A Few Bad Apples – New Cannabis Companies

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You’re reading a copy of this week’s edition of New Cannabis Ventures’ weekly newsletter, which we’ve been publishing since October 2015. The newsletter includes unique information to help our readers stay ahead of the game as well as links to the most important events of the week. new.

Friends,

This week, Hightimes Holding Corp., the publisher of High Times magazine, disclosed in an SEC filing that it is in default on loans to ExWorks totaling approximately $28 million. We weren’t surprised at all, having shared our negative view of business in early 2020. ExWorks is in receivership and shareholders of the company, which raised funds through a Reg A+ offering, are at risk.

This is not the only poor execution of a company in the cannabis industry. The one that led us to warn our subscribers at 420 Investor, Agrify, crashed this week, down 79.3%. It’s now down almost 98% in 2022. When the company announced the acquisition of two equipment companies in late 2021 for $50 million, we saw that as a red flag.

Cannabis investors, unfortunately, have no shortage of bad companies to invest in. 9 years ago, when I started 420 Investor, I found myself spending a lot of time notifying my subscribers and very little time finding good companies. It has improved a lot, as there are now big companies trading in our view. Still, there are plenty of companies that shouldn’t trade.

The poor performance of so many companies in the sector weighs financially and operationally on legitimate companies. When investors are burned, they are reluctant to invest again. Many investors have selected companies that we believe are poor choices, and their losses translate into an inability to buy the stocks of companies worth investing in.

We’re not going to provide a list of companies to avoid, but we want to alert our audience to things investors need to be aware of. Financially, be careful with companies that have high levels of debt and negative cash flow. Look for companies that have strong management and avoid those that don’t. Don’t fall into the traps of promoting paid actions!

Avoiding bad companies is very important, but we believe there is another key lesson. We fear the weakness in bad apples, which are still plentiful, will severely erode sentiment and weigh on top companies in the sector. Poor execution at Hightimes and Agrify is just that. These do not at all reflect, in our view, the weakness of the industry. Investors should be careful not to miss a bargain that might be elsewhere due to negative sentiment.


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New Cannabis Ventures publishes selected articles as well as exclusive news. Here are some of the most interesting business content from this week:

Exclusives

Eaze has had several iterations since its inception in 2014. It was established as a technology company, pivoting in 2020 to become a plant-touching vertical operator. Today, Eaze is a four-state delivery-focused MSO. In an exclusive interview, CEO Cory Azzalino discusses company expansion plans its delivery platform beyond California and Michigan to Colorado and Florida, as well as its heavy investments in the Sunshine State. The company intends its expansion into Florida to help fund new investments in California and Colorado.

In late September, Northern Lights Acquisition Corp., a special purpose acquisition company, finalized his purchase of SHF, LLC, d/b/a Safe Harbor Financial and changed its name to SHF Holdings, Inc. It also began trading on the Nasdaq. Since its IPO, its stock has fallen sharply. In an exclusive interview, CEO Sundie Seefried said the company has its work cut out for it and is stepping up its investor relations efforts to educate investors and keep the stock performing well. She said they are also actively seeking financial institutions interested in get out of the cannabis market.

Although Canadian retail sales in August were up 0.2% from July, growth was the lowest since the start of legalization. August sales reached C$393.7 million, compared to July’s revised C$392.9 million. Sales were up 13% from a year ago, down from July’s 17.2% growth rate. Sales in Ontario fell 2.2% from July, but were up 15% from a year ago. Alberta sales were down 2.9% from July, but up 11% from a year ago. Quebec was up 1.9% from July and down 2% from a year ago, while British Columbia was up 10% from July and 27% from one year ago.

Mergers

The Green Organic Dutchman plans to join forces with BZAM Cannabis. The producer of organically grown premium cannabis, announced that it would merge with the private producer of flowers and 2.0 products. Together, the company is estimated to be the sixth largest Canadian cannabis company based on retail sales from June to August 2022, according to a press release.

BGP Acquisition Corp. and Craft 1861 Global have entered into a definitive agreement business combination agreement, which is intended to constitute the qualifying transaction of the company. As part of the deal, BGP will indirectly acquire all outstanding shares of Craft Global in exchange for $430 million of proportional voting stock. Following the closing, BGP will continue to operate the business of Craft Global and intends to rename itself CRAFT 1861 Global Holdings, which will remain a reporting issuer under Canadian securities laws. “Having spent the last decade refining our products and our approach to the nascent cannabinoid industry, we are excited about the inflection point we find ourselves at and believe this combination with BGP will help support the growth of the brand. Craft 1861 globally,” said CEO Robert Aranda.


For real-time updates, download our free mobile app for android Where Apple devices, like our Facebook page, or follow Alan on Twitter. Share and learn about industry news with like-minded people on the largest group of cannabis investors and entrepreneurs on LinkedIn.

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Use the suite of professionally managed software NCV Cannabis Stock Indices to monitor the performance of publicly traded cannabis companies within the day or over longer periods. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index and Ancillary Cannabis Index.

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Sincerely,

Alain and Joel

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Alan Brochstein, CFA

Based in Houston, Alan leverages his experience as an online community founder 420 Investor, the cannabis industry’s first and still largest public equity-focused due diligence platform. With his vast network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. To New Cannabis Companies, he is responsible for content development and strategic alliances. Prior to focusing on the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as a freelance research analyst after more than two decades in research and portfolio management. Prolific author, with more than 650 articles published since 2007 on Looking for Alphawhere he has 70,000 subscribers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, Wall Street Journal, Fox Business and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | E-mail

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