Money and Marijuana are the two green substances that are very important for all the investors in Canadian. From the beginning of the Year Horizons Life sciences ATF is having an assortment of around four dozen pot stocks of different weights than tripled the performance of the product.
ArcView Market Research and BDS Analytics analyzed the situation that Global weed sales are hitting $12.2 billion in the year 2018, and also it was expected that it would grow up to 38% in next year. After that, they stated that the investors would continue to pile into the pot stocks. On the other side, one should know that most of them are expecting to do online platform for trading cannabis in order to improve the weed sales.
The latest regulation is consolidation
The first stage of growth is capacity expansion. After capacity expansion, it is important for the industry to provide proper attention towards the next phase that is consolidation. In recent months there is a great variety of deals among the dispensary operators in the United States. The quick rundown is given as:
- Harvest Health & Recreation is acquiring privately held Verano for $850 million in stock;
- Cresco Labs is purchasing Origin House for an estimated $823 million in stock;
- MedMen Enterprises is purchasing privately held PharmaCann for $682 million in stock;
- iAnthus Capital Holdings bought MPX Bioceutical for around $600 million; and
- Canopy Growth is acquiring Acreage Holdings for $3.4 billion in a cash-and-stock deal, contingent on the U.S. legalizing cannabis at the federal level.
The real consolidation time has now occurred among the Canadian port growers. And it is expected that in the next upcoming year the three marijuana stocks will look to be the surest bets.
Hexo has faced a lot of aggressiveness after acquiring the new strike brands at the cost of $197 million. Purchasing it will be a great opportunity. A potential bidder will get several advantages after purchasing Hexo, and the first one is Added Capacity. HEXO is already on the track for 108,000 kilos with around 1.3 million square feet of growing space.
Additionally, with the latest purchase of Newstrike, it will add around 42,000 more kilos. HEXO is approximately the sixth-largest producer in Canada with a track of 150,000 kilos annually. And in case the demand exceeds then HEXO could quickly boost the capacity through rolling the size by 2020.
Secondly, among all the Canadian Growers HEXO is among the most de-risked portfolios. Several people think that it is impressive for HEXO to have annual provincial supply deal of Canopy Growth’s 70,000 kilos then you should consider the sales of the home province of Quebec in April 2018. Over 05 years, there is a requirement of at least 200,000 kilo supply deal. There should be an option of the 06th year and also the amount should increase annually. Since it is analyzed that the HEXO Production will not speed up till 2019, also it is expected that the deal will represent approximately 30% of its output through 2023.
Thirdly, there is a brand name partner of HEXO in Molson Coors Brewing (NYSE: TAP). In early August, the joint venture named Truss (57.5%-42.5% joint venture) is expected to develop, manufacture, and distribute nonalcoholic cannabis-infused beverages in the upcoming era.
Finally, Last year in an interview with the Montreal Gazette, the Chief Executive Officer of HEXO Mr. Sebastien St. Louis stated that last year HEXO was for sale at a special price. St. Louis said, “In five years there may be four global cannabis companies and whether HEXO is a buyer or a seller on that journey, what matters to us is for our shareholders to participate in that to become one of the four… It’s certain that if someone comes and offers a 150 percent premium tomorrow, we are for sale.”
The first and foremost thing to note about OrganiGram is that it provides a vast amount of geographic diversity. In Canada’s Eastern provinces and territories, it is the primary grower with an annual capacity of 113,000 kilos at its Moncton, New Brunswick, campus. Atlantic Provinces do not have as much population as Ontario or British Columbia. The studies have shown by fourth-quarter National Cannabis Survey states that the rate of adult-use cannabis is much higher in the New Brunswick, Prince Edward Island, Nova Scotia, and Newfoundland and Labrador. This is one of the best news for any potential suitor, especially for OrganiGram.
OrganiGram also focuses on higher-margin derivative products. Recently a second-quarter operating result has been released stating that at Moncton, the company has begun refurbishing 56,000 square feet. Also, factors like added extract capacity and edibles development also have an important role. Additionally, OrganiGram believes that a faster-onset beverage formulation for infused-cannabis drink will be developed and for that it is also looking for an experienced beverage partner. With nothing going on outside of Moncton, NB, OrganiGram’s ultimate objective is likely an obtaining at a strong premium.