Pot Stocks Set for Biden Boost? (GRWG, CURLF, MCTC, TLRY)

The drumbeat to legalize cannabis is getting louder and louder in the US. Joe Biden is, by all accounts, starting to run away with the presidential takeover, relegating Mr. Trump to the history books as a rare one-term president, and potentially via a decisive landslide. Among other things, such an election result will suggest the incoming administration will have a mandate on certain core issues, one of which, surprisingly, seems to be cannabis legalization, or so say the smart folks at CIBC.

We should note that this is also speculation driven by polling and betting odds that show a strong likelihood that the democrats will take the Senate as well as the White House, while holding onto the House of Representatives, when they sweep through town in November.

Right now, betting site Predictit.org is showing Biden with a 63-40 price edge to win, and Democrats overall with a 62-39 edge in the “Who will control the Senate after 2020?” market.

Furthermore, because of the virus, the vote is likely to actually take place well ahead of November given the massive numbers expected to mail in their ballots this year to avoid crowded polling stations as possible transmission hot spots – and your typical mail-in vote is often penciled in weeks ahead of the official election day. In other words, if Trump is going to mount a comeback, he had better get moving because he has a lot of ground to make up, and only a matter of weeks in which to do it.

All of that takes us back to CIBC’s analyst projection out on Monday: if Biden wins, and the Dems control both houses of Congress, then expect the US to legalize weed for recreational use nationwide sometime in 2021. This makes perfect sense because it ties into what Biden will face as a critical issue in year one of his presidency: the specter of state bankruptcies across the country following the horrors of our collective battle with the virus. Legal weed reduces the burden of enforcement and creates a major tailwind in tax receipts. In other words, people will toke it up either way. But legal weed has a massive impact on state fiscal health.

What does that really mean? 

It means that it’s time to get excited about Pot Stocks! With that in mind, here are a few interesting names in the space: GrowGeneration Corp (OTCMKTS:GRWG), Curaleaf Holdings Inc (OTCMKTS:CURLF), MCTC Holdings Inc (OTCMKTS:MCTC), and Tilray Inc (NASDAQ:TLRY).

GrowGeneration Corp (OTCMKTS:GRWG) trumpets itself as a company that, through its subsidiaries, owns and operates retail hydroponic and organic gardening stores in the United States. GrowGen also operates an online superstore for cultivators, located at https://growgen.pro/. 

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 (OTCMKTS:GRWG) just announced the pricing of an underwritten public offering of 7,500,000 shares of its common stock at an offering price of $5.60 per share. GrowGen expects the gross proceeds from the Offering to be approximately $42.0 million, before deducting the underwriting discount and other estimated offering expenses. 

According to the company’s release, the Offering was upsized from the previously announced offering size of $35.0 million of common stock. GrowGen has also granted the underwriters a 30-day option to purchase up to an additional 1,125,000 shares of common stock offered in the public market. The Company expects to close the Offering on or about July 2, 2020, subject to the satisfaction of customary closing conditions.

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.

GrowGeneration Corp (OTCMKTS:GRWG) generated sales of $33M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 29.9% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($11.4M against $17.3M, respectively).

Curaleaf Holdings Inc (OTCMKTS:CURLF) operates as an integrated medical and wellness cannabis operator in the United States. CURLF is a major vertically integrated MSO cannabis operator with a strong presence that is expanding to 23 US states. 

Curaleaf Inc.’s Florida operations were the first in the cannabis industry to receive the Safe Quality Food certification under the Global Food Safety Initiative, setting a new standard of excellence. It cultivates, processes, markets, and/or dispenses a range of cannabis products in various operating markets, including flower, pre-rolls and flower pods, dry-herb vaporizer cartridges, concentrates for vaporizing, concentrates for dabbing, tinctures, lozenges, capsules, and edibles. 

Curaleaf Holdings Inc (OTCMKTS:CURLF) recently announced that it closed its milestone acquisition of GR Companies, Inc., the largest private vertically-integrated multi-state operator in the United States, on July 23, 2020.

According to the release, with completion of the acquisition of Grassroots, Curaleaf is the world’s largest cannabis company by revenue and the most diversified vertically integrated cannabis company in the United States, the world’s largest cannabis market. The transaction expands Curaleaf’s presence from 18 to 23 states, with the combined company having affiliated operations spanning over 135 dispensary licenses, 88 operational dispensary locations, over 30 processing facilities and 22 cultivation sites with 1.6 million square feet of current cultivation capacity. Curaleaf’s expanded geographic dispensary presence now offers access to medical or adult use Cannabis to more than 192 million people, or roughly two-thirds of the United States population.

And the stock has been acting well over recent days, up something like 14% in that time.

Curaleaf Holdings Inc (OTCMKTS:CURLF) managed to rope in revenues totaling $129.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 177%, 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 ($251M against $177.1M).

Cannabis Global, Inc. (OTCMKTS:MCTC), currently still trading as MCTC Holdings (OTCMKTS:MCTC), is an R&D play in the CBD and cannabis markets. In a very interesting step, the company just moved into the cannabis delivery-based dispensary retail business through a release that dropped last week. In the release, officially, the company announced the closing of a definitive agreement to “enter the fast-growing California cannabis delivery market.” 

According to the release, Whisper Weed, Inc. and Cannabis Global have created a new California Corporation to be named CGI Whisper W, Inc., which will provide management services for the delivery entity. CGI Whisper W, Inc, will receive 51% of the profits from the new entity, which will be recognized as income by Cannabis Global, Inc. 

“The delivery sector is the hottest area of the California cannabis business and we are very pleased to have a seat at the table,” commented Arman Tabatabaei. “We not only will be able to grow our revenue base relative to direct delivery, but we also see Whisper Weed as a perfect platform to launch our infusion technologies in the regulated marketplace.  With the deal closing, we are already in the process of adding other delivery platforms and other businesses to our overall portfolio.”

Cannabis Global, Inc. (OTCMKTS:MCTC) views this agreement as an important step toward the verticalization of its IP-driven focus. Many of the technologies developed for CBD and non-THC marketplaces can be directly applied to the regulated California cannabis marketplace, including the Company’s newly developed tetrahydrocannabivarin (THC-V) and Cannabinol( CBN) delivery technologies. 

Shares of the stock have been running in recent days, up as much as 60% in the past five trading sessions.

MCTC Holdings Inc (OTCMKTS:MCTC) had no reported sales in its last quarterly financial data. But it appears to be closing in on commercial-stage operational gains for shareholders and has a strong IP edge in the industry. In addition, with this agreement, the company should now be in a position to start booking topline growth in the cannabis delivery-based dispensary retail business.

Tilray Inc (NASDAQ:TLRY) engages in the research, cultivation, processing, and distribution of medical cannabis. 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.

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.

Tilray Inc (NASDAQ:TLRY) just announced that it will report results for the second quarter ended June 30, 2020 on Monday, August 10, 2020 after market close. According to the release, the Company will host a conference call to discuss these results in the afternoon (at 5:00 p.m. ET) on that day.

The report should be important for the space in general because TLRY is known for being somewhat overhyped relative to its actual operations, and the market will be anxious to understand how this archetypal “pot stock bubble victim” has managed to evolve in terms of the long-term prospects for servicing its major liabilities. 

TLRY shares have been moving higher over the past week overall, pushing about 3% to the upside on above average trading volume.

Tilray Inc (NASDAQ:TLRY) managed to rope in revenues totaling $52.1M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 126.2%, 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 ($174M against $171.4M).

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