The cannabis sector has been under pressure and this weakness has been taking place on lighter-than normal volume. Earlier this month, we highlighted this trend as something investors need to watch and we continue to monitor trading activity due to the recent increase in selling-pressure.

Although this trend is concerning, it is something that shouldn’t surprise investors. Last year, cannabis stocks pulled back around this time and recorded a similar decline in overall trading volume. We are monitoring how the sector trades from here and remain bullish on the long-term opportunity.

Today, we have highlighted five important company developments that investors need to be aware of. While the weakness is concerning, it has created a great opportunity for investors to buy high-quality cannabis companies on a dip.

Aphria: Trades Lower on Positive News

Earlier this week, Aphria Inc. (APH.TO) (APHQF) released a favorable update on the company’s worldwide operations and the shares have been trending lower since this announcement. This update come after the marijuana producer announced that recently acquired Nuuvera will be renamed Aphria International and be a wholly-owned subsidiary of the company.

Aphria International will focus on existing and future opportunities in established regulated international cannabis markets. Former Nuuvera CEO Lorne Abony will lead Aphria International and will become the Executive International Strategic Advisor to the CEO of Aphria.

Aphria International will focus its activities on established regulated cannabis markets around the world, including where Aphria International already has significant interests. These markets currently cover Europe, Africa and the Middle East, with assets and agreements in Germany, Italy, Spain, Portugal, Malta, Lesotho, and others. Aphria’s existing assets and interests in Australia will also be managed under Aphria International.

During the last week, Aphria has fallen approx. 15% and we remain bullish and favorable on the long-term outlook. The Canadian marijuana producer has announced several significant developments in 2018 that have the company positioned for significant growth going forward. Aphria is led by a management team with a proven track record and investors need to keep an eye on this high-quality cannabis producer.

Aurora-CanniMed: A Global Cannabis Leader

One of the biggest stories of 2018 so far has been Aurora Cannabis’ (ACB.TO) (ACBFF) acquisition of CanniMed Therapeutics (CMED.TO). We are very favorable on the combined company. The transaction unites Aurora with CanniMed, a pioneering cannabis company that has been operating in the industry longer than any other competitor, and whose brand strongly resonates with the medical community. The combined entity, under the Aurora banner, creates a global medical cannabis leader, and will continue to pursue an aggressive strategy of rapid technological and product innovation, and international expansion.

CanniMed has been a cannabis leader for almost two decades. In 2000, the company was granted a contract by Health Canada to produce medical cannabis, making it the longest standing federally regulated producer in Canada. With an 18-year track-record, 13 of which as the sole supplier to Health Canada, and not a single product recall, CanniMed has built an impressive reputation with the Canadian and international medical community, and has developed, organically, a network of over 5,000 referring physicians.

We are bullish on the combined company and see tremendous opportunity for synergies. Both companies are laser focused on two of the most significant trends in the cannabis industry, international markets and cannabis oils.

The trend toward smokeless marijuana products continues to increase and CanniMed was an earlier adopter to this. The company was one of the first to receive a license to sell cannabis oils from Health Canada and produces cannabis in a GMP compliant facility. CanniMed also offers a gelcap product and is developing new smokeless products (i.e. dissolvable thin wafer).

One of the reasons why we are favorable on the potential of the combined company is due to the support that Aurora would provide CanniMed. We are bullish on the long-term outlook and consider the combined company to be a global leader. This is an opportunity that investors need to watch.

Delta 9 Turns its Focus to Germany

Over the last year, Canadian marijuana producers have been laser focused on international opportunities and we are favorable on this trend. One of the markets we are most favorable on is Germany and we continue to keep an eye on the companies levered to this emerging medical marijuana market.

Earlier this week, Delta 9 Cannabis (NINE.V) (VRNDF) signed a non-binding letter of intent with CanPharma GMBH and Global Group Kalapa S.L. for the exportation of medical cannabis to Germany.

Kalapa is based in Barcelona, Spain and owns a number of subsidiary companies, including a CBD extracts production and distribution company and the Kalapa Clinic, the first European consultancy focused on medical co-treatment with cannabinoids. Kalapa is a joint venture partner with CanPharma, a Berlin-based firm that is attempting to acquire a cannabis import license for its operations in Germany.

Under the agreement, Delta 9 has agreed to export a minimum of 40 kilograms of cannabis a month and an additional amount of cannabis extracts to CanPharma for sale to medical cannabis patients in Germany. The agreement would also commit Delta 9 to provide additional cannabis for the German market in such amounts as may be mutually agreed by the parties.

Although this is a significant development, Delta 9 has a lot to do before the marijuana producer will be able to recognize any value from this opportunity. We have been monitoring Delta 9 from the sidelines and the shares have fallen more than 30% in 2018. This is a stock we continue to keep an eye on and will monitor how the company executes from here.

Hydropothecary Trades Lower After Reporting Earnings

The Hydropothecary Corporation (THCX.V) (HYYDF) traded lower after the marijuana producer released second quarter financial results for the period that ended on January 31st and we are monitoring how the shares continue to move.

Hydropothecary is focused on increasing production capacity through expansion initiatives and two projects are currently underway, including a new 250,000 sq. ft. greenhouse (expected to be completed by July), increasing annual production capacity to 25,000 kg and providing the ability to supply Société des alcools du Québec (SAQ) and medical patients during the first year after the legalization of recreational marijuana.

Hydropothecary is a low-cost producer which is a very attractive aspect of the story. During the second quarter, the weighted average cash cost of dried inventory sold per gram was $0.97. The marijuana producer is well capitalized and had more than $260 million in cash as of January 31st.

We are favorable on the company’s ability to produce marijuana at a low-cost and see upside to current levels. Hydropothecary has been flying under the radar and we remain favorable on the opportunity.

Isodiol Acquires Florida-Based Water Company

Isodiol International Inc. (ISOL:CNX) (ISOLF) has come off its recent highs and we are monitoring the global Bioactive CBD innovator which specializes in the development of pharmaceutical and wellness products. We have been monitoring the recent pullback and remain favorable on Isodiol as the company continues to execute on its strategy and expand its reach.

Earlier this week, Isodiol’s subsidiary, IsoBev, signed a definitive agreement to acquire Azure Bottling LLC, a premier water bottling facility in Florida. Azure has secured manufacturing and distribution agreements to supply water to Sysco, McArthur Dairy/Dean Foods, and Dollar General Stores throughout the United States. At full capacity, Azure can produce approx. 5.3 million bottles per month and expects this number to increase to approx. 8.58 million bottles after making improvements over the next several months.

IsoBev focuses on Isodiol’s beverage brand portfolio and will capitalize on these enterprise level companies for additional support and distribution of all beverage brands created in-house. We are favorable on this acquisitions and believe it solidifies IsoBev’s position within the CBD innovator. We expect Isodiol to recognize significant synergies from this acquisition and will monitor how the company is able to integrate the businesses.

The acquisition is an important milestone for Isodiol as the facility will create value for the beverage portfolio such as CBD and hemp waters as well as the growth potential of some of the core business initiatives. We continued to view Isodiol as an attractive opportunity and will monitor how the shares continue to trade from here.