It is interesting to see the overview of the contest between two main poles of the sphere, that of the canopy and medical marijuana on the cannabis market. The exemplary companies taken to comparison here are the Canopy Growth Company and Medical Marijuana, Inc.
Canopy is based in Smiths Falls, Ontario, Canada. It is positioned as the biggest world’s player in the cannabis business. Its most prominent strategic investor is Constellation Brands. Constellation owns wine brands, spirits brands, and beer brands (Modelo, Corona). In August 2018, Constellation invested $4 billion in Canopy for 38% of the shares, receiving warrants with the option of purchasing the dominant stake in the company. Canopy works with sales of marijuana used as medical and recreational, in the non-U.S. countries, where cannabis has been pushed through legislation to become legal.
Medical Marijuana is a very low-price-per-share company from California that trades outside the stock exchange system at a market capitalization of $200 million. They remain focused on cannabidiol (CBD) market in the U.S. By the 2018 Farm Bill, the planting of hemp is legalized in order to obtain CBD without THC. With the TCH being the psychoactive agent in cannabis, the THC products remain federally illegal. With all that, Medical Marijuana had around $20 million in sales last quarter, which looks more than promising for investment.
For the time being, Canopy stands better, with making over CA$106 million in the last quarter and a recorded growth exceeding more than 400% in the last quarter of 2018. Medical Marijuana generated nearly twice the amount of the previous quarter, with over $20 million.
According to GAAP (Generally Accepted Accounting Principles), Medical Marijuana was registered with net income in $9.5 million during the last quarter. It can be assigned to an unrealized gain on minor investments in subsidiaries. But even with that additional gain put aside, the net income for Medical Marijuana reaches $1.5 million.
On its part, Canopy is at a loss. It created an astonishing C$335 million net loss during the last quarter, and for the whole year, the loss went to C$670 million. The damage seems to be the consequence of expanding investments made in Canada and another fifteen countries around the world.
Their investments included purchasing Germany’s C3 Cannabinoid Compound Company, the This Works Products from the U.K., a CBD company. Then they paid $300 million for the right to buy Acreage Holdings for $3.4 billion (if cannabis pass as legal at the U.S. federal level).he last years’ investment from Constellation.
Canopy seems to have an advantage over Medical Marijuana — it is more extensive and growing at a more rapid rate. It is valued at circa 68 times that of Medical Marijuana. But do not underestimate penny stock.
We think that the potential investments would be more likely to bear fruit on Medical Marijuana’s side. Unfortunately, both companies currently deal with serious issues.
With the potential of instability when the lead is in the interim (as it is the case in C
Canopy may be that generous with spending due to tanopy) and questionable loans in Medical Marijuana, it seems that one should refrain from the investments in these companies altogether.
However, if we are to advise to whom to deliver first anyway, Canopy would be our choice. Their leadership will remain closely connected to the Constellation investment, and they do not seem to give in to circumstances all too easily.
If you are not in a hurry, until further development, steer clear from these companies. However, you shouldn’t lose sight of the potential for positive turnover, when the weather clears up.