In this week's "Rising High," The Fly's recurring series focused on cannabis stock news, The Fly looks back at an executive departure, a shipment vehicle theft and "Cannabis 2.0" updates.
AURORA CCO STEPS DOWN: Aurora Cannabis (ACB) announced Saturday that Cam Battley had stepped down as chief corporate officer effective December 20, 2019. Additionally on Monday, Aurora Cannabis provided an update on the readiness of its operations with the introduction of new product formats. The company commenced shipments of initial orders received to 10 of Canada's provincial regulators of Cannabis 2.0 products following December 17, however most Canadian consumers will likely not see the products on retail store shelves until early January 2020 due to varied retail operations across the country. Initially the company is providing a variety of CBD and THC vape and edible products, such as gummies, chocolates, baked goods and mints. Following the news, MKM Partners analyst Bill Kirk lowered his price target on Aurora Cannabis to C$2 and kept his Sell rating. The analyst said that the "sudden departure" of one of the industry's "strongest voices" during a period of insider selling and dwindling operating cash does not send a strong message to investors. He added that profitability for cannabis cultivators is expected to get worse before it gets better as pricing decreases and supply continues to grow. Jefferies analyst Owen Bennett also lowered his price target to C$3 from C$7 and downgraded Aurora Cannabis to Hold from Buy. The news is likely to be seen as Cam Battley "jumping ship from a company that has struggled to support credibility on the back of a number of recent actions," Bennett said. The analyst sees credibility as well as funding issues for Aurora Cannabis.
ALEAFIA SAYS SHIPMENT VEHICLE STOLEN: Aleafia Health (ALEAF) announced Friday it had received an update from a third-party transportation company regarding a shipment of Aleafia Health's packaged, finished cannabis products intended for the adult-use market. The authorized carrier was in possession of the company's cannabis products and was contracted to deliver the shipment to provincial wholesale facilities in the next week. On December 20, 2019 the carrier notified Aleafia Health that the transportation vehicle containing the shipment had been reported stolen from the carrier's facility. The third-party carrier has filed a police report, and is cooperating with the ongoing investigation. The company said the value of the shipment is not material.
CRESCO LABS INITIATED WITH BUY: Roth Capital analyst Scott Fortune initiated coverage of Cresco Labs (CRLBF) on Friday with a Buy rating and C$12 price target. The company is executing on a consumer packaged goods strategy of branded products and wholesale distribution in 11 pro-forma states, Fortune said, adding he believes Cresco is on track to produce "robust" revenue growth, expanded margins, and "meaningful" profitability.
DELTA 9 ACHIEVES RECORD RETAIL SALES FOR DECEMBER: On Monday, Delta 9 Cannabis (VRNDF) provided investors with an update on the Company's initial sales of new "cannabis 2.0" products in its Manitoba retail stores. The company said, “Month to date the Company has achieved record retail sales for December 2019 and these results were improved by $52,957 in Cannabis 2.0 product sales over the past 5 days, or approximately 9.5% of overall sales for the week. The product mix of 2.0 products based on sales has been 51% vapes and 49% edibles. The Company has achieved an average Gross Margin of 31% on sales Cannabis 2.0 products.” Delta 9 stores have received a wide variety of edibles and is beginning to gather retail analytics from existing sales to monitor consumer preference of the new 2.0 product line to manage the supply chain, inventory controls and product mix.
ORGANIGRAM RELEASES ‘CANNABIS 2.0’ PRODUCTS: Organigram (OGI) announced Monday that the first of its 'Cannabis 2.0' products have been released, including Trailblazer Spark, Flicker and Glow 510-thread Torch vape cartridges. Shipments of the custom-designed cartridges were sent to Manitoba, Saskatchewan, Ontario, New Brunswick and Nova Scotia, starting December 17, from the company's Moncton production campus. The release is the first of the company's planned and staggered rollout of vaporizable products, including Edison + Feather ready-to-go distillate pens and Edison + PAX ERA distillate cartridges. The company's next-generation product portfolio includes high-quality infused chocolate and a dissolvable powdered beverage product, designed using nanotechnology for faster onset of cannabinoids. Planned releases of Organigram's edible products are anticipated through calendar Q1 and Q2 of 2020.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aphria (APHA), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), Cronos Group (CRON), CV Sciences (CVSI), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), General Cannabis (CANN), Greenlane (GNLN), GrowGeneration (GRWG), Harborside (HSDEF), Harvest Health & Recreation (HRVSF), Hemp Inc. (HEMP), Hexo (HEXO), India Globalization Capital (IGC), Indiva (NDVAF), ICC International Cannabis (WLDCF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen Enterprises (MMNFF), Origin House (ORHOF), Planet 13 Holdings (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Westleaf (WSLFF) and Zynerba (ZYNE).
