{"id":8611,"date":"2019-01-13T10:49:22","date_gmt":"2019-01-13T10:49:22","guid":{"rendered":"https:\/\/www.denverpost.com?p=3324222&amp;preview_id=3324222"},"modified":"2019-01-13T10:49:22","modified_gmt":"2019-01-13T10:49:22","slug":"pot-sector-focus-shifts-from-legalization-to-legitimacy","status":"publish","type":"post","link":"https:\/\/cannitrol.com\/blog\/pot-sector-focus-shifts-from-legalization-to-legitimacy\/","title":{"rendered":"Pot sector focus shifts from legalization to legitimacy"},"content":{"rendered":"<div id=\"wp_fb_like_button\" style=\"margin:5px 0 5px 5px;float:right;height:100px;\"><script src=\"http:\/\/connect.facebook.net\/en_US\/all.js#xfbml=1\"><\/script><fb:like href=\"https:\/\/cannitrol.com\/blog\/pot-sector-focus-shifts-from-legalization-to-legitimacy\/\" send=\"true\" layout=\"standard\" width=\"450\" show_faces=\"false\" font=\"arial\" action=\"like\" colorscheme=\"light\"><\/fb:like><\/div><div class=\"media_block\"><\/div>\n<div><img src=\"https:\/\/cannitrol.com\/blog\/\/wp-content\/uploads\/2019\/01\/pot-sector-focus-shifts-from-legalization-to-legitimacy.jpg\" class=\"ff-og-image-inserted\" \/><\/div>\n<p><strong>By Kristine Owram, Bloomberg<\/strong><\/p>\n<p>After a wild year for the cannabis sector, it\u2019s appropriate that 2019 kicks off with a focus on Aphria Inc., the Canadian pot producer that was attacked by short sellers and is now the target of a hostile takeover bid.<\/p>\n<p>Aphria reports results for the fiscal second quarter on Jan. 11, and there will undoubtedly be plenty of questions on the conference call about the allegations from short sellers that it overpaid for \u201cworthless\u201d assets in Latin America. Aphria called the claims by Quintessential Capital Management and Hindenburg Research \u201cmalicious and self-serving.\u201d<\/p>\n<p>The saga took a new twist in the quiet days between Christmas and New Years, when Green Growth Brands Inc. proposed a hostile bid for Aphria, whose stock lost a quarter of its value in December. The potential offer, which has yet to be finalized, raised further questions about Aphria\u2019s links to the much smaller Green Growth, with short-seller Hindenburg Research saying it\u2019s \u201clikely an attempt to generate the appearance of demand in the hopes of spurring credible offers.\u201d Aphria said the offer, valued at C$2.8 billion ($2.1 billion) at the time, \u201csignificantly undervalues the company.\u201d<\/p>\n<p>The fallout will affect the sector as a whole, resulting in \u201cgreater emphasis on corporate governance, deal due diligence, and M&amp;A valuations,\u201d Andrew Kessner, analyst at William O\u2019Neil &amp; Co., wrote in a recent note.<\/p>\n<p>Aphria played just one part in a hectic year for the burgeoning cannabis sector. At the beginning of 2018, former U.S. Attorney General Jeff Sessions had just thrown a wrench into states\u2019 legalization plans, Canada\u2019s recreational market was still just a campaign pledge by Prime Minister Justin Trudeau and pot stocks were trading well above current levels.<\/p>\n<p>We can sum up the year with three \u2018L\u2019 words: legalization, legitimization and listings:<\/p>\n<p>\u2013 Legalization of medical marijuana has spread well beyond Canada to places like Thailand and the U.K. that few people saw coming.<\/p>\n<p>\u2013 Legitimization of the drug has gathered pace at an astonishing speed, with traditional consumer and pharmaceutical companies ranging from Constellation Brands and Anheuser-Busch InBev, to Altria Group and Novartis investing in or partnering with pot firms.<\/p>\n<p>\u2013 The number of cannabis listings has soared, with at least 149 companies worth a combined C$54.7 billion trading on Canadian stock exchanges as of Jan. 2. A growing number of those are U.S. firms with market values above C$1 billion.<\/p>\n<p>In terms of stock performance, the BI Global Cannabis Competitive Peers index sank 54 percent in 2018. It was a wildly volatile year for many pot stocks, but none could match Tilray Inc., the only cannabis stock to be listed solely on a U.S. exchange. It closed the year up 315 percent from its July initial public offering, but that represents a major come-down for investors \u2014 at its highest point in September, it was up 1,665 percent. The stock peaked at $300, and now trades close to $70. It still has a market value of $6.6 billion, surpassed only by Canopy Growth Corp. among pot firms.<\/p>\n<p>It\u2019s going to be hard to top the action-packed year that was, though 2019 will have almost as many catalysts for cannabis investors as 2018.<\/p>\n<p>What to watch this year:<\/p>\n<aside class=\"related right\" \/>\n<p>\u2013 The U.S. will dominate the news flow and stock listings: with the recently passed farm bill legalizing hemp, some say it\u2019s only a matter of time before legislators follow suit and legalize cannabis nationwide. Others argue a divided Congress will stymie any real progress. Either way, 2019 will be America\u2019s time in the marijuana spotlight as investor interest rapidly shifts from Canada to the much larger U.S. market, where consumer spending on legal cannabis is expected to reach $20.9 billion by 2021 from $11 billion last year, according to Arcview Market Research and BDS Analytics.<\/p>\n<p>\u2013 As the U.S. weighs proposed legislation that could open up banking and stock exchanges to cannabis companies, institutional investors will feel increasingly comfortable investing in the space. To date, cannabis investments have largely been the purview of retail investors, family offices and specialty hedge funds.<\/p>\n<p>\u2013 Legalization of both medical and recreational cannabis will continue to spread around the world, with France, Italy, Peru, New Zealand and even Lebanon on the list of countries thought to be the next movers.<\/p>\n<p>\u2013 Clear winners and losers will begin to emerge in Canada as pot producers report their first earnings that include recreational sales. Expect plenty of consolidation and a few outright failures. <\/p>\n","protected":false},"excerpt":{"rendered":"<div class=\"media_block\"><\/div>\n<p>After a wild year for the cannabis sector, it&apos;s appropriate that 2019 kicks off with a focus on Aphria Inc., the Canadian pot producer that was attacked by short sellers and is now the target of a hostile takeover bid. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[8054,146,52,6811,55,6964,5898,6813,77,5667,56,9,5019,1,3,61,1736],"tags":[8055,2724,2632,6816,2635,6967,5902,6818,2655,5673,2636,5022],"_links":{"self":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/8611"}],"collection":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/comments?post=8611"}],"version-history":[{"count":0,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/8611\/revisions"}],"wp:attachment":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/media?parent=8611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/categories?post=8611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/tags?post=8611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}