U.S. CBD MARKET COULD GROW TO $15B: The FDA's previous decision that red yeast rice is an acceptable dietary supplement with naturally occurring levels of Monacolin K may set precedent for full spectrum or broad spectrum hemp extract that contains cannabidiol, or CBD, Piper Jaffray analyst Michael Lavery said in a Tuesday research note. However, CBD is the active ingredient in FDA-approved Epidiolex, which complicates its regulatory treatment, the analyst adds. He notes that because CBD isn’t an approved drug, the FDA rules do not allow it to be marketed as a dietary supplement. Nonetheless, given the red yeast rice precedent, the analyst "would logically expect" the FDA to allow products with hemp extract to be marketed as over-the-counter dietary supplements, "even if its views on CBD isolate may be less predictable." Lavery believes the U.S. CBD market could be $3B-$6B in 2020 and grow to $8B-$15B in five years. The analyst has Overweight ratings on both Canopy Growth (CGC) and Tilray (TLRY).
CANOPY GROWTH ACQUIRES THIS WORKS: Canopy Growth announced Thursday that it has finalized an all-cash transaction to acquire This Works for a purchase price of C$73.8M. Founded in 2004, This Works is a provider of natural skincare and sleep solutions with a customer base spanning 35 countries. This Works CEO Anna Persaud will remain at the helm of business operations post-acquisition. Additionally, the company announced Tuesday the appointment of Mike Lee in the acting role of CFO. Lee’s permanent role as CFO will commence upon receiving Health Canada security clearance. Lee has worked for companies such as E. & J. Gallo Winery, PepsiCo (PEP), and recently Constellation Brands (STZ), where he served as SVP, CFO for the $3B Wine & Spirits Division.
TILRAY RECEIVES LICENSE FOR EU CAMPUS: Tilray announced Thursday that its subsidiary Tilray Portugal has received a standard manufacturing license and a Good Manufacturing Practices certification, in accordance with the European Medicines Agency's standards, for its Biocant Park manufacturing facility in Cantanhede, Portugal. This license and certification allow Tilray Portugal to manufacture and export GMP-certified dried cannabis as an active substance for medicinal products. Tilray has established sales and distribution arrangements to supply medical cannabis through pharmaceutical distribution channels throughout Germany and the European Union. The company said, “This license and certification further enhances Tilray's capacity to serve international markets such as Germany and other EU member states, as well as none-EU jurisdictions that recognize EU GMP certification.”
POT PARAPHERNALIA TAKES HIT FROM TARIFFS: The U.S.-China trade dispute affects even the pot trade, with the companies hurt, ironically, being those that carefully avoid touching the still federally illegal weed, Barron's Bill Alpert wrote on Saturday. One is KushCo (KSHB), a fast-growing company that supplies cannabis producers with packaging, chemicals, and vaping hardware that saw its stock sold off this year as gross margins shrank under the weight of tariffs.
INNOVATIVE INDUSTRIAL PROPERTIES ACQUIRES GREEN LEAF FACILITIES: Innovative Industrial Properties (IIPR) announced Monday that it closed on the acquisition of a property in Saxton, Pennsylvania, which comprises two buildings totaling approximately 266,000 square feet of industrial space for $13M. Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement with a subsidiary of Green Leaf Medical, which intends to operate the property as a licensed medical-use cannabis cultivation and processing facility. Green Leaf Medical has redeveloped approximately 103,000 square feet of the industrial space for medical-use cannabis cultivation and processing, with the remaining approximately 163,000 square feet of industrial space available for future redevelopment.
OTHER CANNABIS STOCKS: Publicly-traded companies in the space include Aurora Cannabis (ACB), Cronos Group (CRON), MediPharm Labs (MLCPF), CV Sciences (CVSI), Aphria (APHA), CannTrust Holdings (CNTTF), General Cannabis (CANN), India Globalization Capital (IGC), ICC International Cannabis (KNHBF), Biome Grow (ORTFD), MediPharm Labs (MLCPF), Indiva (NDVAF), OrganiGram (OGRMF), MedMen Enterprises (MMNFF), Elixinol Global (ELLXF), Planet 13 Holdings (PLNHF), Wayland Group (MRRCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), Origin House (ORHOF), Sunniva (SNNVF), Sproutly (SRUTF), DionyMed Brands (HMDEF) and GrowGeneration (GRWG).
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Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp