Cannabis stocks were mixed on Wednesday, with Aphria Inc. falling after it announced plans to issue up to $300 million of convertible debt.
Leamington, Ontario-based Aphria APHA, -10.01% APHA, -9.59% Â said it would sell the notes in a private placement with the aim of using the proceeds to finance international expansion, for acquisitions and the catchall general corporate purposes. The stock has been under pressure since the company posted earnings earlier this week, showing a wide loss for its fiscal third quarter, that overshadowed a surge in revenue in the first full quarter of Canadian legalization.
Also from Canada, Evolve Funds Group Inc. said it has launched the first exchange-traded-fund focused on the U.S. cannabis industry. The North American Cannabis Holdings Inc. ETF USMJ, +8.33% Â started trading on the NEO Exchange in Toronto on Wednesday.
Evolve Chief Executive Raj Lala said the cannabis opportunity in the U.S. is similar to that of Canada a few years ago, but has the potential to be much larger.
â€śGiven the population in the U.S. compared to Canada, there are some U.S. cannabis companies generating more revenue than Canadian producers, albeit with much smaller market caps,â€ť he said in a statement.
The fund will have competition as soon as Thursday, when the Horizons ETFs Management Inc. will launch its own fund tracking U.S. cannabis companies. That fund, the Horizons US Marijuana Index, is also listing on the NEO Exchange and will focus on U.S. cannabis and hemp companies. The ETF will trade under the ticker symbol â€śHMUS.â€ť
â€śAs the U.S. continues to further liberalize its marijuana regulations, we anticipate that more investors will be looking to invest in companies with significant business operations in the U.S. market and HMUS will provide a diversified and liquid way to gain that exposure in one ETF,â€ť Horizons Chief Executive Steve Hawkins said in a statement.
Canopy Growth Corp. CGC, +2.81% WEED, +2.81% Â Chief Executive Bruce Linton is expecting revenue to top C$1 billion ($744 million) this fiscal year, according to a Bloomberg report. That would be 19% above analyst estimates. Linton is expecting revenue to grow steadily through the year and to accelerate in the final quarter as Canada adds more retail outlets.
Village Farms International Inc. shares VFF, +10.34% Â rose 3.9%, recovering some of their prior-day losses that came after short seller Citron Research said the company is working with shady stock promoters that have a record of failed businesses, while company insiders have been dumping their stock.
Citron said the company should be scrutinized by the U.S. Securities and Exchange Commission because so many of the red flags that the regulator has warned investors about are evident in the company.
â€śWith a rapidly growing universe of cannabis stocks to invest in this global trend, why would investors choose to give their capital to a company that only owns 50% of a farming entity alongside an operator with a long history of stock promotion and failures?â€ť Citron said in a research report. â€śAt the same $700 million enterprise value, you can invest in a much higher quality operator like CannTrust. Unlike the Canadian listed US multi state operators or vertically integrated players, Village Farms is at best a farmer with a record of failure.â€ť
The company was not immediately available for comment. The stock has fallen 11% on the week.
From Colorado comes the news that burger chain Carlâ€™s Jr. is planning to test a CBD-infused cheeseburger for one dayâ€”4/20 of courseâ€”at one restaurant in Denver. Colorado is one of the 10 states that has legalized cannabis for adult recreational use, but the company will still be at risk of an enforcement action.
CBD, the nonintoxicating cannabis ingredient thatâ€™s widely held to have wellness properties, is viewed by the Food and Drug Administration as a drug as it is used in the only cannabis-based medicine to win FDA approval as a treatment for childhood epilepsy. The FDA has told companies they cannot add it to food or beverages without its approval.
â€śWe have reviewed the issues surrounding hemp-derived CBD oil and will be offering it on 4/20 at one location in Denver, a city which has been a trailblazer in the CBD movement,â€ť said a Carlâ€™s Jr. spokesperson said in an emailed statement to MarketWatch.
Hexo Corp. HEXO, +11.43% Â was up 8.7% after Bank of America initiated coverage of the stock with a buy rating.
Cannabis Watch: All of MarketWatchâ€™s coverage of cannabis companies
Additional reporting by Tomi Kilgore