5 Marijuana plays to watch in 2019
The global cannabis market could be as big as $150 billion by 2025.
October saw Canada embrace full legalization.
And cannabis just got another big boost: in December, the U.S. Senate approved a Farm Bill full of pro-hemp provisions.
Whole Foods Market expects hemp products to be among the Top Ten items in 2019.
Cannabidiol, or CBD, is a compound found in cannabis that is popping up all over the U.S. market.
Right now, CBD generates $418 million in sales, but that figure is expected to jump to $1.6 billion by 2021, according to Brightfield Group.
It’s no wonder that investors are looking to extend the Green Wave from this year into 2019.
Here’s five companies worth keeping in mind:
#1 Canopy Growth Corp. (NYSE: CGC) (TSX:WEED)
The biggest cannabis stock around, Canopy Growth Corp. expects to have a strong market position in the United States by late 2019, according to CEO Bruce Linton.
Canopy moved its listing from Toronto to the NYSE in May 2018, and in August announced a deal for $4 billion in investment from Constellation Brands, the beverage company behind such brands as Corona and Svedka.
The company suffered loss late in 2018 when it failed to reach its revenue goal, and it enters 2019 at a discount, falling to $32 from its high of $56 in mid-October.
But the company is still among the best ways to play the cannabis market, particularly now that it’s trading below its previous highs.
It’s the biggest name in the biz, with a market cap of over $10 billion.
Cronos Group, with $2.3 billion, can’t compare to Canopy in terms of output and market share.
Plus the company is sitting on a pretty big war chest, with $429 million stockpiled, not including the cash it received from Constellation.
And as the market grows bigger, both in Canada and within the U.S., Canopy’s revenues should start to grow as well.
#2 Wayland Group (CN: WAYL)
This cannabis company is a bit smaller than its competitors.
But it’s hiding a big secret.
Wayland Group is a cannabis producer that has prioritized one thing, and one thing only: efficient production at a low cost.
And thanks to its production innovations and global reach, it is entering 2019 with a decisive edge over much of its competition…including heavy-hitters like Canopy Growth Corp. It works like this.
Wayland has harnessed AI technology to oversee its production facilities in Canada, where it also uses energy efficiency, renewable power sources and water recycling to cut down on costs and waste.
The company’s Langton, Ontario facility has been categorized as “88-percent-to-net-zero,” meaning that it doesn’t have to rely on external sources of water and power. A natural gas well on-site means electric charges have been reduced from $0.20/kilowatt hour to $0.05/kilowatt hour.
What does that mean? Wayland is now selling CBD at CAD$16 per gram in Europe compared to prices as low as $5.65 in Canada.
Automation, including the use of AI tech, is a crucial part of Wayland’s drive to cut down costs. Here’s Wayland CEO Ben Ward discussing their automation drive.
The company has stayed relatively quiet about its innovations, as it works to scale up production.
Its global reach gives it access to markets in Europe, North America and Latin America.
In November 2018 it announced an acquisition in Colombia and a joint venture in Italy.
In December, the company announced an agreement to purchase 819 hectares of land in the San Juan Province in Argentina.
But the big attraction for the cannabis investor is this company’s huge upside. Right now, Wayland has an almost $250 million market cap.
But its low cost production and other business plans could put it in direct competition with companies like Tilray and Aurora, which are each worth billions.
Right now, Wayland’s revenue stream is small: only about $4 million.
In comparison, Canopy’s revenue was $40 million in 2017.
But next year, Wayland expects to build up a revenue stream of $100 million.
While Canopy, Tilray and Cronos Group get big fast, Wayland is taking its time. And investors have already started to notice.
People who had interest in cannabis stocks in 2018 should look at Wayland in 2019. This little company, by harnessing cutting-edge tech to cut costs and potentially realize big profits, could be the vertical integrator of cannabis.
#3 Tilray (NASDAQ:TLRY)
Unlike Canopy Growth Corp. and Aurora Cannabis, Tilray didn’t need to raise lots of capital in 2018.
The reason? The company’s IPO in July has given it all the cash it needs.
Tilray can’t match Canopy or Aurora in terms of production or square footage: it has 912,000 square feet, compared to Canopy’s 4.3 million.
But Tilray does benefit from a big market cap: $9 billion, twice that of Aurora and nearly that of Canopy, the biggest cannabis firm out there.
What Tilray does have is market outlets, particularly in Germany, where it has been approved as a supplier of cannabis flowers and cannabis oils.
Earlier this year Tilray announced a partnership with Sandoz Canada, a subsidiary of Novartis, for joint development and marketing of medical cannabis products.
Some analysts think Tilray is heading for a slump, as its price has been in decline in November and December and its earnings have failed to meet expectations.
Still, it’s worth keeping your eye on this company, which could be well-positioned to challenge Canopy as a major producer in 2020 and beyond.
#4 Cronos Group (NASDAQ: CRON) (TSX: CRON)
The first cannabis stock to list on the NYSE, Cronos Group announced some big news in December: $1.8 billion in investment from Altria.
The tobacco company is pivoting to cannabis and wants a piece of Canada’s legal cannabis market, while Cronos can use Altria’s resources to move more quickly past some U.S. regulatory hurdles.
Altria paid a premium for 45% of Cronos, sending the stock price soaring.
The deal gives Cronos an immense amount of cash to develop its products and markets next year, as well as an inroad to the highly-regulated markets of the United States.
This deal is part of the reason Cronos is the best marijuana stock of all time, and one of the biggest healthcare stocks of the year in terms of growth.
Cronos also has a partnership with Ginkgo Bioworks to develop high-purity CBDs from strains of yeast engineered in labs.
These methods could greatly reduce the costs of producing CBD products, giving Cronos another edge over its competition.
#5 Aurora Cannabis (NYSE:ACB)
Aurora is a strong producer that has a capacity of 70,000 kilos of cannabis per year.
By early 2019, that figure should reach 150,000 kilos, and the company expects to produce half a million kilos in the near future.
A lot of that product comes from the company’s production facilities in Uruguay, which was the first country to fully legalize cannabis.
The company is also building strong brand loyalty, at a time when most cannabis products are relatively new with consumers. Through October, Aurora boasted a market share of 30% supplied through Ontario Cannabis Store, a major distributor. Two of its products were in the top three best-selling marijuana products.
In December, Aurora announced plans to buy out Mexico’s Farmacias Magistrales SA, the first and only federally licensed importer of raw materials containing THC in all of Mexico.
This will give Aurora access to a market of 130 million people, and control over Farmacias’ 80,000 retail outlets now distributing CBD products.
Other cannabis companies that deserve some credit:
Emblem Corp. (OTCMKTS:EMMBF)
Emblem is a leading licensed marijuana producer in Canada. With a number of cannabis-based products, Emblem works closely with the medical community to ensure both patients and physicians have the information necessary to make decisions regarding treatments involving marijuana.
Recently, Emblem completed testing on a new oral extended release product with partner Canntab Therapeutics. With the successful tests, the companies announced that they will be moving forward into clinical trials.
In addition to its advancements in the medial field, Emblem is also working towards a safer community, partnering with DriveABLE in an effort to curb accidents from impaired drivers. Nick Dean, CEO, Emblem Corp. explained, “Impairment – whether from alcohol, cannabis, fatigue, underlying medical conditions, or narcotics – is a serious issue that affects safety on roads and in the workplace.”
THC Biomed International (OTCMKTS:THCBF)
THC Biomed operates as a licensed producer under Canada's Marihuana for Medical Purposes Regulations. It is also engaged in the research & development of the products and services to medical marijuana.
THC Biomed's recently announced a new THC-based beverage, aiming to appeal to a broader range of consumers. John Miller CEO explained, "THC has conducted extensive research on cannabis edibles and beverages and I have found our product to be exclusive in its category."
Though THC Biomed may be smaller than some of its more well-known competitors, it is just as ambitious. And it’s beginning to pay off. Earlier this month, the company made its first shipment of cannabis products to its Saskatchewan partner, and is rapidly expanding its holdings, with two new strata lot purchases, adding to its growing array of assets.
Medical Marijuana Inc (OTCMKTS:MJNA)
Medical Marijuana Inc. is an investment holding company which specializes in medical cannabis and industrial hemp products. Additionally, it licenses its proprietary technology to test, produce and track products to other companies within the industry. Headquartered in California, the company is one of the few major cannabis companies making substantial moves in the United States.
In the third quarter of 2018, Medical Marijuana Inc. announced its largest revenue quarter in the company’s history, exceeding $16.8 million dollars, an increase of 116% from the year prior.
Medical Marijuana, Inc. CEO Dr. Stuart Titus noted, "In Q3, we saw incredible international expansion and released numerous exciting new products," adding. "As we continue our momentum in Q4, we will aim to increase shareholder value through further development of our subsidiaries and their product lines."
Namaste Technologies Inc (OTCMKTS: NXTTF)
Through its subsidiaries, Namaste operates as a retailer of a variety of marijuana products, including vaporizers and other smoking accessories. The company sells its goods through e-commerce sites operating in 26 countries.
In addition to its accessory business, Namaste also engages in product development and the distribution of medical cannabis products in Canada.
Recently, Namaste, through its subsidiary Canmart Inc., entered into a supply agreement with Agra Flora to purchase and distribute up to 10% of Agra Flora’s massive Delta Greenhouse Complex at a price of $4 per gram.
HEXO Corp. (OTCMKTS:HYYDF) (TSX:HEXO)
Hexo, previously Hydropothecary, is making some major moves in the cannabis industry. The company, which is engaged in the production, distribution and marketing of cannabis and cannabis products, has secured a huge deal with international beverage giant Molson Coors.
The joint venture signifies a new era in recreational marijuana, bringing two heavyweight industries together under one roof.
HEXO’s CEO and co-founder Sebastien St-Louis, explained, “As two leading companies who share a track record of excellent practices, as well as respect for law and regulations, HEXO and Molson Coors Canada have established a relationship built on trust, and together we will develop responsible, high-quality cannabis-infused beverages for the consumable cannabis market in Canada.”
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