WHAT IS THE VR CANNA SECTOR REPORT?

Back in 2014 when I began to following individual stocks in this industry, I made claims that someday the big alcohol and tobacco companies will swoop in and buy all the best companies. Well, those predictions have come true since there was hardly a month that didn't produce headline news about another billion dollar investment in the cannabis industry.

Two commercial giants from the worlds of beer and cannabis announced they have teamed up to spend $100 million to research cannabis-infused beverages. Belgium-based AB InBev which includes Budweiser in its portfolio of beer brands has partnered with Tilray which produces cannabis brands such as Marley Natural. The companies are funding a venture with $50 million apiece to produce beverages infused with THC and CBD from cannabis. And, we can't forget about the granddaddy deal of them all - Constellation Brands (STZ) investing $5 billion in Canopy Growth (CGC). The Constellation-Canopy deal fueled a surge in alcohol-cannabis deals as competitors scrambled to get a foothold in the new space.

Recall that the cannabis plant contains over 100 different cannabinoids. These are chemical compounds that react with receptors in the nervous and immune systems. THC and CBD are the two most prominent cannabinoids in cannabis. THC is the psychoactive component that gets people high. And it also has medicinal properties. CBD has medicinal and therapeutic properties and no intoxicating effects.

In September 2018, CannTrust partnered with Breakthrough Beverage Group. Breakthrough is one of the leading alcohol wholesalers, both in Canada and the United States. It will provide sales infrastructure for CannTrust’s cannabis-infused drinks. Lagunitas, which is owned by beer giant Heineken, is selling a cannabis-infused beverage in California. Major soft drink companies are showing interest in the cannabis space, too. Specifically, they are looking at non-intoxicating health and wellness beverages infused with CBD. Take Coca-Cola, the world’s largest beverage company. Two years ago it suggested it might partner with Aurora Cannabis to produce CBD-infused beverages. These beverages could be used to treat inflammation, pain, and cramping, among other things. The deal didn’t end up happening. But the fact a company as big as Coca-Cola even considered it is bullish for the industry. Around the same time, PepsiCo’s CEO said the company was “looking critically” at the market. Further, former Coca-Cola executive Eugenio Mendez – who was the company’s vice president of global marketing for water, enhanced water, and sport drinks – joined a prominent U.S.-based CBD producer. Another former Coca-Cola executive, Tim Haas, joined the board of directors of New Age Beverages, a Colorado-based company that develops cannabis-infused drinks.

Major soft drink companies are showing interest in the cannabis space, too. Specifically, they are looking at non-intoxicating health and wellness beverages infused with CBD.Take Coca-Cola, the world’s largest beverage company.Late last year, it suggested it might partner with Aurora Cannabis to produce CBD-infused beverages. These beverages could be used to treat inflammation, pain, and cramping, among other things.The deal didn’t end up happening. But the fact a company as big as Coca-Cola even considered it is bullish for the industry.Around the same time, PepsiCo’s CEO said the company was “looking critically” at the market.Further, former Coca-Cola executive Eugenio Mendez – who was the company’s vice president of global marketing for water, enhanced water, and sport drinks – joined a prominent U.S.-based CBD producer.Another former Coca-Cola executive, Tim Haas, joined the board of directors of New Age Beverages, a Colorado-based company that develops cannabis-infused drinks.

Molson Coors (TAP) has invested in Hexo Corp. Molson estimates that Canada’s cannabis-infused beverages market could be worth $3 billion. And, we just learned in early October, 2018 that Altria (MO) is talking to Aphria (APHA) but in December we later learned Altria made a $1.8 billion deal with Canadian cannabis grower Cronos (CRON) instead. AND, it was reported on November 19. 2019 Altria (NYSE:MO) added more than 4M shares to its Cronos (NASDAQ:CRON) stake, according to a filing.

As a side note back in late 2018, Altria revealed it was spending nearly $13 billion to buy a huge stake in vape-pen company Juul. E-cigarettes have been sold in the U.S. since 2007 and have grown into a $6.6 billion business. The Altria purchase of a 35% stake in Juul puts the value of the company at $38 billion, larger than Ford Motor Co., Delta Air Lines or retail giant Target. At some point, Juul would dispense Cannabis - that's the long-term bet! Now, there are reports that Philip Morris International (PM) and Altria (MO) which were formerly one company that separated may rejoin. In late 2018, Anheuser-Busch InBev, the massive brewer that makes Budweiser, Bud Light, and tons of other beers, announced that it is partnering with Canada's Tilray to research "non-alcohol beverages containing THC and CBD," per a press release.

And, let's not forget about medical cannabis and big pharmaceutical companies looking to get a piece of the pie! GWPH Pharmaceuticals (GWPH) has the led the way since the 1990s and is the first gain FDA approval for two of its Cannabis drugs. Jazz Pharmaceuticals plc (Nasdaq: JAZZ) is buying GW Pharmaceuticals plc (Nasdaq: GWPH) in a deal valued at $7.2 billion or $6.7 billion net of GW cash. Jazz will acquire GW for $220.00 per American Depositary Share (ADS), in the form of $200.00 in cash and $20.00 in Jazz ordinary shares.

Cannabis is super tax income generator for the states have approved it. Cannabis stocks are volatile but the big picture is still positive. Maybe, just follow former Speaker of the House, John Boehner and former Prime Minister of Canada, Brian Mulroney who serve on the board of Acreage Holdings which is acquiring a vast array of U.S. based cannabis assets and now they are being acquired by Canopy Growth.

Probably the biggest story is the growth in the U.S. based Cannabis stocks including Curaleaf, Green Thumb, Cresco Labs, Truelieve, GrowGeneration, and Planet 13. These companies ACTUALLY MAKE MONEY, unlike the Canadian stocks which are yet to show a clear turnaround. The recent merger of Tilray and Aphria have created the largest or second to the largest Cannabis company compared to Canopy Growth.

The cannabis industry’s fear of big tobacco trying to elbow into the industry has finally come true with the March 12, 2021 announcement of a $175 million investment into Organigram Holdings Inc. (NASDAQ: OGI) from a wholly-owned subsidiary of British American Tobacco or BAT (NYSE: BTI). The BAT subsidiary has subscribed for approximately 58.3 million common shares of OGI, which represents a 19.9% equity interest.

Marijuana’s legal headway in recent years has paved the way for new interest in remedies typically relegated to the black market. Companies that work with drugs like psilocybin, an ingredient in magic mushrooms, or Ibogaine, used in ayahuasca-style ceremonies, are proliferating, with early-stage investors predicting such substances have an even better shot than cannabis at disrupting the US$70-billion market for mental health. The question now is whether such aims bear out —and in time to catch up with all the money flowing in. Psychedelics have captured investor interest!

 


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