Spark Report

Legalization Set to Test Canada’s Cannabis Stock Prices

Staff — Mon, 19 Mar 2018 04:21:17 +0000

Canada’s publicly traded cannabis businesses are booming thanks to Justin Trudeau’s vow to “legalize, regulate, and restrict access to marijuana” in order to displace the illegal market. Legalization will make Canada just the second nation to legalize cannabis after Uruguay. The Canadian cannabis market is estimated at $5.7 billion a year, with 90% of that for non-medicinal purposes.

The two market leaders are Canopy Growth and Aurora Cannabis which recently had a successful hostile takeover of medical provider CanniMed Therapeutics for $850 Million dollars. Each company currently holds market caps of well over CA$6 billion dollars and climbing.

They Must Be Killing It Then Right?

Well not so much… The market cap of Aurora trades at about 260 times their annual revenue of $23 million in sales. That’s a pretty insane valuation purely being pushed by the thought that legalization will send those revenues sky high.

In addition to the unjustified market valuation, a U.S based hedge fund estimated that Canopy Growth’s entire production capacity can be recreated for less than $150 million and Aurora’s for less than $100 million.

Only time will tell if these two leaders can justify their current market caps when legal cannabis hits Canada around summer 2018.

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Canadian Company Brewing Up Pure Cannabis Beer

Staff — Mon, 19 Mar 2018 04:19:43 +0000

Cannabis has been used to lace wines and beers for years but one Canadian company claims to be the first with “global reach” to produce beers brewed entirely from the plant.

Canada’s Province Brands (PB) has filed a provisional patent for their creation and is marketing it as “alcohol-free, yet highly intoxicating”. The beverage is said to be low in calories, sugar and gluten-free.

Fun fact: PB CEO Dooma Wendschuh is the co-founder of the video game production company behind the massively successful Assassins Creed franchise.

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Shopify Chosen to Run Ontario Cannabis Sales

Staff — Mon, 19 Mar 2018 02:52:21 +0000

When cannabis becomes legal in Canada later this year, consumers in Ontario will only be in a unique position of only being able to legally purchase through the Ontario Government. Unlike the U.S and even other provinces such as Alberta and British Columbia, Ontario has decided to get deep into the cannabis business by becoming the sole distributor of cannabis via 40 government-run shops and an online store. The government-ran stores are expected to increase to 150 by the year 2020.

Shopify Inc., the Canadian based online sales platform have been chosen to run the cannabis e-commerce sales portal as well as manage inventory, accounting and human resources for the Ontario Cannabis Retail Corporation (OCRC). Shopify will also power transactions in brick-and-mortar stores via iPads with additional product and health information.

Who Should Care About This?

Mostly anyone associated with the currently booming, multi-billion dollar cannabis tech industry. These tech companies have been developing dispensary specific software solutions and battling it out for market share anywhere that allows medical or recreational sales.

The fact that a major incumbent like Shopify can just walk into a lucrative mega-deal should have a lot of cannabis specific businesses on edge. The hesitation from established companies to wander into the industry might be wearing off and competition in all areas could become more fierce as legalization takes hold.

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Privateer Closes $100 Million Dollar Investment

Staff — Mon, 05 Feb 2018 06:58:32 +0000

With a healthy $100 million Series C round of investments, Privateer is a private equity firm investing in and flat out buying emerging cannabis companies. The new investment puts the firm’s valuation at $600+ Million.

What Exactly Do They Do?

Their first and most notable investment was Leafly, the go-to site for many medical marijuana patients and dispensary owners and typically referred to (by mainstream media) as the Yelp of cannabis. The firm is headquartered in Seattle, Washington and includes a founding team of 2 Yale grads and an SF university MBA. Privateer navigates murky legal issues by distancing itself from dealing with Marijuana directly and instead focuses on the media, services and products side of the marijuana industry, often estimated in the $10 billion dollar market range.

Privateer’s other investments include Tilray, Marley Natural and The Goodship. Tilray is a cannabis producer, distributor, and an R&D lab. Marley Natural and The Goodship are more lifestyle B2C brands.

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France Flirting With Legalization… Almost

Staff — Wed, 31 Jan 2018 21:04:32 +0000

The election of Emmanuel Macron and a more centrist government has lead France to “soften” it’s legalization. France has previously instated serious prison time and fines up to almost $5000 for simple cannabis possession and the new laws would result in a fine of closer to $200 and no jail time.

France is the largest cannabis consumer in Europe and a 2014 study showed the possible tax gains from regulating cannabis were 2 billion euros a year.

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States Pressure Congress to Relieve Cannabis Banking Issues

Staff — Wed, 31 Jan 2018 05:25:14 +0000

Since the dawn of cannabis legalization, companies have had a hard time utilizing basic banking like everyone else. While banks would love to handle the cash-rich cannabis industry, they have notoriously stayed away over fears of federal regulators siding with federal laws. Everything has been made even more uncertain with Attorney General Session’s decision to resend the Obama era policy that kept federal prosecutors from going after cannabis companies that operate legally under state laws.

This has lead to AGs from 18 medical or recreational states to ask members of Congress to create an exemption for banks that want to deal with cannabis businesses. The states argue that allowing these businesses to bank legally will add billions into the banking system, thereby increasing taxes collected and giving regulators more visibility into business financials.

Both Sen. Elizabeth Warren and Sen. Bernie Sanders have asked for regulation since January and with Congress in a fustercluck over a number of other issues, it’s hard to say when there might be movement.

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Legal Cannabis Reducing Violence for Border States

Staff — Mon, 29 Jan 2018 04:56:55 +0000

Scientists took time out of their schedule to prove a point cannabis activists have been suggesting for years. A new study shows that legal cannabis “leads to a decrease in violent crime in states that border Mexico”. The authors claim their results show that legalization “leads to a reduction in violent crime in markets that are traditionally controlled by Mexican drug trafficking organizations”.

There is no doubt that more competition from better packaged medical strains has made the old school “brick weed” from our southern neighbors obsolete is many (if not most) regions of the U.S. That lack of demand (and price) has caused the cartels to move onto other (still illegal) endeavors elsewhere.

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Cannabis Decorated Nails A New Instagram Trend #WeedNails

Staff — Sun, 12 Feb 2017 13:04:33 +0000

Highlights:

Instagram trend using #weednails has over 3000 tagged pictures
Decorated using crushed cannabis leaves
Salons are now offering ‘whole leaf incapsulation’ services to keep up with demand

Wash. Recreational Cannabis Store Raided For Not Paying Taxes

Staff — Sun, 12 Feb 2017 11:43:53 +0000

Highlights:

Nine Point Growth Industries, Kitsap County’s first marijuana business has been shut down by Agents with the state Liquor and Cannabis Board
Owes $29,000 in taxes
2,000 plants and clones were taken
first time the state has seized and destroyed all the plants from a licensed producer for the producer’s failure to comply with regulations.

Survey Finds Cannabis Link To Less Alcohol, Opioid Usage

Staff — Sun, 12 Feb 2017 11:36:36 +0000

Highlights:

Survey conducted by Eaze, a California based delivery service.
Consisted of more than 250,000 cannabis consumers in 100 cities across California, in addition to more than 5,000 unique survey responses.
Survey showed that 82 percent of people point to marijuana as the reason they drank less alcohol.
Research showed that 95 percent of medical marijuana consumers who’ve turned to opioids for pain management reported using less fewer opioids—thanks to cannabis