Cannabis shares were mostly higher Wednesday, with Tilray Inc. in focus after it unveiled a more than $300 million deal that is its biggest acquisition yet.
Tilray stock TLRY, +2.33% was up 4.5%, after the company announced a $317 million cash-and-stock deal for Manitoba Harvest, a company that claims to be the world’s biggest hemp food maker. Tilray said it expects to use the deal to launch CBD-derived products in the U.S. as early as this summer.
However, for now, the legality of CBD, a non-psychoactive ingredient that can be derived from cannabis or hemp plants, is unclear. While hemp was legalized in the recent farm bill, CBD remains under the purview of the Food and Drug Administration, which has issued initial guidelines that say companies must get pre-approval before selling products with CBD in them. The FDA is planning to hold public talks on the issue, although it has not yet set a date.
Manitoba Chief Executive Bill Chiasson told MarketWatch the current plan is to introduce a line of CBD-infused tinctures, a CBD spray and CBD gel caps, and Manitoba and Tilray will follow all required federal and state guidelines.
Aurora Cannabis Inc. ACB, +1.01% ACB, +0.66% shares rose 1.5%. That company, which is also making hemp investments, said it has appointed Michael Singer, previously chairman of the board, as executive chairman. The company named Ronald Funk lead independent director and Margaret Atkins as new independent director and chair of the audit committee.
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Diane Jang, who had been on the board since November 2017, has resigned her position as director.
“As Aurora continues to mature into one of the world’s largest and leading cannabis companies, it is important that our board continues to examine its composition to ensure that its experience and expertise aligns with the company’s strategic direction,” Singer said.
CannTrust Holdings Inc. TRST, +0.17% CNTTF, +0.66% shares were flat, after that Vaughan, Ontario-based company said its shares will start trading on the New York Stock Exchange next Monday. Shares will trade under the ticker symbol “CNST”.
Meanwhile, California took in just $345 million tax revenue from legal cannabis in its first full year of sales, according to data released by the state on Tuesday. That is way less than the $1 billion the state was expected, a trend blamed on the continued strength of the black market and high taxes on the substance.
The California Department of Tax and Fee Administration reported $103.3 million in cannabis tax revenue in the fourth quarter, after a revised $100.8 million in the third quarter. The state collected $60.9 million in the first quarter and $80.2 million in the second quarter.
New Gov. Gavin Newsom is expecting cannabis tax revenues to climb by 45% in the coming fiscal year, according to numbers in his proposed state budget released last week. Newsom, who was a strong backer of legalizing cannabis for adult recreational use in the Golden State, is proposing to boost spending on regulation of the sector by 51% to $201 million from $133 million last year.
The ETFMG Alternative Harvest ETF MJ, +0.93% was up 1.4%, and the Horizons Marijuana Life Sciences ETF HMMJ, +0.14% was up 1.1%. The S&P 500 SPX, +0.09% and the Dow Jones Industrial Average DJIA, +0.09% were slightly higher.
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