How Would the CLIMB Act Help Your Cannabis Stock Portfolio?
At times cannabis stocks tend to react to news regarding the cannabis industry. For example, when a company releases progressive news or reports positive earnings it can have a positive impact on how marijuana stocks perform. Now in light of the continued effort to enact federal cannabis reform a new bill is in the works which would be beneficial to cannabis stocks.
This past week Rep. Troy A. Carter, Sr., and Rep. Guy Reschenthaler introduced a new bill called The Capital Lending and Investment for Marijuana Businesses (CLIMB) Act. This new bill aims to provide a safe harbor for national securities exchanges.
Specifically, the New York Stock Exchange, Nasdaq, and other securities market participants list state-legal cannabis operators. Particularly the cannabis companies that currently cannot list in the United States. The CLIMB Act could be a bridge that helps things like the SAFE Act as well as finally ending cannabis prohibition. As well this new bill could add some help to the hardships the sector has been facing. With the non-existent help to proper funding compared to other legal businesses the CLIMB Act could be the answer.
The executive director of the national cannabis roundtable Saphira Galoob shed some light on the matter. She said “The CLIMB Act is critical because it provides state legal American businesses with traditional funding and support mechanisms for this emerging industry, which other domestic industries currently enjoy. The more financing sources available to cannabis businesses the better, particularly for entrepreneurs, small and minority-owned businesses that may otherwise face challenges in obtaining access to capital.” If this bill becomes successful will the marijuana stocks mentioned below be some of the first to jump up to the big boards?
Tilray Brands, Inc.
Tilray Brands, Inc. engages in the research, cultivation, production, marketing, and distribution of medical cannabis products. It operates through five segments: Cannabis Business, Distribution Business, Beverage Alcohol Business, Wellness Business, and Business Under Development. In one of the company’s recent news updates, Tilray announced it has made some improvements to an accretive strategic transaction with HEXO.
The amended terms include an increased discount on the purchase price of the HEXO Note. Plus a reduced Tilray conversion price on HEXO shares. This also reaffirms $80, million in projected shared cost-saving synergies. Furthermore, this deal is expected to close in July 2022.
Canopy Growth Corporation
Canopy Growth Corporation together with its subsidiaries, engages in the production, distribution, and sale of cannabis and hemp-based products for recreational and medical purposes primarily in Canada, the United States, and Germany. It operates through two segments, Global Cannabis and Other Consumer Products. This past month the company released its fourth quarter and fiscal year 2022 financial results.
Aurora Cannabis Inc.
Aurora Cannabis Inc. produces, distributes, and sells cannabis and cannabis derivative products in Canada and internationally. It also engages in facility engineering and design, cannabis breeding, research, production, derivatives, product development, wholesale, and retail distribution activities. During the first week of June, the company announced a repurchased of $20 million US worth of convertible notes. So Aurora has repurchased an aggregate of approximately $25.3 million principal amount of its convertible senior notes at a total cost, including accrued interest, of $24.3 million in cash.
The purpose of the transaction, which represents a repurchase of a portion of the Notes at a 5.25% discount to par value, was to reduce the Company’s debt and annual cash interest costs. Annual cash interest savings from the repurchases of Notes made from Q3 2022 onwards now total $9.5 million.
Aurora’s balance sheet is among the strongest in the industry with approximately $455 million in cash. This includes the transaction announced, about the Company reiterating its expectation of achieving a positive Adjusted EBITDA run rate by the first half of fiscal 2023.
How Would the CLIMB Act Help Your Cannabis Stock Portfolio?
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