Impressive joint ventures with big cannabis companies lack the technology to back their valuations

As the scent of legalization sweeps across North America, early movers scramble to secure their place on the cannabis market. Though well-orchestrated, strategic partnerships might not be enough to keep more innovative marijuana ventures at bay.

Growing with partners

Green Growth Brands Inc. (GGBXF), a one-year-old cannabis company is a true leader in terms of partnerships in this fresh market.

After a successful trial last autumn, when roughly 75% of GGB products have been sold at Designer Shoe Warehouse stores, the two companies have signed a revenue-sharing agreement. DSW, the subsidiary of Designer Brands Inc. (DBI), will continue to sell CBD-based Seventh Sense products on the American market and secure GGB’s presence in the U.S.

The company has also entered an agreement with Simon Property Group, Inc. (SPG), which has opened them access to over 100 prime shop locations in US malls . While selling their products, GGB will also be buying CBD ingredients from Tilray, Inc. (TLRY) to develop a line of CBD skin products along with the Authentic Brands Group.

The company has lately suffered a backlash in their expansion, as Aphria Inc. (APHA) has rejected their all-stock bid last year. The bid has expired in April, and now Green Growth Brands need to repurchase their shares, which will set them back by $89 million.

Booze and buds don’t mix

With a market cap of $16.5 billion Canopy Growth Corporation (CGC) is sitting comfortably at the top of the cannabis ladder.

A leader like this couldn’t be overlooked for long. Last August has brought breakthrough news, as the beverage giant Constellation Brands, Inc. (STZ), has bought 39% of Canopy Growth shares for $4 billion.

The most significant cannabis investment to date is a way for Constellation to bring cannabis-infused beverages to the market and balance the declining sales of alcohol. This is sad information for beer-lovers, as this joint venture will have to limit itself to non-alcoholic drinks. For now, lawmakers don’t intend to permit drinks combining alcohol and cannabis.

Thanks to money coming from Constellation’s investment, Canopy has acquired the rights to buy U.S.-based Acreage Holdings (ACRGF), preparing for expansion over the border. It will only come to life once cannabis becomes fully legal in the United States. As there is no official information on the date of legalization yet, this partnership will be kept on hold.

Pop the tops

While the big players are wrestling for market dominance, smaller competitors successfully implement their innovative concepts and become leaders in their subsectors.

Constellation Brands and Canopy Growth can feel threatened by the technology belonging to Sproutly Canada, Inc. (SRUTF). After last year’s acquisition of Infusion Biosciences Canada, Sproutly possesses the means to dissolve cannabinoids in water naturally.

Not only their process allows for the production of a transparent and tasteful product, but it resembles more the effects of smoking cannabis than ingesting it. The 5–90-minute timeframe is much more acceptable than 2–8-hour effects duration of traditional edibles, while the effects correspond to a given strain of marijuana.

Sproutly’s proprietary Infuz20 technology has rapidly gained attention and recognition, which has resulted in the formation of a definitive agreement with Moosehead Breweries Limited. This exclusive joint venture will develop, produce, and market cannabis-infused beverages in Canada.

As edibles are scheduled to become legal in Canada on 17th of October, Constellation and Canopy might find themselves outsmarted by a much smaller joint venture, but with some impressive technology behind.

Truly medical

Even though popular opinion points towards medical benefits of using cannabis, scientific research is rather narrow, and lawmakers don’t allow to advertise the “pro-health” benefits of marijuana products.

The only exception is GW Pharmaceuticals PLC (GWPH) — the premiere company to successfully receive the Food and Drug Administration’s (FDA) approval for the first cannabis plant-derived medicine in the United States.

Epidiolex® targets two rare forms of epilepsy, and in this niche, it stands uncontested. The technology behind the medicine and its uniqueness have attributed to the company’s stock value rising 42.5% over the last 12 months.

GW Pharma’s position can be only questioned by Zogenix (ZGNX), as the latter plans to release their counterpart to Epidiolex® this year. With supposedly higher effectiveness, their product might soon hurt GW Pharma’s revenue plans.

Playing with genes

OrganiGram Holdings (OGRMF) is on the market for more than a decade, giving it a veteran status among most of the cannabis stocks.

As only one of three companies, it has supply agreements with all Canadian provinces, giving its products a broad outreach. What could grab even more attention is their recent partnership with Hyasynth.

This Montreal-based biotechnology company is experimenting with genetically engineered yeast strains to form cannabinoids outside the natural path. This technology has the potential to reduce the time from a seed/clone to a ready product and open a way to precisely compose its desired effects.

With news like that, no wonder that OrganiGram stock’s value has almost doubled since the beginning of the year.

Breaking the habit

CV Sciences, Inc. (CVSI) is mostly known thanks to its subsidiary — PlusCBD Oil. The top-selling brand of hemp-derived CBD oil in independent retail.

After increasing its outreach by 45% in 2018, CV Sciences currently supplies over 2,200 stores in the U.S. The quality of CV’s products has been certified by U.S. Hemp Authority, making it one of only thirteen companies to make it into this exclusive group.

CV Sciences is in the process of certifying their CBD-and-nicotine formula designed to help individuals stop using tobacco products. Carrying the codename CVSI-007, it stands as CV’s innovative ace that can grant them positive prospects for the future, as they have no direct competition in this field.

The marijuana market is relatively new and subject to many changes in the near future. Companies exert different strategies for growth, which yield a whole spectrum of results. While some of the mentioned ventures do not stand a chance to contest the top 10 companies, they might do even better by finding their niche with the use of cutting-edge technology and becoming leaders in their own sense.