7 Companies That Entered The Cannabis Space In 2018

As Canada prepared for full legalization of weed and the cannabis industry in the United States was booming, more businesses joined the industry either as startups or as established companies that changed or diversified their business models.

For publicly traded companies, announcing entry into marijuana industry was a boon for their share price, especially for small- and micro-cap stocks. Given the popularity of the industry, investors quickly piled into the companies as they entered the fast-growing marijuana industry, much like in the second half of 2017 when companies pivoted to blockchain and bitcoin.

We identified seven publicly-traded companies that joined the marijuana space this year, took a closer look at their involvement in the industry and what direction their stocks took following the announcement.

Pyxus International Inc PYX

Market cap: $125.4 million

Between Feb. 8 and Feb. 13, the stock of Alliance One International surged over 65 percent. The main reason behind the appreciation was the tobacco company announcing details related to its “One Tomorrow” strategy. In January, the company announced its wholly-owned subsidiary Canadian Cultivated Products acquired 75 percent of Canada’s Island Garden and 80 percent of Goldleaf Pharm, both of which specialized in medical marijuana production and retail in Canada.

In September, the company announced it would change its name to Pyxus International to highlight its transition to a new industry.

New Age Beverages Corp NBEV

Market cap: $268 million

On Sept. 19, New Age Beverages Corp, a Colorado-based manufacturer of organic and healthy beverages said it would launch a portfolio of CBD-infused beverages in October. In the week following the announcement, the company’s stock quadrupled.

The company debuted its portfolio of CBD-infused beverages at the North American Convenience Show in Las Vegas. The portfolio includes relaxation teas, sparkling waters and CBD-infused shots, each containing 25mg of full-spectrum CBD. The company plans to release the products as soon as the 2018 Farm Bill is enacted.

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Net Element Inc NETE

Market cap: $24.3 million

Net Element provides a payments-as-a-service and value-added services platform for small to medium enterprises in the U.S. and some emerging markets. On Oct. 22, Net Element said it launched a secure and compliant payment processing offering designed for cannabis companies. The stock jumped by 53 percent following the announcement and is still about 50 percent above pre-announcement levels.

Molson Coors Brewing Co TAP

Market cap: $14 billion

On Aug. 1, Molson Coors Brewing Co said its Canadian unit, Molson Coors Canada entered into an agreement with Hexo Corp HYYDF. Both companies agreed to form a joint venture that would look for opportunities in the cannabis-infused beverages segment, focusing on non-alcoholic beverages. The beer maker will have 57.5 percent of the JV, with Hexo controlling the rest.

The stock of Molson Coors didn't react much to the news, while Hexo’s shares advanced by 14 percent. The lack of reaction can be attributed to the fact that despite the full legalization of cannabis in Canada, the edibles and beverages will only be available for customers next year. During Molson’s third-quarter earnings call, CEO Mark Hunter said the market for non-alcoholic cannabis-infused beverages in Canada could be worth $3 billion.

Imperial Tobacco Group plc IMBBY

Market cap: $29 billion

Imperial Tobacco Group is another tobacco company that entered the cannabis space earlier this year, being the first of the so-called Big Tobacco companies to do so.

Imperial Tobacco Group, which makes Kool and Winston cigarettes, in June partnered with Snoop Dogg’s Casa Verde seed investment firm to invest in Oxford Cannabinoid Technologies, a UK-based British medical marijuana research company.

Virtual Crypto Technologies Inc VRCP

Market cap: $2.2 million

Nano-cap Virtual Crypto Technologies started as a developer of software and hardware to allow buying and selling cryptocurrencies through point-of-sales systems, ATMs, tablets, PCs and mobile devices.

At the beginning of September, the Israel-based company said it developed a payment solution for cannabis retailers that would allow paying at dispensaries with cryptocurrencies. In October, the company said it unbundled the software from the hardware and started offering the CannabitPay Software Solution as downloadable software for mobile devices and some POS systems that dispensaries use.

The thinly-traded stock has lost over 60 percent since the company first announced its pivot to cannabis.

Youngevity International Inc YGYI

Market cap: $151.2 million

Last but not least, Youngevity International also joined the cannabis industry this year.

The lifestyle company that provides health, nutrition and other products announced in August it would launch a Hemp FX line that would include three hemp-derived cannabinoid products (Soothe, Relax and Uplift). In October, the Hemp FX line was expanded with two new products (HempFX Hydration - Pure and HempFX Hydration - Sleep).

Joining the cannabis space has provided a boost to Youngevity’s stock, which since the beginning of the year until Aug. 30 dropped by 25 percent. Between Aug. 30 and Oct. 15, shares surged by over 300 percent. Since that date, the stock is down by 50 percent.

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