction between the endocannabinoid system and dopamine levels in the brain are sex dependent.

Stanford University scientists are launching the cannabis medical company Katexco Pharmaceuticals. The company will focus on developing anti-inflammatory drugs that will target the endocannabinoid system with fewer side effects than current medications. This will open up new ways to treat the brain and impact our immune system.

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