October was an absolutely abysmal month for marijuana stocks which experienced a -13% decline, on average, but a handful (only 9 out of a universe of almost 400 marijuana and marijuana-related companies – that’s just 2%) bucked the trend. Here they are and the reasons why they performed so well.
By Lorimer Wilson, editor of munKNEE.com – Your KEY To Making Money!
Dissipation of Negative Vaping Sentiment
The Centers for Disease Control and Prevention investigation into the mysterious wave of lung illnesses related to vaping has found that the 1000+ illnesses – and 36 deaths – were linked to black market vaping products containing THC, not to licensed cannabis companies, As such, the negative sentiment directed at companies involved in the supply of cannabis extract for use in vape pens and the manufacturers of said pens has dissipated with the stocks of most of the vape pen manufacturers bouncing back in price but to a much lesser extent with the stocks of the extract suppliers. In fact, the stocks of the companies that manufacture vape pens increased, on average, by 11.76% in October after a 41.3% decline in September. Those companies are:
- KushCo Holdings (KUSH): +34.5%
- VPR Brands (VPRB): +25.0%
- Greenlane Holdings (GNLN): +15.9%
Legalization of Marijuana-infused Edibles and Beverages in Canada
- AgraFlora Organics (AGRA): +33.3%
- MediPharm Labs (LABS): +22.1%
- BevCann (BEV): +4.4%
The market responded favorably to AGRA’s announcement that its Winnipeg Edibles Facility is all set up to produce a wide assortment of marijuana-infused products which will include gummies, hard candy, and gums; baked goods; flavoured tinctures; gourmet snacks; and CBD-infused pet products with the advent of Cannabis 2.0.
BEV’s announcement that it has entered into a partnership with Capna Intellectual to bring its brand of Bloom vapes to the Canadian market was embraced by the market as an ideal line extension to compliment its planned line of marijuana-infused beverages for the Cannabis 2.0 introduction in mid- to late- December.
LABS, which specializes in cannabis extraction, distillation, purification and isolation,
- signed a private label cannabis concentrate supply agreement with Olli Brands Inc., a manufacturer and marketer of cannabis-infused edibles and teas,
- signed a multi-year agreement to supply TerrAscend Canada Inc. with $27 million of cannabis distillate over 24-months and potentially up to $192 million over 36-months to September 2022 to support the production and launch of its portfolio of branded products in Canada this fall with the advent of Cannabis 2.0 and
- signed a multi-year contract manufacturing agreement for the filling and packaging of vaporizer devices for Cronos Group’s adult-use brand, COVE™.
Outstanding Company Fundamentals
- Trulieve Cannabis (TRUL): +22.8%
- Green Thumb (GTII): +2.8%
Investors responded in a bullish fashion to Beacon Securities analyst Russell Stanley’s reiterated “Buy” rating and price target of C$36.00 per share (currently trading at approximately C$13.50) for TRUL. The company is focused on Florida ( but is expanding into Massachusetts, Connecticut and California via acquisitions) where it already has 34 dispensaries with the goal of having 44 operating dispensaries in the state by the end of the year.
Echelon Wealth analyst Matthew Pallotta, in an October 2 note to clients, elevated GTII to Echelon’s top pick in the cannabis industry maintaining that the company, in contrast to a number of its MSO cannabis peers in the U.S. remains more than fully funded for its stated buildout plans.
Approval of Planned Acquisition
- Cresco Labs (CL): +6.0%
CL confirmed that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (the federal agency steps in with these reviews to make sure mergers, acquisitions and transfers of securities and assets don’t create industry monopolies) had expired on its planned acquisition of Origin House (CSE:OH,OTCQX:ORHOF) for C$1.1 billion and that it was free to close the deal, barring an injunction issued against the transaction by the DOJ. The two firms are now working on closing the deal by November 15th with new terms they can both agree on.