Bottom Line: 230,000 acres is anticipated to be planted this year, up from 78,000 final year. This substantially hemp will yield at least 1.eight million kgs of concentrated CBD oil worth $90 billion! at existing retail costs of ~$50/gram. For reference, CBD sales are estimated to be only $1 billion in 2019 and $two billion by 2020. Get prepared for pricing to fall.

Supply: Brightfield Group, Hemp Small business Journal

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Bottom Line: An outstanding report from Marijuana Small business Every day hunting at the dysfunctional regulatory policies in South America. Colombia, for instance, does not even have a functioning health-related marijuana industry but. Investors in Colombia LP’s want to make positive they are comparing reality against the future promised by management teams.Marijuana - Colombia - MJ

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Bottom Line: The use of unsafe thickeners in black industry vapes is a critical situation, nevertheless from a industry share point of view the widespread media coverage of this difficulty need to drive the customer into the legal industry. The legal industry need to be spending much more time educating customers on the critical overall health dangers from consuming unregulated cannabis as it is the single greatest promoting point of getting legal cannabis in our opinion.

mj - weed products vaporizer

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Bottom Line: We believe federal legalization has a excellent possibility of taking place for the duration of Donald Trump’s second term (assuming he serves a second term). A crucial mass of state politicians will ultimately push a legalization bill by means of the Senate by 2022, in our opinion.

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Bottom Line: The math on CannTrust performs like this. As a going concern, the stock is worth at least C$five/sh. The liquidation worth is about C$two.40/sh excluding lawsuit liability. We are hearing there is a possibility, nevertheless compact, that Well being Canada makes it possible for the business to sell itself with licenses intact or would present a route for an acquirer to win back licenses on the facilities. The possibility of upside explains why the stock is not trading under C$1/sh.

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Bottom Line: Thailand surprisingly is now top Asia in cannabis reform. 334 permits have been issued so far but to safeguard the market the government is only permitting nearby license holders to develop and sell cannabis for the initially 5 years of legalization.mj

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Bottom Line: With the president and the head of the justice committee on board for recreational legalization, there is a excellent possibility Mexico beats the U.S. to complete legalization of cannabisMarijuana - Mexico

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The cannabis sector had its initially week in the green in months, increasing by 7.four%. The U.S. MSO’s have been up 7%, outperforming the Canadian LP’s by two.six%, nevertheless, inside Canada, the six biggest LP’s rose 11% outperforming the group.

The worldwide cannabis index has rebounded and is now up six% for the year, although the U.S. producers are nonetheless down 15%. We will be watching closely the subsequent couple of weeks to see if U.S. stocks continue outperforming Canadian peers as this could signal a shift in investor dollars and consideration.

A possible catalyst to watch is a U.N. meeting in March 2020 to potentially deschedule cannabis as a schedule 1 drug. If this goes by means of with America’s blessing it could set the wheels in motion for federal legalization sooner than later.

The all round marijuana index outperformed the S&P and TSX by five.six and six.eight% this week but has underperformed by 12% YTD.

Supply: New Cannabis Ventures

Industry Outlook

We nonetheless believe a stabilization in the worldwide economy and the coming legalization of edibles in Canada could buoy the sector top into initially sales in December.

With the sector down 36% given that Might and underperforming the broader industry by 37%, we believe there is a excellent possibility the sector rebounds into the finish of the year as extended as worldwide financial information does not take a turn for the worse.

Canadian LPs are nonetheless stuck in a legal industry increasing slower than investors anticipated, creating it tough to show the income development embedded in their trading multiples. LPs are displaying slow development in 2019 and even with the 2020 rollout of edibles, vapes, and topicals development is unlikely to exceed 150% in 2020. U.S. operators in comparison are increasing income 150%-300% in 2019 and at related prices or superior in 2020.

Longer-term, with the Canadian industry legalized, we count on retail and wholesale value compression or unsold inventory from a legal oversupply by the finish of 2019. Falling cannabis costs or an inability to sell all of what is grown will stress producer stocks in 2020. Soon after a shakeout, the remaining stocks will be superior positioned as extended-term getting possibilities.

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