There are two dimensions to the cannabis investment theme: the commodity market’s boom and bust cycle, and the legislative “arrow” of time.
The former is often working against investors but over a shorter time frame. It has to do with the frequent tendency for some of the biggest players to overleverage balance sheets in a gold-rush effect, and then get caught with their pants down when there are suddenly many more big players and supply is glutting.
The latter is always working for investors. Period. That fact seems to be confirmed around every important corner. It’s as if there were drama, and then the scoreboard comes up the same. Time after time. It’s legalized far more than not. Except at the national level, and we’ll get to that.
Both of these dimensions are occasionally lined up in harmony. And the stocks in the space boom higher, especially when risk assets are generally favored. But we would also point out – as outlined in the story below about Eco Innovation Group (OTCMKTS:ECOX) – that technology and innovation is also factor.
In any case, as promised: the federal level prohibition against possessing or selling marijuana is seen as a roadblock to national movement that once-and-for-all ends this snail’s pace state-by-state process of gradual creeping legislative overhaul towards legalization.
But the tenor of recent language from the highest court in the land is promising for legalization advocates. According to a recent piece on CNBC.com:
“Supreme Court Justice Clarence Thomas on Monday said that federal laws against the sale and cultivation of marijuana are inconsistent, making a national prohibition unnecessary. ‘A prohibition on interstate use or cultivation of marijuana may no longer be necessary or proper to support the federal government’s piecemeal approach,’ Thomas, one of the court’s most conservative justices, wrote in a statement. The court’s decision not to hear a new case related to tax deductions claimed by a Colorado medical marijuana dispensary prompted Thomas to issue a statement that more broadly addressed federal marijuana laws.
This is a bold step, and it may come to have important consequences for stocks in the space, such as cbdMD Inc (NYSEAMERICAN:YCBD), Curaleaf Holdings Inc (OTCMKTS:CURLF), Eco Innovation Group (OTCMKTS:ECOX), Tilray Inc (NASDAQ:TLRY), GrowGeneration Corp (NASDAQ:GRWG), Canopy Growth Corp (NASDAQ:CGC), Aurora Cannabis Inc (NASDAQ:ACB), Medical Marijuana Inc (OTCMKTS:MJNA), and ETFMG Alternative Harvest ETF (NYSEARCA:MJ)
We take a closer look at some of the more interesting stories in the space below.
Eco Innovation Group (OTCMKTS:ECOX), as noted above, is perhaps the most interesting name on this list because it hasn’t anywhere near as much market awareness as the other names, but it may be developing a piece of technology that stands to redefine much of what the other names are currently hoping to do.
The company is an incubator for innovations that stand to advance green technology. This mostly seems to apply to sustainable or renewable energy solutions. Even in its latest case – an advancement in bioactive compound extraction with applications in the cannabis and CBD space – it is finding an alternative to CO2.
Eco Innovation Group (OTCMKTS:ECOX) recently announced coverage in Chemical Engineering magazine’s online portal, ChemEngOnline.com, of the Company’s breakthrough glycerin-based supercritical extraction technology. The article may be found ChemEngOnline.com/supercritical-glycerin.
According to the company’s release, the article features a strong overview of the technology, including how it is unique and differentiated in the marketplace for equipment designed to extract natural bioactive product compounds from plants, such as cannabidiol (CBD), tetrahydrocannabinol (THC), and other active compounds from Cannabis sativa plants.
The article also contains commentary from the extractor’s inventor, and ECOX advisory board member, Demitri Hopkins: “Most processes using supercritical fluids — such as carbon dioxide — to extract plant products end up with highly viscous products that are difficult to work with. The glycerin concentrates generated from this system can be used directly in a range of products, and allow standardized concentrations of the target compounds.”
That last sentence in the quote is probably the most important. You can’t standardize concentrations with current extractors.
As noted in the article, the intellectual property behind the glycerin extraction technology has been exclusively licensed to ECO Innovation Group, and fabrication of the prototype is underway at Fluitron Inc. (www.fluitron.com).
“We are excited to receive such favorable coverage in such a highly esteemed and widely respected industry publication, and we continue to be so grateful to have access to Demitri’s brilliant mind, both through this breakthrough in extraction technology and as our valued advisory board member,” commented Julia Otey-Raudes, CEO of ECO Innovation Group.
Eco Innovation Group (OTCMKTS:ECOX) have recently found key support above the $0.025 area, which has held on rising volume over the past six weeks.
cbdMD Inc (NYSEAMERICAN:YCBD) promulgates itself as a company that produces and distributes various cannibidiol (CBD) products. It owns and operates the consumer hemp-based CBD brand, cbdMD. The company’s product categories include CBD tinctures, capsules, gummies, bath bombs, topical creams, and animal treats and oils. It also offers pet related CBD products under the Paw CBD brand name.
The company distributes its products through an e-commerce Website, wholesalers, and various brick and mortar retailers in the United States.
cbdMD Inc (NYSEAMERICAN:YCBD) recently announced that its recently formed subsidiary, cbdMD Therapeutics, has begun a collaboration with researchers at the Colorado State University (CSU) veterinary program, to explore the effects of the Company’s patent pending, proprietary cbdMD branded cannabinoid blend on dogs that suffer from osteoarthritis.
“It has been estimated that one in five dogs are diagnosed with osteoarthritis in their lifetime. With almost 1 billion dogs globally and over 75 million in the US, osteoarthritis effects millions of our loved ones. Paw CBD is committed to providing products that can improve our pet’s quality of life and provide relief for joint discomfort for the millions of pets who suffer from this disease. Our partnership with CSU will serve as the foundation for future work where we will explore the clinical impact of our proprietary broad spectrum cannabinoid blend on pain and mobility in our pets,” said Martin Sumichrast, Chairman and Co-CEO of cbdMD, Inc.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action YCBD shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -6% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -14%.
cbdMD Inc (NYSEAMERICAN:YCBD) managed to rope in revenues totaling $11.8M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 25.5%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($24.7M against $6.9M).
Curaleaf Holdings Inc (OTCMKTS:CURLF) operates as a holding company with interest in medical and wellness cannabis operations. It operates through the Cannabis Operations and Non-Cannabis Operations segments. The Cannabis Operations segment includes the production and sale of cannabis via retail and wholesale channels.
The Non-Cannabis Operations segment provides professional services including cultivation, processing and retail know-how and back-office administration, intellectual property licensing, real estate leasing services and lending facilities to medical and adult-use cannabis licensees under management service agreements.
Curaleaf Holdings Inc (OTCMKTS:CURLF) recently announced the opening of Curaleaf Edgewater Park, the Company’s second dispensary in New Jersey and 107th dispensary nationwide. In addition, the Company announced that its second New Jersey cultivation facility, located in Winslow, completed its first harvest and is now fully operational. The new site has tripled Curaleaf’s cultivation capabilities to serve both the existing New Jersey medical market and the forthcoming adult-use market.
“We are thrilled to grow alongside New Jersey’s flourishing medical community and expand access to best-in-class cannabis products to patients in Edgewater Park,” said Joe Bayern, CEO of Curaleaf. “We continue to work closely with state leadership and regulators to create a successful and sustainable adult-use market, and our expansion positions us to meet the market’s increasing needs while creating hundreds of new jobs in the state.”
The stock has suffered a bit of late, with shares of CURLF taking a hit in recent action, down about -4% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -6%.
Curaleaf Holdings Inc (OTCMKTS:CURLF) managed to rope in revenues totaling $329.6M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 154%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($395.4M against $299.1M).
