CRON Stock Forecast
One of the most intriguing companies in the marijuana market is Cronos Group Inc (NASDAQ:CRON), which is why I’m again taking a look at CRON stock. The Cronos stock forecast is, as has been the case for many months now, different from those of its competitors.
Remember that the stock initially rose to prominence when it became the first pure-play marijuana stock to list on the Nasdaq.
While many other marijuana stocks have since registered on the New York Stock Exchange (NYSE), the only other pot stock trading on the Nasdaq is Tilray Inc (NASDAQ:TLRY).
Speaking of Tilray, that company’s entry onto the scene has dramatically shifted CRON stock’s role in the market.
Whereas Cronos stock was the go-to marijuana investment option for U.S. buyers, Tilray has since supplanted it, which is both bad and good for Cronos.
Bad in the sense that Tilray is often the beneficiary of massive market swings, but good in the sense that much of the volatility has been subsumed by TLRY stock, making Cronos a more reliable—if less exciting—pick.
Chart courtesy of StockCharts.com
But for our purposes, Tilray was a blessing in disguise. Now, instead of being driven purely by hype and market sentiment, Cronos stock has the ability to grow based on its strong business decisions.
With that in mind, it’s good to note that Cronos has signed agreements that span across Canada, including with some of the country’s most lucrative markets.
Marijuana Supply Agreements
One of the first and most important factors in a pot stock’s potential is the company’s ability to score supply agreements. These deals guarantee a reliable buyer in the form of provincial governments in Canada, with the opportunity to expand with the market.
With that in mind, it’s good to note that Cronos has signed agreements that span across Canada, and which include some of the country’s most lucrative markets. That bodes well for CRON stock.
The company recently signed an Ontario supply agreement, as well as one with British Columbia. These are two of the most populous provinces in Canada, and are among the wealthiest. (Source: “Cronos Group Inc. Announces Provincial Supply Agreements,” Cision, August 21, 2018.)
That puts Cronos in the enviable position of having a foothold in two of the best markets available at the moment. Those deals were signed with the Ontario Cannabis Retail Corporation and the BC Liquor Distribution Branch, respectively.
Cronos Group followed up those wins with a Nova Scotia partnership, as well as one in Prince Edward Island.
While these are smaller provinces with less potential compared to Ontario and BC, it demonstrates the company’s willingness and ability to expand into a variety of markets across Canada.
With Canada’s recreational marijuana legalization still in its infancy, Cronos Group’s strong deal-making has put it in an enviable position to reap rewards for years to come, bolstering the Cronos stock forecast.
Next up supporting the Cronos stock forecast is the company’s partnerships, two of which in particular that investors should pay attention to.
The first is with U.S.-based company Medmen Enterprises Inc (OTCMKTS:MMNFF, CNSX:MMEN).
One of the few publicly listed American marijuana companies—with operations in California, Nevada, and New York—MedMen and Cronos joined forces earlier this year to create MedMen Canada Inc.
“MedMen Canada will give us entry into an important emerging market for adult use and broaden our exposure worldwide,” said MedMen CEO and co-founder Adam Bierman. (Source: “Cannabis Giants Join Forces in Cross Border Venture,” Cision, March 19, 2018.)
We always take a very disciplined and focused approach to our growth, and it was important that we find the right partner for our expansion into Canada. Cronos has been a leader in the Canadian medical cannabis space, and their international track record makes them the perfect partner. They have the right infrastructure and expertise to successfully execute this venture.
The move will see the 50/50 joint venture, MedMen Canada, focus on a branded national retail chain, branded products, and research and development.
MedMen Canada will have access to Cronos Group’s 350,000-plus square feet of production facilities and future expansions while leveraging MedMen’s retail brand recognition, giving both companies a huge leg up in entering each other’s markets.
The move is impressive, since it allows Cronos to begin tapping into the U.S. market while MedMen finds new pastures in Canada to ply its wares. This should be good for both CRON stock and MMNFF stock.
Another strong partnership that Cronos signed was with Ginkgo Bioworks, Inc. The two companies are partnering to develop cannabinoids for use in the medical sector.
The two companies believe that cannabis-derived molecules can help with chronic pain, nervous disorders, nausea, weight loss, and some mental illnesses.
With such a wide variety of potential applications, this research could pay off big-time down the line with a swath of new medicinal cannabis products.
The two companies will use each other’s expertise to help conquer the main challenge of cannabinoids: producing them at scale while maintaining a profit.
The collaboration will focus on combining Ginkgo’s research and development with Cronos Group’s production capacity to get the ball rolling on this interesting medicinal marijuana subsector.
“The potential uses of cannabinoids are vast, but the key to successfully bringing cannabinoid-based products to market is in creating reliable, consistent, and scalable production of a full spectrum of cannabinoids, not just THC and CBD,” said Mike Gorenstein, CEO of Cronos Group. (Source: “Cronos Group and Ginkgo Bioworks Announce a Landmark Partnership to Produce Cultured Cannabinoids,” Cision, September 4, 2018.)
Jason Kelly, CEO and co-founder of Ginkgo Bioworks, added: “Legal cannabis is a multibillion-dollar industry with no signs of slowing down, but providers will need to innovate to keep up with demand for better products, including those taking advantage of rare and difficult to extract cannabinoids.”
Cronos Group’s willingness to innovate impresses me and further cements my positive Cronos stock forecast.
CRON stock’s 30%+ gains over the past three months are punctuated by peaks and troughs.
Each rise in stock value can be traced to a major news event (e.g. major investment, Canadian legalization, the firing of U.S. Attorney General Jeff Sessions).
While the company’s stock price is still generally under the sway of the news, as the legal marijuana industry continues to mature, the Cronos stock forecast remains bright. That’s because the company has the proper tools and foundations in place to see growth for years to come.