Beyond the Bong

Canopy Growth Joins S&P/TSX 60 Index

The optimism following the SAFE Banking Act clearing the House Financial Services Committee was short-lived.

And now cannabis investors are searching for a rebound following last week’s big drop.

U.S. Attorney General William Barr was a downer for investors when he told the Senate he would still “favor one uniform federal rule against marijuana.” That’s in place of relying on the current model where states have authority.

But Washington drama is nothing new for the industry.

With that in mind, the Food and Drug Administration has scheduled its first hearing on CBD in food and drinks!

Unlike Barr’s comments, this is actual news.

On May 31, the agency will hear testimony on how to regulate this newly legalized market. This is something I said would have to happen soon… and here it is.

The FDA and the Federal Trade Commission also recently sent warning letters to three companies for making unproven claims about CBD.

Again,it’s important that we start to wrangle the Wild West. It will be good for investors and consumers.

To kick off April, Colorado’s Department of Revenue released its monthly sales figures.

And as we expected, cannabis sales in February declined 4.37% sequentially…

This is the same pattern we’ve seen recently in Canada. And this is exactly the ebb and flow we anticipate.

February should be the slowest month. But keeping in line with the trend, March marijuana sales should skyrocket to a new record.

And that should help propel pot stocks higher!

Last week, my team and I headed to the Cannabis Science Conference in Baltimore.

It was a great opportunity to focus on the technical and medicinal side of the industry. And it gave us time to rub elbows with a number of professionals in the field, including Dr. Jordan Tishler, president of the Association of Cannabis Specialists, as well as Stephen Cital of the Veterinary Cannabis Academy and Dr. Theodore Search from Gofire.

We gained some great insights – about not only the medical marijuana market but also the booming pet care side. We’ll be sharing those interviews in the weeks ahead.

And in the ongoing legitimization of the industry, Canopy Growth Corp. (NYSE: CGC) shares popped more than 5% on Friday. That’s because the company was added to the S&P/TSX 60 Index. It tracks 60 of the largest Canadian companies. With a market cap of $14.5 billion, Canopy is a cannabis whale.

Of course, this is a first – as well as a major win – for the cannabis industry. Shares of Canopy will begin trading as part of the index on April 18.

The High Five

1) Aleafia Health (OTC: ALEAF) has been making headlines recently. And it was the company most requested by readers for us to cover. Last week, it increased its strategic investment in Australia’s CannaPacific, following CannaPacific’s acquisition of a 108,000-square-foot greenhouse in New South Wales.

Aleafia then rang the opening bell on the Toronto Stock Exchange. And it applauded the move by Ontario to lift the cap on 25 retail licenses.

Aleafia is one of my favorite cannabis stocks for 2019. It has a supply agreement with CannTrust Holdings (NYSE: CTST) and a partnership with Cronos Group (Nasdaq: CRON). It’s also filed a 40-F to list on the Nasdaq.

Aleafia will report 2018 earnings on April 29, before the opening bell.

There’s a lot to like about this small cap cannabis company – not even including the anticipated 700% revenue growth.

2) Slang Worldwide (OTC: SLGWF) released fiscal 2018 results on Friday. The cannabis packaged goods company reported $5.2 million in revenue.

At the moment, Slang operates 2,600 retail locations in 11 states and on five continents. And it plans to enter the Canadian market in October, when the infused product market is legalized.

According to retail data aggregator LeafLink, Wana Brands was the No. 1 seller in Arizona, Colorado, Nevada and Oregon in the first quarter.

But Slang’s Organa Brands and O.penVAPE have a strong presence in California, Colorado and Nevada.

3) 3 Sixty Risk Solutions (OTC: SAYFF) signed a contract with Harvest One (OTC: HRVOF) for a variety of security services.

Because of the legal status of cannabis in the U.S. and companies’ inability to work with banks, security is a top priority for the industry. And that’s what 3 Sixty Risk Solutions handles.

4) OrganiGram Holdings (OTC: OGRMF) is in a good position to benefit from the growing popularity of extracts.

The Canadian producer reported second quarter earnings this morning. Expectations were for revenue to increase 544% to CA$23.77 million with earnings per share flat at CA$0.01. Revenue topped estimates at CA$26.9 million, but OrganiGram’s earnings were a surprise loss of CA$0.05.

Shares fell on the report, though not as heavily as Aphria’s (NYSE: APHA). As I’ve been saying, these first full-quarter earnings reports of Canadian adult-use legalization will have not only revenue growth but big losses. Investors are selling this near-term blip, which I continue to believe is a buying opportunity.

5) GW Pharmaceuticals (Nasdaq: GWPH) received its fair share of shout-outs at the Cannabis Science Conference last week. I didn’t see the company’s Epidiolex be officially recommended by any professionals. But the drug’s distinction as the first FDA-approved cannabis-derived treatment was recognized.

Of course, last week Zogenix (Nasdaq: ZGNX) was obliterated after the FDA refused to review the company’s application for Fintepla. The drug is to treat Lennox-Gastaut syndrome seizures in children, the same as GW’s Epidiolex.

Now, the arrival of spring hasn’t meant a lot of green for the cannabis sector… even though we know this is the start of “weed smoking season.”

The Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) is down roughly 6% over the past month…

3 Sixty Risk Solutions, Aleafia and Slang Worldwide have struggled even more. But I believe these are solid long-term plays. For example, Aleafia is still up more than 22% year to date.

Meanwhile, OrganiGram and GW Pharmaceuticals are holding up well and are the best performers of 2019 for this week’s High Five.

The next few weeks will be market movers for cannabis. Do your best to take advantage of the dips.

If you have a pot stock in mind that you’d like me to discuss here, leave the ticker symbol in the comments section.

Here’s to high returns,