Several cannabis stocks jumped higher Monday, with many posting double-digit gains by the close.
Leading the ascent was Acreage Holdings (OTC:ACRGF), (CSE:ACRGu), which gained more than 16% on both the U.S. and Canadian stock exchanges.
The U.S.-based company bolted into prominence in the first half of 2019 when it struck a deal with Canopy Growth (NYSE:CGC), (TSX:WEED), whereby the Canadian marijuana grower acquired the right to buy the multi-state cannabis operator for US$2.4 billion ($C3.4 billion). The deal, however, would only be triggered when marijuana is legalized federally in the United States.
Other companies in the cannabis sector that saw double-digit gains yesterday included: California-based MedMen Enterprises (OTC:MMNFF), (CSE:MMEN), which saw its stock jump just over 11% in the U.S. and 12.5% on the Canadian Stock Exchange; Canadian cannabis giant Canopy Growth, which saw an uptick of just under 12.5% on both sides of the border; Curaleaf Holdings (OTC:CURLF), (CSE:CURA), a Massachusetts-based cultivator, which gained just under 11% in the U.S. and just over 11% on the Toronto exchange; and HEXO Corp. (NYSE:HEXO), (TSX:HEXO), a Quebec-based grower whose stock has been on a steady downward trajectory since the beginning of 2020.
Its shares gained more than 11% on both the Canadian and U.S. exchanges.
Trimming Operations, Improving Focus
It is not entirely clear why the pot stocks were in an upward swing. The lack of an obvious direct causal link to the rally does not mean these companies do not have anything in common when it comes to their recent shift in operating outlook. Most of them have scaled back their operations, repositioning themselves with smaller geographical footprints.
For example, Acreage Holdings recently exited some markets and closed down some of its operations, while MedMen announced plans a few months ago to sell off assets in Arizona and Illinois while at the same time closing another cultivation facility in Illinois completely.
Even Canopy Growth earlier this month announced a number of moves to “streamline operation and improve organizational focus.”
Among the moves it outlined on April 16: it will cease its operations in Africa and transfer ownership of its holdings there to local businesses. It would shut an indoor growing facility in Saskatchewan to “further align production in Canada.” In addition, the company cut back on growing in Latin America, announcing it would cease operations at a cultivation facility in Colombia. And it's halting its hemp cultivation operations in New York.
Such moves have helped pot companies trim their operating costs and refocus their efforts as they move forward in a climate in which it's becoming more and more difficult to raise capital.
It also appears investors are responding positively to the leaner operational outlook.
Lebanon First Arab Country To Legalize Medical Marijuana
Last week, the national parliament in Lebanon voted in favor of legalizing the growing of marijuana for medical use, making it the first Arab country to allow cannabis cultivation.
According to a report published in state-owned newspaper, The National, based in Abu Dhabi, the government will be the only agency authorized to produce and sell cannabis. The move is being characterized as a way to revitalize the Lebanese economy, as estimates show the newly legalized industry could generate up to US$1 billion in revenue a year if it is effectively regulated and taxed.
According to the report, the United Nations’ Office on Drugs and Crime ranked Lebanon among the world’s top five producers of cannabis in 2018. The drug is said to be illicitly grown in the eastern regions of the country.
In the 1990s, Lebanon devoted millions of dollars in foreign aid to combat illegal cannabis cultivation.