We’re wrapping up another busy week as earnings season ramps up and key cannabis banking legislation moves forward in the United States.
Here’s a recap of the top newsmakers and moments that caught our eye here at Investor Intelligence this week, plus a look at what we’re watching next week:
CannTrust eyes U.S. hemp market
Add Ontario-based CannTrust to the growing list of Canadian cannabis producers eyeing U.S. opportunities.
During the company’s fourth-quarter earnings call on Thursday, CannTrust CEO Peter Aceto told analysts: “We are in active conversation on the hemp side in the U.S. trying to find trusted partners we can work with.”
The passage of the 2018 Farm Bill has paved the way for major Canadian cannabis producers to enter the U.S. market, including Tilray and Canopy Growth.
We believe Canadian operators will continue to be bullish on well-positioned hemp opportunities throughout 2019 as they look to fold U.S. assets into their portfolios.
Cronos misses Wall Street estimates, shares slide
Cronos reported fourth-quarter results Tuesday that missed Wall Street’s revenue estimates for the quarter and full year.
The Toronto-based firm posted revenue of 5.6 million Canadian dollars ($4.2 million) for the period ended Dec. 31, 2018, up nearly 250% from the same period in 2017. Full-year 2018 revenue totaled CA$15.7 million, nearly four times revenue reported for 2017.
The company’s red ink for the year rang in at CA$19.1 million, or 11 Canadian cents a share, compared with net profit of CA$2.5 million in 2017.
Analyst Vivien Azer, managing director at Cowen Securities, had projected full-year 2018 revenue of CA$19.1 million and earnings-per-share loss of 9 Canadian cents.
As we noted in our Rapid Response note to subscribers earlier this week: The company left analysts and investors guessing just how much adult-use marijuana it has sold since the launch of Canada’s adult-use program in October.
“Although we find the lack of adult-use revenue disclosure disappointing, we acknowledge that allocating limited product supply is nonetheless challenging,” Azer wrote in a research note Thursday.
To provide context, Azer noted that Tilray posted $3.9 million in net adult-use sales.
Cronos shares have been sliding since Tuesday. The company’s stock was down more than 2% Friday morning at CA$18.39.
Cannabis banking bill lands key approval
We’ve been closely tracking the Secure And Fair Enforcement (SAFE) Banking Act, which landed a key approval Thursday.
The measure aims to provide federal protection for financial institutions that serve state-authorized marijuana and ancillary businesses.
The U.S. House Financial Services Committee voted 45-15 to advance the bill Thursday, after amending it to include provisions to provide a safe harbor for insurance companies and improve access of financial services to minority- and women-owned cannabis businesses.
A full House vote is expected in weeks.
Banks have largely pushed back at servicing the marijuana industry, leaving companies to operate on a cash-only basis. If this bill is approved, it would mark another landmark moment in marijuana, opening access to traditional banking services for thousands of businesses.
Next Week:
April 1
New York-based iAnthus (CSE: IAN) is slated to report its fourth-quarter results after the market closes April 1. The company will host an earnings call with analysts April 2 at 8:30 a.m. We’ll be listening on the quarter’s results and looking for key details about the company’s progress on its acquisition of MPX Bioceutical, announced in October.
