WeedMD exits Bowmanville facility as Mjardin enter supply agreement with BCLDB
In this week's "Rising High," The Fly's recurring series focused on cannabis stock news, The Fly looks back a facility exit, supply agreements and analyst views.
WEEDMD TO EXIT BOWMANVILLE FACILITY: WeedMD (WDDMF) announced Thursday it has reallocated all medical packaging, labelling and distribution activities from its Bowmanville, Ontario site to its Aylmer, Ontario facility which also houses the company's extraction hub. The company said, “These strategic steps are part of WeedMD's ongoing plan to maximize the utilization of its facilities, improve operational efficiencies and further align its cost structure while focusing on growth, following the successful integration of WeedMD and Starseed Holdings.” These structural changes, completed in January 2021, centralize production activities at WeedMD's flagship London-area sites. With the exiting of its Bowmanville facility, which served as WeedMD's medical distribution hub, the company has offered relocation and severance packages, where applicable, to about 20 employees. The move comes after the company announced the appointment of George Scorsis as interim CEO on Monday.
MJARDIN ENTERS SUPPLY AGREEMENT WITH BCLDB: MJardin Group (MJARF) announced Wednesday the completion of a major supply agreement with the British Columbia Liquor Distribution Branch to supply the provincial wholesaler with premium cannabis products in two formats: 3.5 grams whole flower and 5 x .5 gram pre-rolls. MJardin is entering the BC market with its new flagship brand, Flint & Embers. Flint & Embers remains on schedule to be available for purchase in Alberta and Ontario in Q1 of 2021.
INTELGENX RECEIVES ORDER FROM HERITAGE: IntelGenx Corp. (IGXT) announced Thursday the execution of a definitive supply agreement with Heritage Cannabis (HERTF) for the manufacturing and supply of filmstrip products containing 10 mg of CBD using VersaFilm technology for the Canadian and Australian markets. IntelGenx has received its first purchase order from Heritage for 50,000 CBD Filmstrips. IntelGenx expects to make its first shipment of product to Heritage in the second quarter of 2021. In addition to receiving a manufacturing margin, IntelGenx will also receive a double-digit royalty on the gross margin based on product sales. Heritage will supply CBD material for IntelGenx's filmstrip manufacture and supply in Canada and Australia on a non- and semi-exclusive basis, respectively. The agreement also contemplates an option on future co-development of CBD and THC filmstrips using proprietary technology from both companies.
BMO ANALYST SEES FEDERAL REFORM TAKING TIME: If Democrats take both senate seats in Georgia, any federal cannabis law reform likely take some time considering government bureaucracy and the existence of more pressing issues, BMO Capital analyst Tamy Chen said in a Wednesday note. The analyst believes the U.S. strategy with the most direct and immediate impact for Canadian licensed producers would be a strategic relationship with a multi-state operator, such as Canopy's (CGC) agreement to acquire a controlling stake in Acreage (ACRGF). Chen noted that the rally in licensed producer stocks since the U.S. election has expanded the valuations of all the mainline names.
PRICE TARGET RAISES: Cantor Fitzgerald analyst Pablo Zuanic raised the firm's price target on Canopy Growth on Tuesday to C$33 from C$29 and kept a Neutral rating on the shares, citing U.S. optionality. Zuanic said that given its contingent stakes in Acreage Holdings and TerrAscend (TRSSF), Canopy Growth is arguably the best placed Canadian LP in his coverage universe to benefit from an acceleration in the U.S. cannabis legalization process.
Meanwhile on Thursday, BTIG analyst Thomas Catherwood raised the firm's price target on Innovative Industrial Properties (IIPR) to $218 from $177 and kept a Buy rating on the shares. A Democratic control of the House, Senate, and Executive Branch suggests changes are coming for the cannabis industry, the analyst said. Though he also warns that while the passage of the SAFE Banking Act is now more likely, the process could take much longer than some investors expect. Catherwood still anticipates continued robust cannabis sales, a land rush in states expected to add recreational use, and the return of cannabis sector M&A.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Akerna (KERN), Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Auxly Cannabis (CBWTF), CannTrust (CTST), Canopy Rivers (CNPOF), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), CURE Pharmaceutical (CURR), Delta 9 (VRNDF), Emerald Health (EMHTF), FluroTech (FLURF), General Cannabis (CANN), Greenlane (GNLN), Green Thumb Industries (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), HEXO (HEXO), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), Indus Holdings (INDXF), Inner Spirit (INSHF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen Enterprises (MMNFF), Neptune Wellness (NEPT), Omnicanna (ENDO), Organigram (OGI), Planet 13 (PLNHF), Sproutly (SRUTF), Stem Holdings (STMH), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Valens (VLNCF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Village Farms (VFF), Vireo Health (VREOF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).