There’s some big news this week, and we’ll start off with a CEO buying $2 million worth of shares…
There’s a lot of noise going around in the cannabis industry right now, so I want to separate that noise from what’s important, especially when it comes to your investments.
The first thing I want to talk about is Acreage Holdings (CSE: ACRG, OTC: ACRGF). CEO Kevin Murphy recently purchased 154,000 shares of Acreage. At the time, those shares were worth more than $2 million.
There’s an old saying that there are plenty of reasons to sell a stock, but there’s only one reason insiders buy.
It’s because they expect the stock price to go up!
You can see in the chart below that, when the news broke, prices shot up.
I told you last week one way to invest in Canopy Growth Corp. (NYSE: CGC) was through Acreage. Canopy will buy Acreage, but the deal was structured to only close when cannabis is fully legal in the United States. It has its risks, but we know that legalization in the U.S. is a “when” and not an “if” scenario.
Organigram Holdings Reports a Loss
While Organigram Holdings Inc. (Nasdaq: OGI) isn’t in our model portfolios, I know a lot of our members own shares, so I wanted to provide you with some insight.
Organigram is working on a new way to grow cannabis. It’s a little complicated, but here’s what you need to know as an investor. Organigram experimented with a new method for cloning cannabis plants, which has been sweeping the industry, but it learned that it didn’t work for many strains or at a large scale.
However, I’m willing to give companies a pass when it comes to experimenting and finding out what works and what doesn’t. Remember that this industry is just in its infancy, and because of federal restrictions holding back research, there’s still a lot of work that needs to be done.
The company also reported a third-quarter loss thanks to lower reorders from Ontario and British Columbia.
With the CEOs I’ve been speaking with, that’s been a common issue.
Dispensaries will place a large initial order from a producer, then dispensary managers will place smaller orders from those producers to refill the shelves. Signing up those new customers generally happened before the start of 2019, so cannabis companies reported a large amount of revenue, all at once.
Since those new customers are no longer new customers, sales dip because the orders aren’t so big.
For Organigram specifically, Ontario made a large number of orders ahead of retail stores opening in the province.
“Not having that replenishment in Q3 had an impact,” Organigram’s CEO said on a conference call.
However, Ontario is expected to place another large order, with 50 more recreational cannabis stores expected to start opening in October. That should provide another bump in revenue in the short term.
For a longer view, Organigram is also expected to sell edibles, which will be legal in Canada by the middle of December. Edible sales will be another growth catalyst, and I’ll have more reports on the best ways to profit from that market.
The company is also going to sell vape pens, which can have high margins.
Next, I wanted to talk about what is happening with one particular acquisition.
CBD sales are on track to hit $22 billion by 2022. That’s why our experts have identified two CBD stocks with massive profit potential… both trading under $4. Find out more info here.
Origin House/Cresco Labs
On June 10, the U.S. Department of Justice Antitrust Division requested additional information on the proposed transaction. The uncertainty has shareholders of both companies worried, and the additional information requested could delay the deal closing longer than most investors would like to see.
There’s always a chance it doesn’t go through, but Cresco CEO Charlie Bachtell believes the deal is going to close, and so do I.
“We are confident that we will be able to submit all requested documentation to the Department of Justice as soon as possible and continue toward closing of the transaction,” Bachtell said in a statement.
One thing to note is investors hate uncertainty, and the uncertainty behind this deal is similar to the one between Canopy and Acreage. That’s why you’re seeing a disconnect between the prices of where Origin House is trading now, and where they should be trading.
Finally, I know I normally answer questions on Saturday, but I wanted to take some time and answer a question today for one of our fellow members, as some of you may also be having this issue.
Your Question Answered
There’s still some kinks brokerages need to work out to provide better customer service to cannabis investors, but one of our members has a pretty big issue.
Jeffrey H. asks: “Hi, I trade with Merrill Edge and they have recently stopped supporting trading of EMHTF, Emerald Health. Could you tell me what brokerages you know that support this stock that I could trade with?”
Jeffrey, I’m sorry to hear that Merrill Edge is making it harder on you to trade cannabis stocks. My staff looked into it, and we saw that the ticker EMHTF appears on Etrade. On our support page, we also have a list of other brokers that should allow you to trade Emerald Health.
I hope that helps!
Executive Director, National Institute for Cannabis Investors
P.S. Our most conservative experts’ estimates say that each of these six companies could produce 1,000% returns – or more – when they go public. This means that more than $5 billion could be created by each company on IPO day alone. If you want a chance at profits like these, go here now for more details.
18 responses to “What to Know About Acreage, Organigram, and Origin House”
July 17 2019