Canopy Growth declared that it would combine its American holdings into a new holding company called Canopy USA
Cannabis stocks have been subject to a lot of speculation since they first started to appear on Wall Street. One of these stocks in particular has been selected by the AI algorithms in our Biweekly forecast (14 days) as a strong buy. The publicly forecasted October 31st, 2022 forecast identified Canopy Growth Corporation (CGC) in the biweekly forecast as the number 1 stock pick in this particular time frame. The AI system analyzes empirical data of financial market irregularities linked to trader overreaction and underreaction to generate daily projections in six different time frames. Every day our subscribers receive the best stock picks selected by the AI systems algorithms for that day, that week, the biweekly outlook, month, quarter, and annual outlook from that date every single day of the (business) week that the markets are open. Right before this dramatic rise, the company announced that they are consolidating their US assets Acreage Holdings, Wana Brands, and Jetty into a new holding company called Canopy USA. Wana Brands specializes in marijuana edibles, while Jetty specializes in marijuana extracts. Acreage Holdings has a portfolio of cannabis cultivation, processing, and dispensing operations across the United States where marijuana consumption is legal. This action is anticipated to assist the company lower expenses and getting access to the U.S. market, which is anticipated to be worth more than $50 billion by 2026.
There are some technical issues with these acquisitions. Its intended formation of a Canopy USA holding company might result in the delisting of its shares on Nasdaq. The reason was that cannabis businesses that operate primarily in the United States are not allowed to list on American stock exchanges. When Canopy USA completes the acquisition of Wana, Jetty, or Acreage, the business stated that Nasdaq objected to its consolidation of Canopy USA's financial statements.
One of the biggest problems with cannabis stocks is that the marijuana market is not fully legal across all 50 states. Alternatively, only a select number of states have legalized the historically controversial plant. A growing number of voters are pushing their representatives to legalize or regulate marijuana. Currently, marijuana is included by federal law in Schedule I of the Controlled Substances Act, which is reserved for the most dangerous drugs like heroin or methamphetamine. That being said, government officials are slowly moving toward the path of legalization.
The U.S. Department of Justice and HHS were tasked on October 6th by President Joe Biden to "examine promptly how marijuana is scheduled under federal law." At the end of October, Chuck Schumer, the majority leader in the Senate, stated that the Senate was extremely near to passing legislation granting access to the American banking system for cannabis firms. Access to the American banking system is a very big deal. Not only that, Marijuana is presently legal in 21 states in the United States, adding a blue state and even one more red state beginning in the November 2022 midterms elections last week. Voters in North Dakota, South Dakota, and Arkansas rejected initiatives to legalize marijuana for adult use. These three states are among the conservative strongholds in the United States. Initiatives for legalization were approved by voters in Maryland and Missouri.
In the company's own local jurisdiction, the Canadian government initiated a legislative review in September of the 2018 Cannabis Act, which legalized the sale of marijuana in the country.
Canopy Growth Corporation (CGC) 2Q22
"In Q2, we generated net revenue of 180 million, representing a 10% decline over the prior-year period. When adjusting for both the impact of C3 and the impacts of our Canadian retail business, which we are divesting, revenues increased 2%. Sequentially, net revenues increased 7% compared to Q1. "
Revenues from Canadian medical cannabis increased by 8% over Q2 FY2022 thanks to Canopy Growth Corporation's (CGC) ongoing focus on expanding its product lineup. Compared to the previous quarter, adult-use revenues in Canada stabilized while important brands including Doja, Tweed, and Deep Space witnessed increases in market share. Despite the ongoing effects of macroeconomic headwinds and changing Canadian cannabis market dynamics, the company achieved net sales growth of 7% in Q2 FY2023 compared to Q1 FY2023.
Additionally, because of greater investment, they were able to boost BioSteel's net revenue by 299% over the previous year. After the quarter ended, a manufacturing facility was acquired, which is anticipated to assist the brand's continuous, rapid U.S. expansion and spur an increase in gross margin.
Canopy Growth (CGC) bought a controlling investment in the business in 2019. The goal is to establish a strategic collaboration to co-develop CBD products. As of now in FY2023, BioSteel has distribution agreements with Walmart, Rite Aid, and Winn Dixie among others. Drinks made of BioSteel reached 34% All Commodity Volume (ACV)5 in the United States, an increase from 6.5% in Q2 FY2022. As the Official Hydration Partner, BioSteel entered into a multi-year agreement with the National Hockey League and the National Hockey League Players Association. Through this relationship, BioSteel will have access to retail activation rights, league-wide rink-side marketing, product supply rights, and a platform for civic involvement.
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Below is the number 1 stock pick from our biweekly (14-day) forecast we publicly published on Monday, October 31st to our subscribers getting exclusive market insights based on artificial intelligence. Click here to see the original forecast published on Oct 31st, 2022.
You can see the matching Signal Confidence in this stock forecast (SC). These incredibly intricate mathematical functions for statistical programming and modeling, when combined with machine learning, are capable of comparing their current coefficients and algorithms to newly added data, and then adapting to improve the models' accuracy through a process of validation and reflection. The AI system calculates the Signal Confidence (SC), which is expressed as a percentage out of 100%, based on the historical accuracy of each previous financial asset prediction.
Stock Ticker | Open: Oct 31, 2022 | Close: Nov 14, 2022 | ROI% |
Canopy Growth Corporation (CGC) | $3.11 | $4.24 | 36.33% |
The full forecast is not being published today because the majority of these stock picks are still included in other exclusive forecasts and additional relevant time frames that are only available to our subscribers.
Subscribers who bought our number 1 stock pick for the October 31st, 2022 biweekly forecast would have netted a profit of 36.33% or $1.13 per share on this single shorter-term trade. Discretion should always be used when analyzing the market. Your own due diligence is always required and you should always get advice from a licensed & certified financial counselor prior to implementing any financial plans.
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Sources: 1. Constellation Brands Press Release, "CONSTELLATION BRANDS ANNOUNCES PLAN TO CONVERT COMMON STOCK HOLDING IN CANOPY GROWTH" (2022)
2. White House Briefing Room, "Statement from President Biden on Marijuana Reform" (2022)
3. Yahoo Finance, "Cannabis stocks rise amid Senator Schumer's confidence in passing legislation" (2022)
4. The Motley Fool, "Canopy Growth Corp. (CGC) Q2 2023 Earnings Call Transcript" (2022)
5. PR Newswire, "Canopy Growth Corporation Reports Second Quarter Fiscal Year 2023 Financial Results"
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