HITIF - Cannabis Weekly Round-Up: US$1.82 Billion Beverage Call Hits Market

In the cannabis space this week, a marijuana data company shared its positive predictions for the cannabis-infused beverage market.

Meanwhile, Statistics Canada released April marijuana sales data for the country, revealing a small drop in purchases after COVID-19 stockpiling caused a sales spike in March.

Read on for a closer look at some of the biggest cannabis news over the last five days.

Big prediction for cannabis beverages market

Prohibition Partners released a report on cannabis-infused beverages this week, saying it expects the global market to be worth US$1.82 billion by the end of 2020, and US$5.8 billion by 2024.

According to the marijuana research provider, all areas of the drinks market are making moves into cannabis-infused beverages, and consumers are ready to buy in this market. Of the 15,000 adults in North America and Europe that Prohibition Partners polled, 16 percent said they have not yet tried a cannabis-infused drink, but are interested and will likely do so in the next year.

Other data indicates that 28 percent of people who have already tried a cannabis-infused beverage intend to buy more infused products in the next three months.

Click here to skip to the Investing News Network’s overview of the Prohibition Partners report.

“The global drinks market may be large but overall industry growth is slow with some analysts forecasting  annual growth at around just 3%. Our research has found that cannabis-drinks, however, are poised for much bigger growth and point towards an almost 45% compound annual growth rate for the cannabis-infused segment of the drinks industry,” said Claire Birks, senior analyst at Prohibition Partners.

Prohibition Partners is clearly optimistic about the future for cannabis beverages, but it’s worth noting that their reach has been somewhat limited so far. For example, in Canada, Cannabis 2.0 products only became legal last fall, and it took longer than that for companies to be able to start selling drinks.

That said, sales do seem to be picking up, with recent data from the Ontario Cannabis Store showing that C$410,000 worth of beverages were sold from January to March.

Slight drop for Canadian cannabis sales

Statistics Canada provided the latest data on the country’s cannabis sales, revealing that the April number came in at C$180.15 million.

That’s down slightly from C$181.18 million in March, but up substantially compared to the first two months of the year, when marijuana sales in Canada came in at under C$155 million.

The increase in buying seen in March has been attributed to panic buying due to COVID-19. It was not initially clear whether cannabis stores would be able to stay open as provinces and territories across the country put measures in place to stop the spread of the disease, and as a result consumers rushed to stock up on their preferred products.

In total, eight of the country’s provinces and territories saw sales declines from March to April, with Prince Edward Island leading the way.

Marijuana financing activity picks up

Viridian Capital Advisors reported positive financing data this week on the cannabis industry.

The firm, which which tracks investment and M&A activity in the marijuana space, said that during the week ended June 12, more dollars were raised than during the same week in 2019 — according to Viridian, that’s the first time this year that has happened. It was also the first week in 2020 that average tranche sizes were higher than they were last year.

“We recorded 7 capital raise transactions totaling $73.8 million, vs. 12 transactions totaling $71.8 million during the same week in 2019. Average tranche size was $10.5 million this week, vs. $6.0 million in the prior year period,” said Viridian.

The largest amount was raised by MediPharm Labs (TSX:LABS,OTCQX:MEDIF)), which brought in C$37.82 million in a private placement of two series of unsecured convertible notes.

MediPharm followed that news up this week by providing its latest quarterly results and entering into a supply agreement with a subsidiary of VIVO Cannabis (TSX:VIVO,OTCQX:VVCIF). The company’s results were not well received by the market, with its share price dropping about 18 percent after their release — MediPharm reported a year-on-year revenue drop of 49 percent as well as a fall in adjusted EBITDA.

Cannabis company news

Company news in the cannabis space this week was centered largely on financings and quarterly results, plus the departure of one high-profile executive.

• Floundering Acreage Holdings (CSE:ACRG.U,OTCQX:ACRGF) announced a $15 million short-term loan with an annual interest rate of 60 percent. The deal is with an unnamed institutional investor, and it comes not long after the company announced two other definitive funding agreements for a total of $60 million. Both amounts will be used for working capital and general corporate purposes.

• Steve Dobler, co-founder of Aurora Cannabis (TSX:ACB,NYSE:ACB), will retire from his positions as president and director as of June 30. Dobler co-founded the company with Terry Booth, who retired from his position as CEO earlier this year. Since Booth’s departure, Aurora has made an effort to restructure.

• Delta 9 Cannabis (TSX:DN,OTCQX:VRNDF) entered into a partnership to be the exclusive cannabis partner of the Manitoba Hotel Association. Under the agreement, Delta 9 will help members of the association become cannabis retailers and will be able to distribute its products in Manitoba hotels. Also this week, Delta 9 entered the Newfoundland and Labrador market and opened a store in Grande Prairie, Alberta.

• Also raising money this week was HEXO (TSX:HEXO,NYSE:HEXO), which established an at-the-market offering program that will allow it to issue up to C$34.5 million worth of common shares to the public “from time to time.” It also closed the sale of its Niagara, Ontario, facility for about $10.25 million. The funds from the sale will be used partially to expand HEXO’s Belleville, Ontario facility.

• High Tide (CSE:HITI,OTCQB:HITIF) released its latest quarterly results, reporting a year-on-year revenue increase of 197 percent to C$19.57 million. Its adjusted EBITDA rose 156 percent over the same period, clocking in at C$1.94 million. President and CEO Raj Grover described the company’s adjusted EBITDA number as “well ahead of (High Tide’s) peer group.”

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.