Cannabis stocks were mostly lower Thursday, with Valens GroWorks and Hexo Corp. bucking the trend after announcing a partnership, and Cresco Labs boosted by a bullish analyst note.
Valens shares VGWCF, +5.64% soared 6.1%, after it reported C2.2 million ($) in revenue for the three months to Feb. 28, after zero revenue in the year-earlier period. Like its rivals, the company remained loss-making with a loss of C$6.4 million almost double the year-earlier’s C$3.8 million, and per-share loss widening to 7 cents from 6 cents.
Revenue was fueled by contracts signed late last year to provide extraction services to some of the bigger licensed producers, including Canopy Growth Corp. CGC, -0.41% WEED, -0.52% the largest-cap name in the new legal sector.
On Thursday, Valens said it has signed a multiyear deal with Hexo with an initial two-year term. Valens will provide it with an annual minimum of 30,000 kg in the first year, building to 50,000 kg in year two. Hexo shares HEXO, +0.56% HEXO, +0.94% rose 1.4%.
In regulatory news, an Alabama Senate committee has approved a medical cannabis bill that will allow patients aged 19 and older with one of 33 conditions access legal medical weed and buy it at licensed dispensaries. The state is planning to set up a commission with the task of licensing cultivators, distributors and retailers as well as approving medical cards for patients, according to Marijuana Moment, a website that works with activists, industry representatives and policy makers on trends affecting cannabis. The bill will now head to the full Senate for a vote.
In European news, the Netherlands is planning to expand its medical cannabis cultivation in a move that could overturn the monopoly held by Dutch grower Bedrocan, as Marijuana Business Daily reported. The Office Medical Cannabis said it would publish an application process this spring. The country is the main supplier of medical cannabis to other European countries and the move is likely aimed at retaining that grip.
In company news, Aurora Cannabis Corp. ACB, -1.00% ACB, -0.98% has agreed to acquire privately held Chemi Pharmaceutical Inc., an Ontario-based developer of analytics services to the drug and cannabis sectors. Aurora is paying an undisclosed amount of cash and stock comprising 83,299 shares on closing with another 41,649 shares payable on the reaching of certain milestones. Aurora shares were down 1.3%.
New Age Beverages Corp. shares NBEV, +6.99% rose 5.3%, after the company said it is launching a CBD profit line starting Thursday. The line comprises CBD based creams, lotions and oils that will be sold across the globe under its Health Sciences Division wholly-owned unit. The products will be sold online and via a direct-selling channel.
New Age is still planning to launch a line of CBD-infused drinks as part of its agreement with the Marley brand, created by the family of reggae legend Bob Marley.
“The company has been working in close partnership with retailers in the U.S., Japan, and other key markets to launch these beverages, and expects to launch these products worldwide in addition to its line of topicals as individual regulatory landscapes continue to evolve on a daily basis,” the company said in a statement. For now, companies are not allowed to add CBD to drinks sold in the U.S., until the Food and Drug Administration has come up with a set of regulations.
Cresco Labs Inc. shares CRLBF, -2.04% rose 8%, after GMP analyst Robert Fagan reiterated his buy rating on the stock and $21.50 price target after the company’s fourth-quarter earnings. The numbers showed “robust top line growth” and market share gains in all the states in which it operates, albeit at the cost of a sharp rise in selling, general and administrative costs.
“We note CL remains the most profitable large-tier multistate operator with fiscal 2018 EBITDA (earnings before interest, taxes, depreciation and amortization) of $3.5 million, highlighting solid execution,” Fagan wrote in a note to clients. “With five new markets (OH, MA, FL, NY, MD) expected to begin materially contributing to results during the second half, combined with reinforced Midwest positioning and the addition of Origin House, CL’s growth outlook remains very robust.”
GW Pharmaceuticals PLC GWPH, -0.53% was down 0.6%, and Green Growth Brands Inc. was down 3.2%.
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