Let s Toke Business. By Ted Ohashi

Transcription

1 Let s Toke Business Week Ended April 7, 2017 By Ted Ohashi Canadian marijuana stocks continue to advance as expected... p1 Major cannabis study provides basis for medical marijuana benefits... p2 OGI voluntary recall now a more serious Type II.....p7 Green Acre Capital launches new marijuana fund p8 LXX quarterly report shows liquid balance sheet.,...p8 Jeff Sessions confirmation hearing mildly positive.....p8 Ontario marijuana use doubles says study p9 James E. Wagner Cultivation added as a Licensed Producer this week.p10 See our recent articles on Seeking Alpha Canadian Cannabis Companies Set to Advance on Legalization legislation April 3, 2017 Before You Can Sell LXRP High, You Must First Buy it Low March 17, 2017 Why Organigram Merits a 'Must Buy" Rating March 8, 2017 How Attorney General Sessions can Derail the Marijuana Gravy Train February 27, 2017 High Growth Cannabis Company Trading Less Than One Times Sales February 20, 2017 Reassessing the Ever Changing Outlook for Canadian Cannabis Stocks January 30, 2017 Update: My Confidence in Buying Organigram is Affirmed January 20, 2017 Marijuana Stock Market Review & Outlook LTB MJ INDEX: 1wk +0.8% 1 mo -3.6% 3 mo -1.5% 6 mo +11.9% 1 yr +55.8% The LTB Marijuana Composite extended its recovery to two weeks as expected. Although the gain was only 0.8%, there was important information within this market action. We were a bit disappointed momentum did not support the advance. Still, the LTB Composite should move above its 2017 high of 1073 in the weeks ahead. As we stated in our Quarterly Outlook for Cannabis Stocks, talk on the street is the government will go public with their legalization legislation in what is now the week ahead, specifically April 10, (see Breaking & Corporate News below)

2 We were, however, more impressed with the +5.4% advance in the LTB Licensed Producer Index. The chart above left shows the absolute gain made by the index while the chart above right shows the gain relative to the average marijuana stock. As we have been saying, when the legislation is public investors will note the main beneficiaries are the LPs. In Breaking & Corporate News below we comment on the existing Licensed Producers acquiring late-stage applicants under ACMPR. The announced massive growing plans of the 41 LPs already approved are still a little worrying but in the face of all the other positives we expect, we believe investors will overlook an oversupply issue looming a couple of years out and focus on the short term positives. Here are the results for each public LP last week. Emerald Health +35.2% Organigram +21.2% Aphria +18.1% Supreme Pharma +16.1% Cronos Group +13.0% Aurora Cann + 8.4% Emblem + 8.2% CanniMed + 5.4% THC Bio - 2.7% Canopy Growth - 4.0% WEED s performance might be explained by the insider trading report last week that CEO Bruce Linton sold 350,000 shares on March 29, For more see Corporate & Breaking News below. The LTB Low-Priced Composite had a comparatively dull week posting a small loss of 0.9%. We are not overly concerned and expect the sector to pick up its socks in the weeks ahead. It makes some sense that the Licensed Producers would lead the parade with the Low- Priced stocks following suit. These smaller, more speculative stocks can play catch-up quite easily and we expect they will.

3 Marijuana Matters Regular readers will recognize the name Alex Repetski and that of his daughter Gwenevere. Alex was one of our first readers whose interest in cannabis was based in his personal exploration of the subject to treat Gwen s serious epileptic seizures that developed in infancy. He has shared her story that started with using as many as eight different conventional anti-epileptic medications prescribed by doctors, none of which worked and some of which created serious side-effects. So positive were the results of treating Gwenevere with cannabis oil that she is now four and one-half years old and attending kindergarten with other children. Although vocalization is still delayed we hope it will develop. In the meantime, Gwen is physically active and continues to enjoy a much improved quality of life. The school provides a full time healthcare giver and Alex says the administration and the other children and families have been very supportive. In our conversation, Alex updated me on an APP he has actively participated in the development of under the name Strainprint that has commercially launched a revolutionary Cannabis Tracking platform. The mobile APP is free for patients and is available for both Apple ios and Android. Strainprint enables cannabis patients to track and understand the efficacy of their cannabis use by strain, quantity, method of ingestion and dose. Using standardized pain scales, this data will help patients use cannabis more effectively and help clinicians to better tailor therapeutic regimens. The Strainprint database contains all strains and products available under the Access to Cannabis for Medical Purposes Regulations program (ACMPR). Patients can also add their own unique/personal strains. "Strainprint was created out of necessity. As a patient who had limited knowledge about cannabis, the need for a tool to help guide and enhance treatment seemed almost essential. It didn't exist, and that's why we spent several years developing it. We're continually improving the software to ensure a simple and rewarding experience," said Stephanie Karasick, Founder & Chief Strategy Officer. Strainprint enables a patient to create a personal profile and track medication sessions. You record what you are treating, how bad your condition is, what strain you are using, how you are consuming it and how much you are using. Later the APP reminds you to enter how your symptoms responded to the treatment and how you feel. You can enter any strain offered by a Licensed Producer in Canada and you can enter up to 170 conditions you are treating. Later you can review your history and see what has worked best for you. As cannabis use is a process of self-medication, you can adjust your dosages or strains to see what difference it makes. Also, you can see the statistics from other members of the Strainprint community: what has worked for them in treating various conditions. Finally with the assurance of a high degree of security, you can share your records with your doctor by the electronic transfer of your records. Strainprint will help patients and medical practitioners to better understand how specific cannabis genetics and ingestion methods provide the best therapy for over 170 applicable medical conditions," said Alexander Repetski, Chief Communications Officer in a recent press release. (read full press release here) "By using individuals' data to fine-tune their treatment, Strainprint will assist in improving the quality of life for those using cannabis. This data is also needed by the academic community to accelerate research efforts and to further enhance the understanding of cannabis," Repetski added. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) in the U.S. and the Personal Information Protection and Electronic Documents Act (PIPEDA) in Canada compliant solution is already identifying valuable efficacy trends across a variety of medical conditions. This information will

4 enable patients, producers, clinicians and other supply chain partners to better understand the needs of patients and how specific cannabinoids effect a multitude of conditions. "The importance of this real-time crowd-sourced data is integral to both governmental bodies and the academic community to accelerate research efforts and further enhance the understanding of cannabis," said Strainprint President, David Berg. "With the pending legalization of recreational cannabis in Canada, the data acquired by Strainprint also holds significance in determining many facets of regulations concerning public health and safety," Berg added. Repetski reports that physicians and clinicians are finding this data of tremendous value in assisting with the diagnosis of their other patients. So it is truly a win-win-win proposition: the current user benefits, other users in the community get ideas of how to improve their treatment and it all paves the way for potentially new patients to benefit. A new version of the APP will be released in the coming weeks and will include a Loyalty Program, where users can redeem accumulated points for cannabis-related products and merchandise. We believe Strainprint is an excellent idea and encourage readers to download the APP and start participating in the community to help themselves and others self-medicate in a more efficient and effective manner. And I know Alex will also keep us posted on the progress of his princess Gwen. Breaking & Corporate News The target date for enacting cannabis legalization is now on or before July 1, This suggests the legislation will be made public this week as we stated but the government believes it will take until next year to have a fully functioning legal system in place. It will require the coordination of different levels of government and much of that will be out of the hands of the Federal politicians. We speculated several weeks ago that the provinces will proceed at different rates and we think it is likely that British Columbia will be the first to be ready. However, the government remains firmly committed to legalizing marijuana in Canada in their current term. The next Federal election in Canada is scheduled to be on or before October 21, Canopy Growth (TSX: WEED) Chief Executive Officer Bruce Linton sold, according to a recent insider trading report, 350,000 shares of WEED stock on March 29, 2107 at an average price of $10.64 per share generating proceeds of $3.7 million. The sale represented about 10% of Linton s beneficial interest that stood at 3.2 million shares after the sale. Insiders can, of course, sell shares for personal reasons. Linton s reason given in the trading report was the very general statement tax and estate planning. The market doesn t need to be too concerned as we don t believe Linton is playing the market, that is selling stock because he thinks WEED is at a high price level. Back in June and July 2016, Linton sold 400,000 shares or roughly 10% of his then holdings for proceeds of approximately $1.1 million or an average price of $2.75 per shares. So it doesn t mean Linton s sale of stock is an indication the WEED price is about to drop. His reported reason for the sale less than a year ago was the same tax and estate planning although he later expanded that to say he also needed to cover certain financial obligations related to ownership in the Tweed building and a related financing more than three years

5 ago to establish the company. But the point is less than a year ago, Linton sold stock at $2.75 per share compared to the $10.64 he realized on his latest sale. It is interesting to note Canadian Licensed Producers are buying late-stage Access to Cannabis for Medical Purposes Regulations (ACMPR) applicants. Canopy Growth (TSX: WEED) recently entered into an agreement to acquire rtrees Producers Limited described as a late-stage ACMPR applicant based in Yorkton, Saskatchewan. At the same time, Aurora Cannabis (TSXV: ACB) has com- pleted the acquisition of Peloton Pharmaceuticals Inc. ( Peloton ), a Montreal-area late-stage ACMPR- applicant. We reported on this transaction earlier as Peloton was being bailed out of bankruptcy. We will also mention that although Namaste (OTCQB: NXTTF) is not a Licensed Producer, it is one of our favorite smaller cap companies in the marijuana industry. Namaste has entered into a non-binding letter of intent to acquire all of the issued and outstanding shares of Cannmart, also described as a late-stage applicant under ACMPR to become a sales only LP. For those questioning the business outlook for Canadian LPs given the substantial increases planned in production, we can only say these buyers must see something the stock market is missing. It is something to ponder as we await our first look at the legalization legislation expected in the near future. Cronos Group (TSXV: MJN) reports that United Greeneries Holdings has harvested its first crop at its facility in Duncan, British Columbia. The OG Kush strain yielded approximately 60 kilograms of dried cannabis buds. The product has passed internal quality control systems and will be ready for shipment in the near future. United reports it is moving to establish a first-mover advantage in the Canadian recreational marijuana market. Alan Brochstein of New Cannabis Ventures recently interviewed Dan Kriznic, CEO of Invictus MD (TSXV: IMH) to discuss IMH s entry investment in AB Labs and the option to buy Acreage Pharms, the 41 st and most recent Licensed Producer in Canada among other things. (read full interview here) In a busy week, Brochstein also reports on the Horizons Medical Marijuana Life Sciences ETF (TSX: HMMJ) that began trading on April 5, (read full report here) Applications Watch No new Licensed Producers approved by Health Canada last week. There are 41 Licensed Producers: 27 Cultivation & Sale, 12 Cultivation and 2 Sale Only. Eight producers were licensed in 2016 and four so far in No changes to the list of Fresh Marijuana & Oil producers. There are 22 LPs approved: 16 as Production & Sale, 5 approved for Production and 1 approved as Sale Only. Eight oil producers were approved in A new category Sale of Starting Materials has been added. Six LPs are approved to sell starting materials: 4 approved to sell plants and 2 approved to sell seeds. Producer Prov Dried Marijuana Fresh Mari & Oil Sale Start Mat 1. 7 Acres ON Cultivation 2. ABcann Medicinals ON Cultivation & Sale 3. A.B. Laboratories ON Cultivation 4. Acreage Pharms AB Cultivation 5. Agripharm Corp. ON Cultivation & Sale Production & Sale 6. Aphria ON Cultivation & Sale Production & Sale 7. Aurora Cannabis Enter AB Cultivation & Sale Production & Sale 8. Bedrocan Canada ON Sale

6 9. Bedrocan Canada 2 nd site ON Cultivation & Sale Production & Sale 10. Broken Coast Cannabis BC Cultivation & Sale Production & Sale 11. Canada s Island Garden PEI Cultivation & Sale 12. Canna Farms Ltd BC Cultivation & Sale Production & Sale Plants 13. CanniMed Ltd SK Sale Sale 14. CannTrust ON Cultivation & Sale Production & Sale Seeds 15. DelShen Therapeutics ON Cultivation 16. Delta 9 Bio-Tech MB Cultivation & Sale 17. Emblem Cannabis Corp ON Cultivation & Sale Production 18. Emerald Health Thera BC Cultivation & Sale Production & Sale 19. Evergreen Medicinal BC Cultivation 20. Green Relief ON Cultivation 21. Hemisphere Pharma ON Cultivation 22. Hydropothicair/Hydro QC Cultivation & Sale Production 23. In the Zone BC Cultivation & Sale 24. James E Wagner Cult ON Cultivation 25. Maricann, Inc. ON Cultivation & Sale Production & Sale Plants 26. MedReleaf Corp ON Cultivation & Sale Production & Sale 27. Mettrum Ltd. ON Cultivation & Sale Production & Sale 28. Mettrum Bennett ON Cultivation & Sale Production & Sale 29. Natural Med ON Cultivation 30. Organigram Inc. NB Cultivation & Sale Production & Sale 31. Peace Naturals Project ON Cultivation & Sale Production & Sale 32. Prairie Plant Systems SK Cultivation Production 33. RedeCan Pharm ON Cultivation & Sale 34. THC Biomed BC Cultivation $ Sale Production & Sale Plants 35. Green Organic Dutchman ON Cultivation & Sale 36. Tilray BC Cultivation & Sale Production & Sale 37. Tweed Inc. ON Cultivation & Sale Production & Sale Seeds 38. Tweed Farms ON Cultivation & Sale 39. United Greeneries BC Cultivation 40. WeedMD ON Cultivation 41. Whistler Medical Mari BC Cultivation & Sale Production & Sale Plants Sign Up for Cannabis Stock Picks Cannabis Stock Picks Full Disclaimer To have your name removed from our distribution list, please reply to info@cannabisstockpicks.com with your name, location (Province or State) and address. Your name will be removed immediately.

7 This report is a news report for informational purposes only. It is not a solicitation to buy or sell any products, services or securities mentioned herein. Although the information contained herein was gathered from usually reliable sources, the editors are not responsible for the veracity of any statements or to correct any information that proves to be inaccurate. Certain statements contained herein regarding a Company and its operations may constitute forward-looking statements. All statements that are not historical facts, including without limitation statements regarding estimates, plans, objectives, assumptions or expectations of future performance, are forward-looking statements. Such for- ward looking statements involve known and unknown risks and uncertainties that could cause actual results and future events to differ materially from those anticipated in such statements. Please do your own due diligence and consult