The Morning Blunt
Volume 1| Issue 13
September 13, 2018
“Make every detail perfect, and limit the number of details to perfect.”
— Jack Dorsey
The Global Market
Prompted by the failures of the current cannabis testing system, The American Trade Association for Cannabis and Hemp and the A2LA plan to work together to bring testing standardization and regulatory guidelines across the US. The need for standardization in cannabis testing is pressing, and a new partnership promises to bring homogeny to the table. Their goal is to create standards for accreditation, industry equipment, government regulation, and testing processes to ensure quality and seamless communication.
Though KushCo, a company that focuses on ancillary cannabis products such as packaging, is operating at a loss, their stock will still be putting up triple digit returns. Their losses are mostly a reflection of their cash burn that is dependent on capital markets. This cash burn is a result of maintaining massive inventory stocks. Though this stock isn’t incredibly interesting, it will remain stable with positive returns for years to come.
Canopy is growing at an alarming rate, as are many of the other Canadian cannabis companies. The cannabis industry’s booming stock market has investors biting their nails over a pot bubble caused by speculated overvaluation and skyrocketing prices. With heavy investment, speculated over valuation, and endless mergers, could this weed bubble be reminiscent of the Dot Com Bubble? With Canopy, Aurora, Aphria, Tilray, et al investing so heavily prior to legalization, speculators and participants are worried the industry put the cart before the horse. Currently trading at a price worth more than gold, Canopy is estimated to be worth more than $11 billion. Global consumer spending is expected to reach $32 billion by 2022.
Canopy is growing at an alarming rate, but growth doesn’t come cheaply to investors. While probably one of the safest cannabis stocks to invest in, Canopy’s aggressive acquisition campaign has run the cost of shares up. Canopy is continuing to climb this week while Aurora prices lag behind, arguably due to their recent aggressive acquisition campaign. This week Aurora purchased ICC Labs in South America, European hemp producer Agropro, and distributor Borela. To counter, Canopy announced that co-founder Bruce Linton is now a chairman of Martello, a publicly traded tech company, now focusing on acquisitions, as well as announcing their acquisition of Hiku.
Wednesday most cannabis stocks fell due to the recent announcement of a potential ban in the US on flavored e-cigarettes, though Tilray remained steadfast. Citron, shorted Tilray over what they believe to be a valuation discrepancy and compared the boom to bitcoin.
Tilray stock surged 9% on Thursday after they announced receiving clearance to export cannabis flower to Germany. Already exporting oil to Germany, Tilray intends to be the first company to sell both flower and oil in the country. According to Tilray, patients who were once unable to find products with appropriate potency will now have access to a plethora of products.
The country of Georgia is considering exporting hemp for pharmaceutical and cosmetic purposes, though cannabis would still be illegal to sell within the country.
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Critics of cannabis testing insist the state’s regulations are too strict. Nearly a quarter of all cannabis submitted failed in testing for potency, pesticides, packaging, or purity. Most believe the restrictions in place are protecting consumers from low quality products. This seems to have backfired, as less options on the shelves leave consumers to explore black market options. Firms are asking for the state to delay regulations until companies can better organize themselves.
LA has a plan. Issuing over 500 misdemeanors and targeting over 100 illegal cannabis companies, officials are pressing against the black market hoping to dissuade illicit businesses. Officials hope the crackdown will level the playing field for legal businesses struggling to keep up with the ever changing regulations without being choked out by black market business.
Northern California has been struggling to keep up with changing regulations, mandatory farm updates, remediation standards, and taxes associated with producing. Now northern California is suffering from multiple wildfires threatening several businesses, one of which burned the home and crop of Noah Cornell, a home owner and cannabis producer. Noah lost his home near Mendocino National Forest, and over 1200 pounds to the fire. Producers worry with the heavy cost of doing business, the burden of a natural disaster could cost them their livelihoods.
In an effort to combat illegal cannabis cultivators, the Santa Barbara sheriff’s Cannabis Compliance Team has been cracking down on illicit grow operations. Their goal is to stop the environmental damages coming from illegal grows. In the recent round of raids over 1500 plants were seized.
Redding California has approved it’s first commercial grow site in their industrial district. Pinnacle Cultivators will be sectioned off from the public with no retail component to the business. While the city has approved the location, it will take time for Pinnacle to process license paperwork and the building permit.
As edibles and concentrates enter the market in full force, the sales of flower are proportionately decreasing. The market is showing a trend toward technological advancement. E-rigs are replacing blow torches. Vape pens are the most popular delivery system of cannabinoids. We are seeing a trend toward strain specific concentrates. Full spectrum live resin pens are the latest example of strain specific concentrates by Green Dot. From app development for tracking the characteristics of experiences, to metered dosing pens, the future of concentrates is here. Check out the most recent developments in cannabis technology and the future of concentrates.
Researchers found in rats, prenatal exposure to marijuana impacts the sociability and neuropathic development in male offspring. Female rats were unaffected. Though long-term affects of fetal exposure to marijuana are unknown, the study suggests there may be long term developmental deficits in male offspring in larger mammals as well.
Australian life sciences medical company Medlab Clinical, developed, and received license to export cannabis products, Nanabidial and NanaBis. These compounds have a special nano cell delivery system. This nano cell delivery system would deliver THC and CBD to the bloodstream through the mucus membrane of the consumer’s cheek. The ease of consumption and fast delivery system would be beneficial to a variety of patients who are unable to consume cannabis through other means.
Adolphus Busch, grandson of Adolphus Busch of Anheuser-Busch, launched a line of disposable THC vape pens. Having previously established Keef Cola, Busch foresees himself in the cannabis industry for years to come.
Alliance One, soon to be Pyxus International Inc., a tobacco supplier, hopes to shift to cannabis as tobacco sales stagnate. Tobacco sales have lulled in recent years. In an attempt to evolve, Pyxus plans to invest in vape pens to diversify their tobacco and cannabis product lines as consumers move away from old fashioned smoking.