Tired vs. Wired: These cannabis stocks make you forget sundial growers

There is an obsession with Sundial Growers (SNDL) among traders. The stock is up 140% so far and I think the only reason is that it is a low-priced cannabis name that can be traded by all brokers.

Traders consider it “cheap” despite its billion dollar market capitalization. This is the same company that was charged for not disclosing that the product had been returned because it contained mold and bits of rubber gloves.

I often joked about Aurora Cannabis (ACB) for issuing shares as if they were candy. Sundial Growers becomes the “hold my beer” reaction to Aurora. Sundial is drowning in debt and has used every doll in its stock to issue more and more shares. They broke the billion count and I’m not sure the end is in sight.

The company is moving from cannabis wholesaling to retailing, but this is hardly unique in the industry. In fact, Sundial is far behind many competitors in this regard. It hit them hard as net sales recently dropped 46% year over year.

Maybe the Twitter guru leading you to this stock won’t admit it, but in my opinion, it’s a pump and a mess. Ironically, this may end up saving the company because they have a stronger balance sheet, but with a valuation of over $ 1 billion now, there are far better places an investor can put their hard-earned money into, whether he’s an aggressive or a moderate name. want.

Village Farms (VFF) might just be the first name on everyone’s list when trading something instead of Sundial. The fact that these companies have the same market cap is absolutely ridiculous. Village Farms offers the lowest cost of production, owns 100% of Pure Sunfarms, owns a huge greenhouse in Texas that is ready for CBD production when legal, and has international reach. They also have 3x as many sales as Sundial, they are cash flow positive and profitable. Now tell me again why your guru makes you buy a sundial?

Buy a multi-state operator. Which? Almost everyone. Cresco Labs (CRLBF) of Illinois is at the top of my list. With a market cap of about $ 5 billion, you get cannabis from the King of Illinois. Spread across nine states with 15 manufacturing facilities and 20 dispensaries, Cresco has one of the largest footprints in the US. They reported more than $ 150 million in revenue in the last quarter alone, along with profitability.

Trulieve Cannabis (TCNNF) is another alternative. Third quarter sales of $ 136 million came just below Cresco, but the Florida-concentrated cannabis company produced stronger EBITDA. And I wouldn’t blame anyone for going with Green Thumb Industries (GTBIF) or Curaleaf Holdings (CURLF).

The easiest thing would be to buy the Advisorshares Pure US Cannabis ETF (MSOS) which will give you all of the above shares plus another 25.

For those folks who want to stay in the aggressive lane, two smaller considerations are Juva Life (JUVAF) and Cybin (CLXPF).

Juva

Juva is a vertically integrated cannabis company in California. In fact, the CEO received the very first license granted in the state. While growing, processing and selling cannabis through retail and distribution provides a nice stream of income, Juva is taking the road less traveled, which should result in huge returns for shareholders in the future.

Juva will combine IRB-approved patient research studies with testing, along with verifying product integrity through a network of physicians and clinics, along with its own $ 5 million Class 5 cleanroom.

This will not lead to phase I studies with the FDA. Instead, Juva collects a lot of patient-reported data. These patient-reported outcomes per Juva-formulated precision cannabis products allow the company to demonstrate that X produced by Y patients generated Z-responses / outcomes. The most common goal / goal for Z is to reduce a symptom by a certain percentage.

For example, suppose I reported a daily pain level of 7 on a scale of 1 to 10 before starting to use a specific Juva cannabis compound for dosage / precision. After using that product for three weeks, I reported a new pain level of 2 on the same scale, something worthless. Now imagine if 10 people or 100 people or 1,000 people reported similar results. No, Juva cannot make a medical claim, but they could say something like, “Well, Mr. or Mrs. Patient, 85% of people with similar symptoms, like you, reported a reduction in pain when using this particular cannabis strain.”

Short-term result: Juva works with physicians and can steer customers toward stress based on user-reported results. The long-term hope is that doctors will be more likely to recommend cannabis based on patient practice data.

With every patient report, Juva’s data set grows, and we know how valuable data is in today’s world. This will help build a marketable and valuable medical database. It might appeal to others in the cannabis world to partner with Juva and go along with the idea. Since large pharmaceutical companies are not at risk for studies or trials until a federal path is clear, the data they could get from Juva could give them a huge edge over competitors when the path is clear. Current research goals for Juva now revolve around inflammation, oncology, neurology, pain management and opiate reduction. Any possible substitute for opioids would be a huge benefit to society and a huge financial risk to the major pharmaceutical industry.

Cybin

If Juva is the road less traveled, Cybin is the new road being built. Cybin does not work in the cannabis space, but rather in the next evolution of drug therapy, psilocybin. But we are not talking about recreational use. Management sees itself as a life sciences company. The company’s current focus is on developing treatment regimens consisting of proprietary psychedelic molecules and developing their delivery mechanisms, such as the company’s proprietary sublingual film and inhalation system.

The company recently announced that it would raise C $ 20 million. When the deal closed, they brought in more than C $ 34 million, bolstering an already strong balance sheet to one with more than $ 40 million on the books. And they are going to put this money to work.

According to Cybin, the company plans to sponsor a phase 2a and phase 2b clinical trial in patients with major depressive disorder (MDD) later this year. The trial is conducted through the University of West Indies (UWI) and meets the guidelines of the International Conference on Harmonization (ICH) and Good Clinical Practice (GCP). By doing this, Cybin can use the collected data as a bridging strategy to enter other jurisdictions such as the US, Canada and Europe.

If any of these cannabis companies were smart, they’d get Cybin before it gets too expensive. With a market cap of just $ 300 million, I expect it to hit $ 2 billion before Sundial does.

If Sundial were smart, they would reach into that candy jar and now offer Cybin $ 500 million to $ 700 million and turn itself into something that can rival all of the names above. Until then, I would be much more comfortable owning a mix of VFF, MSOS (or a few individual MSO names) and JUVA or CLXPF long before I own a share of SNDL longer than a scalp trade.