5 Stocks To Watch As Cannabis Goes Global

December 21, 2018 - Safehaven


Did you miss out on the last cannabis boom?

Don’t worry.

Another one may be right around the corner.

And this time, could be even bigger.

After the M&A wave died down in 2018, many analysts thought the so-called “Green Rush” was over, but we think they were wrong.

With a combination of newcomers and veterans vying for market share, it’s safe to say the competition is getting intense. And with competition comes innovation.

Gone are the days of simply cutting, drying and selling organic cannabis…

Now there are hundreds, if not thousands of new products to manufacture, market and move.

From THC and CBD oils to edibles and even beverages, the industry is evolving.

Technology is taking over, with automation, data and artificial intelligence quickly becoming a necessity in the next stage of the Green Revolution.

But don’t kid yourself, it’s not only about technological know-how….

Staying relevant in today’s cannabis markets requires grit, but more importantly, a global perspective.

You see, there’s a worldwide wave of legalization about hit, and positioning is everything.

And the best positioned of the bunch are the ones with their feet on the ground, wheeling and dealing across the globe to snatch up the best opportunities at the right time.

From their global footprint to their tech advantages….

Here are 5 cannabis companies investors should be following closely going into 2019:

#1 - Auxly Cannabis Group (TSX.V: XLY)

Auxly is a newcomer to the marijuana industry, with a growing presence in Eastern Canada, especially Newfoundland.

Formerly known as Cannabis Wheaton, the company is the first to propose "cannabis streaming" - bank-rolling the growth plans of licensed producers in exchange for equity and a steady stream of royalties or taking possession of a portion of the actual pot.

Through 2021, Auxly expects to capitalize on the massive supply shortage in Canada's newly legalized markets.

Eventually - however - supply will catch up with demand. In response, the company is aggressively climbing the value chain. The structure they use to talk about this system is the oil and gas terminology of upstream, midstream and downstream.

Investors are bullish on Auxly primarily because of its rapid rate of growth. And its recent strategic partnership with Atlantic Cultivation highlights that sentiment. 

In a $2.5 million deal, Auxly gained a 50 percent equity stake in Atlantic, in addition to a hefty agreement to purchase up to 30 percent of dried cannabis and trim at Atlantic’s Newfoundland and Labrador Facilities.

Hugo Alves, President and Director of Auxly commented: “This partnership with Atlantic, coupled with our premium craft producer Robinson’s Cannabis in Nova Scotia and our world class innovation and extraction hub at Dosecann in PEI demonstrates Auxly’s commitment to Atlantic Canada where we are building meaningful cannabis businesses that have a positive impact on the region.”

In addition to its deal with Atlantic, Auxly has also secured some potentially-high-profit arrangements with other major players in the industry, including Inverrell and Aphria.

With major stake in international holdings, the looming wave of legalization across the globe could give Auxly a leg up on the competition.

#2 - Wayland Group (WAYL.CNOTC:MRRCF)

The Wayland Group is leading a technological progression in the cannabis space that looks set to bring the next wave of profits for companies.

The low hanging fruit has very much been picked in this space – and it is now the companies that can produce efficiently and with low costs that will lead the way into the future.

By partnering with Rockwell Automation, Wayland Group became one of the first companies in the space to automate its facilities using AI – giving it the ability to produce product with roughly 10 percent of the workforce of some of its competitors.

But it didn’t just improve its automation, this innovator also focused on renewable energy and recycling of resources which significantly cut costs. Its Langton facility, for example, has been categorized as “88-percent-to-net-zero,” meaning that it doesn’t have to rely much on external sources of water and power. A natural gas well on-site means electric charges have been reduced from $0.20/kilowatt hour to $0.05/kilowatt hour.

All of this efficiency and cost cutting combines with a business and growth strategy that will likely see Wayland Group become one of the biggest cannabis names in many countries. It has already succeeded in becoming a GMP certified producer in the EU – only one of 5 companies in the world to have such a certificate. The other 4 companies all have market caps of over $5 billion.

It already has facilities in Argentina, Colombia, Switzerland and Germany – with a joint venture in Italy.

Wayland Group has the potential to become a major global player during the second cannabis phase, focusing on efficiency and the globalization of a product that has proven to have insatiable demand.

With a solid base and an impressive growth target, Wayland group is certainly a company to watch in 2019.

#3 - Emerald Health Therapeutics (TSX.V: EMH)

Emerald Health is another producer and distributer of medical marijuana.

Based in British Columbia, Emerald Health is fully licensed by Access to Cannabis for Medical Purposes Regulations (ACMPR) and provides high quality medicine of different varieties.

With a focus beyond dried plant matter, Emerald Health offers a variety of solutions for its patients.

Its primary “Endo” brand provides supplements focusing on pain relief, insomnia, anxiety, memory and more. The supplements utilize different combinations of herbs, not just cannabis, allowing users to find a more targeted solution to fit their needs. 

Most significantly, however, Emerald Health has also just received the green light from Canadian regulatory officials to sell its award-winning Endo product line of endocannabinoid-supporting nutritional products across the country.

The company’s unique approach to research is what really sets the company apart from the competition. With the razer-sharp focus on isolating the most important qualities of each plant and creating new products for patients, it is no wonder their supplements are so popular.

In addition to its primary product line, Emerald also places huge emphasis on its strategic partnerships and acquisitions. And because of this, Emerald is well positioned for the next marijuana boom.

In 2018 alone, Emerald Health secured over 500 acres of hemp harvest for the extraction of low-cost cannabidiol, and the company plans to double that in the next few years.

#4 - Curaleaf Holdings (CSE: CURA)

Curaleaf is a multi-faceted U.S. cannabis company, operating both in the East and West of the U.S.
After a much-heralded debut on the stock exchange, Curaleaf stocks fell in what has been a general correction in global cannabis markets in the last two months. Currently, the company is operating in 12 different U.S. states and has just opened its 35th dispensary. Next to operating dispensaries, cultivating product, and marketing, The company also produces a wide range of cannabis products, including concentrates, edibles, tinctures, capsules, vaporizer cartridges, and dry natural marijuana.

Despite the fact that the company only just went public, it has seen a lot of attention from investors, securing a valuation of over $2.8 billion. Its Florida dispensaries were the first in the industry to receive the Safe Quality Food certification under the Global Food Safety Initiative, setting a new standard of excellence. The company sees great upside in Florida as it is one of the typical high demand, limited licenses states. Next to the sunshine state, the company focuses on equally densely populated states such as Massachusetts, New York and New Jersey.

Curaleaf’s third-quarter financials shocked analysts, with Q3 revenue soaring by 289 percent. "Boasting the largest retail dispensary footprint under a single, unified brand, with now 33 locations across 10 states, Curaleaf has established itself as a leader in the burgeoning U.S. cannabis industry,” CEO Joe Lusardi noted.

#5 - OrganiGram Holdings (TSX.V: OGI)

With strains like Low Tide, Hunter’s Corner and Wabanaki, and a number of cannabis oil and vaporizers, OrganiGram is aiming to corner the Canadian cannabis markets. The holding company represents a number of subsidiaries from which it produces and distributes recreational and medical marijuana, OrganiGram is well positioned to ride the next Green Wave into profits.

The company has carved out its place in cannabis royalty by securing deals across Canada, from Saskatchewan to British Columbia. In addition to its in-person sales strategy, OrganiGram also offers another unique method of distribution. Online and over-the-phone options. More than that, however, OrganiGram and its partners knows how to manage the surging Canadian demand that has left other distributors without product for periods of time.

The company reported some impressive growth numbers for 2018 in December. Some of the highlights?

- Record net sales of $12.4 million for the 2018 fiscal year (up 131% from $5.4 million in 2017).

- Registered medical patients increased to 15,730 in 2018 from 7,404 in 2017 or 112%.

- Reported net income of $20.5 million in 2018 up from $(10.9) million in 2017.

While its share price has fallen a bit since early October, the company expects that Q1 results alone will exceed the total of entire 2018. OrganiGram’s is a market leader in New Brunswick, Nova Scotia, and also has a strong presence in Alberta and Ontario. The company has made several key investments in European medical marijuana companies in countries such as Germany and Serbia.

Bonus runner-up: One more company working to reshape the cannabis industry

CannTrust Holdings Inc. (TSX: TRST)

Canntrust is a cannabis company focusing on the numerous medical benefits of the plant. They offer a number of cannabis-derived products, from CBD and THC pills to actual plant matter.

In September, the company made history with the first approved shipment of a cannabis product to Denmark. The company shipped cannabis oils overseas in a breakthrough deal with its Danish joint venture partner, STENOCARE.

"Thanks to CannTrust's consistent quality and standardized products, we are the first in Denmark to have cannabis oil products approved for the market," noted Thomas S. Schnegelsberg, CEO of STENOCARE.

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Notice for Forward-Looking Information

Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such forward-looking information includes that cannabis use and sales will grow as currently predicted; Wayland’s intended acquisition of various foreign companies and expansion into international markets; that Wayland can become one of the biggest cannabis names in many countries; Wayland’s plans to bring automation and the latest technology to projects in various locations throughout the world; that it could be granted growing licenses; that Wayland can close on its announced purchases and joint ventures; that through efficiency and technology Wayland can substantially lower its production costs below competitors; that Wayland can sell its product at huge gross margins; that Wayland will create a range of cannabis consumer brands, to be distributed through their own digital platforms and retail facilities; that Wayland can successfully integrate pharmaceutical breakthroughs into its products; that Wayland can achieve its sales targets and gross profit margins as planned; and that it will be able to carry out its business plans.

Readers are cautioned to not place undue reliance on forward-looking information. Forward looking information is subject to a number of risks and uncertainties that may cause actual results or events to differ materially from those contemplated in the forward-looking information, and even if such actual results or events are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on Wayland. Such risks and uncertainties include, among other things: that a regulatory approval that may be required for the intended acquisitions and subsequent sales are not obtained or are obtained subject to conditions that are not anticipated; growing competition for intended acquisitions in the cannabis industry; announced or expected acquisitions or joint ventures may not close because of inability to come to final terms, or inability to obtain regulatory compliance; potential future competition in the markets Wayland operates for sales; competitors may quickly enter the industry; general economic conditions in the US, Canada and globally; the inability to secure financing necessary to carry out its business plans; competition for, among other things, capital and skilled personnel; the possibility that government policies or laws may not permit legal cannabis sales or growth or that favorable laws in place may change; interruption or failure of information or other technology systems; the cannabis market may not grow as expected; Wayland’s technology and drive for efficiency may not achieve the expected results and its accomplishments may be limited; Wayland may not successfully develop a cannabis consumer brand; and it may not be successful in developing a cannabis based treatment for medical uses; even if it develops a successful treatment, it may not be able to protect its intellectual property; its patent applications may be rejected or successfully challenged; Wayland’s business plan also carries risk, including its ability to comply with all applicable governmental regulations in a highly regulated business; incubator risk investing in target companies or projects which have limited or no operating history and are engaged in activities currently considered illegal under US federal laws; and regulatory risks relating to Wayland’s business, financings and strategic acquisitions.

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