Hexo Stock Surges on Receiving New Sales License
Shares of the pot stock Hexo (NYSE:HEXO) rose over 9% on Monday to close trading at $0.69. Yesterday, the cannabis giant announced Health Canada amended its Belleville facility license for the sale of dried & fresh cannabis, cannabis topicals, extracts and edible cannabis products for its manufacturing and processing facility in Belleville, Ontario.
This amended license also includes the expansion of the licensed area to include Hexo’s beverage production area dedicated to its beverage division. Hexo’s CEO and co-founder Sebastien Sr-Louis stated, “Receiving the sales license for our Belleville facility is extremely positive news for HEXO and Truss, our joint-venture with Molson Coors Canada.”
He added, “This license allows us to increase our processing capability significantly, achieve greater economies of scale, and continue to roll out more innovative 2.0 products across all of our brands Powered by HEXOTM, including hash, vapes, cannabis beverages, and other edible cannabis products.”
The Belleville facility will be Hexo’s primary facility for the development, processing, and distribution of cannabis products. It is located among key shipping routes in the province and the facility will accelerate Hexo’s expansion strategy. It will also ensure the necessary capacity for the manufacturing and distribution of advanced cannabis products which will help fulfill purchase orders in Canada.
Hexo stock is still trading significantly below record highs
Despite Hexo’s recent upward spiral, shares are still down 92% from record highs. Several marijuana companies are struggling due to a number of structural issues. The cannabis industry has been impacted by lower than expected demand due to the slow rollout of retail stores in major Canadian provinces.
Further, Canada’s licensed producers are also grappling with competition from the illegal market that still accounts for a significant portion of recreational marijuana sales. These issues have driven Hexo’s profitability lower and inventory levels higher. Hexo and peers are burning through cash and continue to raise equity to stay afloat.
In May 2020, Hexo raised CA$50 million by selling stock and warrant units. Each unit contained one Hexo stock and half a warrant that gives the buyer to purchase company shares at a future date but at a pre-arranged price.
Now, marijuana stocks will depend on Cannabis 2.0 products to drive sales higher in the second half of 2020. Hexo and peers continue to invest heavily in expanding product portfolio via partnerships and joint ventures. Will this help marijuana stocks recover in the second half of 2020?
Hexo Stock Surges on Receiving New Sales License
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