Article by Sean Williams, Motley Fool
Excitement has been budding for years in the legal cannabis space, and we’ve begun to see that translate into tangible results.
In the U.S., Oklahoma recently became the 30th state to legalize medical marijuana, while nine of these 30 states have also approved the use of recreational weed. To our south, Mexico legalized medical pot back in June 2017. And to our north, Canada stands ready to become the first industrialized country in the world to legalize adult-use cannabis. It’s no wonder that cannabis research firm ArcView is predicting compound annual sales growth of 28% in North America through 2021.
Marijuana stocks couldn’t catch a break in July
However, moving marijuana from an illicit channel to a legal one won’t necessarily be without its headaches — and that’s certainly reflective in the underlying valuations of marijuana stocks. Even though the group as a whole has had one incredible run since the beginning of 2016, they collectively had a miserable July, which lent to the month’s craziest statistic. After screening for the 25 largest and most influential direct and indirect pot stocks, just one finished the month higher. And, to be honest, you don’t even need a single finger to tabulate its percentage gain.
The big winner for July, which also happened to be the top dog during the awful first quarter marijuana stocks suffered through, is California-based Kush Bottles (NASDAQOTH:KSHB). Kush Bottles ended July a whopping 0.7% higher than where it began the month.
There were two events in July that appear to have allowed Kush, which provides marketing, packaging, and branding services to more than 5,000 cultivators worldwide, to inch its way higher. First, there was the release of the company’s third-quarter operating results. Sales wound up growing a hearty 173% to $12.9 million, which was somewhat aided by the acquisition of Summit Innovations. This buyout moves Kush into hydrocarbon gases and solvents, putting it smack-dab in the middle of the rapidly growing cannabis oils market, which uses hydrocarbon gases in the crafting of oils.
The second catalyst looks to be the announced launch of three new child-resistant packaging product lines (LocTin, Palm N Turn, and UV Glass Concentrate Container) for the cannabis industry. With Health Canada laying out some pretty rigid packaging and marketing restrictions for legal cannabis, Kush Bottles aims to become an indispensable middleman between growers and retailers.
Behind Kush Bottes, the next-best performers in July were posh dispensary MedMen Enterprises, down 0.3%, Aphria (NASDAQOTH:APHQF) down 2.2%, which was the best performance of all direct growers, and cannabinoid-drug developer GW Pharmaceuticals. GW Pharmaceuticals shed just 3.2% of its value in the month following the approval of its lead drug, Epidiolex, a cannabidiol-based oral solution designed to treat two rare types of childhood-onset epilepsy.