Is the next Green Wave underway in Pot Stocks? (TLRY, ECGI, SNDL, VFF, GRWG, IIPR, CRON, MSOS, ARKK)

The market has been volatile over the past few weeks by any measure. Plenty of growth names have wilted in the heat of that tension, with growth investors taking it on the chin on a regular basis.

But one group has been bucking the pressure and powering higher, perhaps under the radar for most market participants: Cannabis stocks.

The AdvisorShares Pure US Cannabis ETF (NYSEARCA:MSOS) has been on fire in February, up more than 25% this month on rising volume, even as the Nasdaq, S&P, and Dow all show up bright red for the month. Growth stocks, as a group. are also down, with Cathy Wood’s ARK Innovation ETF (NYSEARCA:ARKK) suffering yet another beating in February.

At the same time, pot stocks are ripping.

One reason we see this encouraging action in the group has to do with the narrative around federal marijuana legalization. A recent piece in Marijuana Moment noted that Senate leaders are now asking fellow lawmakers to weigh in on the provisions of a bill to federally legalize marijuana that they plan to file in the coming weeks that “aims to right the wrongs of the past and ensure that the federal government is matching the advancements made in states across the country.”

“Supreme Court Justice Louis Brandeis once famously said that the states are America’s laboratories of democracy,” Senate Majority Leader Chuck Schumer (D-NY), Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) wrote in a letter to colleagues last Thursday. “When it comes to reforming the nation’s antiquated cannabis laws, he could not have been more right.”

In other words, there’s finally a ball rolling here, and stocks in the cannabis space are starting to respond after wallowing at deep discount levels last year. That could spark a new “green wave” ahead.

With that in mind, we take a fresh look below at some of the most interesting cannabis names as the group catches fire.

 

Tilray Brands Inc. (Nasdaq:TLRY) is a global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America. The firm is focused on medical cannabis research, cultivation, processing, and distribution of cannabis products worldwide.

Its products include dried cannabis and cannabis extracts. It operates through the following segments: Cannabis and Hemp. The Cannabis segment consists of adult-use, medical and bulk sales of cannabis under regulated licenses and sold to retail, wholesale, pharmacy, government, and direct to patient. The Hemp segment consist of hemp seed, hemp foods, board spectrum hemp extract containing CBD, which are sold in an unlicensed operation and sold to retail, wholesale and direct to consumers.

Tilray Brands Inc. (Nasdaq:TLRY) recently announced that its CEO, Irwin Simon, will be delivering a keynote at Benzinga’s upcoming Benzinga Cannabis Capital Conference, the world’s biggest and most successful cannabis investing and finance event, which will take place on April 20 and April 21, 2022, at the Fontainebleau Miami Beach hotel, in Miami, Florida.

“We’ve seen cannabis businesses raise tens of millions of dollars at our events and this year’s meeting will be even larger, with a record level of investment capital and top-notch operators,” said Chief Zinger Jason Raznick. “We’re particularly excited about Irwin’s keynote, as he will share his wealth of knowledge and experience with our attendees.”

If you’re long this stock, then you’re liking how the stock has responded to the announcement. TLRY shares have been moving higher over the past week overall, pushing about 14% to the upside on above average trading volume.

Tilray Brands Inc. (Nasdaq:TLRY) managed to rope in revenues totaling $155.2M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 207.8%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($331.8M against $314.9M).

 

ECGI Holdings Inc. (OTC US:ECGI) is a newcomer in the space that has recently begun to message about its upcoming plans. For investors seeking a ground-floor type of opportunity with some speculative risk – which is always part of the equation in the most rewarding outcomes – ECGI could be headed for outsized potential precisely because it doesn’t have any baggage and isn’t already crowded with bagholders.

The company just put out a shareholder update letter from its CEO that outlines an interesting plan – one that could be the first in a series of key announcements that help to put this company on the map.

ECGI Holdings Inc. (OTC US:ECGI) came out this morning with a fresh roadmap that pointed to its new direction in the cannabis and cannabinoid space. As noted by the company, “We will fill in further details in coming communications, but we want shareholders to understand now that we have already taken important strides toward commercial stage operations in the cannabis and cannabinoid space.”

The company has already brought in new executives, including Danny Wong: “To help ECGI achieve success in this endeavor, we are excited to introduce Danny Wong as our acting Chief Financial Officer. Danny is a distribution and finance professional with deep experience in the Cannabis and hemp industry. Over the past 4 years, he has served as a contract CFO and COO overseeing sales operations for more than 50 acres of indoor, greenhouse, and outdoor cultivation across multiple companies. Before that, Danny held management roles for leading Fortune 500 companies in the technology space.”

This statement gives us a sense of where the company is headed: “The cannabis industry is rife with competition, but it is also evolving rapidly, opening up new opportunities and new avenues for disruption. As well as becoming a leading vertically integrated cannabis and cannabinoid company, ECGI is arming itself toward the establishment of a dominant presence in the wholesale and procurement center niche serving cannabis retailers throughout California, and eventually across the United States.” It’s an interesting angle without a dominant presence already entrenched in the same niche.

ECGI Holdings Inc. (OTC US:ECGI) also discussed something of where the story is headed over the immediate term, including the likelihood of some acquisition announcements ahead: “we believe the cannabis wholesale market is underserved and represents a powerful opportunity. As we continue to lay our foundation, we have already identified several key acquisition opportunities and believe these steps will further drive us toward achieving our vision. We look forward to presenting additional details related to these acquisitions as well as new milestone achievements we are working toward right now.” The stock is sitting on the floor right now. This transition could spur a lot of fresh interest as the story develops. It’s one of those left-for-dead names that may suddenly have some explosive potential ahead. Investors interested in the cannabis resurgence will likely have it on the radar.

 

Village Farms International Inc. (Nasdaq:VFF) engages in the management and operation of agricultural greenhouse facilities in United States and Canada. It operates through its Produce Business, Energy Business, and Cannabis segments.

The Produce Business segment focuses on the production, marketing, and selling of a product group that consists of tomatoes, bell peppers, and cucumber. The Energy Business segment offers power that it sells per a long-term contract to its one customer. The Cannabis segment covers the production and supply of cannabis products to be sold to other licensed providers and provincial governments across Canada and internationally through Pure Sunfarms.

Village Farms International Inc. (Nasdaq:VFF) recently announced the appointment of Ann Gillin Lefever to the position of Executive Vice President of Corporate Affairs, reporting directly to the Chief Executive Officer, effective immediately. In this newly created role, Ms. Gillin Lefever will be responsible for overseeing investor relations, providing guidance on strategy, growth (including potential mergers and acquisitions) and risk, and leading internal communications, as well as supporting government and public affairs.

“I am thrilled to welcome Ann to the Village Farms’ executive team,” said Michael DeGiglio, CEO, Village Farms. “Village Farms’ has had the benefit of Ann’s expertise and experience for several years as a consultant to the Company, throughout which time her counsel has been integral to our strategic planning, analysis, capital markets strategy and communication. She brings a unique and valued perspective to the team that is firmly aligned with our evolution to a vertically integrated plant-based consumer products company, focused on cannabinoids and related health products, with opportunities in North America and around the world. I look forward to her continued contribution, now as a full-time member of the Village Farms’ team.”

And the stock has been acting well over recent days, up something like 9% in that time.

Village Farms International Inc. (Nasdaq:VFF) managed to rope in revenues totaling $72.4M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 68.3%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($84.5M against $59M).

Other names of interest in the cannabis space include Sundial Growers Inc. (Nasdaq:SNDL), GrowGeneration Corp. (Nasdaq:GRWG), Innovative Industrial Properties Inc. (NYSE:IIPR), and Cronos Group Inc. (Nasdaq:CRON).

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