Cannabis stocks are down, but the sector still holds a lot of promise. PIcture Getty
Weed Week: 420 reminds us that cannabis stocks may be down, but by no means out
Health & Biotech
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- The 420 Day is unofficially the World Marijuana Day, and we look at the possible origins of this day
- Cannabis stocks have been falling, but there’s still a lot of promise
- We take a look at the cannabis stocks on the ASX over the past week
The date April 20th has become an unofficial holiday among cannabis enthusiasts who call it the World Marijuana Day.
The day is also affectionately known simply as ‘420′, and is celebrated by weed-smokers around the globe and promoted in songs by bands like The Grateful Dead.
Nobody really knows about its origin and why this specific date was chosen to pay tribute to marijuana.
One theory is that 420 originated from a police code used to denote marijuana use.
Another theory takes us to April 20th 1995 Vancouver, where 200 cannabis consumers gathered and smoked weed to protest and demand its decriminalisation.
Yet another accepted theory takes us to San Rafael High School in Marian County California in the 1970s, where a group of students used code “420″ to refer to their after-school weed smoking sessions at 4.20pm.
The five students called themselves the “Waldos,” which referenced the wall they would sit on at their school.
The origin of the Waldos has been documented in letters, military records, and high school newspaper clippings to corroborate these origins.
Whichever story you believe, cannabis firms and investors have been struggling to toast 420 over the past couple of years as cannabis stocks have been falling.
The largest cannabis ETF, the US$322 million-sized Pure US Cannabis ETF (MSOS), is down 87% over the past two years, and 24% this year alone.
The ETF underperforms the benchmark US S&P 500 index by a massive 87% the past two years, and 33% this year.
Weed sector still has a lot of runway
Josh Gilbert, a market analyst at eToro, said the fall of listed cannabis shares has mainly been driven by a couple of key factors.
“There has been a lot of disappointment from the sector at the lack of movement towards Federal decriminalisation of cannabis in the US, likely the world’s largest market,” said Gilbert.
“Secondly, it has failed to grow at the rate many predicted, and this is illustrated by how small it still is compared to other ‘sin’ sectors.”
To illustrate, the largest cannabis stock right now is Canada’s Curaleaf, with a market cap of around US$1.5 billion.
When compared to the alcohol industry, China’s Shanghai-listed Kweichow Moutai has a market cap of around US$330 billion, and in tobacco, US’ Philip Morris has a market cap of US$150 billion.
Gilbert also believes there is more hope for the weed industry under a Democratic President, and warns that it may dwindle further if Republicans are back in office in 2024.
“However, we should also note that the long-term trend is still towards state-level liberalisation in the US, with consumers becoming increasingly pro-legalisation, according to annual surveys,” he said.
European markets to pave the way
For now, cannabis companies will continue to be hit by costs arising from the complex patchwork of US state and federal laws, while sector growth is restricted.
But the sector holds of a lot of promise, with pro-legalisation attitudes continuing to grow in the US.
In Europe, Germany is already on the verge of decriminalising and allowing limited recreational use.
The new legislation in Germany will allow those aged 21 and over to legally obtain up to 25 grams of cannabis per day from non-profit members’ clubs, with a monthly limit of 50 grams – but they can’t be consumed on club premises.
The German government has justified its new laws by claiming that they will effectively eliminate black markets and organised crime.
Malta is the only other country in Europe to have legalised recreational cannabis.
Across the rest of the continent however, decriminalisation rather than full legislation has been more the norm so far.
“Germany is set to lead the way in Europe by decriminalising its use, and this could make some of the leaders in this sector a promising long-term investment,” Gilbert added.
To ASX Weed Stocks ….
| Code | Company | Price | % Year | % Six Month | % Month | % Week | Market Cap |
|---|---|---|---|---|---|---|---|
| LV1 | Live Verdure Ltd | 0.18 | -33.33 | 9.09 | 16.13 | 20.00 | $15,256,630 |
| IDT | IDT Australia Ltd | 0.08 | -50.00 | -17.53 | 19.40 | 17.65 | $18,500,361 |
| NTI | Neurotech Intl | 0.06 | 9.26 | -48.70 | 9.26 | 11.32 | $51,560,659 |
| EOF | Ecofibre Limited | 0.19 | -57.47 | -15.91 | -7.50 | 5.71 | $62,858,619 |
| EPN | Epsilon Healthcare | 0.02 | -53.66 | -13.64 | -9.52 | 5.56 | $5,406,372 |
| CPH | Creso Pharma Ltd | 0.01 | -83.33 | -67.19 | 5.00 | 5.00 | $21,365,077 |
| BOD | BOD Science Ltd | 0.07 | -58.83 | -35.00 | 4.84 | 4.84 | $9,952,897 |
| RNO | Rhinomed Ltd | 0.09 | -56.10 | -33.33 | -10.00 | 3.45 | $25,714,772 |
| EMD | Emyria Limited | 0.17 | -47.69 | -19.05 | 0.00 | 3.03 | $49,586,050 |
| AGH | Althea Group | 0.05 | -73.00 | -35.71 | 17.39 | 1.89 | $21,320,525 |
| IHL | Incannex Healthcare | 0.13 | -72.53 | -51.92 | 19.05 | 0.00 | $190,441,243 |
| TSN | The Sust Nutri Grp | 0.02 | -90.00 | -87.86 | 13.33 | 0.00 | $2,533,732 |
| CTV | Colortv Limited | 0.01 | -68.00 | 0.00 | 0.00 | 0.00 | $1,236,985 |
| ECS | ECS Botanics Holding | 0.02 | -25.93 | -4.76 | 0.00 | 0.00 | $22,134,613 |
| MRG | Murray River Grp | 0.25 | 0.00 | 0.00 | 0.00 | 0.00 | $10,808,210 |
| AC8 | Auscann Grp Hlgs Ltd | 0.04 | -40.30 | 0.00 | 0.00 | 0.00 | $17,621,884 |
| MDC | Medlab Clinical Ltd | 6.60 | -60.00 | -37.79 | 0.00 | 0.00 | $15,071,113 |
| EVE | EVE Health Group Ltd | 0.00 | -40.00 | 0.00 | 0.00 | 0.00 | $5,274,483 |
| CGB | Cann Global Limited | 0.02 | -38.24 | 0.00 | 0.00 | 0.00 | $5,436,345 |
| AVE | Avecho Biotech Ltd | 0.01 | -72.22 | -50.00 | -44.44 | 0.00 | $9,189,347 |
| SCU | Stemcell United Ltd | 0.01 | -62.03 | -62.03 | -62.03 | 0.00 | $6,423,649 |
| BOT | Botanix Pharma Ltd | 0.09 | 16.25 | 43.08 | -4.12 | -2.11 | $121,422,470 |
| IRX | Inhalerx Limited | 0.04 | -61.74 | -32.31 | 10.00 | -2.22 | $8,539,513 |
| LGP | Little Green Pharma | 0.18 | -60.23 | -25.53 | -12.50 | -2.78 | $52,130,934 |
| ALA | Arovella Therapeutic | 0.07 | 63.41 | 109.38 | 86.11 | -4.29 | $51,377,235 |
| WNX | Wellnex Life Ltd | 0.07 | -39.53 | -19.75 | 1.56 | -4.41 | $26,891,747 |
| CAN | Cann Group Ltd | 0.15 | -62.35 | -43.52 | 17.31 | -4.69 | $58,221,730 |
| DTZ | Dotz Nano Ltd | 0.19 | -44.12 | -26.92 | -17.39 | -5.00 | $89,968,898 |
| ZLD | Zelira Therapeutics | 0.97 | -60.41 | -28.15 | 2.11 | -6.73 | $11,006,740 |
| VIT | Vitura Health Ltd | 0.32 | 3.23 | -63.64 | -18.99 | -7.25 | $172,524,942 |
| WFL | Wellfully Limited | 0.01 | -80.77 | -56.52 | -33.33 | -9.09 | $4,902,391 |
| EXL | Elixinol Wellness | 0.02 | -66.67 | -44.12 | -9.52 | -9.52 | $7,714,200 |
| HGV | Hygrovest Limited | 0.05 | -18.03 | -28.57 | -23.08 | -10.71 | $11,497,699 |
| MXC | Mgc Pharmaceuticals | 0.01 | -65.22 | -42.86 | 14.29 | -20.00 | $21,325,171 |
| ROO | Roots Sustainable | 0.01 | -90.28 | -85.42 | -41.67 | -50.00 | $606,212 |
IDT’s share price didn’t rise on a weed-related news.
The company has instead announced that the TGA has upgraded its sterile manufacturing licence – allowing it to manufacture and release injectable medicines for clinical trials in Australia and overseas.
The updated licence allows IDT to expand its clinical trial product offering, which already includes orals and Active Pharmaceutical Ingredients (APIs).
Creso announced that its 100%-owned Canadian cannabis cultivation and sales division, Mernova Medicinal, has reached cash flow positive in Q1.
This is a major milestone for Creso Pharma, as it represents the first cash flow positive operating division in the company’s history.
For the first quarter, Mernova delivered unaudited revenue of $1,547,252, which highlighted a whopping 46% increase on the previous quarter (Q4 FY2022: $1,061,275).
Bod Science has completed recruitment of Phase IIb clinical trial of its unique CBD product.
The Phase IIb clinical trial examines the efficacy of a unique CBD formulation on symptoms associated with insomnia in 198 participants over eight weeks, undertaken by Australia’s leading sleep research organisation, the Woolcock Institute of Medical Research.
The company’s target of 198 patients recruited by the end of March 2023 has now been achieved, and the last patient is expected to complete the study by June.
Upon successful completion of the trial, Bod is hoping to have sufficient data to support a registration package, designed for Australia’s Schedule 3 (pharmacist only) market.
Emyria and PAX Centre will develop a care model for psilocybin-assisted therapy in addition to their existing MDMA-assisted therapy care.
The collaboration aims to address substantial overlap between symptoms of depression and PTSD – conditions with growing prevalence – by expanding treatment offerings available for patients with either or both conditions.
Incannex Healthcare (ASX: IHL)
Incannex has announced that it has appointed Quest Pharmaceutical Services (QPS) to provide regulatory advice and manage clinical trials for the development of its CannQuit and ReneCann products for addiction and immune-disordered skin diseases.
CannQuit-Nicotine (N) is a controlled-release, pharmaceutical-grade (cGMP) medicated chewing gum formulation comprising cannabidiol (CBD) and nicotine.
Nicotine chewing gum is already an accepted treatment and maintenance product throughout the globe with annual sales amounting to US $5.2 billion in 2020, however, progression to complete smoking cessation is limited.
By adding CBD in a proprietary combination, CannQuit-N is hypothesised by IHL to improve upon the therapeutic outcomes of nicotine only gum.
At Stockhead we tell it like it is. While Creso Pharma and Incannex Healthcare are Stockhead advertisers, they did not sponsor this article.
