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$LRSV: 4 Cannabis Stocks To Consider after House Votes to Decriminalize Cannabis
Click here:
http://premarketbuzz.com/4-cannabis-stocks-back-in-focus-after-house-votes-to-decriminalize-cannabis
Link Reservations Inc is CBD Petcare provider dedicated to improving the health and life conditions of pets worldwide. Developing and marketing hemp-based CBD products for cats, dogs and horses, the Company is currently present in Europe and in the US. A pioneer in the area, Link Reservations Inc products can be found under its brand LinkResPets (http://www.linkrespet.com).
>>> Aphria and Tilray Combine to Create World's Biggest Cannabis Company
Two of North America's biggest cannabis companies combine into global giant.
Investopedia
By DEBORAH D'SOUZA
Dec 16, 2020
https://www.investopedia.com/aphria-and-tilray-combine-to-create-world-s-biggest-cannabis-company-5092540?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral
Tilray and Aphria announce merger to create $3.9 billion giant
Combined revenue is $685 million over the last year
Deal to enhance U.S. and international presence
Approx C$100 million of annual pre-tax cost synergies expected within 2 years
Canada's Tilray and Aphria have announced they will be merging in an all-stock deal that creates the world’s largest cannabis company by sales. Tilray shares listed on the Nasdaq index were up nearly 30% in pre-market trading on the news.
The combined company has equity value of $3.9 billion and revenue of $685 million in the last 12 months. It will operate under the name "Tilray" and trade under the "TLRY" ticker on the Nasdaq index. Under the terms of the deal, Aphria, the larger of the two, will pay a 23% premium to Tilray’s December 15 closing price of $7.87 and its shareholders will own 62% of Tilray’s stock. Aphria CEO Irwin Simon will be the group's chairman and CEO, and Tilray CEO Brendan Kennedy will become a board member.
"We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” said Simon in the press release. Approximately C$100 million of annual pre-tax cost synergies is expected within 24 months of the completion of the transaction.
The merger is said to create an "unrivaled European platform." Tilray has a 2.7 million square foot, state-of-the-art medical cannabis production facility in Portugal which provides tariff-free access to the European Union. Aphria currently has a medical cannabis distribution subsidiary in Germany.
The deal also targets growth in the U.S. with consumer packaged goods brands SweetWater Brewing Company and Manitoba Harvest. Bloomberg sources say the new headquarters will be moved to the U.S. as sales increase in lockdown and more states legalize the product despite it being illegal under federal law.
And there's plenty of reasons to legalize it, especially as state revenues suffer during the pandemic. Illinois just revealed it raked in $22.88 million in taxes related to cannabis sales in October, almost equal to the $25.74 million it took in from alcohol sales taxes. Illinois became the 11th state to legalize marijuana for recreational use in January this year. The November elections saw four more states (New Jersey, Arizona, South Dakota, and Montana) vote to fully legalize marijuana, but enactment of the bills is pending.
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>>> GrowGeneration Acquires California-Based Grassroots Hydroponics, Expands Footprint in Southern California
Yahoo Finance
December 15, 2020
https://finance.yahoo.com/news/growgeneration-acquires-california-based-grassroots-130000662.html
DENVER, Colo., Dec. 15, 2020 /PRNewswire/ - GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the "Company") the nation's largest chain of specialty hydroponic and organic garden centers, today announced its acquisition of Grassroots Hydroponics, a three-store chain of hydroponic garden centers in Southern California. The acquisition kick starts GrowGen's plans for rapid expansion in the region, with three high-volume retail locations in Anza, Lake Elsinore and Murrieta. With these additions, GrowGen will operate 13 stores in the booming California cultivation market and 39 total retail locations across the country.
Founded in 2008, Grassroots Hydroponics is one of the largest hydroponic operations in Southern California, with annual revenues approaching $20M. This is GrowGenerations's second acquisition in the state within a one-month period; in November, GrowGen acquired The GrowBiz, the nation's third-largest chain of hydroponic garden centers, with stores in Northern California and Oregon.
"We are pleased to add Grassroots to our growing portfolio, with its strong commercial operations and market position," said Tony Sullivan, GrowGen's COO. "We look to acquire best-in-breed hydroponic operations that complement and expand our footprint in mature cannabis markets, and Grassroots delivers a priority region, the critical Southern California market, for GrowGen."
The Grassroots acquisition is the Company's seventh acquisition this year, and follows yet another quarter of record earnings. Last month, the Company announced third-quarter revenues of $55.0 million and adjusted EBITDA of $6.6 million – marking the eleventh consecutive quarter of record revenues and EBITDA for the Company. Accordingly, the Company increased its 2020 revenue guidance to $185 million-$190 million, and adjusted EBITDA to $19.0 million-$20.0 million. It also updated revenue and adjusted EBITDA guidance for 2021 to $280 million-$300 million, and $34 million-$36 million, respectively.
For more information about GrowGeneration, or to locate its stores, please visit www.growgeneration.com.
About GrowGeneration Corp.:
GrowGen owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 39 stores, which include 5 locations in Colorado, 13 locations in California, 2 locations in Nevada, 1 location in Arizona, 1 location in Washington, 6 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 2 locations in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators at growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the major states in the US and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the US. By 2025, the global hydroponics system market is estimated to reach approximately $16 billion.
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>>> GrowGeneration Announces Completion of a $172.5 Million Upsized Public Offering of Common Stock, Including Full Exercise of Underwriters' Option
Yahoo Finance
December 14, 2020
https://finance.yahoo.com/news/growgeneration-announces-completion-172-5-130000471.html
DENVER, Colo., Dec. 14, 2020 /PRNewswire/ - GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the "Company") the largest chain of specialty hydroponic and organic garden centers, with currently 36 locations, today announced that on December 11, 2020, it completed a previously announced upsized underwritten public offering of an aggregate of 5,750,000 shares of its common stock at a public offering price of $30.00 per share for gross proceeds, before deducting underwriting discounts and commissions and offering expenses, of approximately $172.5 million, which includes the exercise in full of the underwriters' option to purchase 750,000 additional shares. Oppenheimer & Co. and Stifel acted as joint book-running managers for the offering. Craig-Hallum Capital Group LLC, Ladenburg Thalmann & Co. Inc., and Lake Street Capital Markets, LLC, acted as co-managers for the offering.
GrowGen intends to use the net proceeds from the Offering primarily to expand its network of hydroponic/garden centers through organic growth and acquisitions, for general corporate purposes and pursuing strategic opportunities which may be presented to the Company from time to time.
About GrowGeneration Corp.:
GrowGen owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 36 stores, which include 5 locations in Colorado, 10 locations in California, 2 locations in Nevada, 1 location in Arizona, 1 location in Washington, 6 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 2 locations in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators at growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the major states in the US and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the US. By 2025, the global hydroponics system market is estimated to reach approximately $16 billion.
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>>> Canopy to close four indoor Canadian cannabis grow sites plus outdoor grow in Saskatchewan, cut 220 jobs
MarketWatch
Dec. 9, 2020
By Ciara Linnane
https://www.marketwatch.com/story/canopy-to-close-four-indoor-canadian-cannabis-grow-sites-plus-outdoor-grow-in-saskatchewan-cut-220-jobs-2020-12-09?siteid=yhoof2
Canopy Growth Corp. CGC, -0.57% WEED, -0.71% said Wednesday it is ceasing operations at four of its Canadian sites and ending outdoor cannabis grow in Saskatchewan, in a move that will impact about 220 employees. "These actions will be an important step towards achieving our targeted $150-$200MM of cost savings and accelerating our path to profitability," Chief Executive David Klein said in a statement. "We are confident that our remaining sites will be able to produce the quantity and quality of cannabis required to meet current and future demand." The sites to be closed are St. John's, Newfoundland and Labrador; Fredericton, New Brunswick; Edmonton, Alberta; and Bowmanville, Ontario. The company is expecting to book pretax charges of $350 million to $400 million in the third and fourth quarters of fiscal 2021 to cover the costs of the moves. The sites are equal to about 17% of the company's indoor Canadian footprint and all of its outdoor footprint. U.S.-listed shares were down 0.7% but have gained 37% in the year to date, while the Cannabis ETF THCX, -1.53% has gained 5% and the S&P 500 SPX, +0.58% has gained 14%.
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IIPR - >>> Forget FAANG, Buy These 2 Unstoppable Stocks Instead
While tech stocks are overvalued, these investments have triple-digit revenue growth and incredible upside over the next decade.
Motley Fool
by Taylor Carmichael
Dec 11, 2020
https://www.fool.com/investing/2020/12/11/forget-faang-buy-these-2-unstoppable-stocks-instea/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
As we get ready to close the book on 2020, allow me to call out two sectors that will create enormous wealth for investors over the next decade.
The first is virtual currencies and digital wallets. Fintech is changing banking and payments forever and Square (NYSE:SQ) is at the center of this revolution. It could eventually become the most valuable financial stock in the world.
Another trend creating a lot of wealth is the (state by state) legalization of marijuana. Billions and billions of dollars will be made in this sector. We can already spot one winner -- the highly profitable (and fast-growing) REIT stock Innovative Industrial Properties (NYSE:IIPR).
Both of these stocks have creamed the FAANG stocks over the last few years and will continue to outperform over the next decade. Here's why you should forget about FAANG and buy these two cash machines instead.
Why Square is more valuable than any bank
The banking system is highly commoditized. If you blindfolded me and set me down in the lobby of an unknown bank, I couldn't tell you if I was in a Bank of America, a JPMorgan Chase, or a Wells Fargo. They're identical. They all have ATM services, online banking, and safety deposit boxes, and all these banks rely on the same credit check reports.
Square is a different breed. It's a fintech specialist that makes financial services cheaper and faster. Right now, the company provides technology for people performing financial tasks. Square customers use its Cash app to transfer money and make payments. When Square jumped into the brokerage business and offered free trades and fractional shares, Schwab followed, and a race to zero-commission trades began.
Last year Square introduced Square Card, a debit card that allowed businesses in the seller network to start making payments from existing revenue streams without the need to set up a bank account. In the third quarter, sellers spent more than $250 million on their Square cards.
Square's technology allows people to transfer money, use debit cards, and buy stocks and trade currencies. It's already providing a lot of traditional banking services. And now Square has been cleared to do the most important banking function -- provide loans. Square's new virtual bank, Square Financial Services, will be headquartered in Salt Lake City, as its charter was approved by the Federal Deposit Insurance Corporation (FDIC) and Utah regulators.
Square is already a huge business, with over $7 billion in annual revenues. And it's still growing incredibly fast; revenues are up 139% in the most recent quarter. While fintech has been very profitable, it's actually just getting started.
What will be amazing is when Square starts loaning money to all the businesses in its network. At first, banking will be a very small part of Square's business. But as the loan division ramps up, Square will start taking market share from the banks. And the company has serious advantages in that regard. Consider all the data Square has about the companies in its network. If you're a restaurant using Square's point-of-sale technology, Square knows all about your revenues and your ability to make payments. Square doesn't need to run credit checks or ask anybody else about your ability to repay debt. The company has a huge advantage over the banks in financial information about its customers. This knowledge is power and will be immensely profitable to Square (and its investors) in the future.
Why Innovative is the winner in marijuana
It's odd to suggest that people might want to sell shares of Amazon (NASDAQ:AMZN) or Netflix (NASDAQ:NFLX) to buy shares of a real estate investment trust (REIT). Why would anybody give up a stake of an internet titan to squat on some land? That's like saying a brick-and-mortar retailer is in a stronger position than an e-commerce leader. Isn't land irrelevant, even a risk, to the future of commerce?
Not if the land is a marijuana farm. Marijuana is already a $10 billion market worldwide, and it's estimated to reach $97 billion in sales in six years. The company that owns the marijuana farms is primed to make a lot of money.
Innovative Industrial Properties (IIPR) is the owner of 5.2 million rentable square feet of marijuana farms in the U.S. Like Square, IIP is taking business from the banks. While marijuana is a cash cow, banks avoid providing financial services to marijuana farmers because marijuana is illegal at the federal level. So IIP has stepped in and is offering innovative financing to pot entrepreneurs: sell us your land for cash, and we'll rent it back to you. And its dividend proposition for investors, which yields 3% right now, is the cherry on top of a growing stock price.
As it acquires more and more acreage through its fantastic business model, this company is more and more valuable. And the numbers don't lie.
Stock Most Recent Quarterly Sales Growth (YoY) Profit Margin Forward P/E Ratio
Amazon 37% 5% 60
Netflix 23% 12% 57
Alphabet 14% 21% 32
IIP 197% 56% 25
DATA SOURCE: YAHOO FINANCE. YOY = YEAR-OVER-YEAR. P/E = PRICE-TO-EARNINGS. TABLE BY AUTHOR.
Innovative Industrial Properties is growing way faster and is more profitable than FAANG stocks. This rapid growth won't last forever. During this decade, the federal government will decriminalize marijuana. It's bound to happen and when it does, the demand for IIP's financing will decrease. Revenue growth will slow dramatically. And that's when IIP will shift into a "boring" REIT stock with a hugely profitable portfolio of marijuana farms.
Forget about FAANG and buy Square and IIPR
While the FAANG stocks are amazing companies that have had an incredible run, as they all start to pass the $1 trillion mark, finding massive growth opportunities will be harder and harder in the future. And the federal government is going to regulate these mega-caps more and more, and maybe break up a monopoly or two.
Square and Innovative are both in the high-growth stage right now, and both stocks have demolished FAANG stocks over the last few years. As more and more investors wake up to what is happening, these two fast-growers will continue to outperform FAANG stocks over the next decade as well.
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>>> Pot Stocks Get a Lift After a Symbolic Win From the UN
Barron's
by By Connor Smith
Dec. 2, 2020
https://www.barrons.com/articles/pot-stocks-get-a-lift-after-a-symbolic-win-from-the-un-51606951733?siteid=yhoof2
Marijuana stocks popped on Wednesday after the United Nations Commission on Narcotic Drugs voted to remove cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs. Schedule IV includes drugs the U.N. believes are liable to abuse and to produce ill effects, with the liability not offset by therapeutic advantages, such as heroin and fentanyl.
Following a recommendation from the World Health Organization, the commission voted 27 to 25, with one abstention, to cut pot from that list. The commission didn’t remove cannabis from Schedule I, which includes drugs that could lead to significant abuse and produce ill effects, but may have therapeutic uses, like morphine and cocaine.
Cantor Fitzgerald analyst Pablo Zuanic noted that the move, while symbolic, “may spur the development of medical cannabis programs in various countries (even though the Commission rejected other cannabis related recommendations made by the WHO, including those related to CBD).”
Also on Wednesday, the Marijuana Opportunity, Reinvestment, and Expungement Act, or MORE Act, moved one step closer to a vote in the House of Representatives. The bill would remove marijuana from the list of scheduled substances, and eliminate criminal penalties for those manufacturing, distributing, or possessing it in the U.S.
Though it is expected to pass in the House, it’s unlikely to gain traction in the near-term with Republicans still controlling the Senate. President-elect Joe Biden has said he supports decriminalizing the drug.
Zuanic wrote that Democrats winning both Georgia runoff elections and control of the Senate “remains a longshot scenario,” though he doesn’t rule it out. If Republicans hold on to a Senate majority, he doesn’t expect bills like the MORE Act to pass.
He does think, however, there could be a chance of bipartisan support for banking reform, so as to allow growers in states where pot is legal to operate with national banks, access banking services, and take loans. That would lower funding costs for such firms, he notes.
Shares of Tilray (TLRY), a Canadian grower that is betting on international medical marijuana sales, jumped 7% to $8.64 on Wednesday. Aurora Cannabis shares rose 12.5% to $10.95, while the ETFMG Alternative Harvest ETF, an exchange-traded fund that provides exposure to marijuana stocks, jumped 3.9%.
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>>> Where Will Innovative Industrial Properties Be in 5 Years?
Motley Fool
Nov 26, 2020
by Liz Brumer
https://www.fool.com/millionacres/real-estate-investing/articles/where-will-innovative-industrial-properties-be-in-5-years/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Innovative Industrial Properties (NYSE: IIPR) is the first, and currently the only, real estate investment trust (REIT) to provide real estate capital to the medical marijuana industry. IIPR has grown tremendously since it first became public in 2016. Investors who first purchased shares of this company shortly after it became public have been handsomely rewarded, with share prices up 339% since its 2018 highs. But where is the company headed? Let's take a deeper dive into Innovative Industrial Properties' growth plan and see where it may be in five years.
Where Innovative Industrial Properties is today
Innovative Industrial Properties now owns and/or manages 63 properties in 16 states with $126.1 million in annualized revenues. The company largely acquires properties through their sale-leaseback program, which allows existing, qualified, and licensed businesses in the cultivation, processing, distribution, and retail medical cannabis fields to gain liquidity by selling the property to IIPR while maintaining their operations through a long-term triple net lease.
Revenues as of the third quarter of 2020 were up 196% when compared to the same quarter of the previous year. Adjusted funds from operations (AFFO) increased 192% from the same quarter the previous year. Dividends also increased 10% from the previous quarter and are up 50% from Q3 2019 dividend prices. Innovative Industrial Properties is also extremely well-positioned financially, with virtually no debt beyond $143.7 million of unsecured debt, making for a 9.4% debt-to-gross-assets ratio. Rent collection averaged 100% from July to October of 2020, a period of time in which many REITs struggled with occupancy and rental collections. Their average remaining lease term is 16.2 years with a well-established, diverse range of tenants.
Where Innovative Industrial Properties seems headed
Right now, Innovative Industrial Properties is the only publicly traded REIT investing in medical cannabis facilities, but another cannabis real estate company recently announced their plans to become a publicly traded REIT. Despite new competition, there is still plenty of demand to go around. 2019 medical cannabis sales grew 37% from 2018, and sales are projected to increase 40% in 2020 from 2019. Medical cannabis is being used to treat both minor and major chronic illnesses including arthritis, cancer, HIV/AIDS, Alzheimer's, and beyond.
In the recent election, two new states, South Dakota and Mississippi, approved the use of medical marijuana, bringing the total number of states having legalized the use of medical marijuana to 36 states and 4 territories. ArcView Market Research estimates that all states will have legalized medical cannabis by 2025 and estimates that sales will reach $34 billion by the same year. There's clearly a strong and increasing demand for this field, and IIPR's growth strategy allows them to serve the expanding industry.
If the company continues to maintain its current growth trends, which have exceeded 143% or more year over year since 2017, we can expect to see revenues around $563 million or more by 2025, assuming an average increase of 75% over the next five years to compensate for increased competition and scale. With that, expect AFFO and dividends will continue to grow in line with revenues. With that being said, those projections are rather conservative given the company's track record. It's very likely IIPR could surpass these figures.
Dividends for the company have increased by $1.02, or 680%, since 2017 with payout ratios ranging from 71% to now around the 90% to 92% range providing roughly 3.2% to 3.6% return for investors. Based on the company's current balance sheet, I expect it to maintain similar ratios and returns for investors as revenues grow.
2025 looks strong for Innovative Industrial Properties
As more and more states legalize medical cannabis, the company will have further opportunities to expand into new markets. While IIPR hasn't publicly shared a specific growth plan, based on current activity, it appears they will continue to utilize their sale-leaseback structure while expanding their current partnerships with existing tenants to help fuel growth. I personally own shares in IIPR and would love to buy more. Their growth prospects look strong, and the opportunity for the marijuana industry remains optimistic.
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>>> Innovative Industrial is one of the few REITs designed for the needs of the cannabis industry. It owns industrial and greenhouse properties tailored for marijuana production.
https://www.fool.com/investing/2020/11/22/3-unknown-but-amazing-dividend-stocks/
Due to Schedule I restrictions, banks cannot loan money to cannabis producers. Hence, Innovative Industrial helps to fund this capital-starved industry by buying property from growers and then leasing it back, giving cannabis companies the financing to move forward with production.
This model has led to the stock price more than doubling since the year began. Also, whether true or not, some perceive a Biden administration as more friendly to the cannabis industry. Moreover, Arizona, Montana, New Jersey, and South Dakota legalized weed for recreational use in the recent November elections. Such trends have worked in the company's favor.
Additionally, Innovative Industrial's time under the grow lights yielded massive growth even before these measures passed. In the most recent quarter, the company grew revenue by 197% from year-ago levels. This led to adjusted funds from operations income tripling over the same period. Also, its annual dividend of $4.68 per share yields around 3%. The company has hiked the payout twice this year.
Moreover, despite this performance, the stock trades at a price-to-FFO ratio of about 34. That's reasonable for a company with such impressive growth today and exciting prospects tomorrow.
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>>> Pot Stocks Gain With U.S. House to Vote on Decriminalization
Bloomberg
By Kristine Owram
November 27, 2020
https://www.bloomberg.com/news/articles/2020-11-27/pot-stocks-gain-with-u-s-house-to-vote-on-decriminalization?srnd=premium
Pot stocks jumped after an updated U.S. House schedule showed a vote will be held on marijuana decriminalization next week.
The BI Global Cannabis Competitive Peers index, which had been trading lower before the announcement, quickly gained 3% to the highest since Feb. 10. Aurora Cannabis Inc. rose 16%, Tilray Inc. jumped 14%, Harvest Health & Recreation Inc. added 11% and Cronos Group Inc. gained 8.6%.
A vote will be held on the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act, which seeks to remove cannabis from the list of scheduled substances, according to a schedule update from Majority Leader Steny Hoyer. The House delayed a vote earlier this year. The Senate is not set to consider similar legislation at this time.
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>>> GrowGeneration Completes Acquisition of The GrowBiz
Yahoo Finance
November 17, 2020
https://finance.yahoo.com/news/growgeneration-completes-acquisition-growbiz-212300363.html
Acquisition Brings Total Number of GrowGen Locations to 36
DENVER, Nov. 17, 2020 /PRNewswire/ - GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the "Company") the nation's largest chain of specialty hydroponic and organic garden centers, today announced it has completed its acquisition of The GrowBiz, the nation's third-largest chain of hydroponic garden centers, with five stores across California and Oregon. The acquisition brings the total number of GrowGen hydroponic garden centers to 36, with new locations in Rocklin, Cotati, Santa Cruz and San Luis Obispo, California, and Portland, Oregon.
Founded in 2010 by Ross and Ryan Haley, The GrowBiz brings annual revenues approaching $50M and a team of experienced executives and growing professionals to GrowGen's portfolio of nearly 400 employees. Additionally, Ross Haley, the former CEO of Hawthorne Gardening Company, a division of Scotts Miracle-Gro, and General Hydroponics, joins Bob Nardelli, former CEO of Home Depot, as a senior strategic advisor to the Company.
"California continues to be a critical market for GrowGen, accounting for 20 percent of the nation's legal cannabis sales. The GrowBiz locations are complementary to our current footprint, bringing our total number of GrowGen stores in California to ten and Oregon to two," said Darren Lampert, GrowGen's co-founder and CEO. "Given the country's changing political landscape and growing support for marijuana legalization – as evidenced by all five states with marijuana ballot measures passing them earlier this month – we expect to see more counties in California and Oregon permitting more cultivation in 2021 and beyond."
The GrowBiz acquisition marks the Company's sixth acquisition this year and comes on the heels of record earnings. Just last week, the Company announced third-quarter revenues of $55.0 million and adjusted EBITDA of $6.6 million – marking the eleventh consecutive quarter of record revenues and EBITDA for the Company. Accordingly, the Company increased its 2020 revenue guidance to $185 million-$190 million, and adjusted EBITDA to $19.0 million-$20.0 million. It also updated revenue and adjusted EBITDA guidance for 2021 to $280 million-$300 million, and $34 million-$36 million, respectively.
Added Lampert, "Our success is directly correlated to the growth of the cannabis industry, which is experiencing substantial growth. Our goal is to have GrowGen gardening centers in a minimum of 15 states next year – up from 11 this year – through a combination of acquisitions and new store build-outs."
For more information about GrowGeneration, or to locate its stores, please visit www.growgeneration.com.
About GrowGeneration Corp.:
GrowGen owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 36 stores, which include 5 locations in Colorado, 10 locations in California, 2 locations in Nevada, 1 location in Arizona, 1 location in Washington, 6 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 2 locations in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators at growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the major states in the U.S. and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the U.S. By 2025, the global hydroponics system market is estimated to reach approximately $16 billion.
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>>> GrowGeneration Stock Is In For Much Greater Upside in 2021
Yahoo Finance
by Divya Premkumar
November 20, 2020
https://finance.yahoo.com/news/growgeneration-stock-much-greater-upside-183128476.html
The efforts to legalize marijuana across the nation bodes well for up-and-coming pot-stock GrowGeneration (NASDAQ:GRWG). In contrast to traditional cannabis companies, GRWG plays the role of the servicer rather than the provider. The company is involved in hydroponics and all the essentials cannabis products require to grow. This key role puts GrowGeneration stock in an optimal position to benefit from the sweeping legalization of marijuana.
This has been the year to go green as investors place their bets on cannabis companies. There are two main reasons for this.
One, the demand for marijuana has soared amidst the coronavirus pandemic as more people live, work and play at home. Second, many states have taken a stronger stance on legalizing marijuana. Recreational use of cannabis is now legal in 15 states with more looking to join.
If you want to make some plays in the cannabis market but don’t want to jump right in, GrowGeneration stock is the perfect way to get your foot in the door.
GRWG Stock Jumps As States Go Green
A drug once abhorred by the public, marijuana has now reached formal acceptance in states across the nation. This comes after the changing attitudes of voters who are now more enthused about legalizing recreational weed than ever before. 15 states in the U.S. and the District of Columbia have now sanctioned the use of recreational marijuana. Earlier this month, New Jersey passed the ballot on its use and will soon be followed by New York.
The gradual decriminalization and acceptance of weed is a positive development for marijuana tool supplier, GrowGeneration. While the company does not deal with the production of cannabis, it does provide growers with the tools required for cultivation. The sweeping cannabis initiatives across states will allow the gardening enterprise to make waves in the multi-billion industry.
GrowGeneration says it is looking to cash in on the upcoming approvals on the East Coast. With New Jersey and New York approving recreational use, it’s only a matter of time before other states follow suit. In an interview with CNBC, GrowGeneration CEO Darren Lampert said that the company expects to benefit from the expanding weed industry. It is already scouting locations to set up shop on the East Coast this spring.
The green sweep will allow GrowGeneration to expand its footprint in the coming years. With the potential for excellent growth, GRWG stock is definitely worth buying.
An All-Round Great Buy
The legalization of marijuana is great news for GrowGeneration but that’s not all the company has going for it. 2020 was a period of high uncertainty and losses for many but GRWG stock proved to be a stable buy in these trying times. In its previous quarter, the company reported a 153% increase in year-over-year revenue at $55 million. Gross profit for the period also saw a massive surge to $14.6 million. This led the company to increase guidance for 2021 and expects sales to be between $280 to $300 million.
Adding to a great bottom line, GrowGeneration also has an acquisition strategy in place to spearhead its growth mission. This year the company acquired a series of businesses including Hydroponics Depot, Big Green Tomato and The GrowBiz. All three companies will bring in an approximate revenue of $71 million. These subsidiary entities will also add value to GrowGeneration’s current product offering. In terms of store numbers, the company is looking to add 22 new locations to the existing 28 next year.
Maintaining a great bottom line while completing several acquisitions during a global pandemic is no easy feat. However, GrowGeneration managed to do all this and more while maintaining a negative debt balance. The company funds its growth plans by issuing more stock – a strategy that has paid off, given its high revenue numbers.
The Bottom Line On GRWG
GrowGeneration may not produce marijuana but is one of the best pot stocks on the market today. The company has the perfect combination of a uniquely positioned business with a great strategy for growth. As the legalization of marijuana sweeps across the nation, GRWG stock is in for a much greater upside.
GrowGeneration is in a stable position right now making it the perfect time to buy-in and benefit from upcoming tailwinds.
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Cannabis ETF dividends - >>> Understanding THCX, MJ Cannabis ETF Dividend Announcements
MarketWatch
June 22, 2020
By Javier Hasse
https://www.marketwatch.com/story/understanding-thcx-mj-cannabis-etf-dividend-announcements-2020-06-22
Last week, two major cannabis-focused ETFs — the ETFMG Alternative Harvest ETF MJ, -0.29% and the Cannabis ETF THCX, -0.44% — announced they would be distributing dividends.
THCX declared a dividend of approximately 25 cents per share, to be paid June 23 to shareholders of record as of the close of business June 22. With this distribution, THCX’s year-to-date dividend payment amounts to roughly 67 cents per share.
MJ, for its part, paid a dividend of 28 cents per share on June 18, to shareholders of record as of the close of business on June 16. With this last payout, the fund expects to provide its shareholders an annualized yield of 8.17% — 7.42% after deducting MJ’s 0.75% expense ratio.
By back of the envelope calculations, THCX’s annualized yield stands around 6.7% before expenses and fees.
But, how is it possible ETFs are returning money to their shareholders even with their valuations down by double digits (around 20%) since the beginning of the year?
The short answer: the money for the dividend (at least in THCX’s case) is coming from securities lending income, according to Matt Markiewicz,Managing Director of THCX The Cannabis ETF.
What this means is, the fund’s positions are being lent out to borrowers at attractive rates. Since the shareholders of THCX are entitled to the majority of that income earned, this income is being returned in the form of a dividend.
Take into account most cannabis stocks boast stellar borrow rates due to the relatively low market cap and float of many of them. This is a result of a higher-than-normal demand to borrow stocks – either to short or just to trade, coupled with a lower-than-average supply of these stocks.
Compound this with the fact that many cannabis stocks are also heavily shorted and what you get is a very favorable solution for the lender. In this context, ETFs like THCX, can lend shares to an institutional investor even for a few days and generate revenue for its own investors.
“Given the fact that most cannabis companies don't pay a dividend, let alone turn a profit, some cannabis ETFs may offer a unique value proposition as they give investors diverse exposure to a growth theme but with an income component,” Markiewicz told Benzinga.
In fact, in two decades working on Wall Street, Markiewicz hasn’t seen many equity portfolios tilted toward growth industries that offer any meaningful level of yield.
“In this zero interest rate environment, financial advisors are open to out-of-the-box solutions to help provide income for their clients. They just don't know it may exist in a cannabis ETF however,” he said.
The investor feels like investors have piled into mega-cap, dividend-paying stocks like Procter & Gamble Co PG, -0.16%, Johnson & Johnson JNJ, -0.53% and even Microsoft Corp. MSFT, -0.95%.
Others, instead, have turned to fixed income ETFs which, “thanks to the Fed, have seen record inflows this year – and it's not even July,” Markiewicz added.
“The herd mentality can be a tailwind when those asset prices are going up of course but when the tide goes out, it may not feel so comfortable standing naked on the beach.”
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Cannabis retail dispensaries - >>> As retail vacancies rise, landlords should reconsider their aversion to this ‘recession-proof’ business
Market Watch
May 11, 2020
By Joe Caltabiano
https://www.marketwatch.com/story/as-retail-vacancies-rise-landlords-should-reconsider-their-aversion-to-this-recession-proof-business-2020-05-08?siteid=bigcharts&dist=bigcharts
5 reasons renting to retail cannabis operations makes sense
With major retail chains such as J.Crew and Pier One filing for bankruptcy and closing stores, landlords may finally be ready to warm up to the cannabis dispensary sector.
Historically, cannabis dispensaries have faced hurdles in finding their ideal retail space. A lot of this has to do with cultural stereotypes about cannabis, as well as the industry’s gray area of legality at the federal level. And it hasn’t helped that dispensaries operate in a business sector with little banking access. Whether because of these factors or others, many of the larger commercial brokers have little to do with renting their property sites to cannabis businesses of any kind — medical or adult-use.
Meanwhile, the COVID-19 pandemic has shuttered retail businesses in a way not seen since the Great Depression. With the possibility of large-scale retail vacancies on the horizon as restaurants, clothing stores and other businesses fail or cut back, now might be the time for landlords to take a closer look at the legal cannabis industry to fill these soon-to-be empty storefronts.
This is a business sector that has had no problem in paying its bills during the coronavirus pandemic, including the rent and taxes. Many experts predict that cannabis will be recession-proof, and both consumers and state governments have proclaimed retail cannabis as essential in the same way as grocery stores, fire departments and pharmacies. And while Wall Street has appeared to sour on many cannabis investments MJ, -0.29%, the overvaluation of cannabis stocks is reminiscent of the 2000 dot.com crash, which saw the actual consumer marketplace shift into overdrive just as investors bailed.
The coronavirus pandemic has illustrated how the cannabis economy is fundamentally different than what many landlords may have previously thought. Here are 5 reasons why landlords should rethink their views on this sector when they are considering who to take on as a tenant:
1. Cannabis businesses are essential. In the 33 states that legally regulate marijuana, long lines at cannabis dispensaries during the pandemic showed how strongly consumers view cannabis as vital to their well-being. Most governments at the state and local level took note. They ensured that retail cannabis operators were allowed to remain open because of their essential role in serving the health needs of communities. Even with the challenges of staffing with social-distancing, these businesses kept making sales from day one of the crisis.
From the perspective of any landlord, it’s probably apparent that these businesses were, and are, better able to cover their rent obligations than the untold thousands of other companies that have been forced closed since mid-March.
2. Government needs the tax revenue from legal cannabis businesses. Make no mistake: Even if the post-pandemic economic recovery were to take hold in earnest today, state governments could see a $200 billion shortfall in 2020. The businesses that continue to pay their taxes will be significant drivers of any economic recovery in cash-strapped states. Additionally, taxpaying companies are less likely to run afoul of IRS laws that could result in business closures (and, with them, missed rent payments).
3. Retail cannabis is a business sector with tremendous growth potential. Most landlords who already rent to cannabis companies know this is an emergent industry that faces a lot of regulatory and legal issues that differ from state to state. But it also is one in which sales of legal cannabis, which topped $12.2 billion in 2019, are forecast to hit an estimated $31 billion by 2024, according to The State of Legal Cannabis 2020 Update. In fact, the coronavirus pandemic brought a notable spike in cannabis sales, one that shows little indication of dissipating as the crisis continues.
4. Retail cannabis companies like big spaces. Cannabis dispensaries tend to favor large, open commercial spaces. Many retail cannabis dispensaries today are capable of supporting anchored retail sites from 1,500 square feet to a roomier (and costlier) 7,000 square feet in size.
A recent survey conducted by National Association of Realtors showed that states that regulate legal cannabis saw an increased demand of 18% for storefronts. However the same survey found a majority of commercial members were not currently leasing to marijuana-related businesses, making cannabis tenants some of the largest rental potential in the economy, with their numbers only expected to grow as legalization continues to spread.
5. Retail cannabis businesses are high-security, safe operations. Legal cannabis is produced, packaged and sold under the constant surveillance of security cameras and in secure buildings with armed guards. These visible safety measures make any site rental a more secure one, regardless of whether the location is for a cannabis dispensary or an agricultural operation. This safety can extend to the physical site and any other nearby tenants.
Today’s cannabis industry still has significant challenges involving banking access, zoning issues, insurance and so much more. All of these issues are of legitimate concern to any potential landlord gauging the risk of renting to a retail cannabis establishment. But the public perception of cannabis has undergone a remarkable change in recent years as both legalization and consumption have expanded. Cannabis is more widely — and properly — viewed as a beneficial health asset, not a mind-numbing vice or a Cheech & Chong punchline of yesterday.
As the world tries to regain its economic footing in the wake of the COVID-19 pandemic, landlords should take note and roll out the welcome mat accordingly. It will be profitable business for them, and it will be good for the nation’s economic recovery as well.
Joe Caltabiano is a co-founder of Cresco Labs, a Chicago-based publicly traded medical marijuana company, and was its president from 2013 until he resigned in March. He previously was senior vice president of mortgage banking at Guaranteed Rate, a Chicago-based residential mortgage company.
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>>> Five more states pass marijuana legalization measures: what it means for cannabis stocks
Yahoo Finance
November 4, 2020
https://finance.yahoo.com/video/five-more-states-pass-marijuana-221051646.html
Yahoo Finance’s Seana Smith and Adam Shapiro speak with Noah Hamman, CEO of AdvisorShares, about the implications for marijuana legalization on cannabis stocks.
ADAM SHAPIRO: We're talking about cannabis, marijuana, use the term you like best, because five states have taken the steps to legalize both medicinal, as well as recreational use of marijuana. So let's talk about where to invest on all of this. And we invite into the stream AdvisorShares CEO Noah Hamman.
Good to have you here, Noah.
NOAH HAMMAN: Thank you, Adam.
ADAM SHAPIRO: And one of the things in the notes that you provided, you said beware the Canadian weed stocks. Why?
NOAH HAMMAN: Because they don't benefit from this, we'll call it a green wave that we saw last night, right, a unanimous across the board for the five states that had measures on the ballot. It's still just state-focused. And so you've got a lot of companies that get the headlines like Aurora, or Canopy, or Cronos, all Canadian companies, they all benefit zero right now from the legalization that you saw in various levels, whether it's adult recreational or medical in those states.
So people look to those stocks because they get a lot of headlines and think, oh, I'm going to buy those. And if you look today, there's a few cannabis ETFs that are just heavily weighted in the Canadian space, and they're down 3%. We have an exchange traded fund with the ticker symbol MSOS that focuses just on the US operators, public companies, and we were up today, only a little bit. It's still going to be a volatile space. But you want to be smart about the stocks that you're investing in relative to what you saw happen last night.
SEANA SMITH: Hey, Noah. It's Seana. When you take a look-- that's interesting, because last hour we were talking about the fact that a lot of these big cannabis stocks that we follow very closely here on Yahoo Finance, they were under pressure, and that's an interesting point as to exactly why that is. When we see more and more states legalizing marijuana, what do you think that's going to do just in terms of overall growth for the industry?
NOAH HAMMAN: I think it's going to make it strong. This year is looking to be up around 40%, probably close to $20 billion in sales. They're projecting double or triple that over the course of the next three years. Think about the states that legalized, Arizona, a big opportunity, New Jersey, huge opportunity.
And then think about the ripple effect. New Jersey now going legal, you've got to imagine New York and Pennsylvania is not going to let that revenue just flow to that state. They're going to probably be coming online soon as well.
ADAM SHAPIRO: I am curious, and I have to disclose that my family is invested in a small cannabis business in California. I have no involvement in it. I just wrote a check years ago. But one of the things I keep hearing from all kinds of people in that industry is that it really isn't going to pop until the federal government allows the banking, makes it simpler. Do you see that on the horizon?
NOAH HAMMAN: I do. I think it's, in part, why the growth, at least we saw in the US multi-state operators today, was a little bit muted, right. It looks like, at least as of now, you still have a Republican-controlled Senate. So the concern is probably nothing's going to happen on legalization, or decriminalization, or even descheduling.
But we think what could happen, and what the Republicans would support, is that Safe Banking Act that already passed the House. So if that happens, and I do think that's incredibly important because these companies need a good solid banking solution, it's just safer for the employees all the way around, I do think that can be passed. And then that's going to be a huge help.
It still blocks out Canada, so you really want to focus on the US multi-state operators, but they're going to be able to have better access to capital, cheaper access to capital. That's going to really help the space. But I think the muted growth you saw in those stocks today was because of where the Senate stands right now, at least as of last night.
SEANA SMITH: Noah, when you take a look at the investors that are interested in these marijuana stocks or interested in your fund, is it more so the retail investor? Or is it the first-time investor? Or the young investor? What are you seeing on that front?
NOAH HAMMAN: Yeah, very much so. It's retail investors. You're starting to see some financial advisors use it, but it depends on their broker-dealer platform as to whether or not something like our ETF or those stocks are available. But yeah, institutions, you know, they still, with federal-- you know, being federally illegal, you know, it makes it very difficult for big institutions to invest in the space. But you're seeing that, slowly but surely, private equity funds, more in the private space, investing in these companies, both private and public.
So I think until those things change, one, the space will be volatile, right. We love the space and think it's a great opportunity over the next decade. It won't be a smooth ride. This is sort of the early internet stages, think about it that way.
The good news is many of these US companies are positive cash flow, right, and generating revenues today. This isn't a startup opportunity. These companies are operating today, and as more states open up, it'll be great. But still, the growth is going to be, you know, not in a straight line.
ADAM SHAPIRO: All right, Noah Hamman, we appreciate your being here, Advisors CEO. Good to have your input on the cannabis industry, and we'll bring you back, especially when we have a new Congress to see if they do pick up the legislation you were just discussing.
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>>> Marijuana ETFs Dip Despite Election
Yahoo Finance
November 13, 2020
https://finance.yahoo.com/news/marijuana-etfs-dip-despite-election-190000733.html
The votes are still being tallied, but we know at least one thing for sure: Tuesday was a good night for marijuana advocates, with legalization measures passing in at least four states.
Yet for some reason, the biggest marijuana ETF, the $600 million ETFMG Alternative Harvest ETF (MJ), is down more than 2% in morning trading.
Competing ETFs were also down: As of Wednesday at noon, the $66 million AdvisorShares Pure Cannabis ETF (YOLO) had slipped down 0.16%, and The Cannabis ETF (THCX), with $24 million in AUM, was down 2.4%. The $16 million Global X Cannabis ETF (POTX) was down 4.1%.
Curiously, however, the AdvisorShares Pure US Cannabis ETF (MSOS) was up 2.0%.
50%+ Overlap Among Global Marijuana ETFs
To untangle what's going on, let's first start where we always do: under the hood.
It makes sense that MJ, YOLO, THCX and POTX would all be trending downward together, as they are all global equity ETFs. Among them, exposure to developed ex-U.S. equities ranges from 39% for YOLO and 67% for MJ, to 73% for THCX and 89% for POTX. (The remainder is U.S. stocks.)
As such, there's a fair bit of portfolio overlap between these four funds. In particular, more than half of all the stocks inside MJ, THCX and POTX are the same—mostly, Canadian pharmaceutical companies:
What makes MSOS an outlier is the fact that it holds only U.S. companies. As a result, the ETF holds fewer than 15% of the same stocks as MJ, POTX and THCX; it holds just 22% of the same stocks as its sister fund, YOLO.
US Marijuana ETF Benefits From Vote
That strong U.S. presence has buoyed MSOS this morning, as traders are betting that wider legalization will further stoke the engines of the domestic U.S. cannabis industry.
Last night, voters in New Jersey and Arizona voted to make marijuana usage legal for medical and recreational use, while South Dakota and Mississippi voted to allow its use in medical applications. Results of a fifth ballot measure in Montana, which would make marijuana legal for recreational use, are still pending.
With wider legalization comes a stronger, more viable U.S. marijuana industry, both in terms of more investor capital for expansions and startups and better banking infrastructure for an industry that has historically been locked out of traditional financial channels.
It may also unleash additional untapped demand, driving revenues for existing cannabis companies higher.
More Competition, Possible Oversupply?
In turn, however, more U.S. cannabis companies inherently increases competition for established players in the space, most of which are domiciled overseas; hence, why all the ETFs with a large global equity footprint have faltered.
Looking forward, it'll be interesting to see how additional legalization ripples into the U.S. supply chain. Marijuana is a productive crop with a relatively short growth window of roughly four to six months before harvest. As a result, ample supply will likely materialize to meet demand in states where marijuana has been newly legalized.
In turn, that will help pressure prices downward, which could potentially reduce margins for retailers, while reducing the raw cost of materials for secondary uses.
Like all emerging industries, marijuana stocks remain extremely volatile, with price action driven by sentiment as much as fundamentals. This is one market for which it pays to stay mellow.
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>>> Cannabis Execs Cheer ‘Green Landslide’ of Votes for Legal Pot
Bloomberg
By Tiffany Kary
November 4, 2020
https://www.bloomberg.com/news/articles/2020-11-04/cannabis-ceos-celebrate-big-night-for-marijuana-legalization?srnd=premium
Curaleaf chairman Boris Jordan: ‘Cannabis won, and won big’
Broad legalization, however, faces hurdles amid Senate results
Despite all the uncertainty surrounding the U.S. election, there’s a clear victor already: domestic cannabis companies.
Leaders across the industry cheered after marijuana measures passed in all five states that had them on the ballot Tuesday -- even in deeply red parts of the country. The results showed how marijuana is becoming less of a partisan issue, and buoyed the biggest U.S.-based players in the market.
“Cannabis won, and won big,” said Boris Jordan, chairman of Curaleaf Holdings Inc., one of the largest cannabis companies. “It’s a green landslide.”
The latest results make recreational marijuana legal in 15 states and approved for medical purposes nearly nationwide, pushing the once-taboo topic of legalization firmly into the U.S. mainstream. Voter support in New Jersey passed by a wide margin, while Mississippi voted for the more liberal of two options to legalize medical use. South Dakota was also the first state to vote in recreational and medical use at the same time.
“We think that is a big signal to Washington and other states,” Jordan said in a phone interview. “Cannabis has won much bigger than anyone thought.”
Green Thumb Industries Inc. jumped 5.3% Wednesday in New York, while Harvest Health & Recreation Inc. and Cresco Labs Inc. each rose less than 1%. Curaleaf shares slipped 1.5% after giving up earlier gains.
Like many of his contemporaries, Cresco Chief Executive Officer Charlie Bachtell was thrilled by the election news pinging his phone all night, waking him after he tried a glass of wine to get to sleep late. Soon after gave up and had a cup of coffee.
“We may not know the results of the presidential election, but it’s safe to say cannabis was victorious,” Bachtell said in a phone interview.
‘Human Issue’
Trulieve Cannabis Corp. CEO Kim Rivers said she indulged in one of the company’s products -- a CBN sleep aid, with no THC -- to help her get through the election uncertainty. After eight hours of shut-eye, she woke up to the industry’s big victory.
“The election is solidifying what we already know: Cannabis isn’t a partisan issue, it’s a human issue,” she said. Rivers added that the industry could also benefit from a possible stimulus bill, if one can be passed after the election.
Despite growing support for cannabis in the U.S., prospects for federal legalization took a hit, at least in the short term, with the likely possibility that Republicans retain control of the Senate.
That weighed on Canadian cannabis companies, which are missing out on the U.S. market strength. Dan Ahrens, chief operating officer at AdvisorShares, where he manages two cannabis ETFs, said some investors had also thought they might have had an easier time breaking into it under an all-blue scenario. Instead, a Republican senate would validate the model of the U.S. companies, which have already managed to “grow tremendously in the last four years during the Trump presidency.”
Shares of Canopy Growth Corp., the industry’s biggest Canadian company, slumped 7.1%, while Tilray Inc., once one of Canada’s hottest stocks, fell 9.4%.
The likelihood of a Republican Senate means that the MORE Act -- legislation which would de-schedule cannabis -- is now off the table, and legal change will more likely happen under the STATES Act, which defers legalization issues to states.
After the latest results led to legalization in New Jersey, Arizona, Montana and South Dakota, as well as medical legalization in Mississippi, the total addressable market for cannabis producers has grown by more than $3 billion, Cowen analyst Vivien Azer said in a note.
With recreational legalization passing in New Jersey, that could put pressure on neighboring markets such as New York, Pennsylvania and Connecticut to make a similar move soon.
The rapid acceptance isn’t exactly a surprise to many in the industry, but executives were still glad to see it actually play out.
“You wake up and you see a third of America is living in states where cannabis is legal for adults,” said Ben Kovler, CEO of Green Thumb Industries.
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GrowGeneration, Scotts Miracle-Gro - >>> These Top 2 Marijuana Stocks Have the Best Profit Margins
These high-flying companies in the marijuana sector are actually making money.
Motley Fool
by Zhiyuan Sun
Oct 31, 2020
https://www.fool.com/investing/2020/10/31/these-top-2-marijuana-stocks-have-the-best-profit/
After two years of a legal market for marijuana in Canada, it has become more vital than ever for sector players to post profits. Experience has shown that blindly expanding production capacity with no preparation for oversupply issues can have devastating financial impacts. Investors are tired of Canadian cannabis companies losing money quarter after quarter and issuing more stock to pay for their operational mishaps. Investors' standards for cannabis businesses are rising.
Meanwhile, cannabis companies in the U.S. are gearing up in anticipation of the drug's possible legalization after the 2020 election. Having learned a few lessons from the Canadian market, U.S. marijuana players area lot more cautious with their expansion plans, resulting in higher average profit margins than their Canadian counterparts. Today, let's look at the top two marijuana stocks that are making decent profits.
1. Scotts Miracle-Gro
Scotts Miracle-Gro (NYSE:SMG) is an ancillary cannabis company that profits from marijuana growers without having anything to do directly with the plant itself. Scotts Miracle-Gro's wholly-owned subsidiary, The Hawthorne Gardening Company, provides soil, fertilizers, pesticides, herbicides, lighting, hydroponics, and gardening solutions that are necessary for raising marijuana plants indoors. During the third quarter of 2020, the entire company's sales grew by 28% to $1.49 billion. The growth was led by a 72% increase in Hawthorne's revenue, reaching more than $300 million in the quarter. Scotts Miracle-Gro's current profit margin is about 8% -- which isn't stellar, but better than the straight-up losses posted by plenty of pure-play marijuana stocks.
Scotts Miracle-Gro's biggest appeal is that it also has a solid business independent of marijuana, giving investors ample diversification. Due to the COVID-19 pandemic, over 8 million American households used grass seed or lawn food for the first time this year. Outdoor gardening, farming supplies, and lawn care account for approximately 80% of its revenue.
This year, Scotts Miracle-Gro expects to generate up to $4.04 billion in revenue and $6.85 in earnings per share (EPS), both representing substantial increases from the $3.16 billion in sales and $4.47 EPS it brought in last year. The stock is surprisingly cheap trading at just 2.4 times sales and 28 times earnings for all its growth. On top of that, Scotts Miracle-Gro is unique in that it is one of the only companies in the cannabis industry that pays a dividend, with an annual yield of 1.5%.
2. GrowGeneration
Hydroponic supplies company GrowGeneration (NASDAQ:GRWG) is also a rare gem in the marijuana sector, with its 0.85% profit margin. While that may not sound like a lot, keep in mind the company's competitors are losing between 7.38% and 1,160% for every $1 they earn in revenue. Last year, the ancillary marijuana company generated $79.7 million in revenue, up 175% from the year prior.
By 2021, GrowGeneration expects to increase its sales to $260 million and bring in up to $28 million in terms of operating income, including non-cash items. For the first six months of 2020, its revenue increased 123% compared to the first half of 2019, to $79.7 million.
GrowGeneration is now the largest hydroponic garden chain in the U.S., with 28 stores spread across 10 states. It plans to operate over 50 stores by the end of next year. On top of that, GrowGeneration also has $56.7 million in cash and equivalents, compared to only $300,000 in debt.
For a company that is growing its sales by triple-digit percentages, has close to zero debt, and is profitable, GrowGeneration is incredibly cheap. Right now, the company is trading for just seven times sales. For marijuana investors looking for growth stocks at a reasonable price, GrowGeneration is definitely a top pick.
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>>> Top Marijuana Stocks for November 2020
VFF.TO, JUSH, and GRWG are top for value, growth, and momentum, respectively
Investopedia
By MATTHEW JOHNSTON
Nov 5, 2020
https://www.investopedia.com/investing/top-marijuana-stocks/?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral
The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON), and Tilray Inc. (TLRY). Many big marijuana companies have continued to post sizable net losses as they focus on investing in equipment to speed up revenue growth, which remains strong despite the pandemic-spurred economic downturn.
On November 3, 2020, voters in New Jersey, Arizona, and Montana approved ballot measures to legalize recreational marijuana, and Mississippi has voted to legalize medical marijuana use. South Dakota, approved ballot measures to approve both.
Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have dramatically underperformed the broader market. MJ has provided a total return of -42.5% over the past 12 months, well below the Russell 1000's total return of 15.6%, as of October 27, 2020.1? All statistics in the tables below are as of October 28.
Here are the top 3 marijuana stocks with the best value, the fastest growth, and the most momentum.
Best Value Marijuana Stocks
These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For young companies that have not reached profitability, this can provide an idea of how much business you’re getting for each dollar invested.
Best Value Marijuana Stocks
Price ($) Market Cap ($M) 12-Month Trailing P/S Ratio
Village Farms International Inc. (VFF.TO) CA$6.57 CA$433.3 1.7
Aurora Cannabis Inc. (ACB.TO) CA$5.24 CA$636.8 1.8
Harvest Health & Recreation Inc. (HARV.CX) CA$1.91 CA$700.9 2.6
Village Farms International Inc.: Village Farms International is a Canada-based agricultural producer. In addition to growing standard vegetables like tomatoes, bell peppers, and cucumbers, the company now also produces cannabis.
Aurora Cannabis Inc.: Aurora Cannabis is a Canada-based company engaged in the production, distribution, and sale of cannabis products. The company announced on September 8 the appointment of Miguel Martin to the role of Chief Executive Officer (CEO). Michael Singer, who was serving as Interim CEO, stepped down from his temporary role, but will remain the company's Executive Chairman.2?
Harvest Health & Recreation Inc.: Harvest Health & Recreation is a Canada-based cannabis company that specializes in cultivation, dispensaries, and production facilities for medicinal and recreational marijuana.
Fastest Growing Marijuana Stocks
These are the marijuana stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales show that a company’s business is growing. This is often used to measure growth of young companies that have not yet reached profitability.
Fastest Growing Marijuana Stocks
Price ($) Market Cap ($M) Revenue Growth (%)
Jushi Holdings Inc. (JUSH) CA$3.49 CA$376.9 6,730
Neptune Wellness Solutions Inc. (NEPT.TO) CA$2.43 CA$312.9 389.9
Cresco Labs Inc. (CL.CX) CA$9.51 CA$1,976 226.7
Jushi Holdings Inc.: Jushi Holdings is a holding company focused on building a portfolio of branded-cannabis and hemp-based assets engaged in retail, distribution, cultivation, and processing operations. The company announced at the beginning of October preliminary revenue estimates for Q3 2020, which ended September 30, 2020. Jushi expects record third-quarter revenue of $24 million.3?
Neptune Wellness Solutions Inc.: Neptune Wellness Solutions is a Canada-based integrated health and wellness company. The company is focused on building a portfolio of natural, plant-based consumer products, including cannabis and hemp.
Cresco Labs Inc.: Cresco Labs is a consumer-packaged cannabis products company involved in growing, manufacturing, and distribution.
Marijuana Stocks with the Most Momentum
These are the marijuana stocks that had the highest total return over the last 12 months.
Marijuana Stocks with the Most Momentum
Price ($) Market Cap ($M) 12-Month Trailing Total Return (%)
GrowGeneration Corp. (GRWG) 17.85 851.1 362.4
Trulieve Cannabis Corp. (TRUL) CA$31.21 CA$3,529 135.0
Planet 13 Holdings Inc. (PLTH) CA$4.47 CA$530.1 125.8
Russell 1000 N/A N/A 15.6
ETFMG Alternative Harvest ETF (MJ) N/A N/A -42.5
GrowGeneration Corp.: GrowGeneration is a distributor of agricultural products. The company operates retail hydroponic and organic specialty gardening retail outlets. It offers plant nutrition, farming soils, crops, advanced lighting technology, hydroponic and aquaponic equipment, and more. GrowGeneration has made two recent acquisitions. The company announced on October 12 that it had acquired Hydroponics Depot, the largest indoor and outdoor garden center in Phoenix.4? A week later, the company announced its acquisition of Big Green Tomato, a Michigan-based hydroponic equipment store.5?
Trulieve Cannabis Corp.: Trulieve Cannabis is a Canada-based holding company that, through its subsidiaries, engages in the cultivation, possession, sale, and distribution of medical cannabis. The company announced in mid-September that it has entered agreements to acquire cultivator and producer PurePenn LLC and Pioneer Leasing & Consulting LLC, known collectively as PurePenn. In addition, Trulieve is buying dispensary operator Keystone Relief Centers LLC, known as Solevo Wellness.6?
Planet 13 Holdings Inc.: Planet 13 is a holding company that, through its subsidiaries, develops cannabis-based products. The company's products include cannabis, cannabis extracts, infused products, vapes, edibles, and more. Planet 13 announced in early October preliminary estimates of record quarterly revenue of $22.8 million for Q3 2020.
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>>> New Jersey Voters Approve Legalizing Recreational Marijuana Use
MarketWatch
by Michelle Kaske
November 3, 2020
https://finance.yahoo.com/news/jersey-voters-approve-legalizing-recreational-030323112.html
(Bloomberg) -- New Jersey will become the fourth most-populous state and the biggest on the East Coast to legalize marijuana sales for adult recreational use as voters approved ending a prohibition of the drug.
Voters passed the initiative after Governor Phil Murphy and other state lawmakers failed to legalize adult marijuana use through the legislature. The measure was ahead with 67% of voters in favor and 33% against with more than 58% of precincts reported, according to Associated Press.
The ballot measure was expected to pass, with 66% of likely voters supporting the initiative in a recent Stockton University poll.
New Jersey will join 11 states that have already fully legalized cannabis, including Maine and Massachusetts. Similar referendums are on Nov. 3 ballots in Arizona, Montana and South Dakota while Mississippi voters will decide whether to allow medical marijuana sales.
Legalizing recreational use may generate $1.9 billion of sales in New Jersey, resulting in nearly $126 million of sales-tax revenue, according to a fiscal estimate from the state’s Office of Legislative Services. Medical marijuana has been legal in New Jersey since 2010.
The push to legalize pot comes as the state plans to borrow as much as $4.5 billion this year to cover budget deficits as the coronavirus pandemic has weakened revenue collections.
Ending the prohibition will also decrease arrests and help boost employment, said Scott Rudder, a former state legislator and president of the New Jersey CannaBusiness Association.
“Instead of spending this money, let’s create more money,” Rudder said. “And instead of arresting people, let’s create jobs.”
New Jersey’s legislature intends to pass enabling legislation by the end of November, according to state Senator Nicholas Scutari. The legislation would impose the state’s 6.6% sales tax on cannabis and allow local governments to implement an added levy of up to 2%, he said.
Lawmakers will seek to include smaller business as the industry develops in the state by offering small-scale licenses for entrepreneurs in communities already affected by black-market industries, Scutari said.
“Black marketers are going to be able to compete for licenses as well,” Scutari said. “Some of them may know more about cannabis than anyone else.”
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>>> Marijuana ETFs Get Second Wind
MarketWatch
October 20, 2020
https://finance.yahoo.com/news/marijuana-etfs-second-wind-193000994.html
For marijuana ETFs, the last 24 months have been a total bummer, with nothing but stems and seeds to show for returns.
For all the enthusiasm we saw in these ETFs’ early days, the reality that the halcyon-days sentiment could not sustain this brave new world of ETF investing that has now taken root.
Returns in the past 24 months are negative, mired in losses of 48%-68%.
In fact, most pot ETFs have been riding a slow decline pretty much since they burst onto the scene in 2019. Only the first-to-market—and largest—marijuana ETF, the ETFMG Alternative Harvest ETF (MJ), has managed to make any money for investors, and that was back in 2018, when it was the lone game in town and there was excessive speculation on publicly traded pot stocks in Canada.
Fanfare Unmatched By Returns
MJ’s quick rise to adoption unleashed a wave of marijuana ETF launches, including:
AdvisorShares Pure Cannabis ETF (YOLO) is an actively managed marijuana ETF with the second-highest assets under management of $62 million and an expense ratio of 0.74%.
The Cannabis ETF (THCX) is a market-cap-selected and -weighted index of North American cannabis companies, which has $21 million in AUM and a 0.70% expense ratio.
Global X Cannabis ETF (POTX) tracks an index of developed-market companies related to cannabis, hemp and CBD, and has $15 million in AUM and a 0.50% expense ratio.
Amplify Seymour Cannabis ETF (CNBS) is also actively managed, and is the smallest marijuana ETF, with $6 million in AUM and a cost of 0.75%
MJ has $574 million in AUM and a 0.75% expense ratio. At one point, MJ topped $1 billion in assets, but outflows in the fund picked up as performance fell into a stupor.
Several other marijuana ETFs have since come to market. (Click here for a complete list of marijuana ETFs.) But the above group represents what has been happening since the novelty of being able to invest in a marijuana ETF became available in 2018.
The 2018-2019 period was right before and after Canada legalized marijuana on a federal level. That proved to be a powerful catalyst for an emerging segment that has since fizzled.
Second Wind May Be Blowing
But this October has been a different ride. There’s been an abrupt turnaround on the back of another potential breakthrough decriminalization story.
What you would think would be a widely covered news story during a presidential campaign went largely unnoticed by the public. A U.S. House vote in late September pushed a big turn of the wheel toward legalization of marijuana nationally. As reported by Investor Place:
“In late September, a U.S. House vote to remove marijuana from the federal Controlled Substances Act was delayed until after the presidential election. If the House remains controlled by Democrats, industry analysts expect the Marijuana Opportunity Reinvestment and Expungement (MORE) Act to potentially pass before the end of 2020. Then, it would be up to the Senate to possibly take a similar action…. Democratic vice president nominee Kamala Harris has recently said marijuana would be decriminalized at the federal level under a Biden administration.”
The news did not go unnoticed to traders who have been bidding up marijuana ETFs since the beginning of the month. While marijuana can currently be legally sold to recreational users in a dozen states, decriminalization at a federal level has bigger implications for the market.
Final Piece In The Pot Biz Puzzle
Because marijuana is a controlled substance, businesses engaged in the selling and cultivation of cannabis are blocked from using the federal banking system, which is a major roadblock for an industry striving to go mainstream. The inability to use credit cards for transaction or FDIC-insured banks has been a limitation for the industry, as well as a hinderance to investment.
Some investors simply cannot invest in an industry deemed illegal on a federal level. If decriminalized, however, marijuana-linked companies can enter the federal banking system, access capital markets and even list on exchanges. That would be a breakthrough for this industry.
Even without legalization, U.S. retail sales of cannabis products are expected to double by 2024 to some $30 billion, according to Marijuana Business Daily. Certainly, a legitimized $30 billion industry with revenues doubling in a few years would attract top investors globally.
The other boon federal decriminalization could unleash is to open the doors for some of the world’s top food, beverage and tobacco companies like Coca-Cola, Philip Morris and Constellation Brands to enter the marijuana industry and take it to the next level.
While the status quo remains the same for now, and the outcome of a U.S. presidential election next month remains to be seen, the winds of a better future are certainly blowing in this sector’s direction.
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>>> Best Marijuana ETFs for Q4 2020
YOLO, TOKE, and CNBS are the best marijuana ETFs for Q4 2020
Investopedia
By MATTHEW JOHNSTON
Sep 14, 2020
https://www.investopedia.com/best-marijuana-etfs-5077586
Marijuana exchange-traded funds (ETFs) provide investors with exposure to equities of companies that engage in the cultivation, distribution, and sale of marijuana and related products. Products of marijuana companies include dried flowers, oils, seeds, edibles, and more. Still prohibited as an illegal substance in many parts of the world, marijuana is gaining wider acceptance for both medicinal and recreational purposes. Support for continued legalization is growing, and cannabis is now a multi-billion industry. Marijuana ETFs are a straightforward way for investors to gain exposure to a diversified basket of marijuana equities and profit from this growing industry.
KEY TAKEAWAYS
Marijuana ETFs significantly underperformed the broader U.S. equity market over the past year.
The ETFs with the best 1-year trailing total return are YOLO, TOKE, and CNBS.
The top holding of the first of these ETFs is Village Farms International, and the top holding for both of the other two ETFs is GW Pharmaceuticals.
The marijuana ETF universe is comprised of 7 ETFs, excluding inverse and leveraged ETFs. Marijuana ETFs have dramatically underperformed the broader U.S. equity market. The S&P 500's total return over the past 12 months is 14.3%, as of September 10, 2020. 1? The best-performing marijuana ETF for Q4 2020, based on performance over the past year, is the AdvisorShares Pure Cannabis ETF (YOLO). We examine the top 3 best marijuana ETFs below. All numbers below are as of September 11, 2020.2?
ETFs with very low assets under management (AUM), less than $50 million, usually have lower liquidity than larger ETFs. This can result in higher trading costs which can negate some of your investment gains or increase your losses.
AdvisorShares Pure Cannabis ETF (YOLO)
Performance over 1-Year: -34.9%
Expense Ratio: 0.74%
Annual Dividend Yield: 7.75%
3-Month Average Daily Volume: 71,888
Assets Under Management: $59.8 million
Inception Date: April 17, 2019
Issuer: AdvisorShares
YOLO seeks to provide long-term capital appreciation by investing in cannabis equity securities. It holds stocks of both domestic and foreign companies, but is primarily focused on those located in the U.S. and Canada. It also focuses on companies that specialize in offering consumer cannabis products.3? The ETF follows a blended strategy, investing in both value and growth stocks with various market capitalizations. The fund holds a relatively large share of cash as a percentage of total assets, at 27.2%. Aside from that cash component, the fund's top three equity holdings include Village Farms International Inc. (VFF), a company that operates agricultural greenhouse facilities and raises various produce; Innovative Industrial Properties Inc. (IIPR), a real estate investment trust (REIT) focused on industrial properties leased to tenants in the cannabis industry; and GW Pharmaceuticals PLC (GWPH), a biopharmaceutical company that develops novel therapeutics.4?
Cambria Cannabis ETF (TOKE)
Performance over 1-Year: -44.7%
Expense Ratio: 0.42%
Annual Dividend Yield: N/A
3-Month Average Daily Volume: 8,900
Assets Under Management: $12.3 million
Inception Date: July 25, 2019
Issuer: Cambria
TOKE seeks to offer capital appreciation through investments in global equity markets exposed to the cannabis industry. The company targets between 20 to 50 marijuana companies within a market-cap spectrum spanning micro-, small-, and mid-cap stocks.5? Close to half of the securities held are of companies based in the U.S., while the rest are either based in Canada or in Britain.6? The ETF follows a blended strategy, investing in both growth and value stocks. Its top holdings include GW Pharmaceuticals; Aphria Inc. (APHA), a producer of medical cannabis; and Constellation Brands Inc. (STZ), a producer of alcoholic beverages that also owns stakes in cannabis projects.7?
Amplify Seymour Cannabis ETF (CNBS)
Performance over 1-Year: -46.5%
Expense Ratio: 0.75%
Annual Dividend Yield: 0.65%
3-Month Average Daily Volume: 4,842
Assets Under Management: $5.8 million
Inception Date: July 23, 2019
Issuer: Amplify
CNBS seeks to provide investors with exposure to the global cannabis industry. At least 80% of its holdings are invested in companies that generate 50% or more of their revenue from the cannabis and hemp market. The ETF invests in a basket of equities across the market-cap spectrum, from micro-cap to large-cap stocks. Over half of its assets are part of either the cultivation & retail or pharmaceuticals/biotechnology segments of the marijuana industry.8? The fund invests in both growth and value stocks. Its top three holdings include GW Pharmaceuticals; Canopy Growth Corp. (CGC), a producer of medical cannabis; and Innovative Industrial Properties.
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>>> Marijuana Is on the Ballot in 5 States. These Stocks Could Benefit From a Green Wave.
Barron's
By Connor Smith
Nov. 3, 2020
https://www.barrons.com/articles/marijuana-is-on-the-ballot-in-5-states-these-stocks-could-benefit-from-a-green-wave-51604428536?siteid=yhoof2
Election Day is here. In several ways, marijuana is on the ballot this year.
New Jersey, Arizona, and Montana will vote on recreational cannabis initiatives Tuesday, while South Dakota will vote on pathways to both recreational and medical pot. Mississippi will vote on medical marijuana, but not recreational marijuana.
“Of these initiatives, Arizona and New Jersey represent the most significant market opportunities given their large populations,” Canaccord Genuity analyst Bobby Burleson wrote in a note last month.
New Jersey is likely to approve legalization of recreational cannabis sales through New Jersey Public Question 1. Cannabis has broader support from Democratic lawmakers in the state. Among them are Gov. Phil Murphy and Sen. Cory Booker, who have both posted support of the measure on social media. Efforts by state lawmakers to approve legislation fell through last year.
The initiative would legalize recreational use for people age 21 and older in New Jersey, as well as the cultivation, processing, and sale of retail pot. The state would apply a 6.625% sales tax to recreational cannabis sales.
Budget shortfalls due to Covid-19 have led pot analysts to speculate states that have dragged their feet on legalization may have more of an incentive to move forward with it now. Canaccord’s Burleson wrote that the approval of recreational sales in New Jersey could also push neighboring states like Pennsylvania and New York to follow suit.
“The governors of both New York and Pennsylvania attempted to pass cannabis legislation earlier this year, failing in part due to a priority shift in light of COVID-19,” Burleson wrote. “Nevertheless, both governors have remained outspoken in support of recreational sales, recently discussing programs for [recreational use] that would commence sales ahead of New Jersey.”
Acreage Holdings (ticker: ACRHF), Curaleaf Holdings (CURLF), Cresco Labs (CRLBF), Columbia Care (CCHWF), Green Thumb Industries (GTBIF), Harvest Health & Recreation (HRVSF), and Trulieve Cannabis (TCNNF) are among the public companies with a retail presence in New Jersey’s medical cannabis market.
Burleson notes that Arizona “has been the fastest growing state market,” of those covered by cannabis research firm BDS Analytics. Harvest is the leader in Arizona’s medical market, followed by Curaleaf, according to the folks at Canaccord.
If Democrats take over the Senate, it could provide a pathway for federal cannabis legislation. The Safe Banking Act, which passed the House of Representatives last year with bipartisan support, was stalled when it reached the Senate. The bill would protect banks that service the pot business in states where it’s legal. Senate Majority Leader Mitch McConnell opposed the effort. FiveThirtyEight forecasts Democrats have a 75 in 100 chance of winning control in the Senate.
Former Vice President Joe Biden has also voiced support for the decriminalization of marijuana. But Biden’s platform would leave legal recreational sales to individual states.
“The Biden/Harris ticket has been outspoken about decriminalizing cannabis and legalizing medical cannabis while being in support of letting states set their own policies regarding recreational cannabis,” Burleson wrote. “This represents a significant shift from President Trump’s position, which has been dramatically more hostile toward cannabis expansion.”
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Green Thumb Industries (GTBIF) - >>> 5 Stocks to Buy With $100 During a Market Sell-Off
Fortunes are made by putting your money to work during periods of panic.
Motley Fool
by Sean Williams
Oct 30, 2020
https://www.fool.com/investing/2020/10/30/5-stocks-to-buy-with-100-during-a-market-sell-off/
Green Thumb Industries
For a handful of U.S. marijuana stocks, it really doesn't matter what happens with the election next week. An abundance of state-level legalizations, along with the federal government taking a hands-off approach to cannabis regulation, means Green Thumb Industries (OTC:GTBIF) can show investors the green.
Among major multistate operators, Green Thumb has the third-most-open dispensaries (just over four dozen). However, it holds 96 total retail licenses in a dozen states, suggesting that Green Thumb can deliver substantial organic and inorganic growth in the years to come.
In particular, Green Thumb has acquired its way into the tourist-heavy Nevada market, which by 2024 could lead the nation in cannabis spending per capita. It also has a growing presence in Illinois, which is a limited-license state that opened its door to adult-use weed sales on Jan. 1, 2020.
Perhaps best of all, Green Thumb generates close to two-thirds of its revenue from derivatives (e.g., vapes, beverages, topicals, concentrates, and edibles). Derivatives yield much juicier margins than dried flower, which should give Green Thumb more bang for each revenue buck.
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>>> A New Marijuana REIT Rival for Innovative Industrial Properties Is Coming to the Market
Two cannabis-focused entities -- Inception REIT and Subversive Real Estate Acquisition REIT -- will merge in a qualifying transaction at the end of October.
Motley Fool
Eric Volkman
Oct 20, 2020
https://www.fool.com/investing/2020/10/20/a-new-marijuana-reit-rival-for-innovative-industri/
Since its debut on the stock market in late 2017, Innovative Industrial Properties (NYSE:IIPR) has been the only publicly traded cannabis-focused real estate investment trust (REIT). But in the near future, a new kid will arrive on the block.
Like Innovative, this company will concentrate solely on the grow spaces, processing facilities, retail stores, and other real estate required by the marijuana industry.
The new kid -- just what name it will go by remains something of a question mark -- will come to the public market via a special purpose acquisition company (SPAC) now called Subversive Real Estate Acquisition REIT (OTC:SBVR.F).
In a move that has become trendy in finance lately, an existing company -- in this case, Inception REIT -- will park itself within Subversive in a nearly $183 million "qualifying transaction" that will merge the two. This maneuver is essentially a backdoor initial public offering that should be completed next Friday, Oct. 30.
The resulting company will be significantly smaller than Innovative. At the moment, Subversive's portfolio consists of 12 properties under binding agreements and five first-lien loans; these are located in nine U.S. states, chiefly California. According to the SPAC, this real estate is worth $201 million.
Inception REIT, meanwhile, holds three properties and one mortgage to a retail store, all located in southern California.
By comparison, as of Sept. 21, Innovative had 63 properties in a portfolio. Its real estate assets totaled more than $815 million at the end of its most recently reported quarter.
Similarly to Innovative, the new company will concentrate on sale-leaseback transactions. Such deals are popular with cannabis companies because they unlock capital that operators in the cash-strapped and frequently money-losing marijuana industry sorely need.
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>>> GrowGeneration Acquires Phoenix-Based Hydroponics Depot
MarketWatch
October 12, 2020
https://finance.yahoo.com/news/growgeneration-acquires-phoenix-based-hydroponics-120000460.html
Acquisition marks the retailer's entry into Arizona's booming medical cannabis market
DENVER, Oct. 12, 2020 /PRNewswire/ - GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the "Company") the nation's largest chain of specialty hydroponic and organic garden centers, today announced its acquisition of Hydroponics Depot, Phoenix's largest indoor and outdoor garden center. With the addition of Hydroponics Depot, GrowGen's portfolio of hydroponic garden centers now includes 29 stores across 11 states.
GrowGen's entry into the Arizona market comes as voters consider Prop 207, which would legalize limited possession, cultivation and use of marijuana for adults ages 21 years or older. If approved, it is estimated that Arizona's cannabis market could grow from over $700 million market in 2020 into a $2 billion market, including both recreational and medical marijuana.
"We're excited to add Hydroponics Depot to our growing portfolio, with year-to-date sales in excess of $5 million and year-over-year growth at 50 percent," said Tony Sullivan, GrowGen's COO. "Importantly, it represents our 11th state and our first retail operation in Arizona, a key market in GrowGen's growth plan. We see tremendous potential from both a medical and recreational standpoint."
Arizona Market and Projections:
Arizona is one of the largest medical cannabis markets in the country, with projected 2020 sales of $700 million to $900 million.
Retail sales of medical marijuana products in the state rose nearly 20% from January to May, according to the Arizona state estimates.
If Prop 207 is approved, Arizona could grow from an estimated $770 million to $2.0 billion with both recreational and medical cannabis.
For more information about GrowGeneration, or to locate its stores, please visit www.growgeneration.com.
About GrowGeneration Corp.:
GrowGen owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 29 stores, which include 5 locations in Colorado, 6 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Arizona, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators at growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the major states in the US and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the US. By 2025, the global hydroponics system market is estimated to reach approximately $16 billion.
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Lexaria; I see so many potential catalysts that could kick in quickly. Even if only one thing is done, LXRP could approach a dollar in no time at all. It should be noted that Lexaria has one of the largest portfolios of PATENTS involving cannabis in the entire world (perhaps the largest portfolio). So over time, LXRP could easily be a multi-millionaire maker. In my opinion, it would be easy to pump such a stock. However, I don't see where pumping is even necessary. LXRP is a gamble, just like most penny stocks, but this one has a PORTFOLIO of patents to back up its claims. And, the company is not fearful of letting shareholders know what they are actually doing. Refreshing!
>>> Innovative Industrial Properties Acquires Florida Property and Expands Real Estate Partnership with Parallel, a U.S. Cannabis Company
Yahoo Finance
September 21, 2020
https://finance.yahoo.com/news/innovative-industrial-properties-acquires-florida-110000546.html
Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it closed on the acquisition of a property in Lakeland, Florida from an affiliate of Parallel, one of the largest privately-held multi-state cannabis operators in the U.S. Parallel is the corporate parent company to Surterra Wellness, its market leading retail brand in Florida and one of the original licensed vertical operators in the Sunshine State, which has a rapidly growing footprint that includes 39 retail dispensaries across the state and multiple industrial-scale cultivation, production, kitchen and research facilities.
The purchase price for the property was approximately $19.6 million (excluding transaction costs). Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement for the property with a subsidiary of Parallel, which intends to continue to operate the property as a regulated medical cannabis cultivation and processing facility. The property consists of approximately 65,000 square feet of industrial and greenhouse indoor cultivation and production space currently in operation, and Parallel expects to develop an additional approximately 155,000 square feet, resulting in a total of approximately 220,000 square feet of industrial and indoor cultivation space. IIP has agreed to provide reimbursement for this development of up to approximately $36.8 million; assuming full reimbursement, IIP’s total investment in the property will be $56.4 million.
As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
"We are pleased to expand our relationship with Beau and Parallel’s strong team of dedicated professionals with this newest long-term real estate partnership," said Paul Smithers, President and Chief Executive Officer of IIP. "With its footprint of 39 operating dispensaries in Florida, Parallel has established a presence of physical access for patients to the large majority of Florida residents. We expect the significant enhancements to Parallel’s Wimauma and Lakeland facilities to drive Parallel’s continued strong growth and enable them to continue to produce high quality medical cannabis products for patients throughout Florida, spanning the range of products now permissible in the state."
Parallel is one of the largest privately-held multi-state cannabis operators in the U.S., with leading positions in several of the largest and fastest-growing markets, including Florida, Massachusetts, Nevada and Texas. Parallel’s operations include 42 retail dispensaries, a robust portfolio of proprietary consumer brands and innovative products, and state-of-the-art cultivation, production and research facilities. Parallel has over 1,600 employees nationwide, and has raised more than $400 million in capital to date. Parallel’s highly accomplished management team is led by Chairman and CEO William "Beau" Wrigley, Jr., who previously served as the Chairman and CEO of global gum and confectionery leader the Wm. Wrigley Jr. Company, which was acquired by Mars, Inc. in 2008 for $23 billion.
"We are thrilled to team once again with IIP as our long-term real estate partner, as we continue to significantly enhance our production capacity and product diversity in Lakeland to meet the tremendous demand from Florida patients throughout the state. This transaction opens up additional significant capital for us to reinvest in our growth and commercial expansion across our five markets," said Beau Wrigley, Jr., Chairman and CEO of Parallel. "While we have multiple cultivation and production facilities in Florida, this Lakeland facility stands out as a state of the art indoor, environmentally controlled facility, which helps us achieve our goal of consistent, high quality, high yield flower throughout the year. In addition, Lakeland houses our commercial-grade kitchen for producing our cannabis edibles to meet our patients’ demand for more variety of products in the expanding Florida market."
Florida represents one of the largest and one of the fastest growing medical-use cannabis markets in the U.S. After authorizing the sale of flower in 2019, Florida authorities further expanded its medical cannabis program last month by allowing the sale of edibles, which is expected to account for an additional $250 million in sales in 2021, according to Marijuana Business Daily. According to the Florida Office of Medical Marijuana Use (OMMU), as of September 11, 2020, there were over 410,000 qualified patients and nearly 2,600 qualified physicians in the medical-use cannabis program. Including this property, IIP owns three properties in Florida, comprising approximately 713,000 rentable square feet (including square footage under development) and representing a total investment, including commitments to fund future development and tenant improvements, of approximately $116.9 million.
As of September 21, 2020, IIP owned 63 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.9 million rentable square feet (including approximately 1.9 million rentable square feet under development/redevelopment), which were 99.3% leased (based on square footage) with a weighted-average remaining lease term of approximately 16.1 years. As of September 21, 2020, IIP had invested approximately $877.3 million in the aggregate (excluding transaction costs) and had committed an additional approximately $274.2 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $10.0 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenant at that property may not elect to have IIP disburse those funds to the tenant and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
About Parallel
Parallel is one of the largest privately held, vertically integrated, multi-state cannabis companies in the world with a mission to pioneer well-being and improve the quality of life through cannabinoids. Parallel owns and operates retail dispensaries in four medical and adult-use markets: Surterra Wellness in Florida and Texas; New England Treatment Access (NETA) in Massachusetts, and The Apothecary Shoppe in Nevada. Parallel also has a license under its Goodblend brand in Pennsylvania for vertically-integrated operations and up to six retail locations, in addition to a medical cannabis research partnerships with the University of Pittsburgh School of Medicine. The Company has a diverse portfolio of high quality, proprietary and licensed consumer brands and products including Surterra Wellness, Coral Reefer, and Float. Parallel operates over 40 retail stores nationwide, including cultivation and manufacturing sites across the four states. The Company conducts advanced cannabis science through Molecular Infusions (Mi), a cannabis-based biopharmaceutical company, and conducts R&D for new product development in its facilities in Texas, Massachusetts, Florida, and Budapest, Hungary. Parallel follows rigorous operations and business practices to ensure the quality, safety, consistency and efficacy of its products and is building its business by following strong values and putting the well-being of its customers and employees first. Find more information at www.liveparallel.com, or on Instagram and LinkedIn.
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Innovative Industrial Properties - >>> Here's the Dividend Stock Most Likely to Double by 2022
The path to making it happen is straightforward.
Motley Fool
by Keith Speights
Sep 20, 2020
https://www.fool.com/investing/2020/09/20/heres-the-dividend-stock-most-likely-to-double-by/
What do you think of when you hear the phrase "dividend stocks"? For many investors, the answers probably include something along the lines of "low-growth" and maybe even "boring." Those descriptors apply to quite a few dividend stocks, but not all of them.
I can think of one stock that offers a relatively high dividend yield that's anything but low-growth and boring. In my view, it's arguably the one dividend stock most likely to double by 2022. The stock I have in mind is Innovative Industrial Properties (NYSE:IIPR).
How the stock can double
Innovative Industrial Properties (IIP) ranks as the leading real estate investment trust (REIT) focused on the medical cannabis industry. It's the first and, so far, only cannabis-focused REIT to list its shares on the New York Stock Exchange.
I like companies with simple and solid business models. IIP checks both boxes. The company buys properties from medical cannabis operators, and then leases those properties back to the operators. Those leases nearly always are for long durations: The weighted-average remaining lease term for IIP's properties is around 16 years.
If you think a cannabis-focused REIT stock can't double in a short period of time, think again. Take a look at IIP's performance over the last three years.
My view is that IIP can easily double (or more) by the end of 2022. How? All IIP has to do is keep doing what it's been doing -- i.e., reinvesting any cash it accumulates into new properties to lease back to medical cannabis operators. At the end of 2018, IIP owned 11 properties. A year later, that number jumped to 46; today, it stands at 62.
There are two reasons why I think IIP will keep growing. First, the U.S. cannabis industry is smoking hot. Thirty-three states have already legalized medical cannabis. More could do so in the upcoming November elections. Second, the Federal Reserve Board intends to keep interest rates near zero through 2023. That means IIP's borrowing costs will remain low.
An added bonus
I fully expect IIP's number of properties to at least double by the end of 2022, driving its revenue, earnings, and stock price higher in the process. And, as they say on the TV infomercials, "But wait... there's more!"
Remember that IIP is a REIT. That means the company must return a minimum of 90% of taxable income to shareholders in the form of dividends. So if IIP's earnings double or more within the next 27 months, so will its dividend payout.
Here's the great thing: IIP's dividend yields north of 3.7% right now. Investors who buy the stock now could very well have an effective yield of more than 7% in a little over two years. Sure, the stock's appreciation would likely keep the dividend yield from rising to that level. However, anyone who bought the stock at the current price would receive much higher dividends from their initial investment.
By the way, IIP's dividend has grown more than its share price over the last three years. Quite a bit more, actually.
Dividends boost total returns. IIP stock really wouldn't have to double by the end of 2022 for investors to double their initial investment, especially with dividend increases along the way.
What could get in the way
Are there any potential gotchas? There are risks that apply to any stock, such as scandals and major geopolitical crises. I also think there's another possible stumbling block that could reduce IIP's prospects of doubling by 2022: marijuana legalization in the U.S.
IIP has enjoyed so much success partly because it doesn't have significant competition from big players. Larger REITs have stayed away from the cannabis industry because of federal anti-marijuana laws. But if cannabis is legalized at the federal level, it could pave the way for more companies to enter the market. This increased competition would likely cause the lease rates charged to medical cannabis operators to fall.
It's possible that the U.S. could be on the path to legalize medical cannabis at the federal level and change laws to recognize states' rights to enforce their own recreational marijuana laws. My view is that's exactly what will happen if the Democrat Party retakes the White House and the Senate.
However, even if more rivals come onto the scene, I still think IIP has a pretty good chance of doubling before 2022 is over. While U.S. marijuana legalization could increase competition for the company, it would also likely expand IIP's market opportunities significantly. IIP should be the exact opposite of a boring, low-growth company over the next couple of years.
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IIPR, TCNNF - >>> Forget Tesla! Buy These 2 High-Growth Pot Stocks Instead
These cannabis companies are outperforming the market this year and should continue to enjoy a wind at their backs.
Motley Fool
Prosper Junior Bakiny
Sep 5, 2020
Tesla's (NASDAQ:TSLA) stock has been scorching hot over the past year. Even amid a volatile coronavirus market, the company hasn't slowed down. Over the trailing 12-month period, shares of the electric car maker are up by 1,030%. While Tesla stands out as a leader in the electric vehicle industry and is set up for an exciting future following a meteoric rise, the company's stock isn't cheap -- not by a long shot.
Tesla is currently trading at about 1,158 times past earnings, and its forward price-to-earnings (P/E) ratio is 333.3. Tesla's valuation metrics are seriously steep, even for a growth stock. Investors looking for companies with strong growth potential that are priced more fairly should check out these two cannabis stocks that I think fit the bill: Trulieve Cannabis (OTC:TCNN.F) and Innovative Industrial Properties (NYSE:IIPR). Here is why both of these companies are well-positioned to deliver market-beating returns.
1. Trulieve Cannabis
Trulieve Cannabis has chosen to focus its efforts in one area: Florida's medical cannabis market. The vertically integrated pot company currently operates 57 of its 59 total U.S. dispensaries in the Sunshine State. Trulieve Cannabis' decision to hone in on the state of Florida has had its perks.
The company profits from a first-mover advantage in many parts of the state, having opened the first dispensary in 19 of the 29 municipalities where it operates. As a result, the company benefits from "brand recognition and media attention," two edges that attract customers. Trulieve Cannabis' financial results prove these advantages.
During the second quarter, which ended on June 30, the company reported $120.8 million in total revenue, representing a 26% sequential quarter-to-quarter increase and a 109% year-over-year increase. Trulieve Cannabis also reported adjusted earnings before taxes, expenses, depreciation, and amortization (EBITDA) of $60.5 million, 23% higher than the previous quarter, and 92% higher than the year-ago period. Moving forward, the company will probably continue this performance for one major reason.
Legal cannabis spending in the state of Florida is set to reach $2.5 billion by 2024, up from $659.6 million in 2019, according to the research firm BDS Analytics. Medical cannabis will account for $2.2 billion of this total spending, and Trulieve Cannabis is well-positioned to profit from this market expansion.
Finally, the company is currently selling for 19.39 times past and about 21 times forward earnings. This is very reasonable considering that Trulieve has enjoyed 10 consecutive quarters of profitability and growth in an industry where that achievement is a pipe dream of most businesses. In my view, these factors make Trulieve Cannabis one of the most attractive and exciting pot stocks available.
2. Innovative Industrial Properties
Investors looking for pure-play cannabis stocks won't find what they are looking for in Innovative Industrial Properties, but it would be a grave mistake for them to ignore this company. With its shares up by 555% since its December 2016 IPO, this real estate investment trust (REIT) has consistently outperformed the broader market.
Innovative Industrial Properties has been able to perform well thanks in part to its winning business model. The company purchases real estate properties from medical-cannabis operators and leases these properties back under long-term agreements. Innovative Industrial Properties currently boasts 61 properties in 16 states, with an average lease length of 16.1 years.
Innovative Industrial Properties has made recording strong financial results a habit. During the second quarter that ended on June 30, the company recorded a revenue of $24.3 million, representing a 15.2% sequential increase and a 182.5% year-over-year increase. Innovative Industrial Properties also recorded a net income of about $13.3 million, compared to the $11.9 million it recorded during the first quarter and the $3.4 million it recorded during the year-prior second quarter.
And the company still has room to grow. Innovative Industrial Properties established itself as a leader in its field as the first publicly-traded on the New York Stock Exchange (NYSE) to provide real estate capital to the medical cannabis industry. Medical uses of marijuana are now legal in 33 states and the District of Columbia, which means Innovative Industrial Properties is well-positioned to continue expanding its operations throughout the country.
And while estimates of the growth of the medical marijuana market in the U.S. vary, most agree that it will increase rapidly in the coming years. Sales of medical cannabis products in the U.S. will grow at a compound annual growth rate (CAGR) of 17% through 2025 and reach $13.1 billion by 2025, up from $4.4 billion in 2018, according to data analytics firm New Frontier Data.
This means that the demand for Innovative Industrial Properties' services will likely increase. Also, investors who buy shares of Innovative Industrial Properties can enjoy a dividend yield of 3.11% -- compared to the average 1.82% of the S&P 500 -- and a reasonable cash payout ratio of 61.7%. The company has raised its dividends by 606.7% over the past three years, making it an attractive stock for income-oriented investors.
Strong growth prospects, consistent profitability, and a juicy dividend yield make this company a unicorn in the pot industry. For those reasons, Innovative Industrial Properties is well worth its valuation metrics. The company's P/E ratio is 44.4, while its forward P/E is 37.40. Investors looking to buy top cannabis stocks should consider adding Innovative Industrial Properties to their portfolios.
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>>> Hemp, Inc. (HEMP) focuses on the provision of industrial hemp. The company is involved in processing and farming industrial hemp; extracting hemp CBD oil; and educating and empowering hemp farmers and entrepreneurs with knowledge, processing, infrastructure, and support. It also engages in the sale of hemp accessories, such as extractors, harvesters, storage bags, containers, fertilizer, soil amendments, humidifiers, dehumidifiers, balers, greenhouses, and greenhouse equipment; and drying, trimming, curing, storing, and brokering for other farmers harvesting hemp, as well as provision of research and development, hemp consulting, and educational entertainment services. The company was formerly known as Marijuana, Inc. and changed its name to Hemp, Inc. in June 2012. Hemp, Inc. was founded in 2008 and is based in Las Vegas, Nevada. <<<
>>> Green Thumb Industries Inc. (GTBIF) manufactures, distributes, and sells various cannabis products for medical and adult-use in the United States. It offers cannabis flower; and processed and packaged products, including concentrates, edibles, and topical and other cannabis products under the Rythm, Dogwalkers, The Feel Collection, incredibles, Dr. Solomon's, Beboe, and other brands. The company distributes its products primarily to third-party retail stores, as well as sells finished products directly to consumers in its own Rise retail stores. As of August 12, 2020, it owned and operated 48 retail stores. It also had licenses for 96 locations across 12 U.S. markets. The company was founded in 2014 and is headquartered in Chicago, Illinois. <<<
>>> Cresco Labs Inc. (CRLBF), together with its subsidiaries, cultivates, manufactures, and sells medical cannabis and medical cannabis products in the United States. It offers cannabis in flowers, live concentrates, and liquid live resins under the Cresco and Reserve brands; soft gels, tinctures, and lotions under the Remedi brand; gummies, fruit chews, hard sweets, and chocolates under the Mindy's brand; and vape pens, popcorn, shake, pre-rolls, and shorties under High supply brand. It operates 22 dispensaries in Illinois, Pennsylvania, Ohio, California, Nevada, Arizona, Massachusetts, and New York. The company is headquartered in Chicago, Illinois. <<<
>>> Trulieve Cannabis Corp. (TCNNF), together with its subsidiaries, operates as a medical cannabis company. The company cultivates and produces products in-house and distributes its products to Trulieve branded stores (dispensaries) in Florida, California, Massachusetts, and Connecticut, as well as directly to patients through home delivery. It produces approximately 155 stock keeping units, including smokable flower, flower pods for vaporizing, concentrates, topicals, capsules, tinctures, and vape cartridges. As of April 17, 2020, the company operated through 45 dispensaries in Florida. Trulieve Cannabis Corp. is headquartered in Quincy, Florida. <<<
>>> Curaleaf Holdings, Inc. (CURLF) operates as an integrated medical and wellness cannabis operator in the United States. It operates in two segments, Cannabis Operations and Non-Cannabis Operations. The Cannabis Operations segment engages in the production and sale of cannabis through 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. It offers oils for vaporizing, cartridges, concentrates, tinctures, mints, capsules, edibles, and flower pods. The company also provides hemp-based CBD products. As of June 29, 2020, it operated 57 dispensaries, 15 cultivation sites, and 24 processing sites in 18 states. The company was founded in 2010 and is headquartered in Wakefield, Massachusetts. <<<
Innovative Industrial Properties - >>> 3 Cannabis Stocks That Are Well Positioned To Benefit From Industry Growth
Benzinga
IAM Newswire
September 4, 2020
https://finance.yahoo.com/news/3-cannabis-stocks-well-positioned-152245746.html
More and more countries are likely to follow the trend of legalizing medical marijuana. The truth is that there is plenty of competition among growers, and that a few cannabis companies are showing a profit. Consequently, this unprecedented year was tough for these stocks as the Alternative Harvest ETF (NYSEMKT: MJ) which tracks the whole industry is down more than 23% year to date.
But there are plenty of growth opportunities ahead. And here are three stocks that can make good use of this trend.
Innovative Industrial Properties – All The Positives Of Investing In Cannabis
There is one marijuana stock that's up and it is Innovative Industrial Properties Inc (NYSE: IIPR). It is a fast-growing, real estate investment trust that was founded in 2016. Moreover, it is the first company on the New York Stock Exchange to provide real estate capital to the medical-use cannabis industry. When it comes to cannabis-related stock, it is a rare find with safe and high yields. It simply does a good job at capturing the benefits of investing in the industry. Most importantly, it has solid fundamentals that resulted in both revenue and profit growth.
In the second quarter, revenue increased 183% year-over-year as it amounted to $24.3 million. As for the net income of $13 million, it is even more impressive considering it is 263% more than during the same period in 2019. Now, it has 14 consecutive quarters of increased revenue and 12 consecutive quarters of increased earnings to fall back on. Since April, the company purchased eight properties which amount to 775,000 square feet of space. On September 1, it announced it closed on the acquisition of a property in Michigan. Its portfolio now has 62 properties in 16 states comprising over 4.7 million square feet -- 99% is its properties are under a long-term lease.
While some of the company's renters have seen business fall because of the pandemic, Innovative Industrial Properties said all of its renters paid what they owed from April to July, not counting one Los Angeles company in receivership. Its tenants are the VIPs of the industry, including Curaleaf Holdings Inc (OTC: CURLF), Trulieve Cannabis Corp (OTC: TCNNF), Cresco Labs Inc (OTC: CRLBF), and Green Thumb Industries Inc (OTC: GTBIF).
Moreover, the company keeps expanding its portfolio with new buildings and tenants. Since dividend was introduced in 2017, dividend payout was raised by more than 600%. Naturally, its price has climbed more than 60% year-to-date but growth opportunities will directly increase with market expansion.
Hemp Inc – Ground-Breaking Milestones Ahead
Back in August, Hemp Inc (OTC: HEMP) surpassed $2 million in sales from its premium, high quality hemp flower. The company expects to hit ground-breaking milestones quarterly with other products that are yet to come. Its CEO, Bruce Perlowin reported a frustrating first quarter filled with disruptions but also encouraged investors that the company is going full speed ahead. Global leader in the industrial hemp industry started a mass marketing campaigns so the company is certain it will have revenue in the millions to report for the third quarter and beyond. As a part of its bold strategy, Hemp was focused on growing and processing a high CBD hemp grow in Southern Oregon, and the fruits of its labor started blooming in the second quarter.
Research and Markets reported the global industrial hemp market is projected to grow from $4.6 billion in 2019 to $26.6 billion by 2025. This forecast implies a CAGR of 34%. Additionally, the Brightfield Group predicts the smokable hemp flower market will be valued at $70.6 million this year which is a drastic increase when compared to 2018's $11.7 million.
KushCo Is Well Positioned With Its Global Footprint And Range Of Products
Despite seeing its revenue drop almost by half, KushCo Holdings Inc (OTC: KSHB) has been able to successfully cut costs dramatically in order to sustain itself while attempting to move towards positive EBITDA. The recognized and respected provider of ancillary products and services to the legal cannabis and CBD industries represents an ideal partner for companies such as XS FINL INC/SH (OTC: XSHLF). XS is a specialty finance company that leases equipment to cannabis and hemp companies in the U.S. It entered into a strategic partnership with KushCo on January 31st this year. On September 2, its CEO had nothing but praise for its associate. He said that XS hse been able to take advantage of additional lead generation through KushCo's extensive network, positioning the company to collaborate with a high-quality customer base resulting in larger leasing agreements with the potential for more business in the future. Besides being a reputable brand with a global footprint, KushCo has a diverse range of cannabis-related products under its belt.
Outlook
2020 took a toll even on the mightiest. But there are plenty of growth possibilities in cannabis, especially as more and more medical studies are being conducted to prove its efficiency. Data Bridge Market Research forecasted that the global market for medical marijuana is expected to have a 20% compound annual growth rate through 2027. The above companies are well-positioned to benefit from this growth.
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>>> Innovative Industrial Properties Acquires Michigan Property and Expands Real Estate Partnership with Holistic Industries
Business Wire
September 1, 2020
https://finance.yahoo.com/news/innovative-industrial-properties-acquires-michigan-214000505.html
IIP Expands Property Portfolio to 62 Properties in 16 States Comprising Over 4.7 Million Square Feet
Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it closed on the acquisition of a property located at 29600 Stephenson Highway in Madison Heights, Michigan.
The purchase price for the property was $6.2 million (excluding transaction costs). Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement with a subsidiary of Holistic Industries Inc. ("Holistic"), which intends to operate the property as a regulated cannabis cultivation, processing and dispensing facility, upon completion of development of an approximately 63,000 square foot industrial building. In connection with the development of the property, IIP has agreed to provide reimbursement of up to $18.8 million. Assuming full reimbursement for the development of the property, IIP’s total investment in the property will be $25.0 million.
In addition to the Michigan property, IIP owns and leases to Holistic three other properties in Maryland, Massachusetts and Pennsylvania.
As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
"We have had the privilege of being Holistic’s long-term real estate partner since 2017, and supporting them in their expansion over the years with key growth capital along the way," said Paul Smithers, President and Chief Executive Officer of IIP. "Josh and his team of dedicated professionals have set a standard for product quality, patient care and customer experience that we are proud to support, and we are thrilled for the success that they have achieved."
Holistic is one of the largest private, vertically-integrated multi-state operators in the cannabis industry, with operations in California, Maryland, Massachusetts, Michigan, Pennsylvania and Washington D.C. Founded by Chief Executive Officer Josh Genderson in 2011, Holistic’s success is driven by its unique and scalable approach and mission to be the best place to work, shop and invest in the cannabis industry. Holistic is dedicated to delivering exceptional cannabis products to patients and customers in an environment of highly focused customer service and individualized patient care.
"IIP has been an excellent real estate partner, and we appreciate their unwaivering support in facilitating our expansion over the past three-plus years," said Josh Genderson, Chief Executive Officer of Holistic. "We look forward to working closely with IIP in the development of this property and the vision we have for the community, creating a state-of-the-art facility that produces the high quality, consistent product, with a compassionate, customer-focused experience for our patients and customers, and an operation that provides great jobs and opportunities for career advancement for local residents."
According to a Michigan Marijuana Regulatory Agency report, July 2020 total sales for medical-use and adult-use cannabis were approximately $109.6 million, equating to approximately $1.3 billion in sales on an annualized basis and representing a continued strong, month-to-month growth. Michigan began regulated adult-use cannabis sales in December of last year. As of today, IIP’s total investment, including committed funding for future tenant improvements, for the properties IIP owns in Michigan is approximately $155.8 million.
As of September 1, 2020, IIP owned 62 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.7 million rentable square feet (including approximately 1.7 million rentable square feet under development/redevelopment), which were 99.3% leased (based on square footage) with a weighted-average remaining lease term of approximately 16.0 years. As of September 1, 2020, IIP had invested approximately $844.8 million in the aggregate (excluding transaction costs) and had committed an additional approximately $245.9 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $14.5 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenant at that property may not elect to have IIP disburse those funds to the tenant and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
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>>> EnWave Announces 2020 Third Quarter Consolidated Interim Financial Results and Corporate Strategy Update
GlobeNewswire
August 28, 2020
https://finance.yahoo.com/news/enwave-announces-2020-third-quarter-130000219.html
VANCOUVER, British Columbia, Aug. 28, 2020 (GLOBE NEWSWIRE) -- EnWave Corporation (TSX-V:ENW | FSE:E4U) (“EnWave”, or the "Company") today reports the Company’s consolidated interim financial results for the third quarter ended June 30, 2020.
Consolidated Financial Performance:
($ ‘000s) Three months ended June 30, Nine months ended June 30,
2020 2019 Change
% 2020 2019 Change
%
Revenues 5,998 10,075 (40 %) 22,099 26,654 (17 %)
Direct costs 4,441 7,217 (38 %) 15,483 17,639 (12 %)
Gross margin 1,557 2,858 (46 %) 6,616 9,015 (27 %)
Operating expenses
General and administration 1,197 1,118 7 % 4,513 3,165 43 %
Sales and marketing 1,449 1,203 20 % 5,188 3,263 59 %
Research and development 396 665 (40 %) 1,412 1,375 3 %
3,042 2,986 2 % 11,113 7,803 42 %
Net loss for the period after taxes (1,166 ) (1,322 ) 12 % (4,442 ) (1,561 ) (185 %)
Adjusted EBITDA(*) (1,034 ) 139 (844 %) (3,239 ) 2,304 (241 %)
Loss per share – basic and diluted $ (0.01 ) $ (0.01 )
$ (0.04 ) $ (0.02 )
* Adjusted EBITDA is a non-IFRS financial measure. Refer to the disclosure below regarding non-IFRS financial measures and in the Company’s MD&A.
EnWave’s interim consolidated financial statements and MD&As are available on SEDAR at www.sedar.com and on the Company’s website www.enwave.net.
Key Financial Highlights for Q3 (expressed in ‘000s):
Revenue from EnWave in Q3 2020 was $1,609 compared to $5,075 in Q3 2019, a decrease of $3,466 or 68%. The decrease in revenue was due to a slowdown in large-scale Radiant Energy Vacuum (“REVTM”) machinery sales primarily to cannabis royalty partners.
Revenue from NutraDried in Q3 2020 was $4,389 compared to $5,000 in Q3 2019, a decrease of $611 or 12%. NutraDried revenues were downwardly impacted by several retailers in the U.S. that were required to close during the early months of the COVID-19 lockdown. Lower revenue derived from retail sales was offset by a 160% increase in online sales during the quarter.
Gross margin for Q3 2020 was 26% compared to 28% for Q3 2019, with the lower gross margin driven by a change in sales mix, with proportionately lower NutraDried revenues, paired with lower overhead absorption at NutraDried with curtailed production volume.
SG&A expenses (inclusive of R&D expenses) for Q3 2020 were $3,042 compared to $2,986 for Q3 2019 and $3,835 for Q2 2020. In March 2020, the Company implemented a cost containment strategy to lower SG&A expenses across both business units. For Q3 2020, SG&A expenses were reduced by $793 compared to Q2 2020. EnWave and NutraDried remain focused on reducing non-essential and discretionary expenses to reduce overhead while maintaining operations in response to COVID-19 challenges.
Reduced company-wide overhead expenses by $1.0 million over three- months relative to Q2 2020; the result of bold and significant cost containment measures implemented in response to the current global pandemic.
Consolidated net loss after taxes was $1,166 for Q3 2020 compared to a net loss $1,322 for Q3 2019. Adjusted EBITDA(*) was negative $1,034 for Q3 2020, compared to positive $139 for Q3 2019, a decrease of $1,173. The decrease to Adjusted EBITDA(*) reflects the negative impacts of COVID-19 on the Company, including the delay in commissioning of several REVTM machines caused by international travel restrictions and disruptions to retail distribution of Moon Cheese® in Canada and the U.S.
Maintained a strong balance sheet with a working capital surplus of $23,780 and cash balance of $15,559. Our cash position was unchanged from Q2 2020, a result of the cost containment strategies implemented in the quarter. The Company is well positioned with a robust treasury to advance the expansion of the global deployment of REVTM technology.
Q3 Significant Accomplishments:
Significant accomplishments made during Q3 2020 and to the date of this report include:
Signed an exclusive royalty-bearing commercial license agreement with Orto Al Sole Di Gandini Claudio (“Orto Al Sole”), a family-owned Italian fruits and vegetable producer. Orto Al Sole purchased a 10kW REV™ machine to initiate commercial production of premium dried fruit and vegetable snack products for the European market.
Signed a royalty-bearing commercial license agreement with Pick-One S.A. de C.V. (“Pick-One”) following a successful evaluation and development of shelf-stable snack prototypes. Pick-One will be producing dried cheese and fruit snacks using REVTM technology for the retail grocery market in Mexico. Pick-One has begun royalty-bearing commercial operations using a 10kW REV™ machine at its Chihuahua manufacturing facility in Mexico.
Signed an equipment purchase agreement with Calbee Inc. (“Calbee”), Japan’s largest snack food company with global operations, for an additional two 10kW REVTM machines to be installed in Japan in preparation for the commercial launch of REVTM-dried snack products. Calbee has successfully developed several “better-for-you” snack products internally using REV™ technology and intends to intensify its commercialization, focusing on premium, healthy fruit and vegetable snack products.
Completed the installation of a 60kW REVTM processing line for The Green Organic Dutchman Holdings Ltd. (“TGOD”) in Ancaster, Ontario. EnWave has completed training TGOD personnel on the commercial use of EnWave’s machinery for the dehydration of cannabis and expects to begin accruing royalties starting in Q4 2020. This fully commissioned REV™ system producing high-quality flower products demonstrates the value proposition of using EnWave’s technology for large-scale cannabis producers.
Developed a remote installation program which enables our partners to skillfully collaborate with our engineering department to commission a 10kW REVTM machine to counter the travel restrictions imposed by COVID-19 on our business operations and ability to earn royalties. EnWave and its licensed partner, Responsible Foods, located in Iceland, completed the first successful remote commissioning of a 10kW REVTM dehydration machine and plans to replicate this remote commissioning program with other partners while there are restrictions on international travel.
Completed the fabrication of a 100kW REVTM processing line including an auxiliary materials conveyance system, for Fresh Business, a Peruvian royalty partner. The machine was crated and shipped to Peru and will be installed for the royalty-bearing commercial manufacture of premium fruit and vegetable products intended for export to Western markets.
Secured an October 2020 national promotion with a major club retail customer in the U.S. for the 10oz Cheddar Moon Cheese® product, where the product will be sold in all U.S. regions of the customer under a promotional discount. This promotion will run in all U.S. stores of the major club retailer for the month of October, and will liquidate a substantial portion of NutraDried’s inventory, improving the balance sheet and cash position of the Company.
Signed three new Technology Evaluation and License Option Agreements with companies that will rent 10kW REVTM machinery to evaluate the commercialization of new and innovative products that leverage the Company’s patented dehydration technology.
Redesigned the mooncheese.com website to be more interactive and consumer friendly, and more effective in communicating our core advantages, with a focus on growing the high-margin online sales of Moon Cheese®. The newly improved website was operating for Q3 2020 and online sales for NutraDried increased 160% year-over-year in the period.
REVworxTM Toll Manufacturing Division:
EnWave intends to start a new operating division called “REVworxTM” that will serve as a toll manufacturing facility for companies seeking third-party manufacturing resources to launch new and innovative REVTM-dried products into the marketplace. At present, there are no large-scale REVTM-processing facilities that have flexible toll manufacturing capability in North America, and there is a growing demand from consumer products companies for this service.
With the internal capacity to toll manufacture REVTM products, EnWave expects to accelerate the commercial introduction of REVTM products into the consumer marketplace while building a recurring revenue business through tolling contracts. Management anticipates this service will complement its global machine sales and royalty-licensing business model by enabling access to REVTM machinery for companies that would otherwise not pursue in-house commercial adoption of the technology.
The project is in the initial stages of planning, including identifying a suitable facility locally in Metro Vancouver to install a large-scale REVTM processing line and auxiliary equipment. The Company aims to secure a facility and have it ready for commercial food production in early calendar 2021.
Cost Containment Strategy:
The effects of the COVID-19 pandemic and measures to prevent its spread have had an impact on our operations and financial performance, and as a result, we undertook prudent measures to maintain a strong financial position by reducing expenses and managing short-term liquidity. The steps taken by the Company include:
Curtailed non-essential and discretionary expenses across all segments of the business, including manufacturing overheads and SG&A expenses as well as R&D expenses.
Reduced manufacturing overheads by sub-leasing two underutilized warehouse units at EnWave’s Delta facility.
Postponed or cancelled international business travel and in-person tradeshows.
Eliminated the use of contractors wherever possible and in-sourced several functions that were previously managed by external contractors.
Downsized staff by 36 full-time employees (19 at NutraDried and 17 at EnWave).
Reduced NutraDried’s marketing programming budget for the balance of the year and reallocated the reduced budget to channels expected to yield near-term positive results.
Leveraged the Canada Emergency Wage Subsidy (“CEWS”) program in Canada, and the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) program in the U.S.
As a result of these cost containment strategies implemented starting in Q3 2020, the Company has significantly reduced overhead expenses by approximately $1.0 million in Q3 vs Q2 2020. The Company aims to be prudent in managing expenses and liquidity while maintaining the ability to rapidly scale-up when economic conditions improve.
COVID-19 Pandemic:
Since the beginning of the global pandemic, we have and continue to prioritize the health and safety of our employees and their families, and our partners. We continue to follow all of the regulations set by Provincial and State governments and health authorities in all markets in which we operate our business.
The international travel restrictions imposed globally to contain the spread of the virus continues to have an impact on EnWave’s international operations. Our ability to meet with prospective global partners and to complete the installations of additional royalty-bearing REVTM machines have been temporarily impaired due to the pandemic which delays our achievement of billing milestone payments and commencement of commercial production and the related royalties.
EnWave has developed a remote installation program for 10kW machines, which has allowed certain willing partners to collaborate remotely with EnWave’s engineers to commission a 10kW REVTM machine. During Q3 2020, we had one partner successfully complete a remote installation and we are currently working with others to complete this task. The option to remotely install machines is dependent upon our partners’ technical capacity and willingness, and some partners have chosen to wait until EnWave staff can be sent to their site for installation. The timing of these installations is highly dependent on international travel restrictions that are in place and prolonged international travel restrictions will impact our ability to conduct our business.
COVID-19 caused distribution challenges for NutraDried’s products with retail store closures and many retailers pausing new product evaluations. Early in the pandemic, many states imposed shelter-in-place orders that caused a decrease in demand for on-the-go snack products, and many of our retail customers closed entirely for an extended period of time, negatively impacting sales. As the retail environment has now improved in most states, the Company is optimistic that this impact was temporary and should improve over the coming quarters.
Additionally, many retailers in the U.S. that the Company was targeting for new distribution temporarily halted adding new products due to the pandemic, which challenged our ability to secure meetings with buyers to gain new points of distribution for Moon Cheese®. Despite the challenges of the pandemic, NutraDried’s sales and distribution have improved since the start of the pandemic, with June 2020 revenues being the highest monthly shipments in the quarter. Management is optimistic for improved distribution for Moon Cheese® products over the coming quarters as retailers continue to re-open safely and retail supply chains stabilize.
The extent to which COVID-19 may impact our financial and operational performance will depend on future developments, including the duration and severity of COVID-19 in the markets in which we operate. We cannot presently forecast the full duration and magnitude of COVID-19’s impacts on our business over time, or the pace of recovery from the pandemic across our end markets, operations, and supply chains.
(*) Non-IFRS Financial Measures:
Adjusted EBITDA is not a measure of financial performance under IFRS. We define Adjusted EBITDA as earnings before deducting amortization and depreciation, stock-based compensation, foreign exchange gain or loss, finance expense or income, income taxes, non-recurring impairment and restructuring charges and government grants. This measure is not necessarily comparable to similarly titled measures used by other companies and should not be construed as an alternative to net income or cash flow from operating activities as determined in accordance with IFRS. Please refer to the discussion included in the Company’s interim MD&A for the nine months ended June 30, 2020.
About EnWave
EnWave Corporation, a Vancouver-based advanced technology company, has developed a Radiant Energy Vacuum (“REV™”) – an innovative, proprietary method for the precise dehydration of organic materials. EnWave has further developed patented methods for uniformly drying and decontaminating cannabis through the use of REV™ technology, shortening the time from harvest to marketable cannabis products.
REV™ technology’s commercial viability has been demonstrated and is growing rapidly across several market verticals in the food, and pharmaceutical sectors, including legal cannabis. EnWave’s strategy is to sign royalty-bearing commercial licenses with innovative, disruptive companies in multiple verticals for the use of REV™ technology. The company has signed over thirty royalty-bearing licenses to date. In addition to these licenses, EnWave established a Limited Liability Corporation, NutraDried Food Company, LLC, to manufacture, market and sell all-natural dairy snack products in the United States, including the Moon Cheese® brand.
EnWave has introduced REV™ as a disruptive dehydration platform in the food and cannabis sectors: faster and cheaper than freeze drying, with better end product quality than air drying or spray drying. EnWave currently offers two distinct commercial REV™ platforms:
nutraREV® which is a drum-based system that dehydrates organic materials quickly and at low-cost, while maintaining high levels of nutrition, taste, texture and colour; and,
quantaREV® which is a tray-based system used for continuous, high-volume low-temperature drying.
EnWave is also active in the pharmaceutical industry through a joint development agreement with GEA Lyophil, a leader in GMP drying machinery.
More information about EnWave is available at www.enwave.net.
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PZOO - .0001 - Cannabis laboratory in Las Vegas
Outstanding shares - 2,688,214,838 08/03/2020 - https://www.otcmarkets.com/stock/PZOO/security
Authorized shares - 2,950,000,000 @ 0.001. https://esos.nv.gov/EntitySearch/BusinessInformation
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1. Last week the CFO emailed me that "We will be putting out more news in the near future." Hopefully that means real soon. He responded readily to two of my emails so please feel free to write him yourself.
Please see the contents of the last email he sent me below:
Ben Hoehn <ben@pazoo.com>
Thu 8/20/2020 7:40 AM
Hi Phil yes the lab in vegas is open and has been. We will be putting out more news in the near future.
Ben Hoehn
Chief Operating Officer/Acting Chief Financial Officer
PAZOO, Inc.
ben@pazoo.com
Cell 513-967-9964, 1-855-PAZOO-US
www.pazoo.com OTC: PZOO
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2. Their registration in Nevada is current and four officers come up:
https://esos.nv.gov/EntitySearch/BusinessInformation
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3. "Elements of Cannabis have been shown to aid in the fight against COVID-19." - As more confirmation of that comes out I think these super cheap good OS cannabis stocks are going to move, if they haven't already. https://www.spokesman.com/stories/2020/aug/12/cannabis-and-covid-19-researchers-explore-benefits/
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4. Most recent PR (that I'm aware of) is dated November 13, 2019 - "MA & Associates LLC Cannabis Testing Laboratory Receives ISO Accreditation, Passes Inspection" - https://apnews.com/35e7607161b29fec94d69d57190ac85c
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5. A potential concern is their delinquent filings. I've written the corporation asking about that and hopefully they're on top of that.
This NEW pot product is a homerun!
https://www.slangww.com/slang-worldwide-debuts-live-resin-vape-cartridges-in-colorado/
Bruce Linton Invests MORE in Growing Global Brand Portfolio of SLANG?
Today latest updates on the SLANG website - what to learn from the big boys?
>>> EnWave Corporation Refining Development of a Medical Device to Relieve COVID-19 Symptoms
GlobeNewswire
August 25, 2020
https://finance.yahoo.com/news/enwave-corporation-refining-development-medical-130000090.html
VANCOUVER, British Columbia, Aug. 25, 2020 (GLOBE NEWSWIRE) -- EnWave Corporation (TSX-V:ENW | FSE:E4U) (“EnWave”, or the "Company"), announced today it is collaborating with the University of British Columbia (“UBC”) to investigate a manufacturing method for a new inhaler with the goal of using it to help provide relief for COVID-19 patients (the “Project”). The Project will be primarily funded by a $50,000 NSERC Alliance government research grant.
UBC researchers are searching for a drying method that would allow for the encapsulation of microparticles (used to improve the delivery and absorption of drugs) into an inhalable treatment. EnWave’s patented Radiant Energy Vacuum (“REV™”) dehydration technology has shown promise as a viable option for this specific manufacturing process.
UBC researchers involved are Assistant Professor Anubhav Pratap Singh and Professor David Kitts from UBC’s Faculty of Land and Food Systems, and Assistant Professor Mattia Bacca and Postdoctoral Fellow Alberto Baldelli from the Faculty of Applied Sciences.
“This inhalable treatment aims to provide relief to COVID patients while a vaccine is in development. We hope it can be more accessible, reasonably affordable and commercialized much sooner,” said Baldelli.
Currently, there are no preliminary results. However, the research team hopes to generate the first prototypes of encapsulated ACE2 (angiotensin-converting enzyme 2) by the end of the summer. At the same time, project collaborators from the University of Sydney and St. Paul’s Hospital in Vancouver are going to generate data on the toxicology of ACE2 to lung tissue.
Uniformity and process repeatability has previously been demonstrated through the use of REV™ technology in the pharmaceutical industry. A cGMP REV™ machine design has previously been built and has demonstrated fast drying cycles for vaccines (approx. 6 hours to 12 hours) with equal or superior retention of biological activity compared to traditional lyophilization techniques. Competing lyophilization technologies generally take 24 hours or longer to stabilize pharmaceutical products.
Researchers at UBC and EnWave are assessing the feasibility of REV™ technology for the manufacture of the inhalable ACE2 encapsulated microparticle. The Project will be segmented into two phases, a lab scale feasibility assessment and a proof of concept trial.
Recent funding for this research has been approved by the Government of Canada through the Natural Sciences and Engineering Research Council (“NSERC”). The Project is entitled: “Treating the early symptoms of Covid19 by encapsulating recombinant ACE2”.
“The innovative nature of our proprietary drying technology could support a breakthrough in the commercial feasibility of the COVID-19 treatment that our UBC collaborators have been developing,” stated EnWave’s CEO, Mr. Brent Charleton. “We hope that this Project will lead to a viable treatment against COVID-19 and help strengthen the fight against this pandemic.”
About EnWave
EnWave Corporation, a Vancouver-based advanced technology company, has developed Radiant Energy Vacuum (“REV™”) – an innovative, proprietary method for the precise dehydration of organic materials. EnWave has further developed patented methods for uniformly drying and decontaminating cannabis through the use of REV™ technology, shortening the time from harvest to marketable cannabis products.
REV™ technology’s commercial viability has been demonstrated and is growing rapidly across several market verticals in the food, and pharmaceutical sectors, including legal cannabis. EnWave’s strategy is to sign royalty-bearing commercial licenses with innovative, disruptive companies in multiple verticals for the use of REV™ technology. The company has signed over thirty royalty-bearing licenses to date. In addition to these licenses, EnWave established a Limited Liability Corporation, NutraDried Food Company, LLC, to manufacture, market and sell all-natural dairy snack products in the United States, including the Moon Cheese® brand.
EnWave has introduced REV™ as a disruptive dehydration platform in the food and cannabis sectors: faster and cheaper than freeze drying, with better end product quality than air drying or spray drying. EnWave currently offers two distinct commercial REV™ platforms:
nutraREV® which is a drum-based system that dehydrates organic materials quickly and at low-cost, while maintaining high levels of nutrition, taste, texture and colour; and,
quantaREV® which is a tray-based system used for continuous, high-volume low-temperature drying.
EnWave is also active in the pharmaceutical industry through a joint development agreement with GEA Lyophil, a leader in GMP drying machinery.
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>>> 7 Marijuana Stocks to Buy As the Industry Continues to Grow
InvestorPlace
by Joel Baglole
August 21, 2020
https://finance.yahoo.com/news/7-marijuana-stocks-buy-industry-150223679.html
Finding the best marijuana stocks to buy isn’t an easy task. However, despite having generally under performed, many still have a lot of potential.
While differing regulations across jurisdictions and borders have hampered near-term growth, the global legal marijuana market is still forecast to reach $73.6 billion by 2027, according to market research by Grand View Research Inc.
That equates to a compound annual growth rate (CAGR) of 18% in each of the next seven years. The continued legalization of both medical and recreational marijuana in the U.S. and abroad is expected to propel the industry higher. This means there will still be promising marijuana stocks to buy as several should rise in coming years. While the road ahead might be volatile, there’s no doubting the potential growth that is waiting to be unlocked in marijuana stocks for long-term investors.
Here are seven marijuana stocks that investors shouldn’t overlook:
Canopy Growth (NYSE:CGC)
Tilray (NASDAQ:TLRY)
Aurora Cannabis (NYSE:ACB)
Aphria (NASDAQ:APHA)
GrowGeneration (NASDAQ:GRWG)
Cronos Group (NASDAQ:CRON)
Hexo (NYSE:HEXO)
Let’s take a look at what makes each among the best marijuana stocks to buy now.
Marijuana Stocks to Buy:
Canopy Growth (CGC)
We’ll start with the largest marijuana company by market capitalization, Canopy Growth. Being the biggest player in the recreational marijuana space has made Canopy Growth vulnerable to the industry’s growing pains over the past few years.
Earlier in 2020, the Canadian-based company reported a whopping 1.3 billion CAD loss for its fiscal fourth quarter, announced the layoff of 500 staff members and closed two of its largest greenhouses where it grows marijuana. The company also scrapped plans to open a new third greenhouse. Additionally, Canopy Growth has endured a lot of changeover among its executive ranks and board of directors. The Chief Executive Officer, Chief Operating Officer and Chief Commercial Officer have each changed in the past year.
All the turmoil has wreaked havoc with CGC stock, which is 41% below its 52-week high at $16.92 a share. Yet, there is reason to be optimistic about Canopy Growth’s future prospects.
The company’s most recent fiscal first quarter results were much improved, demand for recreational marijuana has risen since the novel coronavirus pandemic brought life as we know it to a halt, and Canopy Growth is cash rich, having 2 billion CAD in reserves. These facts mean that Canopy Growth is more resilient than many smaller marijuana companies and capable of withstanding the industry’s ups and downs. The company has also seen an upswing in its medical marijuana sales and recently launched a new U.S. focused e-commerce website called ShopCanopy.com that gave its shares a boost.
Investors can expect that Canopy Growth will find its footing and that its share price will appreciate in time. As such, it remains one of the key marijuana stocks to buy.
Tilray (TLRY)
Like most marijuana companies, Tilray has seen its stock get beat up over the past year. In fact, TLRY stock has fallen 85% in the past 12 months and is now trading at just over $7 a share.
However, investors playing the long game should look at Tilray stock as a buying opportunity at current valuations. On Aug. 10, Tilray released its second-quarter results that were downright scary. From April 1 through to June 30, the company lost $81.7 million, a 125% increase from the $36.3 million loss reported in the same period of 2019. Sales across all business segments, including hemp products, rose by only 10% year-over-year in the second quarter to $50.4 million. The poor results sent investors fleeing and TLRY stock fell 13% the next day.
However, it’s not all bad for Tilray. Investors looking for a silver lining can take comfort from the fact that sales from the company’s international segment, while totaling only $8.3 million, were up 349% from the second quarter of 2019, and medical marijuana sales also jumped in the most recent quarter. Also, Tilray has a product line that is more diverse than many marijuana companies, focusing on recreational and medical products, as well as hemp.
It all bodes well for the company’s long-term prospects. Plus, much of the second quarter loss can be attributed to one-time, non-recurring charges and a one time inventory write down. TLRY stock may surprise on the upside in the coming months.
Aurora Cannabis (ACB)
Aurora Cannabis’ stock been a real yo-yo. The price of ACB stock had grown nearly 250% between 2015 and when Canada officially legalized marijuana use throughout the country in 2018. However, the share price then fell 91% from its record high of $128.27 on poor earnings and a lack of demand for legal marijuana products.
But after reporting better than expected quarterly results this spring, the price of ACB stock jumped 200% in one week to $17.40 a share. Sadly, the stock has fallen again in recent months and now trades just under $10 per share. So what to make of this extremely volatile stock and the company behind it?
Like many marijuana producers, Aurora Cannabis has struggled with fluctuating demand and struggled to manage its inventory. The company has closed five of its production facilities and sold off its largest greenhouse that had one million square feet of production space. Aurora Cannabis has also halted construction on two other production facilities that had been in the works. With scaled down operations, Aurora Cannabis has forecast that it will post an operating profit by the first quarter of 2021. Time will tell if the company succeeds, but investors may want to consider grabbing ACB shares before they jump higher — again.
Aphria (APHA)
Not only is Aphria one of the largest marijuana companies with a market capitalization of $1.30 billion, but the company’s stock is outperforming the broader sector. Since August 2019, APHA stock is down 25% to $4.63 a share, compared with a decline of 52% for the Horizons Marijuana Life Sciences ETF, which is widely used by analysts as an industry benchmark. There’s reason to be bullish on Aphria, which is doing better today than many of its peers.
Aphria is moving aggressively into the cannabis derivative market that includes edible products, and is also focusing on vape products, where it is currently the market leader. Also, Aphria is ranked No. 1 in the adult-use recreational cannabis market in Canada, where the drug is 100% legal in all jurisdictions. And, Aphria is also having success expanding into Europe, notably Germany, due to several strategic acquisitions.
GrowGeneration (GRWG)
Now for a marijuana stock that has been crushing it lately. On Aug. 13, GRWG stock was trading at $9.88 per share. In the last five trading days, the stock price has more than doubled (up 123%) to $22.02. The stunning jump has been due to the fact that the company’s sales grew more than 100% in the second quarter on strong demand for its hydroponic and gardening products that are used by marijuana growers large and small.
While GrowGeneration’s shares trade at 156 times expected earnings, the current share price could be justified if the company can maintain its current sales momentum and meet its ambitious growth projections. Chief Executive Officer Darren Lampert is confident, noting that his company is well-positioned to capitalize on a multi-billion dollar industry that is still in its infancy. If he’s right, and GrowGeneration can continue supplying marijuana growers with the equipment needed to cultivate the plant, then GRWG stock may be cheap at its current level.
Cronos Group (CRON)
As a marijuana producer, Cronos Group is vulnerable to the challenges that have plagued the entire industry in the U.S. and Canada. Covid-19 related store closures, inconsistent regulations and government red tape, and a strong black market have conspired to hurt Cronos Group’s sales and growth. For the second quarter, the company reported an operating loss of $31.3 million, compared to a loss of $16.8 million in the year earlier period. The news sent CRON stock down 16% recently, and it currently trades at $5.44 a share.
Despite the struggles, Cronos Group is well positioned to ride out the current turmoil and stay afloat until it can find firmer footing. The company ended the second quarter with more than $1.3 billion in cash and investments, which is more than most of its competitors. Equally positive, Cronos Group has almost no debt and there are signs that the entire marijuana market might be bottoming. Nowhere left to go but up — fingers crossed.
Hexo (HEXO)
Now we’re firmly into penny stock territory as Hexo’s share price is currently under $1 at just 72 cents per share. HEXO stock has been more beat up than most marijuana companies. In 2019, it was trading at nearly $8 per share. The sharp decline has come after Hexo’s marijuana infused beverages — it has a strategic partnership with beer maker Molson Coors (NYSE:TAP) — failed to takeoff as hoped. Staff layoffs and production facility closures have followed.
But to its credit, Hexo has been working to diversify its offerings, selling a range of marijuana products such as cannabis oils, sub-lingual sprays, marijuana powder and dried flowers. Also, Hexo operates and sells in marijuana markets around the world, even Israel. This diversification offers a glimmer of hope for the battered HEXO stock and its shareholders.
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>>> GrowGeneration to Take Action Against Hindenburg Research for Statements Intended to Manipulate Stock Price
PR Newswire
August 21, 2020
https://finance.yahoo.com/news/growgeneration-action-against-hindenburg-research-224100860.html
DENVER, Aug. 21, 2020 /PRNewswire/ - GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the "Company"), the largest chain of specialty hydroponic and organic garden centers with 28 locations, today announced that it believes it has uncovered fraudulent attempts to manipulate the Company's stock.
On August 21, 2020, an organization calling itself "Hindenburg Research" published false and defamatory statements about certain Officers and Directors of the Company designed to provide a false impression to investors and to manipulate the market to benefit short sellers.
GrowGen intends to collaborate with law enforcement and regulators to ensure that any criminal activity is investigated and prosecuted. GrowGen will be taking steps to ensure that the organization ceases and desists from all illegal and otherwise wrongful activity. GrowGen will vigorously defend the value of the Company on behalf of shareholders and investors.
About GrowGeneration Corp.:
GrowGen owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 28 stores, which include 5 locations in Colorado, 6 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators, located at www.growgen.pro and www.growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the major states in the US and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the US. By 2025, the global hydroponics system market is estimated to reach approximately $16 billion.
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>>> Is Innovative Industrial Properties a Great Dividend Stock?
The cannabis company raised its payouts by 6% earlier this year.
Motley Fool
David Jagielski
Aug 23, 2020
https://www.fool.com/investing/2020/08/23/is-innovative-industrial-properties-a-great-divide/
Are you looking for a great dividend stock? They're often hard to find, and that's because it takes a lot to be one. The company needs to pay investors an above-average yield, it should increase its payouts regularly, and the dividend payments should also be safe. You want to be able to just buy the stock and not worry about it.
Today, I'll look at whether cannabis-focused Innovative Industrial Properties (NYSE:IIPR) hits all the checkmarks to be considered a great dividend stock. Let's take a close look at not just the company's dividend, but the strength of Innovative's overall operations, to assess whether you should invest in the company today.
Innovative's dividend yield of 3.5% is well above average
Currently, Innovative pays its shareholders a quarterly dividend of $1.06. At a price of about $120 per share, the stock's yielding a little over 3.5% today. If you were to invest in an average stock on the S&P 500, your yield would be closer to 2%. That's a big difference, and it's easier to see when you put it into dollars. A $25,000 investment at a 2% yield would earn you $500 each year. But at a rate of 3.5%, you'd be earning $875, or an extra $275 annually. Imagine you hold the dividend stock for 10 years, and you're now looking at a difference of $2,750. And that's without factoring in any dividend growth along the way.
Innovative has increased its dividend payments by more than 300% in just two years
Even if a dividend stock pays a decent yield today, you also want to consider its growth. If the dividend isn't increasing over the years, that means inflation will erode your payouts over time. Innovative is a real estate investment trust (REIT), meaning it has to pay 90% of its earnings back out to its shareholders. As long as profits continue to rise, so too will the company's dividend payments.
Innovative has been growing its dividend rapidly in recent years. Just two years ago, the San Diego-based company was paying its shareholders a quarterly dividend of $0.25. Payouts have more than quadrupled in value since then, rising 324%. The company's most recent rate hike, from $1.00 to $1.06, is a modest 6% increase and likely much more sustainable over the long term, if investors are wondering what type of increase might be more typical in the future.
However, there are never any guarantees when it comes to dividends. Investors always need to be prepared in the event that a rate hike doesn't happen, or is not as high as they had hoped. For now, at least, Innovative looks like a solid dividend growth stock.
Is Innovative's dividend safe?
On Aug. 5, Innovative released its second-quarter results for fiscal 2020, recording sales of $24.3 million. That's a year-over-year increase of 183% from the prior-year period, when its sales were $8.6 million. The big jump comes primarily as a result of Innovative acquiring and leasing out more properties than it had a year ago.
Since April, Innovative acquired a total of eight properties with rentable square footage totaling 775,000. At the end of June, Innovative owned 58 properties with a total of 4.4 million rentable square feet. A year ago, the company owned just 22 properties, and its rentable square footage then was 1.7 million.
Innovative's strategy involves acquiring distressed assets in the cannabis industry and then leasing them back to marijuana companies. It's been working well for the business and has helped generate strong streams of income. In Q2, Innovative recorded funds from operations (FFO) of $19.7 million -- up 321% from a year ago. FFO is a common substitute for net income when evaluating REITs, as it can give a better picture of the company's overall performance when factoring out depreciation and other adjustments.
FFO per share was $1.12 in Q2, and that suggests that Innovative's quarterly dividend of $1.06 is well supported by the company's current operations.
The dividend is great
With above-average payouts that have increased rapidly in recent years and some impressive sales and profit growth, Innovative checks off all the boxes of a great dividend stock and then some. And with more states potentially legalizing cannabis this year, there may be many more growth opportunities for Innovative to continue adding properties to its portfolio in the near future.
Year to date, the stock's been soaring above not just the Horizons Marijuana Life Sciences ETF (OTC:HMLS.F) but also the S&P 500:
Its incredible growth, along with a top dividend, makes Innovative an appealing investment to add to your portfolio today and hang on to for many years as the cannabis industry continues to expand.
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>>> Innovative Industrial Properties Expands Real Estate Partnership with AWH at Illinois Property
Business Wire
August 20, 2020
https://finance.yahoo.com/news/innovative-industrial-properties-expands-real-212000986.html
Innovative Industrial Properties, Inc. (IIP), the first and only real estate company on the New York Stock Exchange (NYSE: IIPR) focused on the regulated U.S. cannabis industry, announced today that it entered into an amendment of the lease with a subsidiary of Ascend Wellness Holdings, LLC (AWH) at the property located in Barry, Illinois, making available an additional $18 million in funding for expansion of AWH’s regulated cannabis cultivation and processing facilities at the property, including a new 90,000 square foot greenhouse facility and further production capacity enhancements for the existing 75,000 square foot industrial facility located on the property. The lease amendment also adjusted the base rent under the lease to take into account the additional available funding. Assuming full payment of the additional funding, IIP’s total investment in the property will be $51 million.
In addition to this Illinois property, IIP owns and leases to AWH two other properties in Massachusetts and Michigan, with IIP’s total investment in properties leased to AWH, including commitments to fund future tenant improvements, equaling approximately $119.8 million.
As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions.
Illinois, the 11th state to legalize cannabis for adult-use, commenced adult-use cannabis sales on January 1 of this year. In July alone, Illinois adult-use cannabis dispensaries generated nearly $61 million in sales (excluding medical cannabis sales), according to the Illinois Department of Financial and Professional Regulation, exhibiting consistent, strong growth month over month. IIP owns six regulated cannabis cultivation and processing facilities in Illinois, representing a total expected investment of approximately $204.6 million, which includes commitments by IIP to fund future tenant improvements and construction at certain properties.
"We are excited to once again expand our long-term real estate partnership with AWH," said Paul Smithers, President and Chief Executive Officer of IIP. "The AWH management team has done tremendous work in positioning itself as one of the leading MSOs in states that represent tremendous market opportunities, and has continued to execute well on its mission throughout these uncertain times in serving patients and customers with the highest quality products and dedication to patient care and customer service."
AWH is a vertically integrated cannabis company, with assets in Illinois, Michigan, Ohio, Massachusetts and New Jersey. In Illinois, AWH currently operates two dispensaries in Springfield and Collinsville under the brand name Illinois Supply and Provisions, and expects to open two additional dispensaries, including its flagship retail location in Fairview Heights.
"We greatly value our long-term real estate partnership with IIP, with a team that works closely with us to find optimal solutions for our real estate capital needs, providing us with a key capital source to allow us to grow thoughtfully and on our timeline," said Abner Kurtin, Chief Executive Officer and Co-Founder of AWH. "With this additional capital at the Barry facility, we expect to further enhance our production capacity to meet the tremendous demand and continued growth we see in the Illinois market today."
As of August 20, 2020, IIP owned 61 properties located in Arizona, California, Colorado, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Nevada, North Dakota, Ohio, Pennsylvania and Virginia, totaling approximately 4.6 million rentable square feet (including approximately 1.6 million rentable square feet under development/redevelopment), which were 99.2% leased (based on square footage) with a weighted-average remaining lease term of approximately 16.0 years. As of August 20, 2020, IIP had invested approximately $835.4 million in the aggregate (excluding transaction costs) and had committed an additional approximately $228.3 million to reimburse certain tenants and sellers for completion of construction and tenant improvements at IIP’s properties. These statistics do not include up to approximately $14.5 million that may be funded in the future pursuant to IIP’s lease with a tenant at one of IIP’s Massachusetts properties, as the tenant at that property may not elect to have IIP disburse those funds to the tenant and pay IIP the corresponding base rent on those funds. These statistics also treat IIP’s Los Angeles, California property as not leased, due to the tenant being in receivership and its ongoing default in its obligation to pay rent at that location.
About Innovative Industrial Properties
Innovative Industrial Properties, Inc. is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. has elected to be taxed as a real estate investment trust, commencing with the year ended December 31, 2017. Additional information is available at www.innovativeindustrialproperties.com.
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>>> GrowGeneration Reports Record Financial Results Q2 2020
PR Newswire
August 13, 2020
https://finance.yahoo.com/news/growgeneration-reports-record-financial-results-110000282.html
Record Revenues of $43.5 Million, Adjusted EBITDA of $4.6 Million and Net Income of $2.6 Million
2020 Revenue Guidance Increased to $170-$175M
Adjusted EBITDA Guidance for 2020 is $17.0-$18.0M
GAAP Net Income Guidance for 2020 is $7.0-$8.0M
2021 Revenue Guidance Set at $245-$260M
Adjusted EBITDA Guidance for 2021 is $26.0-$28.0M
DENVER, CO, Aug. 13, 2020 /PRNewswire/ - GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the "Company"), the largest chain of specialty hydroponic and organic garden centers, with currently 28 locations, today reported record revenues of $43.5 million and adjusted EBITDA of $4.6 million for Q2 2020. Q2 2020 was the Company's 10th consecutive quarter of record revenues. The Company also reported record GAAP net income of approximately $2.6 million for Q2 2020 compared to net income of $1.1 Million for Q2 2019. As we continue to outpace guidance, we are increasing 2020 revenue guidance to $170M-$175M and Adjusted EBITDA to $17.0M-$18.0M. Revenue guidance for 2021 is $245M-$260M. Adjusted EBITDA guidance for 2021 is $26M-$28M.
GrowGeneration Reports Record Financial Results Q2 2020
Record Revenues of $43.5 Million, Adjusted EBITDA of $4.6 Million and Net Income of $2.6 Million (CNW Group/GrowGeneration)
GrowGeneration Reports Record Financial Results Q2 2020 Record Revenues of $43.5 Million, Adjusted EBITDA of $4.6 Million and Net Income of $2.6 Million (CNW Group/GrowGeneration)
More
Financial Highlights for 2nd Quarter 2020 compared to 2nd Quarter 2019
Revenues up 123% to $43.5 million for Q2 2020 vs $19.5 million for Q2 2019
Same store sales were $25.1 million for Q2 2020 vs $16.9 million for Q2 2019, a 49% increase
Adjusted EBITDA of $4.6 million for Q2 2020 vs $1.7 million for Q2 2019, an increase of 166%, $.12 per share, basic
Gross profit margin % for Q2 2020 was 26.7% vs 29.9% for Q2 2020
Gross profit was $11.6 million for Q2 2020 vs $5.8 million for Q2 2019, an increase of 99%
Store operating costs as a percentage of sales was 9.2% for Q2 2020 vs 14% for Q2 2019, a decrease of 34%
Income from store operations was $7.6 million for Q2 2020 vs $3.1 million for Q2 2019, an increase of 146%
Income from store operations as a percentage of revenue was 17.5% for Q2 2020 vs 15.8% for Q2 2019
Corp Payroll and G&A as a percentage of revenue was 7.2% for Q2 2020 vs 7% for Q2 2019
GAAP net income per share, basic, was $.07 for Q2 2020 vs $.04 for Q2 2019
GAAP net income was $2.6 million for Q2 2020 vs net income of $1.1 million for Q2 2019 2020
Working Capital and Cash
Working capital was $35.2 million on June 30, 2020 vs $30.6 million at December 31, 2019
Cash on June 30, 2020 is $14.8 million, cash on December 31, 2019 was $12.98 million, and cash as of August 12, 2020 was $59.3 million
Proceeds from the sale of common stock and warrants was $282,000 for Q2 2020
On July 2, 2020, the Company completed the offering of 8,625,000 shares of its common stock generating $48.3 million in gross proceeds before deducting the underwriting discounts and commissions and other offering expenses. Oppenheimer & Co. Inc. acted as the sole book-running manager for the Offering. Ladenburg Thalmann & Co. Inc. and Lake Street Capital Markets, LLC acted as co-managers for the Offering
Recent Events
May 12, 2020, we opened our Store Support Center in Denver, CO
On June 16, 2020, the Company purchased the assets of H2O Hydroponics LLC. located in West Lansing, MI, creating a 15,000 sq. ft., $8.0 million operation in West Lansing, MI.
On June 29, 2020 GrowGeneration was added to the Russell 3000Ò Index
On July 2,2020 Oppenheimer & Co. Inc. acted as the sole book-running manager and closed on a $48.3 million Offering. Ladenburg Thalmann & Co. Inc. and Lake Street Capital Markets, LLC were acting as co-managers for the Offering
The Company surpassed $100 million in year-to-date revenues on August 10, 2020
On August 10,2020, the Company purchased the assets of Emerald City Garden, located in Concord, CA
On August 12, 2020, the Company entered into a partnership with Whole Cites Foundation, committing to donate free product to develop urban farms across the US
Darren Lampert, Co-Founder and CEO, said, "The Company's Q2 2020 record financial results reflect our continued focus on revenue growth and EBITDA expansion. Q2 2020 is the Company's 10th consecutive quarter of record revenues. Revenues were up 123% for Q2 2020 versus Q2 2019, to $43.5 million. Adjusted EBITDA was $4.6 million for Q2 2020 compared to $1.7 million for Q2 2019, an increase of 166% or $.12 per share, basic. Our same store sales were up 49% for the period Q2 2020 versus Q2 2019. Income from store operations was $7.6 million for Q2 2020 vs $3.1 million for Q2 2019, an increase of 146%.
Our online business increased by 149%, Q2 2020 versus Q2 2019. Our commercial division generated over $9.0 million in revenues, an increase of 142% Q2 2020 versus Q2 2019. The Company added 167 new commercial customer accounts from Q1, 2020 to Q2 2020 and now services over 700 commercial accounts. We continue to see strong demand for our products that include LED lights, nutrients, additives, soils and other products that outfit and feed grower's gardens. Our Sunleaves private-label nutrient and additives line of product is now generating over $100,000 a month in sales. Our weekly walk-in transactions are now 10,000, an increase of 50 %, quarter over quarter. On June 16, the Company successfully acquired H2O Hydroponics LLC, and consolidated it with our West Lansing operations into a new 15,000 sq. ft. super hydroponic garden center. The Company believes that the combined business will generate over $8.0 million in annual revenues in 2020.
Our mergers and acquisitions pipeline is the most active it has been since our inception. We have set a corporate goal to reach 50 stores and 15 states in 2021.
On July 2, 2020 we closed on a $48 million upsized follow-on public offering with Oppenheimer & Co. Inc. acting as the sole book-running manager for the Offering. Ladenburg Thalmann & Co. Inc. and Lake Street Capital Markets, LLC acted as co-managers for the Offering. The Company intends to use the net proceeds from the Offering primarily to expand its network of hydroponic/garden centers through organic growth and acquisitions, and for general corporate purposes.
On June 29, 2020, we were added to the Russell 3000® Index. We believe our Russell 3000 listing will increase long-term shareholder value by improving awareness, liquidity and appeal to institutional investors.
While we take this opportunity to announce our quarterly earnings, we are mindful of the COVID-19 plight which is besieging society, leaving no one unaffected. We are thankful for the dedication of health care workers and first responders, as well as the essential workers who are keeping our communities running.
As a result of our first-rate preparedness, all of our personnel have been working since mid-March with complete effectiveness. I have been inspired by the efforts and dedication of GrowGen's team as they have worked tirelessly to service our customers and communities.
The economic road ahead will challenge all businesses, but GrowGen's strong Executive Team, balance sheet and amazing employees put us on excellent footing to overcome adversity.
As we continue to monitor the COVID-19 situation, GrowGen is considered an "essential" supplier to the agricultural industry, suppling the nutrients and nourishment required to feed their plants. Accordingly, we are open during this difficult time and will remain open for the foreseeable future. We have plans and procedures in place to ensure our customers and employees stay safe during this time of uncertainty. All of us at GrowGeneration remain committed to the safety and well-being of our customers and employees and send our prayers and thoughts to all in the growing community.
GrowGeneration has partnered with Whole Cities Foundation and has committed to donate free product to local communities and their urban farms that have been severely affected."
Annual Guidance for 2020 and 2021
Full year 2020
Sales $170M-$175M
Adjusted EBITDA guidance for 2020 increased to $17.0M-$18.0M
GAAP pre-tax net income guidance set at $7M-$8M.
Full Year 2021
Sales $245M-$260M.
Adjusted EBITDA for 2021 is $26.0M-$28.0M.
Conference Call
The company will host a conference call on Thursday, August 13, 2020 at 9:00AM Eastern Time.
Participant Dial-In Numbers:
Toll-Free: (+1) 888-664-6383
*Participants should request the GrowGeneration Earnings Call or provide confirmation code: 28032517
About GrowGeneration Corp.:
GrowGen owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 28 stores, which include 5 locations in Colorado, 6 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators, located at www.growgen.pro and www.growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the major states in the US and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the US. By 2025, the global hydroponics system market is estimated to reach approximately $16 billion.
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>>> GrowGeneration Corp. Acquires Concord, CA Based Emerald City Garden
PR Newswire
August 11, 2020
Adds 28th Store, Expands Northern CA Footprint
https://finance.yahoo.com/news/growgeneration-corp-acquires-concord-ca-120000199.html
DENVER, Aug. 11, 2020 /PRNewswire/ - GrowGeneration Corp. (NASDAQ: GRWG), ("GrowGen" or the "Company") the largest chain of specialty hydroponic and organic garden centers, with currently 27 locations, is pleased to announce that the company has purchased the assets of Emerald City Garden located in Concord, CA. Concord is located in the " green zone". With the acquisition of Emerald City Garden, GrowGen opens up the East Bay region. Emerald City Garden has been in business since 2012 and is one of the largest hydroponic operations in the region, with 2020 sales estimated to be approximately $4.0 million.
CEO Comments:
Darren Lampert, GrowGeneration CEO stated, "The Emerald City Garden acquisition is our 3rd in 2020,adding a strong team and customer base to our portfolio of hydroponic garden centers. Emerald City Garden, located approximately an hour outside of Oakland and San Francisco, strategically positions GrowGen to capture commercial growers and increase revenue through its sales, marketing and purchasing post our acquisition."
California Market and Projections:
In 2019, legal sales of adult-use cannabis in California topped $2.8 billion.
By 2022, the legal adult-use cannabis market in California is projected to jump to $5 billion – boosted significantly by California's recreational cannabis market. The California cannabis industry's total economic impact could be nearly $10 billion.
As of January 2020, California has issued over 10,000 commercial cannabis licenses. There are 7,551 active licenses, including 4,220 cultivators, 987 manufactures and 910 retailers, delivery services, 944 distributors, 243 microbusinesses, 129 transporters, 86 event organizers and 32 testing laboratories.
About GrowGeneration Corp.:
GrowGen owns and operates specialty retail hydroponic and organic gardening stores. Currently, GrowGen has 28 stores, which include 5 locations in Colorado, 6 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators, located at www.growgen.pro and www.growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers. Our mission is to own and operate GrowGeneration branded stores in all the major states in the US and Canada. Management estimates that roughly 1,000 hydroponic stores are in operation in the US. By 2025, the global hydroponics system market is estimated to reach approximately $16 billion.
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