420 Investor Weekly Review 08/12/22

Review

Illinois medical cannabis sales for July were released and left overall sales for the state up 6% from a year ago and just 1.6% sequentially from June. Michigan adult-use flower sales boomed, leaving July sales at a record $210 million, up 12% sequentially.

I distributed this written material to 420 Investor subscribers during the week:

Here are some of this week's highlights for Focus List names:

  • AAWH opened its 3rd NJ dispensary in Fort Lee.
  • AYRWF opened its 50th Florida medical dispensary and its third Massachusetts adult-use store, Somerville.
  • CCHWF launched its first pre-rolls in NY.
  • CEAD posted $3 million in revenue in Q2 and ended with cash well above its market cap at $20.6 million and no debt.
  • CRON revenue slipped sequentially but grew a lot from last year on better profitability in Q2.
  • CRLBF praised the success in Illinois for social equity groups helped by its SEED Initiative
  • CURLF named a new CFO and two additional hires. The company's Q2 report was in line with expectations for revenue ($338 million) and better than expected on adjusted EBITDA ($86 million). It took control of Polish company, CanPoland, and a German company, Four 20 Pharma.
  • CWBHF had a big miss in Q2, with revenue of $18.9 million and adjusted EBITDA of -$5.4 million. The company engaged Hanson Faso Sales and Marketing for the central part of the U.S. The company also revealed a premium sports product line undergoing NSF's certification process.
  • GDNSF posted a stronger-than-expected Q2 at $21.1 million revenue.
  • GNLN secured a $15 million asset-based loan.
  • GRWG lost is CFO, replacing Jeff Lasher with Greg Sanders, formerly the Controller.
  • HYFM soared after releasing its Q2 results that had been pre-announced. Sales fell from $133.8 million a year ago to $97.5 million.
  • JUSHF allowed its former CFO to join Curaleaf and settled the lawsuit against the company.
  • LOWLF reported revenue for Q2 below expectations at $13.2 million with adjusted EBITDA at -$1.1 million.
  • MAPS lowered its outlook for 2022 after missing estimates for Q2 at $58.3 million in revenue. The company launched Weedmaps for Business, a fully integrated suite of end-to-end solutions for retailers and brands.
  • TCNNF slightly missed expectations in Q2, reporting revenue of $320 million and adjusted EBITDA of $111 million. It lowered its 2022 outlook.
  • TLLTF is launching the 1906 brand in Pennsylvania.
  • TRSSF revenue grew substantially due to NJ, but it was below expectations at $65 million.
  • VFF reported overall cannabis revenue of $35.6 million in Q2, up 24% sequentially and 44% from a year ago. It reported a big loss with fundraising ahead.
  • VRNOF released Reserve and Essence flowers into AZ, FL, MA and PA. It opened its 55th Florida medical dispensary.

There were comments in over 140 discussions in the Forum. Don't miss out on this most informative part of 420 Investor! Not familiar with the the Forum? This video will help! This is a great way to track your favorite tickers, even those not on the Focus List, and to get your questions answered quickly.

Please check the Focus List, (which has technical, fundamental and valuation ratings as well as a market-cap table). To help track market caps, we maintain tables for the Canadian LPs and the American cannabis operators and ancillary companies.

Market Performance

The Global Cannabis Stock Index rallied but trailed the broad market strength, increasing 1.9% to 15.56, still up from the all-time low close of 14.76 set 6/30:

The index, which lost 26% in 2021 following a 5.2% gain in 2020, is down 52.6% in 2022. It currently includes 26 stocks and ended 2021 at 32.85. In August, it has rallied 1.0%:

For perspective, the index, which began 2013 at 100, bottomed in August 2013 at 70 after a prior peak of 220 in February 2013 and peaked in 2014 at 1010. The long post-2014 decline ended in February 2016, with the market soaring at the beginning of 2018 to levels not seen since 2014. We took out the 2016 lows by a wide margin in early 2020 and then soared into 2021 before reversing. We recently made a new all-time low:

Model Portfolios

Flying High , up 21.7% in July , ended the week valued at $228,864, up 7.0% during the week and now up 7.3% in August. This model portfolio was launched on 9/23/13 with $10,000 (paper), and it ended 2013 at $18,225, 2014 at $15,702, 2015 at $9608, 2016 at $49,568, 2017 at $112,891, 2018 at $161,346, 2019 at $165,249, 2020 at $252,409 and 2021 at $294,249. The year-to-date gain was 16.6% in 2021, and the model portfolio is down 22.2% in 2022. The model portfolio has increased 2189% since inception. Flying High has 8 positions and 0.1% cash. During the week, I exited a Canadian LP and added to an ancillary name and created a position in a different LP. I also trimmed another LP and added to an ancillary name, the new LP and an existing MSO position. Finally, I trimmed two LPs and added a new position in an MSO.

420 Opportunity, which rose 19.3% in July, ended the week at $53,012, up 5.0% (and +5.1% in August) This model portfolio, which was funded with $50,000 (paper) on 4/8/14 and ended 2014 at $17,105, 2015 at $11,418, 2016 at $44,915, 2017 at $91,407, 2018 at $94,616, 2019 at $77,715, 2020 at $105,373 and 2021 at $90,823, has a goal of being fully invested and outperforming the market as measured by the 420 Investor Cannabis Stock Index, which gained 1.9% during the week. In 2021, the model lost 13.8%, while the index decreased 26.0%, and it is down 41.6% in 2022 compared to the index loss of 52.6%. The model portfolio has gained 6.0% since inception, while the overall market has declined by 98% during that time-frame. The model maintains 18 holdings and 0.1% cash. The three largest holdings include CEAD/CEADW (9.9%), OGI (9.2%) and AYRWF (8.8%). During the week, I trimmed CGC and ACB and added a new position in LOWLF. I trimmed GRWG and added to IIPR. I trimmed VLNS and added a new position in CRON. I trimmed ACB further and added to MAPS. I trimmed GRWG again. I also sold the balance of VLNS and added a new position in TRSSF.

420 Quality, which was funded with $50,000 (paper) on 3/1/17 and was up 20.4% in July, ended the week at $74,468, up 4.7% this week (and 4.9% in August). In 2021, the model portfolio lost 21.8% compared to the 26.0% loss in the index. In 2022, it has returned -41.1% compared to the index return of -52.6%. It ended 2017 at $109,480, 2018 at $119,053, 2019 at $113,123, 2020 at $161,504 and 2021 at $126,323. To learn more about the model portfolio, which is longer-term focused, please read the description I posted before launch. Since inception, the model has gained 48.9%, while the index has lost about 81%. The model has 19 holdings and no cash. The largest positions include OGI (10.0%), CEAD/CEADW (9.2%) and HYFM (9.1%). During the week, I trimmed CGC and ACB and added a new position in LOWLF. I trimmed GRWG and added to IIPR. I trimmed VLNS and added a new position in CRON. I trimmed ACB further and added to MAPS. I trimmed GRWG again and sold the balance of VLNS, adding to TRSSF and to SMG.

Calendar

As a reminder, 420i posts a calendar for your convenience, as does New Cannabis Ventures. NCV also posts a separate calendar for conference calls. We are almost done with the June 30th quarter!

  • Monday: Agrify, Auxly, Columbia Care, CV Sciences, IM Cannabis, MediPharm Labs and Rubicon Organics have all scheduled morning calls, and 4Front, Ascend, Greenrose, Planet 13, Springbig, The Parent Company, TILT Holdings and urban-gro have afternoon calls.
  • Tuesday: Greenlane, Indiva, InterCure, Item 9 Labs and Verano Holdings host calls in the morning, and Delta 9 hosts a call during trading hours.
  • Wednesday: Cresco Labs hosts a call in the morning, and Cannara Biotech hosts a call during the trading session.
  • Thursday: Ayr Wellness reports in the morning.

Companies with fiscal years ending in May (April for Canadian Venture stocks that don't file with the SEC) must report their annual financials in August. This includes none from the Focus List since Tilray already filed. Companies with years ending in March, September and December must file their quarterly reports by mid-August (or by late August for Canadian-listed stocks that aren't on the TSX or NEO or filing with the SEC).

Posted to 420 Investor on Aug 12, 2022 — 6:08 PM
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