There is an obsession with Sundial Growers (SNDL) among traders. The shares rose 140% in the year and I think the only reason is because it is a low-priced cannabis name that can be traded at all brokerages.
Traders consider it “cheap”, despite its billion-dollar market capitalization. It is the same company that was sued for not disclosing that the product was returned for containing mold and pieces of rubber gloves.
I often scoffed at Aurora Cannabis (ACB) for issuing shares as if they were candy. Sundial Growers is becoming the “hold my beer” answer for Aurora. Drowning in debt, Sundial used every bit of its shares to issue more and more shares. They broke the billions and I’m not sure if there is an end in sight.
The company is making the transition from wholesale cannabis to retail, but this is not the only one in the industry. In fact, Sundial is far behind many competitors in this regard. It was a hard blow for them, as net sales fell 46% year on year.
Perhaps the Twitter guru who led you to this action does not admit it, but in my opinion, it is a bomb and eviction. Ironically, this can save the company, as they have a stronger balance sheet, but with a valuation now well over $ 1 billion, there are much better places where an investor can put his hard-earned money, whether he wants a name aggressive or moderate.
Village Farms (VFF) should undoubtedly be the main name on everyone’s list when changing something in place of Sundial. The fact that these companies have the same market capitalization is absolutely ridiculous. Village Farms offers the lowest production cost, owns 100% Pure Sunfarms, has a large greenhouse in Texas ready for CBD production when legal and has an international reach. They also have sales three times higher than Sundial, have positive and profitable cash flow. Now tell me again why did your guru buy you Sundial?
Buy a multi-state carrier. Which? Almost anyone. Cresco Labs (CRLBF), based in Illinois, is at the top of my list. With a market capitalization of around $ 5 billion, you are receiving the cannabis king of Illinois. Distributed over nine states with 15 production facilities and 20 dispensaries, Cresco has one of the largest footprints in the United States. They reported more than $ 150 million in revenue in the last quarter alone, along with profitability.
Trulieve Cannabis (TCNNF) is another alternative. Third-quarter revenue of $ 136 million was just below Cresco, but the cannabis company concentrated in Florida produced stronger EBITDA. And I would not blame anyone for choosing Green Thumb Industries (GTBIF) or Curaleaf Holdings (CURLF).
The easiest thing to do would be to purchase the Pure American Cannabis ETF from Advisorshares (MSOS), which will give you all the actions above, plus another 25.
For those people who want to stay on the aggressive path, two minor considerations are Juva Life (JUVAF) and Cybin (CLXPF).
Juva
Juva is a vertically integrated cannabis company in California. In fact, its CEO received the first license granted in the state. Although growing, processing and selling cannabis in retail and distribution generates a good revenue stream, Juva is taking the road less traveled, which should result in huge returns for shareholders in the future.
Juva will combine IRB-approved patient research investigations with product integrity testing and verification through a network of doctors and clinics, along with its own $ 5 million Class 5 clean room.
This will not lead to phase I tests with the FDA. Instead, Juva will gather a lot of data reported by patients. These results reported by patients for precision cannabis products formulated by Juva will allow the company to show that X produced used by Y patients generated Z responses / results The most common target / objective for Z is to reduce a symptom by a specific percentage.
For example, let’s say I reported a daily pain level of 7 on a scale of 1 to 10 before I started using a specific dosage / precision cannabis Juice formulation. Then, after using that product for three weeks, I reported a new pain level of 2 on the same scale, something that is worthless. Now imagine if 10 or 100 people or 1,000 people reported similar results. No, Juva cannot make a medical claim, but they could say something like, “Well, Mr. or Mrs. Patient, 85% of people with similar symptoms reported a reduction in pain using this specific strain of cannabis.”
The short-term result: working with doctors, Juva can guide clients towards the strains based on the results reported by users. The long-term hope is that doctors will be more likely to adopt the cannabis recommendation based on real-world patient data.
With each patient report, Juva’s data set grows and we know how valuable data is in today’s world. This will help you build a valuable and marketable medical database. It could attract other people in the cannabis world to partner with Juva and hitch a ride on the idea. Since large pharmaceutical companies will not risk studies or tests until a federal path is clear, the data they can obtain from Juva would give them a major advantage over competitors when the path is clear. The current study targets for Juva now revolve around inflammation, oncology, neurology, pain control and opioid reduction. Any possible replacement of opioids would be of great benefit to society and an enormous financial risk for large pharmaceutical companies.
Cybin
If Juva is the road less traveled, Cybin is the new road that is being built. Cybin does not operate in the cannabis space, but in the next evolution of drug treatment, psilocybin. But we are not talking about recreational use. Management sees itself as a life science company. The company’s current focus is on developing treatment regimes that consist of proprietary psychedelic molecules and developing its delivery mechanisms, such as the company’s proprietary sublingual film and inhalation delivery system.
The company recently announced that it would raise C $ 20 million. When the deal was closed, they brought in more than C $ 34 million, strengthening an already strong balance sheet for one with more than US $ 40 million in books. And they will put that money to work.
According to Cybin, the company plans to sponsor a Phase 2a and Phase 2b clinical trial in patients with Major Depressive Disorder (MDD) later this year. The study will be conducted by the University of West Indies (UWI) and will comply with the guidelines of the International Conference on Harmonization (ICH) and Good Clinical Practice (GCP). In doing so, Cybin can use the data collected as a bridge strategy to enter other jurisdictions, such as the USA, Canada and Europe.
If one of these cannabis companies were smart, it would get Cybin before it got too expensive. With a market capitalization of just $ 300 million, I expect it to reach $ 2 billion before Sundial.
If Sundial were smart, they would reach that shared jar of candy and offer Cybin $ 500 million to $ 700 million now and turn into something that can compete with all the names above. Until then, I would feel much more comfortable having a mix of VFF, MSOS (or some individual MSO names) and JUVA or CLXPF long before holding an SNDL stake for longer than a scalp deal.
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