This Week in Cannabis Investing December 13th

The year 2019 may be winding down, but things have definitely been heating up in the cannabis space. This week: more news on Cannabis 2.0, new capital coming to the cannabis sector, big news from Major League Baseball, Year 1 sales numbers from Statistics Canada, “Green Wednesday” clobbers Black Friday, and much more.

Monday, as promised, we provided some additional information on some of the initial product releases for Cannabis 2.0 from a couple of Canadian industry leaders: Canopy Growth (US:CGC / CAN:WEED) and Aurora Cannabis (US:ACB / CAN:ACB).

As expected, Canopy Growth’s initial product launch is heavy with cannabis-infused beverages. Canopy has three lines of infused beverages and will also offer some cannabis-infused chocolates. Aurora is introducing a wide range of edibles: infused-chocolates, gummies, and mints.

Also on Monday, we drew attention to the continued rise in the share price of Canopy Growth. The Company has just announced a new CEO, former Constellation Brands (US:STZ) CFO, David Klein. Canopy logged a double-digit gain in share price off the news and has now risen by more than 50% off its November low.

However, the big news on Monday was news of a major capital infusion that is about to hit the North American cannabis sector. Canaccord Genuity is saying that “several debt deals” are coming very soon to the cannabis sector. This will be straight corporate debt, in other words, non-dilutive financing at a time when share prices are at rock-bottom levels. Welcome news, all around.

Tuesday, we trumpeted the numbers from “Green Wednesday”, the cannabis industry’s alternative to Black Friday. Once again, Black Friday was a train-wreck for U.S. retailers. Despite heavy discounting (an average of 19.1%), U.S. retailers actually reported lower sales than for the last four Fridays this fall.

In contrast, cannabis companies offered more modest discounts (12.8%). But the cannabis industry in the U.S. registered a 40% jump in sales versus the four most recent Fridays While overall retail spending in the United States remains anemic, the cannabis industry is boasting robust growth.

Wednesday, we reported on a fascinating subject that Leafly is currently examining in a four-part series: the commercializing of patents for cannabis strains. Billions of dollars in potential IP are on the table here. The “patent race” is on.

Leafly warned about the potential “Monsanto-fication” of the cannabis industry. We choose to see the glass as half-full. With “GMO agriculture” as the example, we expect cannabis companies to be aggressive and competitive in patenting and protecting their own strains.

Thursday, we were all over the latest cannabis numbers from Statistics Canada. First year cannabis sales numbers are now available for Year 1 of recreational cannabis in Canada. As expected, the overall number was a disappointment: below CAD$1 billion.

But we looked deeper, specifically at the per capita consumption rates for cannabis across Canada’s provinces and territories. As has been reported, Canada’s three largest provinces (by population) have been huge under-performers in opening up legal cannabis.

We flipped this around. If those three provinces (Ontario, Quebec, British Columbia) were merely to rise to “average” 2019 consumption numbers, Canada’s cannabis industry would be poised for revenue growth of (at least) 157% in Year 2.

Also on Thursday, we reported on a statement by Kevin Murphy, CEO of Acreage Holdings. Murphy has equated 2019 with being the cannabis industry’s “2008”. We thought this was a powerful analogy – and we illustrated the implications.

Finally, we wrapped up the day’s coverage with “the great anti-cannabis lie”. As cannabis is legalized in U.S. states, most local governments have been outlawing legal cannabis operations.

They say they are “banning cannabis”. This is a lie. Local bans merely force residents to purchase illegal/uninspected cannabis products from the black market. Local governments can’t “ban cannabis”. They can only torpedo the legal cannabis industry. It’s long past time that local governments were called out for this Big Lie.

Friday, we had big cannabis news to report to close out the week, from an unlikely source – Major League Baseball. MLB has dropped cannabis as “a banned substance”. Huge. It’s now beginning “opioid testing” for MLB players. Also huge.

We have a major professional sports league that has almost reversed its rules on cannabis and opioids. Now its cannabis use that is no longer a major taboo and opioid consumption that is under a magnifying glass.

By itself, this is “major league” cannabis news. But already, there are murmurings of additional ramifications from this announcement. We will be reporting on this early next week.

A big week in the cannabis industry for both the U.S. and Canadian cannabis industries. Don’t expect things to slow down next week even as Christmas approaches. Among the stories we’re working on for next week are this year’s winners in the cannabis sector.