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How to Play the Next Cannabis Green Wave in Stocks (CURLF, TLRY, NUGS, CGC, GTBIF)

Cannabis stocks have been on fire in recent days following news that the House Judiciary Committee approved a Bill last Wednesday to push forward legislation set to decriminalize marijuana at the federal level.

The Marijuana Opportunity Reinvestment and Expungement Act of 2019 (the “MORE Act”) passed by a wide margin, 24-10. It saw bipartisan support and is expected to easily pass the House in a full vote. The bill would remove cannabis from the list of Schedule 1 narcotics, which would leave legality entirely up to the states and allow cannabis sellers to access traditional banking services.

In other words, it stands to stimulate a fresh wave of growth and investment in the cannabis patch.

For market participants, this has become a confusing sector, full of sound and fury, signifying little in the way of gains over recent months. To help sort through the rubble and pinpoint the best opportunities for the next wave of gains in front of us, we take a look at five of the most interesting plays in the space: Curaleaf Holdings Inc (OTCMKTS:CURLF), Tilray Inc (NASDAQ:TLRY), Cannabis Strategic Ventures (OTCMKTS:NUGS), Canopy Growth Corp (NYSE:CGC), Green Thumb Industries Inc (OTCMKTS:GTBIF).

 

 

Curaleaf Holdings Inc (OTCMKTS:CURLF) is a vertically integrated cannabis player. The stock has been notably outperforming the broader hemp-cannabis-cbd complex in recent action. Relative strength is an extremely important sector indicator, so this should not be overlooked.

The company roped in revenues of $64.9M during its most recently reported quarterly financial data. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($140.3M against $64.1M).

CURLF just announced it will launch its custom-designed Veterans Cannabis Project pre-roll product in Florida today.

According to the release, a portion of all proceeds will benefit the Veterans Cannabis Project (VCP), an organization that advocates for legal and supported access of medical cannabis for veterans through the Department of Veterans Affairs. In Florida the boxes will be available for $26, and each box contains five 0.4 oz pre-rolls for a total of 2 grams per box.

“We are proud to launch the Veterans Cannabis Project initiative in Florida to provide additional support and education for veterans in the communities we serve,” said Pablo Arizmendi-Kalb, President of Curaleaf Florida. “Through this partnership with the Veterans Cannabis Project, we hope to increase awareness for veteran access to medical cannabis.”

Curaleaf Holdings Inc (OTCMKTS:CURLF) operates a large number of dispensaries, 12 cultivation sites and 9 processing sites with a focus on highly populated, limited license states, including Florida, Massachusetts, New Jersey and New York. Curaleaf, Inc. leverages its extensive research and development capabilities to distribute cannabis products in multiple formats with the highest standard for safety, effectiveness, consistent quality and customer care. Curaleaf is committed to being the industry’s leading resource in education and advancement through research and advocacy.

CURLF shares has been acting well over recent days, up over 10% in that time.

“At Veterans Cannabis Project, our message is simple: medical cannabis may help save lives and veterans deserve full, legal access. I hear every day from veterans who have benefited from medical cannabis as a treatment option for addressing the physical and emotional wounds of war,” said Doug Distaso, Executive Director of the Veterans Cannabis Project. “That’s why VCP is proud to work with Curaleaf, the largest cannabis company in the United States, to advocate for, educate on, and support access to cannabis in Florida where more than 1.5 million veterans reside.”

 


Tilray Inc (NASDAQ:TLRY)
engages in the research, cultivation, processing, and distribution of medical cannabis. This is one of the highest profile names in the space. But if you look under the surface, it may also be the weakest because of the crushing burden of its debt-servicing costs at this point.

The company offers its products in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa. Tilray, Inc. was incorporated in 2018 and is headquartered in Nanaimo, Canada.

According to the company’s IPO announcement, “Tilray, Inc., a vertically-integrated and federally-licensed cannabis cultivator, processor and distributor, today announced the pricing of its initial public offering of 9,000,000 shares of Class 2 common stock. 6,524,000 shares of Class 2 common stock will be offered in the United States and certain other countries except Canada at a price to the public of US$17.00 per share for a total offering size of US$110,908,000 and 2,476,000 shares of Class 2 common stock, which we refer to as Subordinate Voting Shares, will be offered in Canada and certain other countries except the United States at a price to the public of CAD$22.451 per share for a total offering size of CAD$55,586,200. Based on current exchange rate1, the total combined offering size is approximately US$153,000,000.00.”

One of its key subsidiaries is High Park, which was launched to produce and distribute world-class cannabis brands and products for the Canadian market. Based in Toronto and led by a team with deep experience in cannabis and global consumer brands, High Park has secured the exclusive rights to produce and distribute a broad-based portfolio of cannabis brands and products in Canada, subject to applicable laws and regulations.

In addition, High Park has developed new brands and products for the Canadian market. Upon the coming into force of federal legalization of cannabis for adult-use and corresponding provincial legislation, High Park anticipates fulfilling adult-use supply agreements and purchase orders in Quebec, Ontario, British Columbia, Manitoba, Nova Scotia, Prince Edward Island, Northwest Territories and Yukon on October 17, 2018.

Tilray Inc (NASDAQ:TLRY) pulled in sales of $51.1M in its last reported quarterly financials, representing top line growth of 408.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($122.4M against $130.2M, respectively).

 

 

Cannabis Strategic Ventures (OTCMKTS:NUGS) is one of the largest publicly traded marijuana cultivators in the United States, and a rapidly growing story on the California cannabis scene.

The company just put out its Q3 earnings data, and it was something of a revelation that strongly suggests this company is now ready to play in the big boys’ league. The company saw over 1,300% y/y sales growth and 300% growth in assets. This is a company that just went around the shoulder of an exponential growth curve in overall size. And we would expect that trend to continue in the quarters ahead.

“Q3 sets a new standard across basically all top-line metrics, and we expect Q4 to continue to show continued growth,” commented Simon Yu, Cannabis Strategic Ventures CEO. “We were successful in obtaining and investing capital through the last few years, which helped to drive the revenue and a substantial increase in the Company’s total assets, while improving gross profit margins. We expect continued growth on the top-line along with a declining drop in net losses next year.”

The Company is a Los Angeles-based cultivator that incubates, develops and partners with category leaders within the cannabis and ancillary sectors. The Firm’s NUGS brand experience provides operational and financial strategic partnerships and a range of essential services to emerging and existing Cannabis consumer brands.

According to its release, the performance seen in Q3 appears to be something of a watershed moment or a breakthrough, which suggests this stock could be a surprise outperformer as it jumps onto the radar of cannabis stock traders during this resurgence.

“We saw an expected acceleration in top-line growth in Q3 as we expanded the scale of our operations through new investments,” continued Mr. Yu. “As we press forward, we fully anticipate that scaling growth to continue in the months and quarters ahead. Our message to our valued shareholders right now is this: we are committed to continued aggressive expansion and a gradual move toward profitability. We are becoming simultaneously bigger and more efficient with every passing month, and we are more confident than ever in our mission to deliver value and growth to our shareholders. The cannabis growth is still in its very early stage. And we are positioning the Company as a leader for many years to come.”

 

 

Canopy Growth Corp (NYSE:CGC) engages in growing, possession, and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, softgel capsules, and hemps.

It’s perhaps the biggest overall name in the space when it comes to a combination of producing and investing in the space, so it has to be near the top of any measure as far as benefitting from a shift whereby full-scale legalization in the US market is concerned.

The company managed to rope in revenues totaling $90.5M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 249.1%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($3.2B against $372.8M).

According to its own materials, the company offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, and Foria brand names. It also offers its products through Tweed Main Street, a single online platform that enables registered patients to purchase medicinal cannabis from various producers across various brands.

In the company’s words, “Canopy Growth is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. From product and process innovation to market execution, Canopy Growth is driven by a passion for leadership and a commitment to building a world-class cannabis company one product, site and country at a time.”

This is also one of the most geographically diversified players in the cannabis space, with operations in 12 countries across five continents.

One of its most important divestitures and strategic interests is Canopy Rivers Inc., a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. The company works collaboratively with Canopy Growth to identify strategic counterparties seeking financial and/or operating support.

The company has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth and collaborate among themselves, which the company believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem.

 

 

Green Thumb Industries Inc (OTCMKTS:GTBIF) is another recent relative strength leader in the space, with shares holding up better than other cannabis names over the past couple of months, and then bouncing sharply last week on the group’s momentum and energy.

To help push the action, the company just announced it will open Rise King of Prussia, its eighth retail location in Pennsylvania and 34th in the nation, on November 26.

According to the release, Rise King of Prussia will host an open house for the community on November 23 from 1 p.m. to 4 p.m. The open house will be held before cannabis products are on site so all are welcome to attend and meet the Rise team, including the General Manager and Pennsylvania Market President.

Green Thumb Industries Inc (OTCMKTS:GTBIF) is a producer and distributor of cannabis products including flower, concentrates for dabbing and vaporizing, edibles, and topicals. The company markets its products through third party retailers. It also owns and operates a chain of 50 retail stores under the RISE dispensaries name. The company was founded in 2014 and is headquartered in Chicago, Illinois.

The company is a national cannabis cultivator, processor and dispensary operator, is dedicated to providing dignified access to safe and effective cannabis nationwide while giving back to the communities in which they serve.

As a vertically integrated company, GTI manufactures and sells a well-rounded suite of branded cannabis products including flower, concentrates, edibles, and topicals. The company also owns and operates a rapidly growing national chain of retail cannabis stores called RISE(TM) dispensaries.

Headquartered in Chicago, Illinois, GTI has seven manufacturing facilities and licenses for 50 retail locations across seven highly regulated U.S. markets. Established in 2014, GTI employs more than 350 people and serves hundreds of thousands of patients and customers each year.

And the stock has been acting well over recent days, up something like 7% in that time.

Green Thumb Industries Inc (OTCMKTS:GTBIF) has pulled in $114M in trailing twelve-month revenues, representing 228% growth on a quarterly y/y basis. In addition, the company has a strong balance sheet, with cash levels surging above current liabilities ($117M against $83M, respectively).

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