- by Aseppak
- October 10, 2019
Today we wanted to share with you the interesting information about the evolution of the cannabis world in 2019. Here is a quick cheat-sheet about it, yet you can also access the full report by clicking on the link at the end.
1- This cheat sheet is based on Wall Street information and in other public sources.
2- Cannabis companies in the stock market are mainly of 4 categories:
– Canadian-based Companies,
– US Multi-state Operators,
– CBD + Pharma and
3- Most companies list their facility types as “Indoor” and “Greenhouse”.
4- Most stock prices show improved performance for 1 and 3 year periods (we’re talking over 1,000%, 2000% and even 20,000%). Many prices dropped for the 6 months period analysis (ie second semester 2018).
5- In general terms Revenue is increasing at a very fast pace. EBITDA was negative for 2018 but is expected to turn positive in following years.
6- Here is the complete list for the “use of proceeds” for capitalization. The general categories are: term loans, convertible debt, private placement, convertible note, follow-on, IPO.
– WeedMD– for expanding production capacity and growth
– MedMen – to be used for operationalizing existing retail licenses, accelerate geographic expansion through acquisition and invest in tech and digital infrastructure
– GTEC– to be used for general corporate and working capital purposes
– Eve&Co– to fund completions of 780K SQFT expansion of greenhouse production in Ontario
– Flower One– to be used for payment of outstanding notes, ongoing construction and development of Nevada production facility, working capital and corporate purposes.
– Zenabis– to fund the cost of conversion of its facilities to cannabis production and for working capital
– Plus Products– to be used for general corporate purposes and working capital
– HEXO– round : to partially fund the expansion of Quebec facility and leasehold improvements to its newly leased facility in Ontario; round 2: general corporate purposes, funding global growth initiatives and R&D to further advance innovation strategies
– Khiron Life Sciences– to expand its operating capacity, working capital requirements and corporate purposes
– Canopy Rivers– For follow-on investments in existing portfolio companies, new domestic and international investments, working capital and corporate purposes
– SLANG – fund long-term strategy of making targeted brand acquisitions and developing its brands, distribution and supply chain opportunities
– Aurora– support Canidan and international expansion initiatives, for future acquisitions and corporate purposes
7- There were about 60 major merges, partnerships and strategic decisions regarding these companies during the first trimester of 2019.
8- The following CPG (Consumer Packaged Goods) companies have made significant investments (organic or mergers and acquisitions) into cannabis industry:
– Constellation Brands
– Molson Coors
– Philip Morris
– Imperial Brands
– Alliance One
– Estee Lauder
9- There have been a few corporate governance issues and suits in the Cannabis industry, which apparently is not evolving as fast as the businesses are. Conflicts of interest, price inflation, unfair treatments towards stockholders, financial corruption, discrimination, etc. are amongst the most common problems.
10- Newly appointed AG Barr is noted for having a favorable view in relation to Sessions.
11- Asian contries are opening up to medical cannabis (Philippines, Thailand and South Korea in particular)
12- Finally there is retrograde commentary about the US 2018 Farm Bill which legalized hemp:
– Hemp is now an agricultural product
– Hemp farmers now have access to insurance, water rights and incentives
– Everything under 0.3% THC is legal
– Interstate commerce of hemp and hemp-derived CBD is allowed
– Introducing food with CBD into interstate commerce or as dietary supplements still ilegal
Benefits to CBD industry:
– Moving forward in access to banking
– Moving forward in opening mass-market retail channels
– Moves forward in intellectual property, patents and trademarks
– Canadian LP’s can establish CBD brands and legal US operations ahead of US Federal legalization
– US exchanges will become listing options for legal CBD businesses with operations in US
– More investment into Hemp CBD
– New research and clinical trials around hemp and CBD moving forward to CBD supplement industry
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