Cannabis Stocks: How Everything Just Changed this Week (GRWG, TLRY, NUGS, SNDL, CURLF, CGC, CRON, MSOS)

No one really argues against cannabis stocks on the basis of “perfect world” fundamentals. The forward demand curve is exceptional, and the legislative momentum is on their side. But there are hurdles – uncertainties. 

One of the most important such hurdles is the inability for banks to safely provide basic financial services to companies involved in cannabis-related commerce. This has been a major factor holding back cannabis sales for years. Advocates and activists have tried for all that time to get some sort of legislation on track to finally provide some pathway for standard banking services to ramp up for the sector, but to no avail.

That may be changing as we speak.

The first step toward this change actually happened in April of this year when the House of Representatives passed the Secure and Fair Enforcement Banking Act of 2021 (the “SAFE Banking Act”), which prohibits a federal banking regulator from penalizing a depository institution for providing banking services to a legitimate cannabis-related business. In other words, it allows banks to provide financial services to cannabis companies without needing to have cannabis legalized at the federal level first.

But supporters have had little luck in trying to find a way to get it through Congress. Until this week.

The big shift, as covered by MarijuanaMoment.net, was the successful move to add the SAFE Banking Act as an amendment to the National Defense Authorization Act (NDAA) for fiscal year 2022, clearing it for floor consideration, which is expected later this week. 

Even if it runs into another hurdle along the way as it gets scrutinized as an amendment by the Senate, the big shift this week is that we are finding out firsthand that the Act has a lot of bipartisan support. In other words, the big news isn’t so much the nifty trick being used to force the key Act onto the floor on Capitol Hill. It’s the revelation that the process is making clear that something like this is going to pass before long through one mechanism or another. It has plenty of support in principle.

With that in mind, we take a look at some of the interesting stocks in the space with recent company catalysts.

GrowGeneration Corp (NASDAQ:GRWG) has shown bouts of leadership in the cannabis space over the past year as a pick-and-shovel retail play targeting growers in the cannabis space. The company owns and operates 62 specialty retail hydroponic and organic gardening stores.

GrowGen also operates an online superstore for cultivators at growgeneration.com and B2B e-commerce platform, agron.io. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.

GrowGeneration Corp (NASDAQ:GRWG) recently announced the opening of two new hydroponic garden centers to serve the largest hydroponic market in the country, Los Angeles County, California. These locations become the 11th and 12th locations in Southern California. Both locations will be opened for business on September 24, 2021.

A person affiliated with the company was quoted in the release as saying, “These two stores, the largest hydroponic garden centers in Southern California, position GrowGen to sell to the highest concentration of commercial indoor cannabis growers in California.”

It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -18%. 

GrowGeneration Corp (NASDAQ:GRWG) managed to rope in revenues totaling $125.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 189.7%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($124.5M against $59.8M).

Cannabis Strategic Ventures (OTC US:NUGS) is a more speculative name in this group. But recent events suggest it’s worth a closer look. The company is pursuing a vertical farm-to-sale model in the California cannabis marketplace, and it appears to be actively making strides toward that vision.

For example, the company just this morning announced the long-awaited completion of the transfer of cannabis licenses related to strategic activity from 2019 by the State of California and the City of Los Angeles.

Cannabis Strategic Ventures (OTC US:NUGS) noted in its release that, on June 9, 2019, it entered into a material definitive agreement with LW Ventures, Inc. (“LW”) the terms and conditions of which required the Company to restructure its preferred equity and issue common shares to exchange for shares of LW. In turn, LW agreed to fund Company operations up to $8 million and to provide the Company with four cannabis licenses issued by the City of Los Angeles and the State of California for the Retail Sale, Cultivation, Distribution, and Manufacturing of cannabis products.

However, acquiring and transferring the licenses was contingent upon approval of the change of ownership of the licenses by the City of Los Angeles and State of California, and such approval was delayed due to the Covid-19 pandemic. But now, according to its release, that delay is over, and the licenses have now been transferred.

As stated in the company’s release, now that the license transfer process has been completed, the Company can work to complete its transition plan to take over control of related operations, a process that should be completed during the fall of this year.

Cannabis Strategic Ventures (OTC US:NUGS) CEO, Simon Yu, noted in the release, “We are thrilled to finally get past these delays. These four licenses provide the regulatory backing for a series of major next steps critical to realizing our vision of becoming a top-tier farm-to-door vertically integrated premium cannabis company with dominant positioning in the thriving California cannabis marketplace. And I look forward to presenting a more detailed view of those next steps very soon.”

Curaleaf Holdings Inc (OTC US:CURLF) bills itself as a holding company with interest in medical and wellness cannabis operations. It operates through the Cannabis Operations and Non-Cannabis Operations segments.

The Cannabis Operations segment includes the production and sale of cannabis via retail and wholesale channels. The Non-Cannabis Operations segment provides professional services including cultivation, processing and retail know-how and back-office administration, intellectual property licensing, real estate leasing services and lending facilities to medical and adult-use cannabis licensees under management service agreements.

Curaleaf Holdings Inc (OTC US:CURLF) recently announced the opening of Curaleaf Bordentown, the company’s 109th dispensary nationwide. The Company also announced the launch of its Select brand in New Jersey, expanding the brand’s reach to 19 states. Select Bites, which feature the brand’s award-winning, concentrated broad-spectrum oil and science-based formulations that offer precise, consistent cannabis experiences for any occasion, are now available at all Curaleaf New Jersey locations.

“It has been a privilege to serve New Jersey’s medical community over the past six years, and we look forward to forging new patient connections in Bordentown, generating new economic opportunities and delivering exceptional retail experiences as this market continues to mature,” said Patrik Jonsson, Curaleaf Regional President, Northeast. “We are also excited to expand our Select retail footprint and introduce Select Bites to new patient and consumer audiences.”

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 7% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 3% in that time on strong overall action. 

Curaleaf Holdings Inc (OTC US:CURLF) managed to rope in revenues totaling $383.3M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 135.5%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($413.3M against $266.7M).

Other stocks in the cannabis space that may see interest include Tilray Inc (NASDAQ:TLRY), Sundial Growers Inc (NASDAQ:SNDL), Canopy Growth Corp (NASDAQ:CGC), Cronos Group Inc (NASDAQ:CRON), and AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS).

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).