Weed week: cannabis is about to get scary in Canada
The ASX’s 32 tradeable pot stocks and pot stock wannabees are down 17 per cent over the last 12 months.
The Small Ords (ASX:XSO) has risen 1.62 per cent in the same time, and the All Ords (ASX:XAO) and the ASX200 (ASX:XJO) are both up over 8 per cent.
There are now 35 listed pot stocks in Australia, but Cann Global (ASX:CGB — formerly Queensland Bauxite), Affinity Energy (ASX:AEB), and Alchemia (ASX:ACL) are yet to come out of suspension.
If you think that’s rough, it’s even tougher in Canada right now.
Hexo Corp CEO Sebastien St-Louis reckons 80 per cent of small licensed producers in Canada will go bankrupt within the next two years, as 186 producers flood the market with marijuana flower.
He said during the third quarter conference call earlier in June this hurt everyone, as smaller producers drag down prices to survive and larger ones are forced to follow to maintain market share.
New Cannabis Ventures called this an “extreme” view but pointed out that Canada’s quarterly sales fell short of predictions and the market there was beginning to recognise that many of the 186 cannabis licences “may not be viable”.
The upside is that lots more cannabis is better for retail openings, which is better for customers, which will be better for downstream sales in what is still a tight supply market, they say.
Still in Canada, Canopy Growth boss Bruce Linton has been fired.
He “stepped down” effective immediately, but later came out to say he’d been pushed by the company’s new major investor, beverage company Constellation Brands.
On Constellation’s latest earnings call, CEO Bill Newlands said he was “not pleased with Canopy’s recent reported year-end results,” which included a $C323m ($352m) loss.
It’s all very complicated as to what is legal and what’s not though, but we’re reasonably sure we’ve untangled the byzantine threads of this Sino pot play.
And as far as possible from the cannabis investment cycle was an unusual story from Perth this week about a family who tested positive for “marijuana” after eating at a local cafe.
The family allege that after breakfasting on March 2 at the Bada Bing cafe in Woodlands, in western Perth, the two children began hallucinating and their mother later had symptoms of THC intoxication.
The cafe owners have been charged with two offences of selling unsuitable food.
Unlisted companies were having a good week: Medcan collected the trifecta of licences after securing permission to research; last week Canadian CannTrust shipped its first products to Australia, to be sold by its local partner CannaTrek; and this week Canadian Aleafia said it would start shipping product in August to its local CannaPacific, of which it owns 10 per cent.
And in order of share price movement — biggest to smallest of course — is the news among listed pot stocks:
Roots Sustainable (ASX:ROO) says its going deep in the US and Canada after making four big sales, by setting up a sales team there.
US hemp play Ecofibre (ASX:EOF) pleaded ignorance for why its share prices might be going up so much, but humble-bragged that its upcoming results would confirm its “market leading position” in US pharmacies.
Have investors forgiven eSense Lab (ASX:ESE)? After a disastrous 18 months the new eSense boss told us the company was back on track (read all about it here), but only after the latest order for another 10,000 30ml bottles of electronic cigarette liquid by US company VaporSpec have investors begun to believe again.
Roto-Gro International (ASX:RGI) made a few more friends on the market this week after completely overturning its board, effective immediately, and even Stemcell United (ASX:SCU) got some love after hiring Singapore’s non-resident ambassador to the Sultanate of Oman for its board.
Zelda Therapeutics (ASX:ZLD) got the go-ahead to test medical marijuana as a way to reduce opioid use among people with chronic non-cancer pain. St Vincent’s Hospital Melbourne is launching the trial immediately and results should come through by the end of the year.
AusCann (ASX:AC8) finally got that TasAlk deal across the line, albeit in a more limited form. The close-lipped Tasmanian grower will supply the Perth drug maker with cannabis resin from 2020, with the quid pro quo being that AusCann will source 30 per cent of its raw marijuana needs from TasAlk for three years.
Creso Pharma (ASX:CPH) made its first $C150,000 from its Canadian growing operations, and has started paying down $5.15m worth of debt by issuing convertible notes and immediately converting them into stock ahead of being taken over.
In total it’s issuing just over 30m new shares, options and performance rights, or a quarter of the issued stock registered by ASX.
Medical tech company Lifespot Health (ASX:LSH) has signed a heads of agreement with US-based IONIC, which runs a portfolio of cannabis brands in the US market. It gives the American exclusive rights to distribute Lifespot’s Bluetooth-enabled vaporiser — which can be used for recreational cannabis — in the US for a 12-month period.
And Elixinol Global (ASX:EXL) has done a deal to distribute into German pharmacies as white labelled products for three years, and also into Austria and Switzerland.
Affinity Energy is still trying to raise the money to stay afloat, and as such is still suspended, while its cannabis partner Cann Global is getting closer to an outcome after investors waved through all the necessary changes at a general meeting this week.