In this week's "Rising High," The Fly's recurring series focused on cannabis stock news, we look back over a U.S. entry plan, a pharma partnership and a facility expansion.
CANNTRUST ANNOUNCES JV IN CALIFORNIA: CannTrust (CTST) announced Wednesday it is establishing operations in the U.S., starting in California. CannTrust has signed a non-binding letter of intent that will provide access to over 3,000 acres of farmland for hemp production with Elk Grove Farming Company to secure low-cost hemp with high cannabidiol content. CannTrust and Elk Grove will each have 50% ownership of a new entity. CannTrust will guarantee the off-take of biomass produced by the JV and will use its expertise to process, formulate and sell hemp-derived CBD products in U.S. markets where such sales are lawful. This initiative is the first step in CannTrust's development of full-scale U.S. operations. Prior to commercial scale cultivation from the venture in 2020, the company plans to execute on its processing strategy from the biomass produced from the venture, and its product development strategy. Investment in the U.S. operation is expected to be up to $20M through to the end of 2020. This level of capital investment assumes starting with up to 300 acres for cultivation in 2020. Commercial operation of the JV is targeted to begin in 2020, subject to local regulatory approval.
CANOPY GROWTH PARTNERS WITH CURE PHARMACEUTICAL: CURE Pharmaceutical (CURR) announced Wednesday it is collaborating with Canopy Growth Corporation (CGC) to develop a new low-dose cannabidiol oral thin film using CURE's patented CUREfilm technology for global distribution. CURE is registered with the U.S. Drug Enforcement Agency to develop and manufacture cannabis-derived and synthetic cannabinoid-based products using its CUREfilm technology at its facility in Oxnard, California. Additionally, Canopy Growth announced Monday it has entered into a multi-year agreement with Colombia-based Procaps. Through the agreement, Canopy Growth will leverage Procaps' formulation and encapsulation capacity. Furthermore, the company announced Wednesday that its shareholders voted in favor of the issuance of common shares of Canopy Growth and certain amendments in connection with the company's proposed acquisition of Acreage Holdings (ACRGF).
COMPASS POINT LOWERS TILRAY PRICE TARGET: Compass Point analyst Rommel Dionisio lowered his revenue and earnings estimates for Tilray (TLRY) on Monday and cut his price target on the shares to $38 from $41. The analyst said a press release issued by the Canadian government Friday effectively delays the introduction of advanced forms of cannabis until at least mid-December 2019, at the earliest. Licensed cannabis companies must give Health Canada 60-days notice of their intent to sell products such as vapes, beverages, or edibles, but the government will not be accepting any such applications until Oct. 17, noted Dionisio, who keeps a Neutral rating on Tilray shares.
INNOVATIVE INDUSTRIAL PROPERTIES ANNOUNCES LEASE EXPANSION: Innovative Industrial Properties (IIPR) announced Wednesday that it entered into an amendment of the lease with Green Peak Industries, in Dimondale, Michigan, making available an additional $18M in funding for expansion of their cannabis cultivation and processing facilities. The amendment also adjusted the base rent under to take into account the additional available funding and extended the term of the lease agreement. Assuming full payment of the additional funding, IIP's total investment in the property will be $31M. Following the announcement, BTIG analyst Thomas Catherwood raised his price target to $148 and kept his Buy rating on the stock. The analyst noted that the announcement reflects the company's "unique position" to capitalize on a "strategic capital partner" role amid the cannabis industry's "race for growth" trend going forward. Catherwood adds that Green Peak is likely not alone in seeking strategic capital partners to expand cannabis operations in Michigan and Florida.
BIOME GROW GETS SLGA APPROVAL FOR CANNABIS SALES: Biome Grow (ORTFD) announced Monday that it has been conditionally approved for commencing retail sales of cannabis in the province of Saskatchewan with the cannabis being supplied by Biome's wholly-owned subsidiary, Highland Grow.
OTHER CANNABIS STOCKS: Publicly-traded companies in the space include Aphria (APHA), Aurora Cannabis (ACB), MedMen Enterprises (MMNFF), Origin House (ORHOF), KushCo (KSHB), Cronos Group (CRON), MediPharm Labs (MLCPF), CV Sciences (CVSI), General Cannabis (CANN), India Globalization Capital (IGC), ICC International Cannabis (KNHBF), Indiva (NDVAF), OrganiGram (OGRMF), Elixinol Global (ELLXF), Planet 13 Holdings (PLNHF), Wayland Group (MRRCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), Sunniva (SNNVF), DionyMed Brands (HMDEF), Sproutly (SRUTF), GrowGeneration (GRWG) and Harvest Health & Recreation (HRVSF).
