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.
Re call 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. Breakthru 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. 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.
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 (APHQF) 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. Interesting.
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. And, on top of all this Cannabis has now become a political football with Democrats and Republicans alike calling for legalization to gain or hold on to important constituency votes. In addition, Cannabis is super tax income generator for the states have approved it. Follow the money, folks! The money is in Cannabis stocks. They are volatile and we have to trade them, 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. The stock market is a wonderful place! But, it has its cycles and there is great volatility in the roller coaster Cannabis shares. We've been in a correction (possible an early-stage bear market) since April, 2019, BUT THIS IS NOT THE END OF THE STORY.
NORTH AMERICAN MARIJUANA INDEX - THREE YEAR TIME FRAME POSTED JANUARY 27, 2020:
VR CANNABIS STOCKS LISTED BY MARKET CAP FOR JANUARY 27, 2020:
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