You’re reading this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015. The newsletter includes unique insight to help our readers stay ahead of the curve as well as links to the week’s most important news. We post this and all of the newsletters on our website here.
Friends,
This was a big week for the Canadian cannabis industry, with the the Legislative Review of the Cannabis Act published yesterday afternoon. The Expert Panel, a group of five that wrote the report, was appointed by the Minister of Health and the Minister of Mental Health and Addictions. The Cannabis Act legalized adult-use in Canada in late 2018, and this was the first official review.
Chapter 2, which begins on the tenth page, lists 54 recommendations, but this falls short of making some very necessary changes to the regulation of the world’s first legalized cannabis nationwide in a large developed country. We have pointed out some of the flaws in the market, including the distribution through the provinces for most of the country, the limits on THC per package in edibles at just 10mg, and the high level of taxation.
The market is very mature now and is showing signs of its age. This morning, the January sales, released by Statistics Canada, showed the slowest annual growth to date. Total sales of C$400.1 million grew just 1% from a year ago:
The stocks in the sector have popped recently. The 5 stocks that are in the NCV Global Cannabis Stock Index and that trade over $1 are still down year-to-date for the most part:
The one that is up a lot is Organigram, which we have written about here in the past very bullishly. I exited it in my model portfolio at 420 Investor yesterday after the rally, which leaves it slightly above tangible book value. I have also mentioned Village Farms here, and I have greatly reduced my position on this stock that trades at just 50% of its tangible book value. It’s not in the index and is up -24.8% year-to-date.
We are still worried about Canopy Growth’s prospects, and we find Tilray to be quite expensive. The big rallies in the names that we have liked have left them not as promising right now. Today’s news about weakening demand in Canada adds to reasons to be cautious on Canadian cannabis stocks.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most important content from this week:
Exclusive Articles
Cannabis Company Q4 Financials Were Not Exciting
Capital Raising
Cannabist Closes Convertible Note Offering
Ispire Technology Sells 2.05 Million Shares at $6.00
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Sincerely,
Alan
