This is individual research and does not constitute investment advice.
With each passing week, the U.S. moves closer to being like Canada – entering a post-prohibition era.
Last week, another domino fell… Alabama’s Senate Judiciary Committee approved legalizing medical marijuana 6-2.
At the moment, the measure sets a THC cap at 3% and calls to form a Medical Cannabis Commission that would begin issuing licenses and rules by January 1, 2021. It now moves to the Senate floor for a vote.
There’s another medical marijuana bill pending in Alabama’s House of Representatives. But it hasn’t received a vote yet.
Speaking of medical marijuana, the Arizona Department of Health Services just released March sales figures.
And the trend was exactly what we wanted to see.
The Grand Canyon state’s dispensaries sold 12.9 million pounds of medical marijuana. By far, the No. 1 condition cannabis was used to treat was chronic panic, accounting for nearly 88% of all patients. No surprise, considering what we heard from the Association of Cannabis Specialists’ Dr. Jordan Tishler in last week’s CannaBiz Now!
I’ll admit, it does seem strange there was no record-breaking acquisition last week.
But we did have CBD maker Elixinol (OTC: ELLXF) take a 25% stake in AltMed LLC. This is a move to corner the cannabis pet care market.
You see, 65% of pet CBD sales originated from AltMed’s Pet Releaf hemp-derived CBD pet line.
This is a booming trend we’re seeing in the industry, going after the $75 billion pet care market. And in Thursday’s CannaBiz Now! I will talk about this specifically with a leading veterinary cannabis expert.
In other deal news, Valen GroWorks (OTC: VGWCF) and Hexo Corp. (NYSE: HEXO) signed a two-year agreement. Hexo will provide 80,000 kilograms during that time to Valen to process.
Valen and Hexo – along with the majority of last week’s High Five, including TerrAscend (OTC: TRSSF) – were some of the only cannabis stocks to see green last week.
TerrAscend was on our radar because of earnings. And it reported strong fourth quarter results.
And because ‘tis the season, we’re focusing on earnings once again this week…
The High Five
Below are this week’s High Five, where – each Monday – I cover the five pot stocks I believe will make major moves – up or down – in the week ahead:
1) Planet 13 Holdings (OTC: PLNHF) reported record-breaking 4/20 sales. The company’s Las Vegas Superstore dispensary saw 6,000 visitors (3,500 paying customers) with an average purchase of $91.
That’s more than $318,000 in sales.
In March, the company reported $5.5 million for the month, with an average purchase of $89.
On top of that, it announced its Phase 2 expansion is well underway and scheduled to open in the third quarter. This includes a bistro, coffee shop, event space and consumer-facing production facility.
Planet 13 will report fourth quarter earnings on Tuesday morning, before the opening bell.
2) GTEC Holdings (OTC: GGTTF) announced its GreenTec is the No. 1 selling product on CannMart’s site. The company’s average selling price is $5.86 per gram against an all-in cash cost of $1.11.
For 2019, GTEC is projecting to sell 2.5 million grams for an estimated $12.5 million in revenue. But it’s in supply negotiations with several of the top five Canadian licensed producers (LPs). This is a situation to watch.
3) Harvest Health & Recreation (OTC: HRVSF) reported fourth quarter revenue shot up 135% to $16.9 million. And this was a 52% increase from the $11.2 million the U.S. multistate operator saw in the third quarter.
Even better… gross profit increased 342% to $7.6 million.
Now, for 2018, Harvest Health reported a net loss of $67.5 million. But $50.7 million of that was a nonrecurring, noncash fair value charge as debt was converted to equity. Shares saw a nice pop on the report but then dipped to end the week.
Shares have recently seen resistance above $10. But they look attractive on the dips.
4) Medicine Man Technologies (OTC: MDCL) delayed its fourth quarter earnings report until Tuesday after the closing bell.
This isn’t a bad thing.
The company thought it would be beneficial to wait until after the legislative insights on Colorado state bill HB 19-1090. This bill would allow public company ownership of Colorado licensed cannabis businesses.
Back in January, Medicine Man Technologies announced its intent to acquire Medicine Man Denver. The company has four retail locations and one of the largest indoor cultivation operations in the state.
This would help Medicine Man Technologies reach annual revenue of more than $40 million. But it needs HB 19-1090 to be approved for this to happen.
As the future of this bill is being decided now – and Medicine Man Technologies is poised to be a major beneficiary of passage – the company thought it prudent to delay earnings.
5) Hemp Inc. (OTC: HEMP) is a true penny pot stock. But I’ve been asked about this one fairly frequently, so I figured I’d spotlight it.
First, it’s teeny tiny.
But it is the first all-hemp publicly traded company. It also recently released that revenue for 2018 grew 1,800% to $1.9 million! Though the majority of that came from a massive fourth quarter where it saw $1.6 million in revenue.
CEO Bruce Perlowin, who posts daily updates on his Facebook page, said he believes 2019 will be a breakout year for the company.
The one obstacle is Hemp’s market cap is a mere $20 million and shares trade for roughly $0.025. That gives you some idea of the float – more than 750 million shares. And trading volume is a robust 22 million per day. Excessive liquidity is the primary obstacle for investors.
As always, we want to compare our High Five to the industry’s benchmark…
Over the past month, the Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) has slipped roughly 8%…
The broader cannabis sector has largely struggled, weighed down by earnings from the Canadian LPs.
But we see that Planet 13 continues to soar and run away from the pack, as the company announces one record-breaking performance after another.
Medicine Man Technologies is also up more than 50% in the past month.
And even though Harvest Health and GTEC have declined over the past month, they’ve outpaced the marijuana ETF.
If you have a pot stock in mind that you’d like me to discuss here, leave the ticker symbol in the comments section.
Here’s to high returns,
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Source: Energy & Resources Digest