The year just ended was challenging for the broader cannabis industry. As of Q2 2019, state authorities revealed that the amount earned from the excise tax on cannabis was $74.2 million. Although this was a gain from the previous quarter, the figures were way below estimates. Cannabis stocks, on the other hand, lost significant value during the year. In the last six months of 2019 alone, Sunniva Stock (CNSX:SNN) (OTCMKTS:SNNVF) lost 92.9% of its stock value. However, optimism levels in the growth of the industry are in a positive trajectory, which bodes well for Sunniva stock and others.
Sunniva stock analysis
In the first three days of 2020, Sunniva stock has jumped over 15% to $0.22. This is the strongest indication so far that the New Year is different from 2019. Besides Sunniva’s commitment to restructuring and to re-strategize for growth’s sake, sentiments in the broader cannabis markets are positive.
This year is particularly defining for the cannabis industry because many more US states could lift the ban on the recreational use of marijuana. In addition, Illinois threw open the recreational marijuana market with legalization late last year. This year, six states among them Arizona and the Dakotas will ask its citizens to decide on the question of legalization of recreational marijuana during the 2020 State and Federal elections.
About Sunniva stock
Sunniva is a cannabis company with a commitment toward vertical integration. To that end, the company controls several wholly-owned subsidiaries, each with unique operations. CP Logistics, for instance, is a limited liability company licensed to extract various products from hemp and other cannabis plants. On the other hand, LTYR Logistics, LLC runs the distribution segment of Sunniva. The subsidiary’s operations are confined to California and it distributes products with Sunniva labels exclusively. Other subsidiaries under Sunniva’s ambit include Full-Scale Distributors, LLC and Sunniva medical Inc. (which could be sold to CannaPharmaRx if the two agree).
Improved market opportunity in 2020
Some of the challenges that Sunniva stock faced last year had a lot to do with shrinking market opportunity. Particularly, the shrinkage of the opportunities came from a huge tax burden that was, sometimes, asynchronous among county governments and local city councils. For example, the retail sales tax falls between 9% and 11% but lack of a synchronized approach meant that some local authorities’ retail sales tax goes beyond this range.
In this New Year, state authorities in California are working on a set of laws that will change the taxation landscape as far as the cannabis industry is concerned. Particularly, Assembly Bill 37 (AB 37) wants to include commercial cannabis businesses in the category of businesses allowed to claim tax credits and deductions. AB 37 already went through Governor Newsom’s office and received his assent.
A further reason for the improved market opportunity in 2020 is the SAFE Banking Act. First brought to the Congress in mid-2017, the act protects cannabis businesses against unfair treatment by financial institutions. This includes denial of services such as share insurance and deposit of finances. Already, the act passed the House test and is awaiting to jump the Senate hurdle and the President’s assent.
Recent developments for Sunniva
Interestingly, the last few months have not been all bleak for Sunniva stock. There are several developments that could provide much-needed impetus for the growth of the company’s stock. Some of the developments are discussed here.
Disposing off Canadian assets
Sunniva is undergoing fundamental restructuring to adopt lean operations. Notably, the California cannabis market has great potential for the company to grow its bottom line but that depends on its operational efficiency. To that end, the company has divested and it is in the process of divesting some wholly-owned subsidiaries. On December 19, 2019, Sunniva revealed the closing of the commitment to divest Natural Health Services Ltd. to Cura-Can Health Corp. Notably, the transaction was worth $9 million CAD in cash and stock.
Sunniva is in the process of disposing of Sunniva Medical Inc., another Canada-based asset. In a December 23, 2019, press release, the company detailed that the SMI transaction between Sunniva and CannaPharmaRx was nearing completion. According to the Chairman and CEO of Sunniva, Dr. Antony Holler, the disposing off of the company’s Canadian assets to focus on the California market.
Scaling down California operations
In the last three months, Sunniva has faced several legal disputes concerning the Finder’s Fee Agreement and the Build to Suit Lease dispute. However, the company assured investors in an update that the issues were under control. Specifically, the company committed to scaling down operations in California to preserve funds to settle the disputes. The move is critical towards swinging market sentiment in the company’s favor.
Although 2019 was tough, Sunniva stock managed to drag it out without significant casualties. The company faces a New Year with promises of greater growth and wider expansion of its activities in California. Particularly, the divestment of Canadian assets gives the company more operational space and more funds to pursue growth opportunities in the world’s largest cannabis market. With Sunniva stock already up 15% since the start of 2020, there is the confidence that the market is yet to see the best of Sunniva stock.
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Disclosure: We have no position in Sunniva stock 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…