Hexo stock plunges on Q4 revenue warning, 2020 outlook retraction 

Another day, another major development weighing on the cannabis sector. This time, Quebec-based cannabis producer Hexo Corp revised its revenue guidance for its upcoming fourth-quarter results while yanking its outlook for its fiscal 2020 revenue target. Hexo now sees its fourth-quarter revenue coming in between approximately $14.5 million and $16.5 million. The company’s CEO Sebastien St-Louis told analysts its fourth quarter revenue would come in double what it reported in its third, which was $13 million. Hexo previously said it expected to reach $400 million in net revenue for fiscal 2020. In his statement, St-Louis said withdrawing the company’s earlier outlook was a “difficult decision.” Hexo will report its year-end financial results on Oct. 24.

Recent industry developments push pot stocks to fresh two-year low 

It wasn’t just Hexo’s stock that suffered in Thursday’s trading session. Amid a wide range of issues plaguing the cannabis sector – including a vaping-related health crisis, sluggish rollout of retail stores in Canada and a disappointing earnings – pot stocks are now trading at their lowest levels since 2017. The Horizons Marijuana Life Sciences Index ETF traded to a level last seen in November 2017 while the U.S.-traded ETFMG Alternative Harvest ETF slid to a record low.

Canopy Growth appoints Constellation CFO as new chairman

Canopy Growth appointed David Klein, the chief financial officer at Constellation Brands - the company’s biggest investor - as its new chairman. Klein has served as a director on Canopy's board since 2018 and replaces John Bell, who was serving as interim chair. Bell will remain on Canopy’s board. Former chairman and co-CEO Bruce Linton was dismissed in July after Constellation said it was disappointed in the company's results. Canopy is expected to have a new CEO announced by the end of the year.

Tilray + AB InBev=Fluent Beverage Co. 

Tilray finally unveiled some more details behind its cannabis-infused joint-venture with Anheuser-Busch InBev. The two companies announced the launch of the Fluent Beverage Company and plans to launch non-alcoholic CBD-infused beverages as early as December, according to a release. The company didn’t disclose plans to release THC-infused beverages, but continues to research those products for future development. The Nanaimo, B.C.-based cannabis producer and the brewer of Budweiser announced plans to work together in Dec. 2018 in which each company would invest up to US$50 million in the partnership, which is limited to Canada.

Mexico plans to legalize recreational pot by the end of October 

Mexico is on track to legalize cannabis by the end of the month, reports The Leaf Desk. The website reports that Mexican Senator Ricardo Monreal, head of the ruling Morena party, confirmed legalization plans and that a recent consultation found that the majority of the public heavily favours legalizing pot. Mexico’s Supreme Court ruled last year that a nationwide ban on personal possession, cultivation and use of cannabis was unconstitutional and that plans to legalize cannabis should be in place by the end of Oct. 2019. However, it’s unclear if any new legislation will include plans to regulate production, supply and sales at a federal level.

Cannabis companies still getting financing deals done despite recent downturn 

Despite the recent challenges some cannabis companies have faced finding new sources of capital, others are still actively announcing new financing deals. Village Farms International announced it completed a bought deal that raised $25 million, offering 2.6 million shares to investors at $9.40 a pop. Meanwhile, MediPharm Labs said it closed a credit facility with a “top 5 Canadian Schedule 1 bank” valued at $38.7 million. MediPharm said it plans to use the credit facility to support the company’s plans in Canada and Australia. The company is also planning to ramp up production capacity to meet the expected demand for cannabis extraction products.

DAILY BUZZ

US$173.2 million
-- The amount of cannabis sales recorded in Colorado in August, the highest monthly total ever, according to the state’s Department of Revenue. 

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