Ventura2020 wrote: Yup, share holders paid him a lot of money but, I would say he had a plan and thank goodness he stuck to it. Brilliant!
So interesting to read the past and be living in the present. All the water that has filtered under the bridge.
I say with some resistance. APHA, now TLRY has had and is, the right CEO at the helm.
Who would have thought the little company APHA was, could be on the top now? Well, I did! And a few other bulls did as well. Rode the waves and bailed on the rip tide. On the gravey train once again.
APHA story is far from over, just a new name and new look, with a behemoth global presence now called TLRY Brands.
Sky and beyond is ours, if the right decisions, M&A's and focus is not lost.
The ship is holding steady! Just do your DD and you will see TLRY is your best option for an emerging Cannabis Market.
$300 SP again! Seems unrealistic but, it did back then as well.
Cheers,
V
May 06, 2019
Canopy Growth (NYSE: CGC), the world's largest cannabis company, has made waves with a bold acquisition that could give it a large U.S. presence. Every time one of the big growers agrees to buy something big, it's customary to pester CEOs of its largest peers with questions about making a similar purchase.
It's also typical for CEOs to say whatever they think investors want to hear. Since marijuana stock investors tend to get excited when companies like Aphria (NYSE: APHA) buy something big, you'd expect its interim CEO to pretend he has a plan to do the same.
However, Aphria's recently appointed executive chairman and CEO, Irwin Simon, isn't following the standard playbook. Instead, he wants to focus on the bottom line, and probably knows what he's doing. After all, the company he founded 25 years ago, Hain Celestial, became a highly profitable owner of dozens of consumer packaged goods brands.
Here are three reasons not chasing Canopy Growth south of the border is the right decision.
1. No control
This is the main reason Irwin isn't willing to enter a deal similar to Canopy Growth's option to acquireAcreage Holdings (NASDAQOTH: ACRGF). The deal's bizarre terms give Canopy Growth the right to acquire Acreage Holdings, but only if the Drug Enforcement Agency relaxes marijuana's controlled substance rating from Schedule 1 to something that allows legal sales at the federal level.
Simon criticized Canopy Growth for spending $300 million up front for the right to buy Acreage for what could be $3.4 billion and perhaps a lot more. Canopy has no control over Acreage's operations, and a lot can change before the 7.5-year option to buy expires.
Acreage is still losing money, and there's a chance it won't be worth a nickel in a few years. There's also the chance that Canopy shares will rise significantly before the option to buy presents itself. According to the terms, Acreage shareholders will receive 0.5818 common shares of Canopy Growth for each of their Acreage shares.
2. Just say no to federal legalization
Simon didn't mention the pickle the U.S. cannabis market is in right now, but it's another big reason Canopy shareholders will probably never see a return from the Acreage investment. More members of Congress are willing to back the end of prohibition than ever, but rescheduling cannabis would require the U.S. Food and Drug Administration (FDA) to regulate it as a real drug.
Under the FDA's purview, healthy state markets for legal cannabis will very likely be regulated to death as they are in Canada and California. For example, in U.S. states with loose regulations, 100 mg of THC per edible is standard. Health Canada wants to limit the amount of THC in one edible package or beverage container to 10 mg, plus they must be free of sugars, colors, and sweeteners.
Just 10 mg is weak enough that accidental consumption isn't going to endanger anyone unless they eat like Homer Simpson. It's a sensible rule, but it will also drive most edible sales underground because 10 mg is completely useless to daily cannabis users, who account for a majority of total sales.
3. This is a low-margin game now
In states where cannabis has been decriminalized, police aren't too interested in shutting down businesses that don't follow all the rules. In California, recently shuttered illegal storefronts disappear from the Weedmaps app more slowly than new ones are popping up. Thanks to regulations and high taxes, state legal cannabis sales in California fell to $2.5 billion in 2018, from $3.0 billion in 2017 when only medical marijuana was legal.
Canada's unlicensed storefronts and mail order marijuana services charge 30% to 50% less for dry flower. To compete, Irwin understands that Aphria needs to control costs wherever he can. Aphria has a gigantic growing facility in Canada, and the company thinks it can produce process, and ship quality cannabis at a lower cost than peers in its domestic market.
An estimated 34% of total cannabis spending in Canada during the last three months of 2018 was legal. Licensed marijuana sales peaked in December, which means over 100 licensed producers must share a market with around $913 million in annualized sales. Only the most disciplined Canadian producers will survive, and Irwin's determined to give Aphria a chance.