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Canopy Growth $321M Takeover Of Mettrum Will Be The Largest Pot Deal In History

d4e0dbfad1109b78c2dab8cd12a4d07dThe pot train is picking up steam ladies and gentlemen. Despite years of aggressive opposition by police unions, private prisons, the alcohol industry, and big pharma, Americans want their weed. So much, in fact, that nine states voted on pro-Marijuana laws on November 8th, with only one not passing. California, Massachusetts, and Nevada now allow recreational use of Marijuana, and Maine is currently performing a recount after razor thin win for herbal enthusiasts [as an aside, CA prop 64 reduces several pot felonies to misdemeanors – which opens the door for pot felons to apply for misdemeanor status. Easy money for any of you Californians with a license to practice law]. While full recreational use may be off the table, Florida, North Dakota, Montana, and Arkansas residents can now use medical marijuana.

As the US Marijuana movement rips into high gear, perhaps it’s a good idea to focus a bit more attention on industry events outside of the country, as an indicator of what’s to come. This week, Canadian medical marijuana producer Canopy Growth Corp ($TWMJF), whose share price has quadrupled in 2016, announced the acquisition of Mettrum health corp for $430 million CAD ($321 Million USD). The acquisition will add 665,000 square feet of production capacity and a post-acquisition cash balance of $68 Million (CAD). Canada, which already allows marijuana for medical purposes, is expected to legalize recreational use country-wide in 2017, as the country’s Task Force on Marijuana Legalization and Regulation just gave the thumbs up.

While pot is still illegal under Federal law in the USA, and Obama’s DEA has officially deemed pot to have no medical use (horseshit), the Obama administration has been mostly hands-off when it comes to individual states that have legalized Marijuana. It will be interesting to see how a Trump administration treats pot with anti-marijuana Jeff Sessions as Attorney General. Trump has hedged his position on this issue, telling Bill O’Reilly:

 “I would, I would really want to think about that one Bill because in some ways, I think it’s good and in other ways, it’s bad. I know people that have serious problems… and… it really, really does help them.”

Regardless of whether or not Trump’s mantra of “leave it to the states to decide” applies to this issue, pandora is out of the box. Let’s take a look at the post-election marijuana landscape.

2012-cannabis-usa

On that note, let’s explore a few ideas in the sector. Beware: most US pot-stocks are complete dog shit. Between shell companies, bad business models, and sloppy reporting – the pot stock landscape is the wild west. Given that caveat, here are a few marijuana related ideas that have their shit together and could make you some green:

Innovative Industrial Properties ($IIPR) went public on the NYSE yesterday. With the proceeds of their IPO, this San Diego based REIT will own and rent facilities for growing and producing medical marijuana. Part of their strategy is buying existing grow operations and lease them back to the tenants. It’s CEO Alan Gold is no stranger to REITs, as former president of BioMed Realty (which leases space to companies such as Illumina, Bristol-Meyers Squibb, etc).

“Our acquisition strategy is to act as a source of capital to these licensed medical-use cannabis growers by acquiring and leasing back their real estate locations. By selling the property and building to IIP, and then leasing it back from us, growers have the opportunity to redeploy the proceeds into their company’s core operation and yield a higher return than they would otherwise get from owning their own real estate.”

abbvAbbVie, Inc. ($ABBV) manufactures synthetic THC for medical use.  One of their drugs, Marinol, is FDA-approved for the treatment of nausea in patients undergoing chemotherapy and AIDS patients suffering from loss of appetite. The drug is made of a synthetic form of THC. ABBV is currently oversold within Exodus, and has good fundamentals.

gwphGW Pharmaceuticals ($GWPH) is a biopharmaceutical company that, together with its subsidiaries, engages in discovering, developing, and commercializing cannabinoid prescription medicines. The company primarily offers Sativex, an oromucosal spray for the treatment of spasticity due to multiple sclerosis. It also focuses on the Phase III clinical development program of Sativex for use in the treatment of cancer pain; and Phase 2 trials in other indications, such as neuropathic pain. They’ve also got a packed pipeline (heh) of new treatments for epilepsy, glioma, TypeII diabetes, and schizophrenia.

caraCara Theraputics ($CARA) is a clinical-stage biopharmaceutical company which focuses on developing and commercializing chemical entities designed to alleviate pain and pruritus by selectively targeting kappa opioid receptors in the United States. Its lead product candidate includes I.V. CR845, which is in Phase III clinical trials for the treatment of acute postoperative pain in adult patients, as well as completed Phase II clinical trials for the treatment of uremic pruritus disease. The company is also developing Oral CR845, which is in Phase IIa clinical trials for the treatment of moderate-to-severe acute and chronic pain; and CR701, which is in preclinical trial stage for treating neuropathic and inflammatory pain.

While the marijuana investment landscape is littered with land mines, there is incredible potential for growth as major players emerge. The above mentioned ideas are a good start, but please do your own due diligence, and feel free to contribute your own pot stock ideas below.

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15 comments

  1. peso trader

    ZPN, our clearing firm does not allow purchases of pot stocks…I don’t know what wirehouse firms allow.

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  2. matt_bear

    i have a handful of lotto pot stocks. I really like this IIPR though. Thanks.

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  3. boyaj

    Good article, with the proper warnings and disclaimers. Eventually, this will become mainstream and a viable way to invest for the long term. Other companies to look at are corollary industries that will touch the supply chain such as Agriculture, Chemicals, and Farming. I mean, Scotts Miracle Grow is up 44% YTD; Deere & Co up 36% YTD; and Archer Daniels up 23% YTD. A pullback in these sectors could offer a more conservative way to invest in these trends.

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  4. zeropointnow

    That’s insane Peso! One more reason wirehouses suck and I am no longer at one. I am almost 100% sure Schwab, Fidelity (National Financial Svcs), and most other E*brokerages clear pot stocks, and I *think* Pershing and Wedbush will clear them too.

    Seriously, WTF?

    Thanks Boyaj, and that’s an excellent set of ideas to compliment the theme.

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  5. ironbird

    Truly impressed the public has handled the edibles so well. Anyone who knows anything about weed knows to not eat it the first time or ever depending on said effects. One of the only good drugs where smoking it is mellow compared to ingesting.

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  6. Zor

    SMG scotts miracle

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  7. ironbird

    Zor No way man. Only Mexico pumps it full of shit anymore. Then again fucking Kellogs is still around.

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  8. soupbone

    I gave the stuff up long ago. So I figure this summer maybe it can help with my anxiety problem and I try some kush? I couldn’t move for 3 hours and thankfully I was alone at the time. Trying CBD instead.

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  9. zeropointnow

    @soupbone, this is the strain that became famous after it was used to treat a little girl who was having 300 grand mal seizures / week. It won’t get you high.

    http://www.cnn.com/2013/08/07/health/charlotte-child-medical-marijuana/

    https://www.leafly.com/sativa/charlottes-web

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  10. ironbird

    soup. To each his own. Seriously not a big weed person. But for those that it is the one that helps. Fuck yeah. And the pot shop stuff is way to strong for some. But they got low and super low thc(potentcy) now. For the peeps that do not want to get stoned just need the medicine.

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  11. uglyflint

    I bought a lottery ticket AMMJ at fidelity. No problems at all.

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  12. mx2101

    I wonder how this category compares to biotech in terms of risk and the “lotto” aspect? Just a general thought, no position.

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  13. Jay

    Thanks for the great overview of the marijuana investing landscape. The moves in these Canadian pot stocks have been wonderful. Everyone here seems to be in on the action. I have no idea what the shares are worth, but it’s a brand new industry opening up that’s got to be worth billions.

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  14. zeropointnow

    Jay, the repeal of prohibition is a gold mine – just have to separate the sticks and stems from the kush to avoid getting burned. There are also a few resident experts on the space within Exodus if you’re not already a member.

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  15. سایبان

    too many thanks for info

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