Aurora Cannabis Inc (ACB)

[Lloyd Cannabinoid]

UPDATE: Cannabis stocks rally after 3 surveys find Americans increasingly favor legalization
Today 12:47 PM ET (MarketWatch)
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By Ciara Linnane, MarketWatch

Canadian cannabis companies are growing enough of the plant, but are still having problems with delivery

Cannabis stocks rose across the board on Tuesday, as three separate surveys found Americans are increasingly in favor of legalization, demonstrating a major shift in opinion over the last two decades.

The General Social Survey (https://gssdataexplorer.norc.org/trends/Civil%20Liberties?measure=grass)conducted by NORC at the University of Chicago found 61% of those surveyed supported legalization, up from 57% in 2016 and 31% in 2000.

A separate survey by Gallup (https://news.gallup.com/poll/243908/two-three-americans-support-legalizing-marijuana.aspx)conducted last October found 66% of surveyees in favor of legalization, up from 60% in 2016 and 31% in 2000. A Pew survey, (https://www.pewresearch.org/fact-tank/2018/10/08/americans-support-marijuana-legalization/)also from October, found 62% favored legalization compared with 57% in 2015 and 31% in 2000. The surveys were first covered by Vox.com. (https://www.vox.com/policy-and-politics/2019/4/15/18311320/marijuana-legalization-polls-surveys-trump)

Support for legalization has been driven by the acceptance of medical cannabis as a treatment for a variety of maladies, including pain management and to reduce frequency of seizures. But many industry players are confident that public sentiment will help persuade lawmakers to drop the federal ban, which continues to classify the plant alongside heroin as a Schedule I drug.

Smoke Wallin, president of L.A.-based Vertical Companies, said he expects the ban to be dropped in the near term, and likely before the next presidential election in 2020.

"It might be the only issue that we can all get behind," he told MarketWatch in an interview.

From Canada comes the news that cannabis companies are growing enough of the plant, but are still having problems with delivery, as MarketWatch's Max Cherney reported (http://www.marketwatch.com/story/cannabis-companies-say-they-are-growing-enough-pot-they-just-cant-deliver-it-2019-04-15).

Pot producers had to scramble to apply the required excise-tax stamps (http://www.marketwatch.com/story/canadas-pot-party-big-demand-short-supply-and-stamps-with-no-glue-2018-10-20)with no glue as legalization kicked off last October, and many are still having to apply them by hand to some packages months later as supply issues continue.

Organigram Holdings Inc. (OGI.V) on Monday joined a chorus of companies saying their challenge in supplying the Canadian cannabis market is not growing massive amounts of marijuana, but transforming the plant into a product that's ready for sale.

Read now:IPO market faces biggest week of 2019 so far with Pinterest, Zoom and Greenlane on tap (http://www.marketwatch.com/story/ipo-market-faces-biggest-week-of-2019-with-pinterest-zoom-and-greenlane-on-tap-2019-04-15)

While Organigram has figured out how to automate its production of some products, the Moncton, New Brunswick-based company still must manually apply the tax stamps onto its raw-marijuana containers, Chief Executive Greg Engel told MarketWatch in an interview Monday.

"Our pre-roll equipment puts [the tax stamp] on automatically, the oil line does it automatically, but the dry flower jar line, we just can't get it automatic," Engel said, adding that he hopes to have a fix in two weeks.

Organigram posted earnings for its fiscal second quarter to Feb. 28 (http://www.marketwatch.com/story/cannabis-company-organigram-swings-to-loss-in-q2-but-revenue-tops-estimates-2019-04-15) on Monday, showing a loss of C$6.4 million ($4.8 million), or 5 cents a share, in its fiscal second quarter to Feb. 28, after earnings of C$1.076 million, or 1 cent a share, in the year-earlier period. Revenue excluding excise taxes came to C$26.9 million. The consensus of four analysts polled by FactSet was for EPS of 2 cents and revenue of C$24.2 million.

Jefferies analyst Owen Bennett called the results "impressive" in a note, saying Organigram's recreational pot sales were second only to Canopy Growth Corp.(WEED.T), (WEED.T) which is the world's largest pot company by market valuation. Organigram shares were up 4.6%.

CIBC analysts raised their stock price target on Aphria Inc. (APHA.T)(APHA.T) to $12 from $10 on Tuesday, a day after that company posted quarterly earnings.

Analysts John Zamparo and Krishna Ruthnum said the numbers showed a company with "significant future capacity potential," but that it is still in ramp-up mode.

"We continue to believe Aphria's cultivation and automation skills provide a solid competitive advantage, and the company's 10% market share in the recent quarter (our estimate) is notable, but at this stage, we gravitate towards other names in the sector with stronger balance sheets and more defined strategies for the medium term," they wrote in a note to clients.

CIBC rates the stock as neutral. Shares rose 1.9% in Tuesday trade.

Aurora Cannabis Inc. (ACB.T) (ACB.T) announced an agreement to buy the Hempco Food and Fiber Inc. sharesHEMP, +9.89% it doesn't already own in a deal that values Hempco at C$63.4 million ($47.4 million). Aurora's U.S.-listed shares rose 3.3%.

Under terms of the deal, Aurora will pay C$1.04 for each of the 48% of Hempco shares outstanding that it doesn't own, which is 14% above Monday's closing price.

"This transaction will enable us to fully integrate Hempco and its new Nisku processing facility into Aurora's global hemp operations including Agropro, Borela and ICC," said Aurora Chief Executive Terry Booth. "Our goal is to strengthen our CBD-from-hemp supply chain as well as our hemp business of hemp-based superfoods, nutraceuticals and fibers."

Canopy Growth Corp. said it's on track to expand its European production footprint, (https://www.newswire.ca/news-releases/canopy-growth-expands-european-footprint-acquires-spanish-licensed-cannabis-producer-cafina-894705832.html) now that it has completed its all-cash acquisition of Spain-based licensed cannabis producer Cáñamo y Fibras Naturales, S.L. The company is one of three in Spain that are allowed to grow, distribute and export cannabis with less than 0.2% THC for medicinal and research purposes, from a 1,600 square foot greenhouse.

"Operating multiple production assets within Europe will allow us to increase revenue in the EU free of supply constraints," said Mark Zekulin, president & co-CEO, Canopy Growth. Shares rose 4.1%.

Aleafia Health Inc. shares rose 4.3%, after the company said it is adding 50,000 kg of extraction capacity (https://www.nasdaq.com/press-release/aleafia-health-to-add-50000-kg-extraction-capacity-at-paris-on-facility-20190416-00279)at its Paris, Ontario facility through the second phase of its expansion.

"The expansion is expected to significantly increase the processing, extraction and packaging of high-margin derivative products including oils, capsules, sprays and other future formats under the Company's adult-use Symbl and medical Emblem brands," the company said in a statement.

iAnthus Capital Holdings Inc. said it has reached an agreement with retailer Urban Outfitters to sell its CBD for Life line of products at select stores starting later this month. The line produced by CBD for Life includes beauty products and pain treatments. It wasn't immediately clear which will be sold at the retail chain. A spokesman wasn't immediately available for comment. iAnthus shares rose 4.5%.

Elsewhere in the sector, Cronos Group Inc. (CRON.T) (CRON.T) was up 1.2%.

Tilray Inc. (TLRY) was up 0.9%, Hexo Corp. was up 2.0% and Green Organic Dutchman Holdings Ltd. (TGOD.T) was up 3.0%. CannTrust Holdings Inc. (TRST.T) was up 1.1% and GW Pharmaceuticals PLC (GWPH) was down 0.6%.

Read:Tilray stock rises after the company shows it can sell recreational pot (http://www.marketwatch.com/story/tilray-stock-rises-after-the-company-shows-it-can-sell-recreational-pot-2019-03-18)

The Horizons Marijuana Life Sciences ETFwas up 1.7%, and the ETFMG Alternative Harvest ETF(MJ)was up 1.3%.

The Dow Jones Industrial Average and the S&P 500 index were up 0.1%.

See also:In California's Weed Country, wildfires burn both cash and crops (http://www.marketwatch.com/story/in-californias-weed-country-wildfires-burn-both-cash-and-crops-2017-10-17)

(http://www.marketwatch.com/story/in-californias-weed-country-wildfires-burn-both-cash-and-crops-2017-10-17)Cannabis Watch:All of MarketWatch's coverage of cannabis companies (http://www.marketwatch.com/storyno-meta-for-guid)

Additional reporting by Tomi Kilgore and Max Cherney

-Ciara Linnane; 415-439-6400; [e-mail]