LONDON, July 24, 2018 /PRNewswire/ --
All year long, companies have been seeing green. Marijuana is poised to
The opportunity in Canada along could be worth it: according to some estimates, the recreational market for pot in Canada could be as large as $10 billion. But it's not just Canada. States all across the U.S. are embracing more relaxed cannabis regulations. The chances of a full legalization stateside are growing day by day.
Cannabis research firm Arcview sees North American legal pot sales reaching $22 billion by 2021 and $57 billion worldwide by 2027. Wall Street has taken notice. Even institutional investors like pension funds are starting to take marijuana stocks more seriously. Still, there are winners and losers out there, and cannabis companies can go bust just as quickly as they go boom.
Here are 5 companies leading the green revolution.
#1 Canopy Growth Corp. (NYSE: CGC) (TSX: WEED)
A real titan in the field, Canopy is the biggest grower in Canada and the single largest marijuana stock in terms of market cap.
For the first few months of 2018, Canopy's stock was up and down. But since May it's taken off, as the company's position improves, and it builds momentum for 2019, when marijuana demand in Canada is expected to be much higher due to this year's legalization. To date Canopy is up 25% from last year.
Canopy has a few notches on its belt. It's the only marijuana stock to be listed on the New York Stock Exchange. It's got the most square footage of any grower, and its acquisitions throughout Canada ensure that it'll maintain that dominance going forward.
Beyond its own product, Canopy has deals with other suppliers: a two-year deal with Sunniva allows Canopy to purchase 90,000 kgs.
Plus, it's looking to break into the recreational market. It's working with beverage maker Constellation Brands to develop cannabis-infused drinks. Constellation clearly believes that Canopy can deliver; the company bought a 9.9% stake in Canopy last year. Right now Canopy is a no-brainer for anyone looking to get in on the marijuana boom.
#2 Scythian Biosciences Corp. (SCYB.V; SCCYF)
It's a marijuana investment company unlike any other. Scythian is way more than biosciences company, it is an incubator for cannabis assets and one of the only truly global cannabis companies, and it's just struck it rich.
On July 17th, Scythian announced a $193 million agreement to sell its Latin American assets to Aphria Inc., a major marijuana player. The announced divestiture of Scythian's LATAM assets clearly demonstrates its ability to identify, acquire and flip profitable projects - and with the LATAM assets, all within a six-month timeframe.
The sale is huge, and it signals Scythian's arrival as a "first mover" in the global cannabis business. Nearly 1.5 billion people are potential customers for marijuana products, but the major weed firms haven't given them any attention. That's where Scythian comes in.
Scythian's strategy is to find small, ready to develop marijuana assets in Latin American and European markets. It incubates these assets, building them into viable investments, before cashing in for a big payday. And Scythian already has more of a global footprint than most cannabis companies. Its target in Argentina, being sold to Aphria, is the only company to receive government approval to work in medical marijuana in Argentina, and it received a license to extract, produce and research medical marijuana in Colombia.
Europe has twice as many viable customers for cannabis products than the U.S., which could translate into double the sales once laws are relaxed. The UK is a particularly large opportunity: with black market marijuana sales of $3.46 billion and 3 million users, the UK could be the next frontier for marijuana firms, especially since political parties have started calling for more relaxed laws.
Scythian is a little company, but it's received ample support from Aphria, one the biggest marijuana firms around. Aphria pumped $14 million into Scythian earlier this year, and the $193 million asset sale is a sign that the two companies are working closely together.
Scythian has a global team scattered across three continents, searching out new ventures and opportunities in need of guidance, investment and incubation. Scythian basically acts like an incubator for Aphria-able to identify opportunities on a global scale, and profitably sell them on successful development. The global opportunities are boundless from Scythian's point of view.
#3 Scotts Miracle Gro. (NYSE:SMG)
While not technically a marijuana stock, Scotts Miracle Gro is poised to ride the green wave. This is a company that will make billions selling equipment needed by growers, from fertilizers to hydroponic supplies.
The company's hydroponics subsidiary, Hawthorne Gardening, acquired General Hydroponics in 2015 and bought out a majority of Gavita in 2016. With these acquisitions under its built, the subsidiary's sales exploded in 2017, rising by 137% to $287 million.
But this fast-growing sector only generates 11% of Scotts' sales, which is what makes this stock so appealing. It's basically a way to profit from the marijuana boom…without exposing yourself to risk from green ventures that go boom and bust.
And while Scotts weathered some bad news earlier this year, with sales slipping owing to poor weather and some hefty expenses, don't expect this stock to falter in the long term. Another acquisition, this time of hydroponics supplier Sunlight Supply, should keep investors thirsty for more.
#4 Aurora Cannabis (OTCQX: ACBFF)
Aurora Cannabis has profited handsomely from the Canadian legalization. The company has been rushing to increase its acreage in order to meet future demand. After acquiring Cannimed for $1.1 billion, Aurora continued its streak by taking over MedReleaf for $2.5 billion in an all-stock transaction, the biggest marijuana deal in history.
With these acquisitions, Aurora will be able to produce 570,000 kgs in 2019, which should put it in great shape to meet market demand next year. Better yet, the company has an agreement with liquor distributor Alcanna, which operates 229 stores across Canada, and could easily start distributing marijuana products.
But Aurora won't stop. It's now established a partnership with cosmetic company Evio Beauty Group to develop hemp-based cosmetics. It's all part of Aurora's plan to diversify its revenue stream, moving away from straight marijuana sales to embrace the wide range of applications available to cannabis.
The big prize for Aurora is the US market. CCO Cam Battley recently indicated the company's hope to move to the US exchange, "in a big way," once conditions are right.
#5 MedMen Enterprises Inc. (OTCQB: MMNFF) (CSE: MMEN)
Valued at more than $1.65 billion, with 800 employees and 18 licensed marijuana facilities in California, Nevada and New York, MedMen is a large U.S. marijuana firm and one of the biggest dispensaries around. Its stores are affectionately known as the "Apple Stores of weed," and the company has done well marketing marijuana in the three U.S. states.
The company announced a 50/50 joint venture, MedMen Canada, with Canadian-based Cronos Group, the first ever marijuana firm to be listed on the Nasdaq. Its IPO proved somewhat disappointing, with the stock price falling shortly after the initial wave of enthusiasm dropped off. But the company has still managed to raise over $100 million since 2017.
MedMen's CEO Adam Bierman wants to break out of the small U.S. markets, where MedMen has thrived. The company is committed to changing the optics of pot, launching ad campaigns encouraging people to forget about "stoners," and has even worked towards using pot to combat the US opioid epidemic. And the company is continuing to grow, adding a thirteenth location to its chain. Other companies making big moves in the marijuana space:
- Beleave Inc. (OTCQX: BLEVF): Beleave is a biotech company focused on the production of medical marijuana in Canada. Its wholly-owned subsidiary, First Access, applied for a pre-license inspection in March 2017.
- Hydropothecary Corp is a another heavy hitter in Canada's cannabis scene. With former BC Health Minister Dr. Terry Lake as the VP of Corporate Social Responsibility, and the well-versed Ed Chaplin, who has raised millions for his previous ventures. By. Meredith Taylor
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Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such forward-looking information includes information relating to Scythian's proposed acquisition of Marigold, MMJ Colombia, ABP and ColCanna; the expected sale of these companies to Aphria and resulting receipt of $193M from Aphria; that cannabis use and sales will grow as predicted; Scythian's intended acquisition of various foreign assets and potential sale to Aphria; that Scythian will be in a prime position in the UK and Europe to take a substantial portion of the cannabis market when laws permit; that Scythian can create its own "ecosystem" - from plant to product - in each territory it enters; its plans to incubate projects in various locations throughout the world; it could be granted licensable patents; and that it's traumatic brain injury solutions will be accepted by medical practitioners.
Readers are cautioned to not place undue reliance on forward-looking information. Forward looking information is subject to a number of risks and uncertainties that may cause actual results or events to differ materially from those contemplated in the forward-looking information, and even if such actual results or events are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Such risks and uncertainties include, among other things: that a regulatory approval that may be required for the intended acquisitions and subsequent sale are not obtained or are obtained subject to conditions that are not anticipated; that a condition to the completion of the intended acquisitions or sale may not be satisfied; construction delays and costs overruns; potential future competition in the markets Scythian operates; that Scythian's technology may not achieve the expected results and its accomplishments may be limited; that Scythian may not establish a market for its services as expected; competitors may quickly enter the industry; general economic conditions in the US, Canada and globally; the inability to secure financing necessary to carry out its business plans; competition for, among other things, capital and skilled personnel; the possibility that government policies or laws may change; technological change may result in Scythian's solutions not be the best or cheapest available; Scythian not adequately protecting its intellectual property; interruption or failure of information technology systems; the cannabis market may not grow as expected; Scythian's technology may not achieve the expected results and its accomplishments may be limited; even if it is granted patents, it may not have success at licensing its technologies; Scythian's business plan also carries risk, including its ability to comply with all applicable governmental regulations in a highly regulated business; investing in target companies or projects which have limited or no operating history and are engaged in activities currently considered illegal under US federal laws; changes in laws; and regulatory risks relating to Scythian's business, financings and strategic acquisitions.
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