How HIGH Can It Fly? Tilray And Cannabis ETF (MJ) Prepare To Rally 25% More To The Upside

Over the past few weeks, a unique opportunity continues to unfold in the Cannabis & Marijuana sector.  I highlighted this near the end of May 2021 with a research article showing how a multiple upside price wave setup may start to unfold after a recent momentum base/bottom setup across various cannabis/marijuana sector symbols.  The confluence of price patterns across a number of cannabis sector stocks suggests a bigger price trend may be about to setup.  My team and I believe this new momentum base/bottom may prompt a strong upside price trend throughout the end of 2021 and may prompt a continuation of this trend into 2022.

Today, I am revisiting these same charts/symbols to see how far things have progresses since our May 31, 2021 research post.  Let’s get started with the charts.

MJ Still Setup For A +14% Rally To Levels Near $24.50 (Or Higher)

This Weekly MJ chart shows the deep momentum base/bottom near $19.90 with moderate upside support above $20 to $21. Using a Fibonacci 100% Measured Move technique, we can identify upside targets near $22.40 and $24.50. Over the past two weeks, MJ actually reached the $22.40 target with recent highs.  Yet, price closed the week lower, near $21.59.

I am also seeing strong trading volume as this new upside price trend extends higher.  This increased volume is a good indication that the upside price trend is starting to build momentum as traders accumulate shares in anticipation of the bullish price rally phase.

My team and I still believe the upside potential in the Cannabis/Marijuana sector is relatively strong.  We believe the recent momentum base that setup across numerous Cannabis sector stocks is presenting a very clear  opportunity for traders to position trades for the pending multi-wave upside price trends.  After the first Fibonacci 100% Measured Move targets are reached, a brief pause in price should be expected, then another upside price trend should prompt an even higher price advance.  This next move will likely conform for the current rally attempt as another Fibonacci 100% Measured Move to the upside.

Tilray Inching Higher – Still Showing A Potential For A +35% Advance

Very similar to the MJ Weekly chart setup, this Weekly TLRY chart shows a fantastic momentum advance after a moderate price pullback from recent highs.  Although recent highs have touched our first Fibonacci target level, near $21.67, there is still ample opportunity for a move to the second target level near $26.70.

We are seeing strong accumulation in the recent trading volume indicated by the series of GREEN candles – suggesting the upside price trend is starting to build real momentum.  We believe the next move higher will target the $23 to $24 level – which will prompt a close above the first target level and setup TLRY on a stronger advance towards the second target level.

From the current price close, the second target level, near $26.70, represents a solid +35% opportunity for traders to profit from this initial wave higher.

GRYN Makes A Big Move – Still Showing Opportunities For Another +22% Advance

In our first research article about this unique setup in the Cannabis/Marijuana sector, we includes GRYN as a potential candidate for an explosive upside trend.  GRYN is not one of the most heavily traded symbols in this sector, yet we feel it is uniquely positioned because it has US FDA approval for its Hemp-based CBD growing and extraction processes.  This US FDA approval means GRYN can produce and sell into almost any medical, consumer, beverage, consumable or other industry as an FDA Approved supplier.

Recently, we saw a big upside in GRYN, rallying over 32% since we first published our May 31 research article.  The next move higher should target levels above $2.21 and setup a new range for the next Fibonacci 100% Measured Move higher.  If GRYN rallies to a high near $2.50 in this current trend, then the next Measured Move upside targets will be $2.79 to $3.45 if the $1.65 to $1.70 price level holds as support.  These approximate (estimated) upside targets represent another +60% to +98% rally phase for GRYN.

Overall, we believe the Cannabis/Marijuana/Alternative Medicine sector has moved away from the downside price trend that has dominated this sector over the past 2 to 3+ years.  Now, after the Reddit group targeted this sector late in 2020, we are seeing renewed focus by traders into this sector.  Once the momentum moves past moderate accumulation and into breakout trending, we may see another big explosive upside trend in a number of Cannabis sector stocks.

The one thing that could deflate this trend is if we start to see a broad US/Global market price correction. If something like a moderate 11% (or greater) US/Global market downtrend sets up, then we will likely see these Cannabis/Marijuana sector stocks attempt to move lower as well – attempting to reset/retest the recent momentum base levels.  This would present a very interesting opportunity for traders to get into positions as these base levels setup and as the accumulation starts to build again.

Want to know how our BAN strategy is ranking the Cannabis/Marijuana sector (and other sectors) for trading opportunities to identify the best opportunities for future profits? Please take a minute to learn about my BAN Trader Pro newsletter service and how it can help you identify and trade better sector setups.  My team and I have built this strategy to help us identify the strongest and best trade setups in any market sector.  Every day, we deliver these setups to our subscribers along with the BAN Trader Pro system trades.  You owe it to yourself to see how simple it is to trade 30% to 40% of the time to generate incredible results.

Have a great Monday!

For a look at all of today’s economic events, check out our economic calendar.

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

Cannabis Entrepreneurs, Celebrity Investors Light up as Legalization Blooms

By Paul Lienert and Jane Lanhee Lee

So far, 36 states and the District of Columbia have approved medical use of marijuana, according to the National Conference of State Legislatures. Of them,15 states and D.C. have approved recreational use of pot.

Cannabis technology startups, including those enabling home delivery of pot, got a big boost during the pandemic as more Americans partook, igniting investor interest in companies that provide everything from cultivation management tools to compliance and e-commerce software for an industry that still operates in a legal gray zone at the federal level.

Cannabis entrepreneurs say they have to move quickly and build their brands before full U.S. legalization levels the playing field – a process that many expect to gather steam this year.

“Why are you going to Weedmaps (for listings of cannabis retailers) if you can go to Yelp? Why do you order through this or that system if you can order through DoorDash or Uber Eats?” asks Steve Allan, chief executive of The Parent Company, which has Jay-Z as chief visionary officer and is looking to consolidate smaller players following its January listing through a special purpose acquisition company.

TPCO has built its own e-commerce technology that can handle everything from business management to retail sales, said Allan.

In one of the biggest venture capital deals in the sector to date, Oregon-based e-commerce platform Dutchie on Tuesday announced it raised $200 million in a funding round that values the company at $1.7 billion.

Dutchie’s investors include former Starbucks CEO Howard Schultz, NBA star Kevin Durant and DoorDash co-founder Stanley Tang. The company’s online marketplace connects cannabis dispensaries with consumers, who can order home delivery.

Reuters has identified more than 90 private and public cannabis tech companies in North America, with total private investment in the first quarter at the highest level in 18 months, according to data compiled by PitchBook and Crunchbase.

All told, investors have poured more than $2.5 billion into cannabis tech startups since 2018.

Public investors are piling in too. Special purpose acquisition companies, or SPACs, that target the broader cannabis industry raised at least $4.3 billion through early 2021, with $1.7 billion of that still waiting to be deployed, according to cannabis researcher BDSA.

That interest comes as shares of publicly-traded cannabis companies – many of which are listed in Canada because they are barred from U.S. exchanges – have begun to rebound after a brutal sell-off in 2019.

“We’re still in the very early innings” of investing, said Harrison Aaron, an investment analyst with Gotham Green Partners, a New York-based private equity firm with a cannabis-centric portfolio.

U.S. legal cannabis sales for both medicinal and recreational use last year jumped 45%, according to BDSA.

“We don’t necessarily want things to go (fully) legal today because there’s a lot of value in our companies, and we want more time to build,” said Lenore Kopko, managing partner at Gotham Green.

Others believe entry to the cannabis industry may not be quick or easy for many of the big outside players.

“Cannabis legislation, regulations and supply chain flows create complexity that is not built into software made for other industries,” said David Hua, founder and CEO of Meadow, which sells compliance and operating software for cannabis retailers.

CELEBRITIES GALORE

Cannabis startup funding in the sector has been led by a closely knit network of investors that often co-invest with one another. That network includes Liquid 2 Ventures, headed by former NFL quarterback Joe Montana, and Casa Verde Capital, founded by entertainer Snoop Dogg.

Another of those firms, Beverly Hills-based Arcadian Capital, has invested in more than a dozen cannabis tech startups. Boca Raton-based Phyto Partners has funded 10, many of them as a co-investor with Arcadian.

The network occasionally is joined by other high-profile individual investors. DoorDash’s Tang and Twitch co-founder Justin Kan were among those backing Oakland-based Nabis, a cannabis online marketplace for dispensaries that also has a warehouse, delivery service and online financing for retailers.

There is another draw for investors beyond the immediate business opportunity: data on a brand-new industry.

For Arcadian, the torrent of data that is being generated by cannabis tech startups provides “a great mechanism to learn more about the industry,” said Matthew Nordgren, the company’s founder and managing partner.

Industry boosters say technology developed and incubated by the cannabis industry could open new pathways for retail trade in other sectors.

Socrates Rosenfeld, co-founder and CEO of Jane Technologies, the Santa Cruz creator of an e-commerce platform that has been funded by Arcadian and Gotham Green, called it “a once-in-a-lifetime opportunity for a tech company to work in partnership with the operators in this space to build and redefine how tech and analog retail work together.”

(Reporting by Paul Lienert and Jane Lanhee Lee; Editing by Jonathan Weber and Dan Grebler)

Avicanna Launches into Adult-use Cannabis; Revenue Growth to be 5-10x Greater

Toronto-based biopharmaceutical cannabis company Avicanna announced its advanced cannabinoid formulations will be available through retail channels in early next year in Canada for the first time in its history, sending its shares as high as 30% on Wednesday.

Expansion to retail sales to provide consumers with low barrier access to the same industry-leading formulary of medical cannabis products. It has become evident that many consumers who seek cannabis for medical purposes are not going through medical channels, with nearly 44% purchasing from legal storefronts (adult-use).

“With broadened consumer exposure, and, specifically, low barriers to access (i.e., no medical cannabis registrations/”prescriptions” required), we expect Avicanna’s (AVCN) revenue to grow materially from 1Q21 onward, with first sales into provincial distributors commencing in January 2021,” said Rahul Sarugaser and Michael W. Freeman, equity analysts at Raymond James.

“Given Avicanna’s (AVCN) strong uptake among physicians, and, interestingly, older medical cannabis patients (47% of buyers in 51-75 age-range, and 55% women), the medical cannabis market’s size relative to adult-use, compounded by the adult-use market’s much larger (and rapidly expanding), we anticipate potential revenue derived from adult-use sales to be 5-10x greater than those derived from AVCN’s medical cannabis sales through Shoppers.”

According to the 2020 Canadian Cannabis Survey, 76% of medical cannabis users do not have a medical document – such as a prescription – from a healthcare professional.

The ease of access to store-fronts and systemic barriers to connecting with a health care professional who may provide a medical document have continued to impact medical user numbers year over year, which have remained largely the same around 350,000 active registered medical users in Canada since 2018.

“The existing stigma around medical cannabis and the barriers to obtain a medical document make it particularly challenging for some patients to access medical cannabis through the appropriate channels with the support of a health care practitioner,” said Aras Azadian, Avicanna’s Chief Executive Officer.

“We believe that by expanding the RHO Phyto portfolio into retail sales channels we will provide consumers with easier and low barrier access to standardized medical products they seek. For a biopharmaceutical company like Avicanna, this expansion of our medical products into retail channels is in many ways similar to accessing over-the-counter medical products.”

According to Tipranks, based on analysts offering 12-month price targets for Avicanna in the last three months forecast the average price at C$2.49 with a high of C$2.50 and a low of C$2.50. The average price target represents a 164.93% increase from the last price of C$0.94.

The biopharmaceutical cannabis company shares closed 17.02% higher at C$1.1 after surging as high as 30% to C$1.21 intraday on Wednesday. However, the stock is down over 50% so far this year.

“Avicanna’s (AVCN) entry into the $3.2 billion run-rate Canadian adult-use cannabis market comes after the successful launch of its RHO Phyto products through Shoppers, where the company saw >100%month-over-month sales growth in all product categories,” Sarugaser and Freeman added.

“According to our channel checks, AVCN’s brands made up Shoppers’ top-selling products during the last several months. AVCN remains committed to its medical cannabis patients and will maintain its exclusive, preferred supply relationship with Shoppers Drug Mart, which is slowly but surely building out a powerful nationwide medical cannabis platform.”