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 | | | FDA Chief Questions CBD Legality, Calls for Regulation | | Matthew Carr | Chief Trends Strategist | The Oxford Club | | | | | On Friday, I was doing my morning run on the treadmill as I flipped through premarket financial news.
And I watched the former head of the Food and Drug Administration (FDA), Dr. Scott Gottlieb, on CNBC's Squawk Box.
At times, the interview had me irritated. At other points, I was nodding my head.
In my view, his comments really painted the problem American cannabis and CBD companies are faced with. And a lot of it comes down to lack of clarity.
Gottlieb stated that "all the CBD being put into food and dietary supplements is illegal."
When those words left his mouth, I cringed at what was happening to shares of CBD companies in premarket trading.
He pointed out that there's technically nothing legal on the market now "except for some of the emulsions - that don't get absorbed, like creams" and FDA-approved drugs like GW Pharmaceuticals' (Nasdaq: GWPH) Epidiolex.
Gottlieb also claimed that many CBD products, particularly those ordered online, also contain high levels of THC.
Obviously, with cannabis illegal at the federal level in the U.S., that's a major issue.
But facts are facts... | | | There are no purity or dosing standards in the U.S. And that means anything that a customer consumes that has CBD is illegal... at least from Gottlieb's view.
And the market is desperately awaiting the FDA's thumbs-up. Or at the very least, a blueprint to work from.
Hopefully we'll get some clarity soon.
Now, the ups and downs we saw in recent days may be a truer reflection of what investors are thinking right now.
Last week, GW Pharmaceuticals reported fantastic results. Shares soared as Epidiolex sales blasted off.
Meanwhile, other companies - like New Age Beverages Corp. (Nasdaq: NBEV), which reported a nearly 400% increase in revenue - said the lack of clarity in the U.S. was hampering their growth.
The American cannabis sector needs a concrete regulatory win... Access to capital would be grand.
And the sector ultimately needs a federal body to help legitimize the space.
But at the same time, companies aren't sitting on their hands waiting for the feds to act.
And to the north, Dixie Brands (OTC: DXBRF) is plowing ahead, especially with the Canadian infused products market on the horizon. The company announced a deal with AriZona brands to make THC-infused beverages.
The High Five
Below are this week's High Five, where - each Monday - I cover the five pot stocks I believe will make major moves - up or down - in the week ahead.
We're entering the heart of cannabis earnings season. There are at least 18 companies on the docket this week. But here are my top ones to watch, listed chronologically.
1) Greenlane Holdings (Nasdaq: GNLN) will report second quarter earnings after the closing bell today.
Analysts are looking for the cannabis accessories company to post $50.02 million in revenue with a loss of $0.03 per share. For the year, we're looking for revenue guidance of at least $211.9 million.
Canopy Growth Corp. and Greenlane have partnered to sell Storz & Bickel vaporizers in the U.S. And this will be Greenlane's second earnings report since its IPO in April.
2) Village Farms International (NYSE: VFF) will report second quarter results tomorrow morning.
Expectations are for revenue to increase almost 11% to CA$46.59 million. But we're also expecting to see a major turnaround on earnings, pivoting from a loss last year to a gain of CA$0.04.
The largest greenhouse operator in North America is looking to follow the strong results we saw from fellow cannabis real estate play Innovative Industrial Properties (NYSE: IIPR) last week.
3) Tilray (Nasdaq: TLRY) is one of those pot stocks you either love or hate. And a lot of that depends on when you got in on its IPO last year.
The Canadian producer will report second quarter results on Tuesday after the closing bell.
Wall Street is looking for revenue to soar 321% to $41.1 million.
But all eyes are going to be on those per-share losses, which are expected to increase from $0.17 a year ago to $0.25 this year. Any beat here will be key.
4) Canopy Growth Corp. (NYSE: CGC) will report first quarter earnings Wednesday after the market closes.
And no cannabis earnings week would be complete without hearing from its largest player.
Expectations are for a 321% increase in revenue to CA$109.23 million.
But more importantly, we're looking for that per-share loss to shrink from CA$0.40 a year ago to CA$0.38 this year.
This will be the first earnings report for the company in the post-Bruce Linton era. And everyone on Wall Street will be tuning in.
5) Neptune Wellness Solutions (Nasdaq: NEPT) will report on Wednesday before the opening bell.
Expectations for the Canadian and U.S. extraction company are a loss of CA$0.03 per share with a revenue increase of 14% to CA$4.5 million.
Of course, that's just a small sampling of what's on deck this week. We'll also hear from big names like Aleafia Health (OTC: ALEAF), Charlotte's Web Holdings (OTC: CWBHF), Harvest Health & Recreation (OTC: HRVSF), MediPharm Labs Corp. (OTC: MEDIF), Trulieve Cannabis Corp. (OTC: TCNNF) and more.
It's going to be a busy one.
As always, we like to compare the performance of our High Five with the benchmark Horizons Marijuana Life Sciences Index ETF (OTC: HMLSF).
We're at a point where a 6% loss over the past month marks a turnaround for the sector... We also see that every one of our High Five is outperforming the marijuana benchmark, except for Canopy... which is also the largest holding of the Horizons Marijuana Life Sciences Index ETF.
Neptune has cooled down from its highs a couple of weeks ago. But we see Village Farms and Greenlane are gaining momentum. Those three companies are in positive territory over the last month, but they also aren't "traditional" pot stocks like a Canopy or Tilray.
But we've started to see the broader cannabis sector turn around. And that was triggered by some solid earnings we heard at the beginning of this season. So we're going to look for this momentum to continue.
We also have some catalysts on the horizon with the FDA saying it plans to have regulatory framework in place for CBD by this fall... and the Canadian infused products market in October.
That bodes well for a return to gains.
If you have a pot stock in mind that you'd like me to discuss here, click the comment button below.
Here's to high returns,
Matthew | | | | |  | | | | | |  |  | | | | Matthew Carr | August 10, 2019 President Trump's threats and trade war drama are just a couple of the ingredients in this pricey burrito bowl. Read More | | | | |  | | | | Matthew Carr | August 8, 2019 Local Maryland hemp farmer Walt Rampata provides a ground-floor perspective on both CBD and the broader cannabis industry. Read More | | | | |  | | | | Nicholas Vardy | August 7, 2019 Socially responsible investing is costing people billions of dollars. Here's why it's not worth it to be a social justice warrior. Read More | | | | | | | | | | |
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