CannTrust and HEXO are going to move up in the world
2019 is going to be a great year for marijuana stocks. This is the opinion of a number of industry analysts, and the markets are already reflecting significant strength. As the marijuana ecosystem continues to evolve, there are going to be many companies that look to gain better position and stability and two of them are already planning on making a move to attract better investments.
HEXO and CannTrust Holdings, two marijuana growers out of Canada that are currently listed on the over-the-counter (OTC) exchange of NASDAQ, have filed paperwork to move their common stock to the New York Stock Exchange (NYSE). The decision to uplist, as it’s called, comes from the companies’ desire to show more legitimacy to their operations, and the marijuana industry in general. By appearing on the same exchange as other companies with long, successful histories, they can demonstrate that they are capable of being listed on the exchange, as well as that they are here to stay.
Being on the NYSE is also important for attracting a certain type of investor – the institutional investor. Investment banks, in many cases, will shy away from companies that are listed on an OTC exchange, but having “NYSE” beside a ticker symbol carries a significant amount of weight.
HEXO and CannTrust won’t be the first two companies to uplist – Cronos Group uplisted to the NASDAQ exchange and Canopy Growth, Aphria and Aurora Cannabis all uplisted to the NYSE. However, the two offer something a little different. They could become the first two marijuana companies to uplist and generate an operating profit. Aurora, for example, has maintained a bottom-line profit recently, but this was only due to fair-value adjustments on investments.
HEXO has a long-term supply deal with Quebec’s regulatory cannabis body, SQDC. It will deliver 200,000kg of marijuana to the province over the next five years and the amount supplied will increase each year. The company has also signed a partnership with Molson Coors Brewing that will lead to the creation of cannabis-infused beverages in Canada. Both of these deals give the company a great deal of financial certainty for years to come.
CannTrust’s success lies in its geography. Its Niagara and Vaughn facilities employ hydroponics for the cannabis growth and their locations give them water and electricity at reduced costs. This will give the company excellent yields against low-cost production. CannTrust is also putting the final touches on a production greenhouse in Niagara that will be more than one million square feet – provided it can overcome a few permitting hurdles – which will increase its growth capacity. This will keep CannTrust seeing green – both in production and in the bank – for a long time.