Cannabis stocks have shown some bright signals so far in 2022, most particularly in February, when the Secure and Fair Enforcement (SAFE) Banking Act passed the US House of Representatives (for the sixth time). There is new hope that the bill will finally make it through the Senate this time around.
If SAFE passes, it will be an enormous step toward fully legitimizing the cannabis industry on a Federal level and helping to push it further into mainstream US consumer daily life.
Rep. Ed Perlmutter (D-CO) has been the main force pushing SAFE through DC channels for the past few years. His latest attempt will work to enfold the bill into a large-scale manufacturing and innovation bill with language related to the cannabis industry attached.
What’s the main hurdle in the Senate? It’s actually that Senate leaders have prioritized a broader path to full federal legalization rather than the SAFE act, which leaders see as an incremental step that could undermine pressure to fully legalize.
Either way, there’s a long-term legislative tailwind for the cannabis industry, and for stocks tied to the space.
Given their depleted valuations after years of consolidation, 2022 could be coming into focus as a pivotal investment opportunity for market participants seeking exposure to the space. With that in mind, we take a look below at some of the most interesting names in the cannabis space.
GrowGeneration Corp. (NASDAQ:GRWG) engages in the retail of hydroponic and organic specialty gardening products. The comapny offers lighting fixtures, nutrients, seeds and growing media systems, trays, fans, filters, humidifiers and dehumidifiers, timers, instruments, water pumps, irrigation supplies, and hand tools. GrowGeneration Corp. (NASDAQ:GRWG) recently announced the acquisition of Horticultural Rep Group (HRG).
“With this acquisition, GrowGen is strengthening its global product supply chain and adding significant distribution of its growing list of private label products,” said Michael Salaman, President and co-founder of GrowGen. “Keith Harrington is one of the most respected executives and one of the early innovators of the U.S. modern horticultural market. We are excited that he will contribute his multi-decade expertise to the GrowGen team.”
Even in light of this news, GRWG hasn’t really done much of anything over the past week, with shares logging no net movement over that period.
GrowGeneration Corp. (Nasdaq:GRWG) managed to rope in revenues totaling $116M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 110.9%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($93M against $72.5M).
Cannabis Global Inc. (OTC US:CBGL) bills itself as an emerging force in the cannabis marketplace with a growing product and proprietary intellectual property portfolio.
The company produces and markets the Comply Bag, an innovative solution for cannabis storage, transport, and tracking. It also has an interesting subsidiary, Natural Plant Extract (NPE), licensed in Southern California as a cannabis manufacturer and distributor. NPE licenses its tech to partners for the production of edibles for the cannabis marketplace. CBGL has also filed three non-provisional and multiple provisional patents for cannabis infusion and nanoparticle technologies and continues an active research & development program.
Cannabis Global Inc. (OTC US:CBGL) most recently put out very interesting news related to a key enhancement to its cannabis manufacturing capabilities at NPE. The Company’s new production unit, named “213 Solventless Labs”, will specialize in producing solventless cannabis products like hash and rosin as well as solventless vape cartridges, and cannabis edibles. Operations have already begun with recent equipment installations.
“It is with great pride that we announce the production of super premium concentrates at our Lynwood facility,” CEO Arman Tabatabaei comments, “The art and science elements combined within this process allow us to produce some truly extraordinary products for the consumer cannabis markets.”
According to the company’s release, CBGL’s solventless extraction methods use water, ice and heat to extract the desirable components from cannabis plants. This process doesn’t produce any byproducts or harmful chemicals found in other types of extracting solvents like butane, which can alter taste profile and affect the end-user’s experience with the product.
Cannabis Global Inc. (OTC US:CBGL) shares have been sliding and could now be extremely cheap relative to peers given that the company does have commercial-stage operations and has put together a very compelling IP portfolio. Its new 213 Solventless Labs strategy could be the key to sparking a tipping point where market sentiment is concerned, especially if we start to see investment dollars flowing back into cannabis plays early this year as federal legislative momentum picks up.
Tilray Brands Inc. (Nasdaq:TLRY) bills itself as a global cannabis-lifestyle and consumer packaged goods company with operations in Canada, the United States, Europe, Australia, and Latin America.
The firm is focused on medical cannabis research and the cultivation, processing, and distribution of cannabis products worldwide. Its products include dried cannabis and cannabis extracts. It operates through the following segments: Cannabis and Hemp. The Cannabis segment consists of adult-use, medical and bulk sales of cannabis under regulated licenses and sold to retail, wholesale, pharmacy, government, and direct to patient. The Hemp segment consists of hemp seed, hemp foods, and broad-spectrum hemp extract containing CBD, which are sold in an unlicensed operation and sold to retail, wholesale and direct to consumers.
Tilray Brands Inc. (Nasdaq:TLRY) recently announced that its medical cannabis division, Tilray Medical, has completed its first sale of medical cannabis in Malta. Tilray’s EU-GMP medical cannabis products are now available in pharmacies across Malta, providing patients with safe and reliable access to high-quality medical cannabis.
Denise Faltischek, Tilray’s Chief Strategy Officer and Head of International Business, said, “As demand for cannabis continues to grow across Europe, we’re incredibly proud to partner with established and reliable distribution partners to supply new markets with high-quality medical cannabis which patients can rely on.”
We’ve witnessed flat action in the stock over the past month. It continues to trade under its 50-day moving average, but off its lows from January in the key $5/share area. Volume in TLRY has been steady.
Tilray Brands Inc. (Nasdaq:TLRY) currently trades at a market cap of $2.75 billion, with a significant war chest ($331.8M) of cash on the books, which compares with about $314.9M in total current liabilities. TLRY is pulling in trailing 12-month revenues of $431.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 207.8%.
Other key stocks in the cannabis marketplace include Trulieve Cannabis Corp. (OTC US:TCNNF), Innovative Industrial Properties Inc. (NYSE:IIPR), Sundial Growers Inc. (Nasdaq:SNDL), Village Farms International Inc. (Nasdaq:VFF), and AdvisorShares Pure US Cannabis ETF (NYSEArca:MSOS).
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