Cannabis sector sluggish after long weekend; Friday Night Inc. (TGIF.C) increases CBD sales & Pivot Pharma (PVOT.C) talks EU distribution

The cannabis sector took a hit after the recent long weekend. On Tuesday, Aurora (ACB.T) fell $0.38 CAD, closing at $6.16 CAD on 27,132,419 shares traded. Aphria (APH.T) fell $0.43 CAD, closing at $9.79 CAD on 5,038,532 shares traded.

This might be an amped-up version of the ‘Weekend Effect,’ an observation on the irrationality of shareholders rather than an omen of imminent market failure.

The market experiences fluctuations at unexpected times like over the weekend. Economists like Frank Cross have theorized that stock prices typically fall on Mondays because of the habit companies have of releasing bad news after market close on Fridays. Other theories attribute the ‘Weekend Effect’ to short selling or even disillusioned traders losing optimism over the weekend.

 

 

Friday Night Inc. increases CBD sales

Last week we reported that TGIF was ramping up its CBD processing capabilities by expanding its hemp facility in Las Vegas to 12,000 sq/ft.

Friday Night (TGIF.C) announced they generated $1.6M CAD in sales last month through their 91% owned subsidiaries AMA and Infused MFG, a 362% increase from the previous July. 

“The increased sales of both medicinal and adult-use cannabis and CBD products are a result of improving efficiencies and processes in our current facilities,” said Chris Rebentisch, founder of Infused.

 

Canna Hemp’s new hemp only line (owned by Infused MFG)

Friday Night recorded $3,317,497 of sales in Q1 of 2018 compared to $2,962,699 in Q4 of 2017.

Friday Night has also recently acquired Spire Global Logistics, a company which offers security programs and assists in keeping companies compliant. Apart from recently signing $280,000 in contracts, the company will be instrumental in keeping both Friday Night and its clients regulation compliant.

Forbes reported in 2017 that a significant number of cannabis companies were in violation of regulations: “76% of all operators fail at least on inventory requirements, 72% on security and surveillance requirements, 67% on labeling and packaging, 64% on business records and 53% on transport and storage.”

As reported in July, Friday Night’s first-mover’s advantage in the travel hot spot of Nevada puts them in a good position to continue their growth.

EU distribution

Pivot Pharmaceuticals (PVOT.C) claims it’s poised to become a major player in the European Union’s cannabis market thanks to a recently announced collaborative distribution agreement with S.T.U GmbH.

Under the agreement, Switzerland-based S.T.U. GmbH will sell Pivot Pharmaceuticals’ products in the U.K., Switzerland, Germany, Austria and Italy while Pivot Pharmaceuticals will return the favour by distributing S.T.U. GmbH’s products in the United States, Canada and Latin America, where regulations permit.

Pivot cannabis powder

Pivot Pharmaceuticals specializes in the production of cannabis-based pharmaceuticals and nutraceuticals, including food additives, capsules, beverages and lotions. Its partner, S.T.U. GMbH, offers organic CBD oils under its Hemplix product line.

Patrick Frankham, CEO of Pivot Pharmaceuticals, said that “to execute on our business plan, Pivot has positioned itself to have the largest portfolio of bio-cannabis based health and wellness derivatives in the industry.”

It’s still early days for Pivot Pharmaceuticals’ manufacturing processes as the company has to acquire its Dealer’s License Application or complete the construction of its Canadian facility.

Challenges abroad

The European market is not without its own distinct drawbacks. Legislation, treaties and other legal boundaries all present challenges to foreign retailers hoping to gain entry into Europe. Today, medical cannabis is the only legal avenue for distributors outside of the Netherlands where it exists in a legal grey-area.

Furthermore, in most European nations which allow for these prescriptions, controls even require doctors to specify the exact strain of cannabis they’re prescribing, delaying patients’ experimentation in order to find the right strain for them, posing a significant opportunity cost.

More established companies like Canopy Growth (WEED.T) and Aurora Cannabis (ACB.T) also have their own EU expansion strategies, posing a serious threat to Pivot Pharmaceutical’s aspirations of claiming dominant market share. With so much of the pie already staked out by the major players, and with product launch still to come, Pivot Pharmaceuticals is facing serious challenges from the competition.

 

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

1933 Industries

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