By Ciara Linnane, MarketWatch
“Positive views (are) likely to be taken around implications for greater financial focus and commitment from Constellation Brands, though also negatives around potential lack of external appetite for the role, and the likelihood of a heavy focus on an unproven beverage category,” he wrote in a note to clients. “Expect financials to continue to underwhelm as domestic Canada struggles continue.” Bennett rates Canopy stock as underperform.
Others noted the news does not solve a major obstacle for the Canadian sector; the shortage of retail stores that has allowed the black market to thrive. The red tape that is holding up licensing has contributed to a sharp selloff in the sector in the past six months as licensed producers are unable to get their product to consumers. Companies continue to post heavy losses as revenue proves elusive and many are now running out of cash and resorting to often dilutive actions to fund operations.
TerrAscend shares /zigman2/quotes/209651870/delayed TRSSF -0.23% /zigman2/quotes/207845920/delayed CA:TER -0.35% slid 11%, after the company announced a private placement to raise about $20 million, by issuing 10.8 million units at C$2.45 per unit. The Canadian-listed stock was last trading at C$2.38.
Last week, AgMedica Bioscience acknowledged a “liquidity crisis” that requires “immediate interim financing” to implement a restructuring. Wayland /zigman2/quotes/201797915/delayed MRRCF 0.00% , meanwhile, filed for creditor protection.
“We expect many more of these stories in the coming months, with only those showing positive financial momentum and/or cash stability likely to succeed,” said Jefferies’ Bennett.
Elsewhere in the sector, Aurora Cannabis /zigman2/quotes/210559470/composite ACB -5.35% /zigman2/quotes/203734337/delayed CA:ACB -4.13% was down 3.4%, Tilray /zigman2/quotes/209129655/composite TLRY +0.63% was down 2.9% and Aphria Inc. /zigman2/quotes/207425803/composite APHA +1.89% /zigman2/quotes/205566616/delayed CA:APHA +1.59% was down 2.6%, while Cronos /zigman2/quotes/206842762/composite CRON -2.36% /zigman2/quotes/202715342/delayed CA:CRON -2.36% fell 1.7%.
Aleafia Health /zigman2/quotes/203485112/delayed ALEAF -3.27% was flat, Hexo /zigman2/quotes/206508254/composite HEXO -0.20% /zigman2/quotes/200008967/delayed CA:HEXO 0.00% was down 3.9% and Organigram /zigman2/quotes/209289540/lastsale OGI -3.81% was down 3.4%.
CBD company Charlotte’s Web /zigman2/quotes/205374221/delayed CWBHF -1.23% /zigman2/quotes/212650907/delayed CA:CWEB -3.33% was down 2.3%, and Curaleaf Holdings /zigman2/quotes/205334348/delayed CURLF +0.28% /zigman2/quotes/203485866/delayed CA:CURA +0.53% was down 0.2%.
Illegal at Home but Lucrative Abroad: China Bets Big on CBD
As products made with CBD, or cannabidiol, take off in the U.S., Chinese entrepreneurs are looking cash in. The WSJ visited China’s cannabis heartland to see how they are navigating this highly sensitive industry as they try to turn their country into a CBD superpower. Photo composite: Sharon Shi. Video: Clément Bürge
The ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ -0.29% was down 1.2%, while the Horizons Marijuana Life Sciences ETF /zigman2/quotes/208856346/delayed CA:HMMJ +0.86% declined 1.7%