CNTTF Stock: Canntrust Paving Way for Diageo With Breakthru Beverage Deal?

CannTrust Stock Forecast

It’s an exciting time in the legal marijuana industry, with many pot companies growing in leaps and bounds, wheeling and dealing, and otherwise grabbing headlines.

One such company is CannTrust Holdings Inc (OTCMKTS:CNTTF, TSE:TRST). The CannTrust stock forecast is brighter than it has been in a long while. That’s because the company has nailed down several big business deals.

One of those big deals is with Breakthru Beverage Group, a company that is also involved with Diageo plc (NYSE:DEO) via a Breakthru-Diageo partnership.

CannTrust’s deal with Breakthru may make CNTTF stock one of the hottest options at the moment.

Allow me to explain.

CannTrust recently entered an agreement wherein the company will partner with Breakthru to invest in the creation of a cannabis-focused sales brokerage company—in anticipation of Canadian marijuana legalization.

Breakthru will also be investing in CannTrust for an as-of-yet undisclosed amount.

Brad Rogers, president of CannTrust, said the following:

CannTrust has made significant investments in both capacity and innovation with the next generation of products such as edibles and cannabis-infused beverages expected to launch in 2019. We have a nano-technology that enables us to produce cannabis infused beverages neutral in taste, and clear as water. This technology will position us to be a leader in Canada, and in future markets globally.

(Source: “CannTrust and Breakthru Beverage Enter Exclusive Partnership in Recreational Cannabis Market in Canada,” Cision, September 10, 2018.)

But the real gold of this deal for the CannTrust stock forecast is the implication that Diageo, a U.K. alcohol producer that has long been rumored to be seeking an “in” with the marijuana market, may have set its sights on CannTrust.

With Breakthru acting as a national broker for Diageo in Canada, the Breakthru-Diageo partnership may be a sign of things to come.

Should Diageo decide to produce cannabis-infused beverages under the label of CannTrust, expect to see CNTTF stock soar.

Should Diageo Consider Working With CannTrust?

While it’s not confirmed that the CannTrust-Breakthru distribution deal will lead to a Diageo investment into CannTrust, there are a number of good reasons why Diageo should consider partnering with CannTrust.

Chief among them is the company’s focus on cannabis oil products, its global business plan, and a number of new partnerships.

CDB oil production has been ramping up at CannTrust, which speaks to the potential that the company sees in the market.

On the back of increased cannabis oil sales, CannTrust was able to achieve CA$11.5 million in profit in its second quarter, up from a $23,040 loss in the same period a year prior. (Source: “CannTrust Reports Record Revenue for Q2 2018 and is on Track to Full Completion of its Million sq ft Niagara Facility,” Cision, August 18, 2018.)

Furthermore, CannTrust’s global expansion is continuing apace, with the company becoming the first ever to ship medical cannabidiol (CBD) oils to Denmark. These CBD oils are the first legal cannabis products to hit the Danish market after cannabis tea, greatly expanding medical marijuana’s presence in the country.

Denmark only approved medical marijuana on January 1 of this year, and the rollout of legal marijuana products in the country has been slow. That’s because Denmark has one of the most stringent approval processes in the world.

The first shipment of CBD oil to Denmark “signals a significant step in CannTrust’s international expansion,” said Rogers.

“As more and more countries around the world accept and approve the use of medical cannabis, Denmark is a shining example of how CannTrust’s expertise and pharmaceutical approach make us a strong global partner.” (Source: “CannTrust Makes History with First Shipment of Cannabis Oil to Danish Partner, STENOCARE,” Cision, September 18, 2018.)

Another big win for the company was a supply agreement that CannTrust recently signed with Aleafia Health Inc (OTCMKTS:ALEAF, CVE:ALEF).

The terms of the agreement give CannTrust the right to buy up to 15,000 kilograms of cannabis from Aleafia in 2019. Aleafia said the agreement allows for it to leverage CannTrust’s processing and packaging expertise. (Source: “Aleafia Signs Cannabis Supply MOU with CannTrust for up to 15,000 kg in 2019,” Aleafia Health Inc, September 27, 2018.)

Overall, CannTrust has been making significant progress toward global expansion and bolstering its inventory. Both factors are going to be huge boons for the company as the marijuana industry continues to expand.

With Canadian legalization right around the corner, CannTrust’s supply agreements will play an especially important role, allowing the company to fulfill its obligations. The possibility of supply shortages when legalization hits is a concern, but CannTrust has been working to head that off.

All this combines to make CannTrust one of the better options for the Breakthru-Diageo partnership.

CannTrust stock, meanwhile, has surged by about 53% over the past three months, representing a strong and steady line of gains while other pot stocks have experienced volatile surges and troughs. CNTTF stock’s stability makes it especially attractive to investors.

Chart courtesy of StockCharts.com

Analyst Take

With Diageo looking to get into the legal marijuana sector, it appears that CannTrust would make an excellent partner. With the Breakthru-Diageo partnership, CannTrust and Diageo already have an intermediary connection.

With Diageo looking to profit from the very exciting cannabis-infused beverage business—and with CannTrust looking to help push more CBD oil products and absorb capital to fuel growth—a partnership between the two companies would serve both of their goals nicely.