CannTrust Holdings Inc (NYSE:CTST) stumbled. The company was caught growing cannabis illegally in certain sections of its Niagara grow facility. Consequently, the regulator, Health Canada, suspended the company’s grow and sales licenses.
The scandal of illegal growing and the subsequent suspension of CannTrust’s licenses hit the stock hard. To make matters worse, all this happened when there was already a broad selloff in Canadian cannabis stocks over issues ranging from uncertainty over the country’s national election to fears over the slow development of Canada’s cannabis market. At $0.91, CannTrust is at its record lows and more than 90% off its all-time high.
CannTrust stumbled. But a stumble is not a fall. In fact, there are many bright sides to CannTrust’s stumble. Knowing that CannTrust has a history of bouncing back from its lows, seeing that CannTrust is hard at work to regain its licenses, and considering huge growth potential for the company in Canada’s recently expanded cannabis market, it would be hard not to see CannTrust’s current circumstance as a blessing in disguise.
CannTrust is a Canadian cannabis company. The company was founded by a team of pharmacists. CannTrust operates in both medical and recreational cannabis markets.
History repeats itself
At no time in the past has CannTrust dropped this low. But it is reassuring that CannTrust has a track record of recovering from its lows.
In August 2017, CannTrust was trading at one of its lows at $1.75. But by January 2018, the stock had jumped to $8.30. That is a return of more than 370% return in a space of roughly five months.
In July 2018, CannTrust was trading at $5. By September 2018, the stock had sprinted to $10. That’s a return of 100% in roughly two months right there.
In December 2018, CannTrust was trading at $4.50. By February 2019, the stock had jumped to $9.30. That’s a return of more than 100% in a little over two months.
Health Canada did CannTrust a big favor and the company is making good use of it
After discovering CannTrust’s illegal cannabis growing at the Niagara facility, Health Canada still gave the company a second chance rather than completely locking it out of Canada’s cannabis market.
Although Health Canada suspended CannTrust’s grow and sales licenses, it opened a path for the company to regain its licenses and resume normal operations. Health Canada gave CannTrust a list of compliance issues it should address before the regulator can restore its licenses. CannTrust has warmly embraced the olive branch extended by Health Canada and is currently working hard to ensure compliance.
Firstly, the company fired its chief executive after he was implicated in the illegal growing scandal. Secondly, CannTrust will destroy C$77 million worth of cannabis that was cultivated in the section of the facility that was found to fall short of regulatory compliance to satisfy a Health Canada requirement.
Additionally, CannTrust is remaking its board of directors, a process that involves removing certain existing directors and recruiting new ones.
CannTrust’s troubles have not affected the outlook of Canada’s cannabis market, which remains bright
Last month, Canada expanded its cannabis market with the legalization of more recreational cannabis products. Many of the newly approved products, such as cannabis-based drinks and edibles will start selling next month. Experts contend that the recent legalization of recreational cannabis products puts Canada’s recreational cannabis market on path to double in size to C$2.4 billion next year.
While fixing its regulatory shortcomings has created a distraction for CannTrust, the company will have a larger domestic cannabis market to serve once it regains its licenses. To strengthen its financial position as it works through the regulatory issues, the company last month began a process to remove 140 jobs. The company expects to save $0.4 million every month from shrinking its workforce.
“Reducing the company’s current operating expenses supports our financial sustainability, and places us in the best position to fully resume production upon the reinstatement of our licenses,” commented Robert Marcovitch, CannTrust interim CEO.
CannTrust big plunge this year has no doubt made headlines. But this is a stock with a history of bouncing back. At its currently depressed valuation, CannTrust looks to be a bargain heading into 2020.
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Disclosure: We have no position in CannTrust and have not been compensated for this article.
What Do Investors See In Medical Marijuana Stock (OTCMKTS:MJNA)?
Medical Marijuana Stock (OTCMKTS:MJNA) has emerged as one of many investor’s favorite pot stocks in the legal cannabis universe in 2020. The stock is already up about 10% in 2020, demonstrating how investors have warmed up to the stock early on in the New Year.
Following a disastrous 2019, cannabis investors lost money but have also learned that their best bets are stocks with strong fundamentals. They are looking for companies that have positioned themselves well in the cannabis industry and have what it takes to go for the opportunities. That is why MJNA stock is catching a lot of investor attention in 2020 because of how it has positioned itself in the cannabis market.
Robust revenue growth and strong financial position have also helped put MJNA on the radar of investors hunting for quality cannabis stocks. Revenue at MJNA more than doubled from $26.5 million in 2017 to $60 million in 2018. MJNA is also not in financial distress as may be the case with other cannabis companies out there. The company finished the third quarter, the most recent reported period, with $5.5 million in cash reserves.
Moreover, MJNA has recently taken steps to expand into new international markets and invest in companies that are leaders in their segments. These prudent actions are helping lift Medical Marijuana stock as more investors learn about them.
About Medical Marijuana stock
Is Tilray Inc (NASDAQ:TLRY) A Buy Or Sell?
For Tilray Inc (NASDAQ:TLRY) and the rest of cannabis stocks, 2019 was no doubt a bad year. But 2020 is shaping up to be a promising year for the stock. To start with, Tilray stock has already gained 8.35% year-to-date. If that says anything, it shows following the broad selloff in Tilray stock last year, we’ve got to a point where sellers are giving way to buyers in the stock.
There are several catalysts that should continue driving NASDAQ:TLRY as you’re about to see. First, below is a brief profile of the company we’re discussing.
Tilray is a Canada-headquartered global cannabis company. It is engaged in activities of cannabis cultivation and processing as well as marketing and distribution of cannabis products. Tilray already has several cannabis products brands to its portfolio. It operates across five continents through subsidiaries in Canada, Australia, Germany, and Portugal.
Following the broad collapse of cannabis stocks in 2019, investors are looking for cannabis stocks that can make a positive impact on their portfolios in 2020. Tilray stands out as an attractive cannabis stock pick in 2020. Here are some of the exciting things about the company.
Tilray CEO sees a bright future for the cannabis industry
On January 25, Tilray CEO Brendan Kennedy spoke on Bloomberg. In that interview, Kennedy framed a rosy outlook for the…
Is Cronos Stock (TSE:CRON)(NASDAQ:CRON) A Buy?
Cronos Stock (TSE:CRON)(NASDAQ:CRON) stock fell 9.22% on January 24, marking its steepest decline so far in 2020. The stock plunge followed an important disclosure that you would only expect from a company that is trying to be straight and transparent with investors. Here’s what happened.
On January 22, after market close, Cronos made a regulatory filing detailing changes in its executive team. In that SEC filing, Cronos revealed that David Hsu and William Hilson have stepped down as its chief operating officer and chief commercial officer, respectively. Unfortunately, some investors read bad news in the executive exits and sold their shares in Cronos.
But a careful reading of the filing doesn’t seem to raise any red flags. Therefore, the big stock plunged points to investors panicking to the degree of responding to a mosquito bite with a missile.
There is no doubt that 2019 was a difficult year for cannabis stocks and Cronos Stock is no exception. But before the uncalled for reaction to Cronos’s regulatory filing, we had been at a point where sellers were starting to give way to buyers in Cronos stock. The stock has gained about 8.0% in the past one month. It had gained more than 13% year-to-date before the January 24 big selloff.
About Cronos Stock
Cronos Stock is a Canada-based global cannabis company. Cronos operates through subsidiaries and…