The Emerging Landscape for Cannabis Stocks (ECOX, TLRY, GRWG, ACB, CGC, SNDL, MJNA, MCOA)

According to a recent report from ResearchAndMarkets.com, the global cannabis market is estimated to be valued at $20.5 billion in 2020 and is projected to reach $90.4 billion by 2026, recording a CAGR of 28%, in terms of value.

This makes it one of the fastest growing large consumer markets in North America over the coming decade. That should signal an important development for secular long-term investors.

As the cannabis marketplace matures further, one can anticipate disruptions and innovations that reshape the power dynamics within and among major players in the industry. But, underneath it all, we should see the tailwind of an expanding pie as developed world legalization and mainstream adoption continue to present the most significant factors in shaping the outcome distribution for shareholders in the space.

This strong growth trend and its accompanying shifting landscape of key developments will set the tone for leading cannabis stocks like Tilray Inc (NASDAQ:TLRY), Marijuana Company Of America Inc (OTCMKTS:MCOA), Eco Innovation Group (OTCMKTS:ECOX), Aurora Cannabis Inc (NASDAQ:ACB), Canopy Growth Corp (NASDAQ:CGC), Sundial Growers Inc (NASDAQ:SNDL), Medical Marijuana Inc (OTCMKTS:MJNA), and GrowGeneration Corp (OTCMKTS:GRWG).

We take a closer look at a few of the more interesting names below.

 

Tilray Inc (NASDAQ:TLRY) offers its products in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa. The company has also been the subject of the recent megamerger in the pot space, combining with Aphria (APHA).

One of Tilray’s 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) recently announced the launch of Symbios, a complement to the Company’s existing medical brand portfolio in Canada. This new brand was developed to provide a broader spectrum of formats and unique cannabinoid ratios at a better price point while offering medical patients a full comprehensive assortment of products, including flower, oils, and pre-rolls for their health and wellness regiment.

Irwin D. Simon, Tilray’s Chief Executive Officer, said, “Medical cannabis innovation and patient care are core to the new Tilray’s business and global growth strategy. As we look ahead, we remain focused on building momentum across our three medical brands – Symbios, Aphria, and Tilray — while meeting the large and growing demand for new, high-quality cannabis products that promote health, wellness, and wellbeing.”

Even in light of this news, TLRY has had a rough past week of trading action, with shares sinking something like -11% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way.

Tilray Inc (NASDAQ:TLRY) managed to rope in revenues totaling $48M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -7.8%, 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 ($416.4M against $284M).

 

Eco Innovation Group (OTCMKTS:ECOX) is a particularly interesting name to appear on this list because it might just come to define the extraction landscape for many of the other names mentioned here due to its recent exclusive licensing agreement for a next-gen prototype system designed to extract natural bioactive product compounds from plants using supercritical glycerin as the extraction solvent.

According to company materials, this could revolutionize the cannabis products marketplace and position ECOX as the bell of the ball. Time will tell.

The company was founded, according to its materials, “by Inventors and Business Professionals to help nurture and catalyze the most innovative and impactful products and services, and to deliver those innovations to the world, improving the quality of life in our communities and the world around us, while delivering value to our shareholders. At ECOX, we are dedicated to developing and commercializing successful products. But we will never lose sight of the fact that we exist, first and foremost, to help people and improve life on the planet we all share. We take our Social Responsibility Contract seriously in all our endeavors. It is not only what we do. It is who we are.”

Eco Innovation Group (OTCMKTS:ECOX) announced this morning a series of proactive steps to eliminate dilution risk for its shareholders through the preemptive canceling of variable convertible debt. According to the company’s release, the variable-rate convertible promissory notes paid posed the risk of a potential conversion of $131,077 at a discount of 39% to the average market price of the Company’s common shares at the time of conversion. As a result of the Company’s payments, that potential dilutive conversion has now been reduced.

The Company eliminated and reduced the Variable Notes as a part of its strategy to protect the Company’s shareholder value by reducing and eliminating dilution risk stemming from variable-rate and discounted convertible financing. Following the payoffs, approximately $70k in variable-rate or discounted convertible debt remains on the Company’s balance sheet. From management commentary, one might reasonably assume that the company is working toward elimination of the rest of this dilution risk as well.

Julia Otey-Raudes, President and CEO of ECOX, stated, “Our reputation as a shareholder-friendly Company and the financial security of our shareholders are both priceless ideals. Reducing the risk of dilution to our investors reduces uncertainty and lightens our balance sheet. We look forward to identifying other opportunities to defend our shareholders’ interests and avoid unnecessary dilution in financing our progress as we move toward the commercial launch of multiple disruptive green technology projects currently in our late-stage pipeline.”

Eco Innovation Group (OTCMKTS:ECOX) shares have been consolidating over the past year as the stock builds up liquidity in anticipation of its transition toward full commercial-stage operations. The company has also noted over recent months that it is planning on a share uplisting process and has completed some related steps. The elimination of toxic debt may help in that process as well.

 

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. The company has been growing rapidly through a series of key strategic moves.

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) recently announced that Power Si, a proprietary brand operated and owned by GrowGen, has signed an exclusive distribution agreement with GreenPlanet Wholesale, one of Canada’s oldest and most trusted hydroponic distributors. PowerSi’s original patented formula of mono-silicic acid has consistently proven to improve the yield, strength, and lateral branching of crops and is a must-have for new and experienced growers. Power Si is widely used in North America and facilitates fast, visible, and structured periods of both vegetative and flowering growth.

“We are thrilled that, at long last, Canadians will have the opportunity to experience firsthand what Power Si brings into their gardens,” stated Mark Walman, Chief Operating Officer for GreenPlanet Wholesale. “This is a groundbreaking product with proven success in the garden and a huge following in countries around the world. At GreenPlanet Wholesale, we are committed to bringing our customers the best products the industry has to offer, and Power Si is another example of this. This product has been long-awaited in the Canadian Marketplace, and we could not be prouder to partner with the great team at Power Si. I can’t wait to hear from our growing community as they begin to use this exciting new product.”

The stock has suffered a bit of late, with shares of GRWG taking a hit in recent action, down about -9% over the past week.

GrowGeneration Corp (OTCMKTS:GRWG) managed to rope in revenues totaling $90M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 172.9%, 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 ($133.1M against $45.7M).

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Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.