Cannabis Central: A Conservative Approach to Investing in the Cannabis Industry

These 7 major consumer & pharmaceutical companies have bought into cannabis companies

June 27, 2020 Chris Thompson Cannabis, munKNEE.com

Below is an article written by Lorimer Wilson of Munknee.com. MunKNEE.com is a new affiliate of eResearch.com.

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Seven major consumer and pharmaceutical corporations have bought into cannabis companies to take full advantage of this rapidly growing market and this article compares their stock performance YTD with that of their marijuana partners:

  1. Altria-logoAltria Group, Inc. (NYSE: MO) has a 45% stake in marijuana grower Cronos Group Inc. (NASDAQ: CRON).
    • YTD:
      • Altria has gone down 15.1% while
      • Cronos has gone down 14.9%
  2. Imperial (Tobacco) Brands PLC (LSE: IMB)(IMMBY) has a 19.9% stake in Auxly Cannabis Group Inc. (TSXV: XLY)(CBWTF), a vertically-integrated cannabis company with diverse international operations.
    • YTD:
    • Imperial has gone down 12.0% while
    • Auxly has gone down 42.6%
  3. Constellation Brands LogoConstellation Brands Inc. (NYSE: STZ) owns about 39% of Canopy Growth Corporation (TSX:WEED; NYSE: CGC) and should it exercise all its remaining warrants and full conversion of the notes, the company would own over 55% of Canopy Growth shares.
    • YTD:
      • Constellation has gone down 4.1% while
      • Canopy has gone down 18.3%
  4. Molson Coors Brewing Company (TSX: TPX; NYSE: TAP) has a 57.5%/42.5% joint venture with HEXO Corp. (TSX: HEXO; NYSE: HEXO) known as TRUSS.
    • YTD:
      • Molson has gone down 28.7% while
      • HEXO has gone down 50.9%
  5. Anheuser-Busch InBev SA (NYSE: BUD) has a $100 million joint venture with Canadian grower Tilray Inc. (NASDAQ: TLRY).
    • YTD:
      • Anheuser has gone down 35.9% while
      • Tilray has gone down 50.0%
  6. Tilray LogoNovartis AG (NYSE: NVS) has a global agreement with Tilray Inc. (NASDAQ: TLRY) which allows Tilray to use the Sandoz supply chain, sales force, and global distribution network to distribute Tilray medical cannabis products.
    • YTD:
      • Novartis has gone down 0.9% while
      • Tilray has gone down 50.0%
  7. Alimentation Couche-Tard Inc. (TSX: ATD.B; TSX: ATD.A)(ANCUF), one of the world’s largest convenience shop retailers with 16,000 stores in 25 countries, has a 9.9% ownership (with the potential to increase to  50.1%) in Fire & Flower Holdings Corp. (TSXV: FAF)(FFLWF).
    • YTD:
      • Couche-Tard has gone up 1.4% while
      • Fire & Flower has gone down 18.9%

In summary:

The 7 consumer products/pharmaceutical companies:

  • are down 11.9% on average YTD compared to their associated marijuana companies which are down 30.2% on average,
  • and 6 of the 7 consumer products/pharmaceutical companies (i.e. excluding Couche-Tard) have dividends that yield 2.4% on average while none of the marijuana companies have dividends.

Conclusion:

Taking a look at the performance of the above companies one could conclude that conservative investors who want to invest in the marijuana sector might be better served by investing in the above mentioned major corporations than in their associated cannabis companies.

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To view the original article, please visit: https://www.munknee.com/88916-2/

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munKNEE.com is a new affiliate of eResearch.com. To learn more about munKNEE.com, please visit their website and sign-up for their weekly newsletter.

About Chris Thompson 340 Articles
Chris Thompson is the President and Director of Equity Research at eResearch. He is a Professional Engineer and CFA Charterholder with a MBA in Investment Management and over 15 years of experience in software development, FinTech, telecommunications, and information technology. For the past 10 years, he has worked in the Capital Markets in Equity Research, M&A Investment Banking and Consulting in various sectors.

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