Cannabis Professional’s daily roundup of industry news. View archive here.
CIBC initiates coverage on Organigram, Supreme, and Aurora. MediPharm Labs enters private label supply agreement with TerrAscend Canada, Uruguay made its first commercial export shipment of marijuana, Colombia’s PharmaCielo enters U.S. market through a sales agreement with distributor General Extract, and the capital of Australia legalizes recreational marijuana.
– Marcy Nicholson
CIBC initiates coverage on Organigram, Supreme, and Aurora
CIBC Capital Markets said this week it has expanded its coverage of the cannabis sector and initiated coverage on three licensed cannabis producers: Organigram Holdings Inc. as outperformer at a $9 price target, The Supreme Cannabis Company as outperformer at a $2 price target, and Aurora Cannabis Inc. as neutral at a $7 price target.
“Organigram represents one of the few opportunities to gain exposure to the cannabis space at a reasonable price and to a company with a demonstrated track record of profitability, a rarity in this sector,” CIBC said in a note.
“OGI offers best-in-class margins, an early-mover brand awareness advantage, a quality management team, and prudent capital allocation in innovation.”
The bank said Supreme Cannabis’s focus on existing consumers who want premium product may be the most effective, yet neglected, strategy in recreational pot is helping the company to distance itself from its mid-cap peers.
Meanwhile Aurora was viewed having domestic market share leadership and early international success, but the company’s lack of CBD and United States exposure, continued capital allocation towards cultivations, and balance sheet in need of support, limits CIBC’s optimism on the stock.
– Marcy Nicholson
MediPharm enters private label supply agreement with TerrAscend
MediPharm Labs Corp. and TerrAscend Canada Inc. entered a private label supply agreement just ahead of the legalization of new cannabis products in Canada, which could expand to be worth $192-million, the companies said on Wednesday.
The multi-year agreement will see MediPharm supply TerrAscend with roughly $27-million of high-quality, private label cannabis distillate over a 24-month period starting September 2019. Purchase options mean MediPharm could supply product over 36 months until September 2022, for a value of up to $192-million, MediPharm said.
Starting next month, these supplies will help TerrAscend launch its new products that are set to be legalized in October 2019.
- Marcy Nicholson
Uruguay makes first commercial marijuana export shipment
Uruguay has made its first commercial export shipment of marijuana since legalizing the drug in 2013, sending 10 tons of cannabis to Australia, where its medicinal use is lawful. Jordan Lewis of the Fotmer company says the shipment of dried flowers is worth US$40-million to US$80-million.
The head of the national drug agency also praised the shipment. Diego Olivera says it shows that “the most demanding markets are looking to Uruguay.” Fotmer made an earlier shipment to Germany, but Olivera says that consisted of samples rather than goods for market. The government cited export earnings as one of its goal when it became the first country to create a national, regulated legal marijuana industry.
- Associated Press
PharmaCielo to supply U.S. distributor with CBD isolate
PharmaCielo Ltd. signed a U.S. sales agreement with General Extract LLC, a multi-state distributor, to provide bulk medicinal CBD isolate through the end of 2019. The agreement includes the option to renew and expand in 2020 based on market demand.
Canada-based PharmaCielo is the parent company of PharmaCielo Colombia Holdings S.A.S. that produces medicinal-grade cannabis oil in the South American country.
PharmaCielo has made initial shipments to the U.S. distributor, with contracted shipping volumes planned for the remainder of 2019, it said.
This agreement marks PharmaCielo’s foray into the U.S. market.
- Marcy Nicholson
Australian capital legalizes recreational marijuana
Australia’s capital has become the first part of the country to legalize recreational marijuana for personal use.
The Australian Capital Territory Legislative Assembly voted on Wednesday to legalize possession by adults of up to 50 grams (1.8 ounces) of dried marijuana and cultivation of two marijuana plants beginning Jan. 31. The assembly is the local government of Canberra, the national capital with a population of 400,000.
Households are limited to growing no more than four plants, regardless of the number of occupants.
Possession of small amounts of marijuana has been decriminalized throughout Australia, but the Australian Capital Territory is the first of Australia’s eight states and territories to take the next step of legalizing possession and cultivation.
- The Associated Press