Cannabis Craze, Blockchain Hype Converge Even More On This Stock!

Source: BILL PETERS: 9/26/2018


Marijuana stocks were mixed Wednesday amid a flurry of news, including Tilray's (TLRY) new supply deal with Supreme Cannabis Co., plans for retail guidelines from the Canadian province of Ontario, and a blockchain stock increasing its cannabis offerings.

India Globalization Capital Gets CBD Relief

Ever invest in a company that does business in heavy-equipment rentals, real estate management, blockchain and medical marijuana and thought, "If only they also had a line of CBD drinks?" Say no more. India Globalization Capital (IGC) has your back.

The company late Tuesday said it plans to create a drink infused with hemp or CBD, as part of a broader 10-year distribution agreement. The move, IGC noted, comes as U.S. lawmakers try to finalize agricultural legislation that could legalize hemp cultivation. Hemp is a source of cannabidiol, or CBD. CBD is a nonpsychoactive substance also found in marijuana plants. Many people use it for pain relief.

Shares of IGC punched 30% higher in the stock market today. In December, IGC's stock nearly doubled in value after it said it would use blockchain to "address issues specific to the medical cannabis industry."

IGC has two businesses, according to its website. One is a legacy infrastructure business comprising heavy-equipment rental, real estate management and commodities trading. The other is a U.S. medical cannabis extracts business. The latter business was started in 2013.

New Age Beverage (NBEV), which plans to unveil a line of CBD drinks in October, was up 1.1%.

Ontario Legalization Rules

Also late Tuesday, MarketWatch reported that Ontario — Canada's largest province — will unveil details of a new law on Wednesday that will determine what brick-and-mortar pot shops can operate in what parts of the area, which includes Toronto. The text of the law is set to be introduced in the province's parliament on Thursday.

The measure also contains a one-time opt-out clause for areas that don't want to sell marijuana, MarketWatch said. Under the law, those vying for a retail cannabis sales license would have to apply for one, rather than compete via auction.

The province last month said it would allow recreational sales in privately run pot retailers starting April 1. That was later than some expected. On Oct. 17, recreational sales in Canada take hold. At that time, Ontario customers age 19 and over can buy weed online via a government-run site.

Marijuana Stocks Mixed

Supreme Cannabis, a Canadian marijuana company, said its subsidiary 7Acres has agreed to supply dry cannabis to Tilray's Canadian subsidiary, Tilray Canada.

The deal is estimated to be worth 12 million Canadian dollars. Supreme described the deal as a "commitment to purchase." The agreement will provide cannabis to medical customers in Canada and begins Oct. 1. It lasts for 12 months.

That agreement follows a similar 2 million Canadian dollar deal between the companies earlier this month.

Tilray rose 4% in the stock market today. Marijuana stocks Cronos Group (CRON) and Canopy Growth (CGC) lost 4.8% and 2%, respectively.

The more modest move for Tilray stock on Wednesday follows its flameout last week. The upswing started last Tuesday. At that time, the company announced it got the DEA's approval to import medical cannabis into the U.S. for a clinical trial.

A day later, Tilray stock stretched as high as 300 after the CEO got some airtime with CNBC's Jim Cramer. Those gains vanished in the days that followed. Observers attributed the price spike to Tilray's thin share supply, buyers trolling short-sellers, and put-option activity.

Green Thumb Financing Deal

Green Thumb Industries, a Chicago-based cannabis retailer whose CEO is connected to Jim Beam lore, said late Wednesday that it entered into an agreement that will give it 65 million Canadian dollars worth of financing.

Under that deal, a group of underwriters led by GMP Securities will buy around 3.3 million shares of Green Thumb at 20 Canadian dollars a share. Green Thumb has also agreed to grant the underwriters an overallotment option to buy up to 487,500 shares at that price, exercisable at any point within 30 days following the close of the offering.

The offering is expected to close on Oct. 17, the day Canada legalizes recreational sales.

Green Thumb said it will use the proceeds from the offering for "for business development, including wholesale capacity, strategic initiatives and general corporate purposes."

Green Thumb CEO Ben Kovler's great grandfather was an investor in Jim Beam after Prohibition ended.