Toronto Opens First Dispensary

Matthew Carr By Matthew Carr
Emerging Trends Strategist

Beyond the Bong
This is individual research and does not constitute investment advice.

It was another week of major cannabis headlines.

The biggest newsworthy event was the opening of Toronto’s first dispensary, The Hunny Pot.

Ontario is home to 40% of Canadians. And Toronto is Canada’s largest city.

So this is an important market for the Canadian cannabis industry.

We recently covered that licensed producers are now making shipments to Ontario. And last week, Invictus MD Strategies (OTC: IVITF) joined this list.

In Toronto, customers braved the cold and stood in line for up to 40 minutes to buy weed from an actual storefront, instead of online.

Currently, there’s a cap of just 25 Ontario dispensaries to start. Though only 10 had licenses in place as of April 1.

Ontario is the last province to open physical brick-and-mortar stores after adult-use was legalized last October. But the industry is already off to a strong start – despite a shortage and some hiccups during the first couple months of the rollout.

In the fourth quarter, Canadians dropped $230 million on legal pot.

Farther south, we got more merger and acquisition news last week as Chicago’s Cresco Labs (OTC: CRLBF) snatched up Origin House for roughly $850 million.

This now vies for the largest acquisition in U.S. cannabis history. Harvest Health & Recreation (OTC: HRVSF) had its own $850 million purchase of Verano Holdings in mid-March.

Origin House expands Cresco’s footprint in California and puts its products on shelves in 725 dispensaries.

It’s also a continuation of Cresco’s aggressive expansion plans. This marks its third acquisition since December. And the company was in our High Five two weeks ago for its $120 million purchase of Florida’s VidaCann.

It’s really stepping on the gas as the U.S. multistate operator (MSO) market heats up. Conservatively, the U.S. legal cannabis market will be worth $80 billion by 2030.

California will take the crown as the largest American market, worth roughly $11 billion. So companies are duking it out to gain market share there.

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The High Five

1) Dixie Brands (OTC: DXBRF) CEO Chuck Smith was my guest on Thursday’s CannaBiz Now! We talked about infused product launches in Canada and in the U.S., as well as plans for CBD products.

Dixie’s Elixir Fruit Punch recently won “Best Beverage” at the recent High Times DOPE Cup. And the company launched a line of infused pulled taffy last week.

We’ve covered before that consumer tastes change as legal markets mature. For example, in Colorado, sales of pre-rolls and dried flower stalled last year. But sales of edibles increased 17%, with infused candy sales increasing 25%.

Dixie currently operates in five states and is expecting to double manufacturing capacity this year.

2) Planet 13 Holdings (OTC: PLNHF) co-CEO Robert Groesbeck was a guest on CannaBiz Now! at the end of February. And last week I wrote that March was the beginning of “weed smoking season” in the U.S.

Last week, Planet 13 released its sales figures for March… and the results were as monstrous as a Las Vegas all-you-can-eat buffet.

Revenue for the month came in at $5.49 million – a 27.7% increase from February’s. And total customers increased 15% from February’s total – to 1,987.

Planet 13 believes these are better results than any U.S dispensary has ever seen.

3) Auxly Cannabis Group (OTC: CBWTF) reported fourth quarter results at the end of March. First, it actually had revenue to report, even if it was a mere CA$747,000. Of course, that was in stark contrast to its net loss of CA$67 million.

Shares dipped on the results… as we’ve seen from other Canadian producers this earnings season. But Auxly has a number of valuable partnerships to watch, including one with Dixie Brands.

4) Neptune Wellness Solutions (Nasdaq: NEPT) announced it completed its first commercial production and will begin shipping extracts.

That means the transitioning nutrition company will record its first cannabis revenue ever for the quarter ending March 31. Neptune’s current commitments are for 150,000 kilograms. Though it believes it’ll be able to double this amount over the next three years. And it should ramp up to 200,000 kilograms by July.

It’s planning to expand its extraction capacity to 6 million kilograms to tap into the global CBD demand and the Canadian legal market.

5) Flowr Corporation (OTC: FLWPF) reported last week it sold 406 kilograms in the fourth quarter. And that was despite the fact that only 20% of grow rooms at its Kelowna facility are operating. Revenue grew to CA$3.3 million. But net loss increased from CA$0.04 per share to CA$0.10 per share.

Back in February, Flowr applied to list on the Nasdaq. Rumor has it this is getting closer to becoming a reality.

Now, despite some broad sector sluggishness in March, the Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF) is up roughly 50% year to date…

This week’s High Five are performing well.

Dixie Brands has eked out a more than 60% gain so far in 2019.

Meanwhile, Planet 13 shares are on fire, surging more than 100%. There’s plenty of momentum after reporting those blowout March sales numbers.

The remainder of this week’s High Five are underperforming the Horizons Marijuana ETF. But Neptune’s 30% gains are nothing to sneeze at. And Flowr’s 49% gain in 2019 is just barely trailing the ETF’s.

There’s never a dull moment in cannabis. And this week, eyes will shift to the U.S. as energy and momentum continue to escalate here.

Plus, we’re ticking ever closer to that all-important cannabis holiday, 4/20.

If you have a pot stock in mind that you’d like me to discuss here, leave the ticker symbol in the comments section.

Here’s to high returns,

Matthew