Smaller Cannabis Stock Winners and Losers YTD

Today we present the biggest Canada-listed cannabis stock gainers and decliners year to date with market caps less than $1 Billion

SmallCapPower | July 4, 2019: What a year it has been for cannabis stocks so far. We’ve seen lots of activity in the cannabis industry, driven by competition, growth, and bullish speculation. This mainly includes the emergence of U.S. multi state operators (MSOs), extraction companies, and the expansion of large LPs into the U.S. and Europe. Expectations remain high for the cannabis industry as Canadian LPs continue to expand and push the envelope in hopes of dominating the global cannabis market.

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Last week, we took a look at the biggest Canada-listed cannabis stock gainers and decliners on a year to date basis with market caps greater than $1B. Today we are going to examine the Canadian cannabis companies with market caps under $1B, which exceeded expectations and saw the largest year-to-date returns, as well as companies that disappointed and realized the lowest year-to-date returns.

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YTD Returns as of December 31, 2018 – June 26, 2019
Share prices as of close Wednesday, June 26, 2019

TOP PERFORMERS

Village Farms International Inc. (TSX:VFF) – $14.79

  • YTD Return: 239.6%

Village Farms is one of the largest producers of premium-quality greenhouse tomatoes, bell peppers, and cucumbers in North America. VFF uses hydroponic growing methods in glass-enclosed facilities to grow its premium-quality products. In the past couple of years, the Company has made moves into the cannabis space by forming joint ventures with Emerald Health Therapeutics and Nature Crisp LLC to form “Pure Sunfarms Corporation” and “Village Fields Hemp USA LLC,” respectively.

What makes Village Farms an attractive investment is that the Company is among a select few LPs that have exposure to two North American cannabis markets (U.S. and Canada). During the first six months of 2019, Village Farms further solidified its position in these markets, propelling its valuation. Forming a joint venture with Arkansas Valley Hemp, an outdoor cultivator in Colorado, in May 2019, along with entering supply agreements with Canna Farms Limited and the Ontario Cannabis Store certainly pleased investors.

MediPharm Labs Corp. (TSXV:LABS) – $5.01

  • YTD Return: 187.4%

MediPharm Labs is a specialized, research-driven extraction company that has operations that focus on a downstream extraction methodology, distillation, and cannabinoid isolation and purification. MediPharm runs a 70,000 sq. ft operation, with laboratory clean rooms built to cGMP and ISO-rated standards in Barrie, Ontario.

Extraction companies performed well during the first six months of 2019, and this can be attributed   primarily to the market realizing the high demand for the specialized services these companies provide. This was demonstrated by the extraction agreements the Company has made with numerous LPs since the beginning of the year, including Cronos Group, TerraAscend, and AV Cannabis Inc.

Valens GroWorks Corp. (CSE:VGW) – $4.10

  • YTD Return: 172.8%

Valens GroWorks is an extraction and research-focused cannabis company licensed under the Canadian Cannabis Act. The Company operates out of its facilities in Kelowna, B.C., and has signed a variety of extraction and supply agreements with various Canadian licensed producers. The Company has utilized all four extraction methods (CO2, ethanol, hydrocarbon and solventless). Valens also has a strategic partnership with ThermoFisher Scientific, one of the world’s leading manufacturers of lab equipment, in addition to an ISO 17025 labs accreditation, which allows the Company to conduct standardized testing for over 400 different metals, pesticides, terpenes, residual solvents, microbials, and cannabinoid profiles.

Similar to MediPharm Labs, Valens GroWorks has also managed to lock up various supply agreements, including Canadian cultivators such as Organigram, Tilray, The Green Organic Dutchman, and HEXO. With plans to increase its capacity to over 1,000,000kg annually from 425,000kg, Valens has the potential future capacity to engage in many more supply deals with LPs.

BOTTOM PERFORMERS

Namaste Technologies Inc. (TSXV:N) – $0.62

  • YTD Return: -23.8%

Namaste Technologies is an international cannabis eCommerce company operating across 20 countries, which utilizes machine learning to provide patients access to medical cannabis products. Through NamasteMD.com, the Company’s integrated telemedicine application, Namaste connects patients with healthcare practitioners to provide them with online medical cannabis prescriptions.

2019 has not been kind to Namaste thus far, and to top things off news was released late in June that email lists of users registered with Namaste MD was uploaded by a Namaste employee to a third-party email solicitation provider for the purposes of soliciting unauthorized cannabis sales.

Vivo Cannabis Inc. (TSXV:VIVO) – $0.44

  • YTD Return: -38%

Vivo Cannabis holds cultivation, processing, and sales licenses from Health Canada for two premium indoor grow facilities in Canada: Canna Farms and ABcann Medicinals. Canna Farms is an award-winning indoor cultivation facility located in Hope, BC, and ABcann Medicinals is an indoor facility in Napanee, Ontario, which contains proprietary plant-growing technology.

Vivo Cannabis has struggled to differentiate itself in a competitive industry. The Company has not differentiated itself as a low-cost grower, or a large-capacity producer. Vivo has yet to get a foothold in the growing U.S. cannabis industry. Investors have struggled to find value in VIVO given that it has had a tough time gaining a competitive advantage in an industry where differentiation is a key to future success.

Liberty Health Sciences Inc. (CSE:LHS) – $0.61

  • YTD Return: -23.8%

Liberty Health Sciences is a cannabis company that focuses on acquisitions of U.S.-based medical cannabis companies. The Company has a strategic partnership with Veterans Cannabis Project to support various research projects focused on the treatment of service-related trauma with cannabis-derived products, as well as a partnership with AdaViv Inc. to enhance the production of cannabis.

Liberty Health Sciences operates 16 dispensaries in Florida: a state characterized by competition in the cannabis space, especially the medical side. With MedMen set to enter the state, Trulieve Cannabis opening more than two dozen stores, Curaleaf Holdings with 23 of its own stores in the state, and numerous other big chains looking to operate in Florida, LHS has a lot of difficult competition to fight with for market share.

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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