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Cannabis Maker Tilray Soars 50% amid U.S. Regulatory Green Light

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Medical cannabis maker Tilray (TLRY), which trades on the Nasdaq, has seen its stock expand by more than 50% today as the market cap races past $20 billion. As CNBC noted, Tilray dwarfs more than 100 companies in the S&P 500. Today’s gains are impressive, even for a stock that has gained about 900% since going public in July. Something to keep in mind is that on the fundamental side, Tilray only boasts $28 million in sales, suggesting that the stock has likely gotten ahead of itself. There’s reportedly been speculation about potential M&A involving Tilray and some rock-solid developments as well.

Meanwhile, the major indices are posting lackluster performances, which places the spotlight all the more on TLRY. Tilray has been buoyed by a couple of catalysts, not the least of which involves the regulatory green light to import cannabis into the lower 48 states for research. Additionally, Tilray chief Brendan Kennedy was featured on CNBC with Jim Cramer, which gave the company good exposure.

 

Source: Yahoo Finance

Kennedy in the “Mad Money” interview with Cramer pointed to a global medical marijuana market with the potential to be worth $150 billion despite all of the regulatory hurdles, one of which the company just cleared. It’s a market in which pharmaceutical giants need to play to remain competitive. Kennedy told Cramer:

“Cannabis is a substitute for prescription painkillers, prescription opioids, and so if you’re an investor in a pharmaceutical company or you’re a pharmaceutical company, you have to hedge the offset from cannabis substitution.”

Similarly, alcohol companies and investors need to jump in because “it’s a great hedge for them.”

Regulatory Bump

In a paradigm shift, the U.S. Drug Enforcement Administration (DEA) has handed regulatory approval to Tilray to import medical cannabis to the United States for research purposes. Tilray has partnered with the UC San Diego to start. It’s a major boon for the Canadian marijuana play that already has a presence in the U.S., as now its North American positioning will only be strengthened.

Not to mention the fact that Coca-Cola announced it’s exploring an expansion into the cannabis industry, too. The beverage giant is in discussion with Aurora Cannabis for a possible marijuana drink. It’s created a frenzy in the cannabis market akin to the early excitement surrounding the blockchain.

Similar to crypto, there’s a great deal of speculation that’s driving Tilray shares right now, and as Cramer pointed out “a lot of retail money,” which may not end well for everyone. Until then, all eyes are on Oct. 17, which is when cannabis is legalized for recreational use in Canada.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 70 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Introducing the Cannabis-Infused Beverage Industry

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Near the end of December last year Donald Trump signed the Agriculture Improvement Act of 2018 into federal law (you may have also heard of it referred to as the “Farm Bill”). Within the 807 page document is a small section which has opened the floodgates on a billion dollar industry: legalized hemp.

The Agricultural Improvement Act removes hemp (defined as cannabis sativa with less than 0.3% THC in its flower and includes extracts, cannabinoids and derivatives) from the Controlled Substances Act (CSA) and categorizes it as an agricultural commodity. THC is the part of cannabis that gets you high and hemp, despite being called cannabis sativa, contains so little THC that for all intents and purposes you can’t get high off of it.

A Movement in the Works

Hemp used to be an agricultural crop and used for its strong fibre until it was grouped together with its psychoactive cousin (cannabis with high levels of THC in its flower – the kind that get you high) and banned in 1937 under the Marihuana Tax Act. It was then formally made illegal under the 1970 Controlled Substances Act. The 2018 Farm Bill legislation reverses decades of improper categorization of a harmless plant.

So how much is this new industry worth? According to the industry group US Hemp Roundtable the wording of the Farm Bill legalizes hemp derived cannabinoids, including CBD. According to New Frontier Data, a cannabis analytics firm, CBD sales could surge to $845 million in 2019, $1.2 billion by 2020 and over $2 billion by 2022. In 2017 the industry grew by nearly 40% and the Farm Bill will only open up more opportunities for hemp and CBD.

Big beverage and consumer goods companies are already eyeing the CBD market. There’s been a ton of buzz (the legal kind) about Canadian Licensed Producers (LPs) of cannabis as the go-to companies for CBD partnerships. Coca-Cola (NYSE: KO) was reportedly in talks with LP Aurora (TSE: ACB) to develop drinks infused with CBD last year.

A Coca-Cola spokesman (Kent Landers) was quoted on Bloomberg saying “[Coca-Cola is] watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world – the space is evolving quickly.” Diageo (LON: DGE) the UK based beverage behemoth was in talks with three different Canadian LPs looking toward a CBD-infused beverage line of products. Molson Coors (NYSE: TAP) has entered a joint venture with Quebec Canada based Hexo Corp (TSE: HEXO) to create their own cannabis-infused beverage product line.

Creating Long-Term Partnerships

This partnership may develop drinks that are infused with THC as well as CBD like Lagunitas, owned by Heineken (AMS: HEIA), who launched a line of THC-infused alcoholic beer last summer. Infusing beer with cannabis is a hot space with Canadian LP Tilray (NASDAQ: TLRY) partnering with Anheuser-Busch InBev (EBR: ABI) to get in on the action by creating a $100 million partnership with the goal of creating a cannabis-infused substitute for beer.

Troy Dayton, CEO of cannabis market research firm Arcview Market Research, sees large players in the food and drink industry such as PepsiCo (NASDAQ: PEP) and Constellation Brands (NYSE: STZ) looking for opportunities in the burgeoning cannabis-infused food and beverage industry, which did an estimated $1 billion in sales in the US and Canada in 2017 and is on track to reach $4.1 billion by 2022, but says that this is “just the tip of the iceberg.”

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Top Five Cannabis ETFs for Long Term Growth

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The global legal cannabis market size was estimated to be valued at $9.3 billion (USD) in 2016 and is expected to balloon to $146.4 billion (USD) by the end of 2025. The cannabis space is booming but it is volatile. Adding Cannabis focused companies to your portfolio has been a challenge to get right. Luckily for those who want to enter the sector but keep a safety net of diversification there are exchange traded funds that track cannabis companies. But which index to pick? Here are five cannabis-focused ETFs to consider for long term growth.

1) Horizons Marijuana Life Sciences Index ETF (TSE: HMMJ)

The Horizons Marijuana Life Sciences Index seeks to replicate the performance of The North American Marijuana Index (which tracks the leading cannabis stocks operating in the United States and Canada). Eligible companies are producers and suppliers of cannabis, biotechnology companies that are engaged in research and development of cannabinoids, companies that offer hydroponics supplies and equipment aimed at increasing efficiency of cannabis cultivation, and companies mainly engaged in leasing property to cannabis growers. HMMJ launched in April 2017, is equal-weighted and rebalanced quarterly with a 0.75% management fee.

2) Horizons Emerging Marijuana Growers Index ETF (NEO:HMJR)

The Horizons Emerging Marijuana Growers Index seeks to replicate the performance of the Solactive Junior Marijuana Growers Index (which tracks a basket of publicly-listed small-capitalization companies primarily involved in the cultivation, production and/or distribution of cannabis). With an emphasis on early stage small-cap companies this ETF has significant upside growth potential. HMJR launched in February 2018, rebalances quarterly and has a management fee of 0.85%.

3) ETFMG Alternative Harvest ETF (NYSE: MJ)

This ETF started life as a Latin American real-estate fund before pivoting to cannabis companies last December when it benchmarked to the Prime Alternative Harvest Index. It is currently the only Cannabis focused ETF trading on a US exchange (as Cannabis is still illegal under US federal law banks are hesitant to touch the sector). This ETF allows an investor to be exposed to global cannabis stocks and major tobacco companies, with an expectation that tobacco companies will eventually enter the cannabis sector. MJ entered the cannabis space in December 2017, includes roughly 30 stocks rebalanced quarterly and has an expense ratio of 0.75%.

4) Purpose Marijuana Opportunities Fund (NEO:MJJ)

The Purpose Marijuana Opportunities Fund was the world’s first actively managed cannabis focused ETF. The fund is run by Greg Taylor. Its strategy allows for active buying, selling and shorting of pot stocks with a focus on growth and relative valuation. The ETF invests primarily in Canadian-focused companies with the potential to expand globally as regulatory clarity improves. That being said, roughly 13% of the fund’s current holdings are in U.S.-based companies. The fund holds a cash position which could be deployed in the event of a pullback in the sector. MJJ was founded in January 2018, holds 40 companies and pays a management fee of 0.75%.

5) Evolve Marijuana ETF (TSE: SEED)

The Evolve Marijuana ETF is another actively managed ETF on the list. The fund invests both in Canada and globally in the recreational and medical cannabis sector. For a taste of the private market this ETF has the option to invest up to 10% of the fund in private companies. SEED was founded in February 2018, holds 25 companies and pays a management fee of 0.75%.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Five Cannabis Stocks to Consider for Long-Term Growth

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In the most recent Midterm elections Michiganders voted to pass Proposition 1 which legalized marijuana for recreational use. Cannabis culture is rapidly going mainstream (although it is still illegal at a federal level in the United States). Marijuana is now legal recreationally in 10 states and legal for medical purposes in 33 states. In addition to these state level legalizations Uruguay and Canada have passed legislature legalizing recreational cannabis country-wide. But no matter where you live the best “high” you can get from Cannabis is in potential sky-high returns in your cannabis portfolio. To help you out here are five publicly traded marijuana stocks to consider:

Aurora Cannabis (NYSE: ACB)

This Vancouver based Cannabis producer has the munchies – for growth. In addition to buying up cannabis producers (such as H2 Biopharma, CanniMed and MedReleaf) they have smartly snatched up a number of ancillary companies to support their operations. Aurora purchased BC Northern Lights, a manufacturer of indoor growing supplies, and Aurora-Larssen Projects, a greenhouse engineering and design consultancy firm. Most notable for its growth potential is Aurora’s purchase of German based Pedanios GmbH in 2007. Pedanios is Germany’s largest cannabis distributor to pharmacies (medical cannabis is legal in Germany while recreational is not). Pedanios has EU GMP certification (the highest certification attainable by pharmaceutical companies to distribute their product in the European Union) and Aurora is laying the groundwork to supply medical cannabis to the EU, with a recent shipment to by Aurora to Italy being the first ever by a private company.

The Green Organic Dutchman (OTCQX: TGODF)

This Mississauga based company is a cannabis producer focused on research and development. They are looking to refine the genetics of medical grade cannabis strains. They are building facilities that grow organically. Organic cannabis fetches a higher price per gram and is expected to rise in demand as consumers look to buy pesticide-free products. In addition, they have operations in 17 countries revolving around growing hemp and the production of CBD oil (rules for growing hemp are less stringent than Cannabis). But don’t think that they’re only focused on the medical market- the company has recently announced a partnership with Velvet Management Inc to fast-track supplying Canada’s provinces with Cannabis (Velvet Management Inc. is a new company created by and with connections to Canada’s largest wine distributor Philippe Dandurand Wines). With this partnership The Green Organic Dutchman has a red velvet carpet laid out as it builds relationships with provincial distributors.

Aleafia Health (TSXV: ALEF)

Aleafia Health is a vertically integrated medical cannabis company. They help patients find the right prescription and have the facilities to grow it too. They boast the largest network of cannabis clinics with 22 across Canada and a patient list of over 50,000 members. Their Aleafa Labs division partners with leading institutions including universities, clinical researches and other cannabis companies to improve the science behind medical cannabis. They’re currently undertaking a project to tackle replacing addictive sleep medication with a cannabis based alternative. If you’re looking for a company with friends in high places look no further: company co-founder and chairman Julian Fantino was a politician before getting into the cannabis sector and was the head of Toronto’s police division before that.

LGC Capital Ltd. (TSXV: LG)

This Canadian headquartered Cannabis investment company has global ambitions and portfolio to boot. They own stakes in cannabis projects in Canada, Jamaica, Italy, Australia, Switzerland and the United Kingdom. In addition to convertible debt and equity stakes they have also smartly negotiated royalty payments in four of their portfolio companies. By 2020 they expect to have 2.1 million square feet of planted Cannabis growing.

Ascent Industries Corp (CSE: ASNT)

This British Columbia based Cannabis company has operations in Canada, the United States and Europe. Ascent is one of the only Canadian licensed producers of Cannabis to have produced and sold cannabis related branded products in recreational and medical markets in the United States. This company is serious about R&D and since 2013 it has done research focused on developing products and intellectual property with Simon Fraser University. The research initiatives are targeting cultivation, extraction, hardware and medical applications.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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