As another week in cannabis ends, another industry-record deal has investors and observers wondering what’s next.
Here’s a recap of the top newsmakers and deals that kept us busy here at Investor Intelligence – plus a look at what we’ll be watching for next week:
Canopy Growth’s Big U.S. Bet
The bold $3.4 billion bet on Acreage Holdings by Canopy Growth grabbed everyone’s attention. We covered the deal’s details extensively for you in our note to subscribers yesterday.
We’ll be watching closely to see how competitors and investors in Canada and the U.S. respond in the coming weeks.
As M&A activity heats up across the industry, “It’s all about access to capital and cost of capital,” Ben Kovler, CEO at Green Thumb Industries, told me late Thursday.
“I’m interested to see what this deal does for those two metrics.”
GTI is among those said to have been on Canopy’s shortlist of targets – though Kovler wouldn’t comment directly on that topic.
“We look at everything through a shareholder lens, and we’re always talking to people who we think can add value,” he said.
“What this really reinforces is what’s going on right now in the world cannabis markets, which is that the value is in the U.S. operators.”
Investors Flocking to Hemp Sector
The hemp sector – boosted by the Farm Bill’s passage – has raised more than 10 times the amount of capital it lured in from investors this time last year.
To date, the sector has seen a total of almost $137 million raised in 2019, a massive increase from a paltry $12.5 million in 2018, according to data tracked by Viridian Capital Partners.
Check out MJBizDaily‘s Weekly Deal Watch for the latest on this trend and top deals.
Aphria Posts Grim Q3 Earnings
Ontario-based Aphria announced Monday that it posted a net loss of CA$108.2 million its fiscal third quarter 2019, despite a sharp increase in revenue.
According to Aphria’s management discussion and analysis filing, part of what’s behind this is that the distribution segment is growing more rapidly than the cannabis space.
And distribution gross margin is well below that of cannabis – 13.6% and 36.3%, respectively.
The company’s bottom line was also negatively impacted by a $50 million noncash impairment charge related to its acquisition of LATAM Holdings.
Aphria trades under the ticker symbol APHA on the Toronto Stock Exchange and the New York Stock Exchange.
Next Week:
- April 23: Arizona-based Harvest Health & Recreation (CSE: HARV) is slated to report its fourth-quarter and full-year earnings Tuesday before the market opens.
- April 24: Crecso Labs (CSE: CL) will release its fourth-quarter and full-year earning on Wednesday before the market opens.
As always, feel free to reach out to me directly with questions, comments or feedback at lisabk@mjbizdaily.com.
Sincerely,
Lisa Bernard-Kuhn
Editor, Investor Intelligence
