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Last year, nearly every cannabis company was racing to find a big-time partner. Cronos Group, for example, secured a $1.8 billion deal with tobacco giant Altria Group. Cronos stock ran more than 100% on the news, rising to a peak market cap of $20 billion. Canopy Growth, meanwhile, locked down a $4 billion capital infusion from Constellation Brands, causing shares to skyrocket.

While the initial rush for partners sent cannabis stocks into the stratosphere, the back half of 2019 has been much quieter. In fact, many pot ETFs are down 50% or more in value. While this has created pain for marijuana investors, it’s also created opportunity for new partners to enter the space at attractive price points. In 2020, I expect a number of pot stocks to secure game-changing partnerships that could resurrect their struggling share prices.

Whichever companies attract the best partners will likely lead the industry in gains. The best time to place your bets is today. Here are two undervalued pot stocks ripe for a transformational partner.

Play the platform

Canopy Growth and Cronos shared one big characteristic before securing valuable partners: an early lead. In the ever-evolving world of pot, Altria and Constellation chose to invest in companies that had a head start on production, marketing, and distribution. If you want to bet on what’s worked thus far, HEXO (TSX:HEXO)(NYSE:HEXO) is the way to go.

HEXO is attempting to build the first platform for the cannabis industry. It has a grow facility in Quebec capable of producing more than 100,000 kilograms of pot per year, a truly massive 580,000-square-foot processing and R&D centre in Ontario, and a 58,000-square-foot distribution facility in Montreal.

In a nutshell, HEXO wants to create a platform so that any company in the world can use its services to create, manufacture, and sell cannabis products quickly and efficiently. It’s this positioning that makes HEXO the ideal buyout candidate. Over the next 12 months, HEXO will be a plug-and-play partner for any company looking to enter the space in a meaningful way. It’s already demonstrated early success. In 2018, it partnered with Molson Coors Canada to help create cannabis-infused beverages.

While HEXO is well positioned to attract more one-off partners, it shouldn’t be ignored that it has essentially built a vertically integrated cannabis company that can integrate seamlessly with a large acquirer like Coca-Cola or Kraft Heinz. If a multi-billion-dollar company wants to make a splash, HEXO is the most obvious target.

The ground floor

If you want to take a bit more risk, Green Organic Dutchman Holdings (YSX:TGOD) is the way to go. Its market cap is 60% smaller than HEXO, and the upside is commensurately higher. Green Organic recently lost its key partner, Aurora Cannabis, and is primed for a new partner to swoop in. The company has two major facilities ramping production next quarter, and all that pot needs somewhere to go.

In reality, Green Organic isn’t as well positioned as HEXO. It doesn’t have the ancillary infrastructure in place and is positioned closer to a pure-play grower. While an outside company likely won’t be interested, there’s big potential for interest from inside the industry. Aurora didn’t need Green Organic’s cannabis output because its internally owned Whistler Medical was already supplying it with enough output. If any pot company experiences disruptions in its supply chain, Green Organic will be at the top of its list.

Last month, Canberra became the first city in Australia to legalize marijuana for recreational use. While many places around the world have legalized medicinal marijuana, there just hasn't been the same appetite for recreational pot, at least not yet.

That's what makes the vote by the Australian Capital Territory (ACT), where Canberra is located, to legalize recreational pot such a big move. The question now is whether it will lead to legalization for the whole country. 

Canberra is similar to many U.S. states

The ACT will permit individuals to use pot as well as grow it. The law takes effect Jan. 31, 2020. As in the U.S., marijuana remains illegal at the federal level, meaning that federal laws could still pose problems for cannabis customers in Canberra and the ACT.  In the U.S., the federal government has turned a blind eye to what individual states have been doing on marijuana, but there's no guarantee that the same will happen in Australia.

Will legalization at the federal level be next?

It has been more than three years since legislation was passed to legalize medical marijuana in Australia. There isn't any movement to suggest that the legalization of cannabis for recreational purposes is on the horizon anytime soon. But there's likely a lot of interest in doing so; data from a 2016 report indicates that cannabis was used by one in 10 Australians over the past year, a number that's likely to have grown since. 

A possible catalyst in Australia would be if New Zealand votes to make pot legal next year. With Canada and a number of U.S. states having done so -- and nearby New Zealand potentially being next -- Australia would have ample case studies to decide whether it wants to follow.

But recent polling numbers suggest the vote could be very close in New Zealand, with 52% opposed to legalization. 

One company that could benefit significantly

Aphria (NYSE:APHA) made an investment in Australian-based Althea in early 2018 and could stand to benefit if legalization comes to pass. 

The investment gives Aphria access to a market that could become more lucrative than ever. Earlier this year, Althea obtained a manufacturing license in the country, making it even easier for Aphria to tap into the market since it could simply help coordinate production without having to ship products directly into the country. 

Growing around the globe has been one way that cannabis companies like Aphria have looked to obtain first-mover advantages, securing deals with various companies. In Aphria's case, it could pay off in a big way. Even if Canberra is the only major city in Australia that legalizes pot, it could bring in a lot of pot tourists, not unlike what has happened in Colorado and in other parts of the U.S. that have legalized marijuana. On its own, Canberra's population (around 400,000 people) won't make it a hot market, but it could become a hub for those in the Oceanic region, giving them fairly close access to legal pot.

Although Aphria would love to be able to sell recreational products in the U.S., the Australian market would be a great consolation prize -- and make it very appealing to investors.

A bipartisan medical cannabis bill was introduced to the Wisconsin legislature on Sept. 20 by Sen. Jon Erpenbach, D-Middleton, Rep. Chris Taylor, D-Madison and Sen. Patrick Testin, R-Stevens Point.

According to Testin, the bill would introduce a regulated process on both the patients’ end and production end. The bill requires a recommendation from the doctor as well as a registry system for said patients. On the production end, a licensing system would be put into place for growers, producers and sellers.

For Testin, the medical marijuana issue has had a personal impact on his life as his grandfather, Blair Testin, fought a terminal diagnosis of cancer. Testin said his grandfather made the choice to seek out medical marijuana illegally, and it was the only thing that provided much-needed relief during rounds of chemotherapy as well as helping him to gain back his fleeting appetite.

Testin pointed out that his family’s experience is not unique in any way.

“Conversations I’ve had from individuals from all across the 24 Senate Districts, because my family stories not unique, but stories of people who have used things like CBD oil, who have used other cannabinoid-derived products and eventually get them much needed relief,” Testin said.

Testin said that he is most impacted by stories of veterans who experience vast difficulties once they are home. Testin explained that they are suffering from physical conditions such as chronic pain as well as mental conditions such as PTSD from serving our country.

Testin said that for him, the bill boils down to patient choice. Testin feels that patients should have access to options besides opioids, which are associated with many horror stories among an opioid crisis.

“We’ve got people who have served our country, they’ve gone overseas, they’ve come home with scars that are visible and some that aren’t, and they have to go commit illegal acts and get the medicine that they need,” Testin said.

Testin thought that while recent conversations have started turning the stereotypes surrounding medical cannabis, many physicians remain skeptical. Testin believes that this is due to the fact that there is more research surrounding opioids and other similar drugs.

 Testin said that professionals often fall back on the argument that there is not enough research to back medical cannabis.

Testin, however, does not agree.

“For me, we’ve seen the opiate crisis run rampant throughout the state,” Testin said. “And oftentimes people who get addicted to more dangerous drugs, such as heroin or fentanyl, started off on legally prescribed drugs. So for me, taking a look at the big picture, and based on research, I’ve taken a look at other countries and … science [does] tend to point that medical cannabis can serve as a safer alternative.”

Testin said that one of the challenges to get this bill passed is uncertainties within the Republican party. Testin, while being very public about his support, has found that some of his Republican colleagues are not opposed to the idea of medical cannabis, but are weary of putting a robust framework in place to support it. 

Taylor felt that the bill is a “no brainer” and expressed frustrations with the Republican party’s hesitations, specifically with the Majority Party leadership.

Taylor, however, did have high praises for Testin.

“He is listening to the people of his district and of the state,” Taylor said.

Testin and Taylor both agreed that the implementation of the bill does face challenges. They cited the list of structures that need to be in place. Taylor did not let those challenges shake her confidence.

Taylor explained that this bill is not the first of its kind. Thirty-three other states — including the District of Columbia — have passed medical marijuana legislation. Taylor pointed out that there are states that have moved beyond that, and have passed recreational legislation as well — including Illinois.

“It’s going to take a little bit to get the whole system up and running,” Taylor said. “But 33 other states and the District of Columbia has done it. So, it’s not like we’re breaking new ground here.”

Testin and Taylor felt that if the bill is passed, Wisconsin would be positively impacted, including finding relief for patients as well as their families. With the legalization of medical marijuana, no patient will need to resort to criminal acts in order to get the medication they need, they said.

Testin and Taylor urged the importance of conversation surrounding the medical marijuana issue in order for everyone to gain perspective of those who would benefit. In regards to those who do not support the legalization of medical marijuana, Testin had a message of respect and understanding.

“I respect your opinion, and I understand why you may not support this position,” Testin said. “But I would encourage you to sit down with the people in your district and hear their stories and see how them using this as a form of medicine has directly benefited them.”

Testin and Taylor believe that constituents communicating with their representatives and senators is also vital for this bill. During the referendum last fall, Wisconsin showed widespread support for medical marijuana.

Taylor stressed that this bill would be difficult to pass, and that it needs the support shown in the referendum to be shown again — especially from younger voters.

“We really need the public to speak loudly to their senators and representatives, that this is important, and that they need to get on board and not block this bill,” Taylor said.

The demand for topical cannabis products has risen in the U.S., especially products that contain only cannabidiol (CBD). But what, exactly, does it do for skincare?

Topical cannabis products are ideal for localized relief, and in recent years, sales of these products have significantly grown. Specifically, topical cannabis product sales in Colorado, Oregon, and Washington increased from $14.2 million in 2015 to $26.39 million the next year. Since then, the demand for topical cannabis products has risen in the U.S., especially products that contain only cannabidiol (CBD). What’s the purpose and functionality of CBD’s presence in skincare products though?

Reasons For CBD’s Presence In Topical Cannabis Products

Due to CBD’s plethora of medicinal properties, more people are interested in trying forms of it, especially topical products like lotions, creams, oils, salves, and balms. To achieve localized relief, it’s common for cannabis users to administer topical CBD products to the areas of their body that need the most help. Fortunately, since CBD is non-psychoactive, it can be consumed or applied at anytime during the day or evening without worrying about feeling cerebrally high after usage.

Thus far, it has been found that CBD works to effectively relieve pain, muscle spasms, anxiety, inflammation, epilepsy, skin disorders, different neurological diseases, etc. Due to this cannabinoid’s known medicinal value, last month a CBD-based drug was approved by the U.S. FDA. The drug is called Epidiolex, and its purpose is to help treat epilepsy and seizure disorders. Since the U.S. FDA publicly acknowledged CBD’s medically beneficial profile via the approval of Epidiolex, the usage of CBD is becoming more accepted. This is one reason why CBD is used in different skincare and beauty products to this day.

Functionality Of CBD In Topical Products

So far, CBD is present in countless skincare creams, serums, oils, and gels with the intention of moisturizing the body’s skin, relieving pain caused by different skin disorders, smoothing out wrinkles, and preventing breakouts and acne. How does this cannabinoid really work in skincare products though, and is it truly effective? One board-certified dermatologist, Jeanette Jacknin who specializes in topical cannabinoids used in different skincare products expressed that several studies have discovered CBD’s impact on the body’s endocannabinoid system, which results in the skin often looking rejuvenated and youthful. The study that Jacknin referred to was one that focused on visible signs of aging in mice in which it was found that CBD could effectively slow down the aging process.

Furthermore, Tamás Bíró—professor, department chair of Immunology at the University of Debrecen in Hungary, and director of applied research at Phytecs shared his knowledge on CBD’s value, especially regarding the treatment of skin issues. Bíró mentioned that CBD possesses anti-inflammatory properties, which can be useful in treating conditions like psoriasis, eczema, and acne. Bíró then conducted cell model research in which it was found that CBD inhibited sebum production while also normalizing overactive sebaceous gland cells, which is known as one major cause of acne. Thus, there’s a significant potential in CBD not only treating various skin disorders but also relieving inflamed and dry skin and preventing acne.

The Growth Of Mislabeled Online CBD Products

Now, let’s touch on the growing issue of mislabeled online CBD products. According to a Journal of the American Medical Association study, it was discovered that there’s an extensive amount of mislabeled online CBD products. Bíró expressed the following about this matter, “…at this moment, CBD and marijuana products are totally unregulated and the ingredients in the jar don’t have to be the same as on the packaging because no one is checking.”

Generally, the most effective ways to find the best Cannabidiol companies on the market is to contact the company and inquire about the steps they take to ensure that their products are consistent and accurate to what’s displayed on their label. These companies should willingly release their up-to-date product’s test results. To avoid the time-consuming process of finding credible CBD products, several CBD-based skincare products are listed below thanks to recommendations from different experts within this cannabis sector.

Effective & Credible CBD Skincare Products

Charlotte’s Web Hemp Infused Cream: Natural Partners is one company that upon request is willing to provide an analysis certificate of any product that’s sold. Natural Partners sell CBD products including Charlotte’s Web body cream that includes Vitamin B, Aloe Vera, and shea butter to help soothe, relieve, and heal inflamed skin. Also, the production of Charlotte’s Web products follows the FDA’s good manufacturing practice guidelines to ensure that they produce safe yet high-quality products.

Myaderm CBD Blemish Control: Myaderm’s products aren’t only formulated by pharmacists, but Myaderm also undergo tests and attains results from Botanacor labs to ensure that each batch of CBD products are pure.

Cannuka CBD Calming Eye Balm: Cannuka uses a mixture of hemp-derived CBD isolate, manuka honey, and Vitamin E to deliver moisture and brightness to the skin near the eyes. The CBD isolate that’s used is tested by Botanacor, and in previous tests, it was found that the products are 99.7 percent pure, and they contain zero impurities.

Vertly CBD Infused Lip Balm: Vertly’s lip balm not only relives dry and chapped lips, but it moisturizes them and delivers anti-inflammatory properties. Vertly’s CBD is also extensively tested throughout the production stage by starting at the hemp farm and then when CBD is added into the product. Additionally, Vertly is partnered with Credo, a natural beauty store/spa that follows strict standards for the products they stock. Thus, Vertly’s products are held to the same standards.

CBD Skincare Co.Body Bar: These CBD body bars soothe dry and itchy skin while softening it after usage. According to Scott Rushton, a founding partner of The CBD Skincare Co., the following was stated about product testing: “We have a certificate of analysis that each soap actually contains what we say is in it.” The company even adheres to third-party SC Labs testing to confirm the CBD oil’s purity.

Overall, although there are numerous online CBD skincare products available, it’s crucial to find ones that undergo testing to ensure that they’re safe, pure, and high-quality. Next time you have a breakout, experience dry skin, or a skin issue of yours flares up, don’t worry because CBD can help in more ways than you could imagine.

Just 10% of users consumed a third of all the cannabis used in Canada in 2018, according to a study headed by a Northern Medical Program professor.

Dr. Russ Callaghan and his team looked at data from the 2018 National Cannabis Survey, which assessed patterns of cannabis use among Canadians at least 15 years old.

"The findings are similar to those in the alcohol field, where we have found that a small subgroup of drinkers usually consumes the majority of alcohol in the population," Callaghan said.

The team also found that males reported consuming 60 per cent of the cannabis consumed and males 15-34 years old disproportionately represented in the heaviest-using subgroups.

"This is the first study to identify this pattern, and it may be important for public-health strategies in designing interventions to reduce cannabis-related harms," Callaghan said.

He said future studies will look at characteristics of the heaviest-using cannabis user group, as well as assess how cannabis-related harms are distributed in Canadian society across individuals using different quantities.

In alcohol-related studies have found that five to 10 per cent of drinkers consume a majority of the volume.

There is also some evidence that most of the alcohol-related harms in societies are not found in the group of heaviest-drinking individuals, but rather in the much more numerous low-to-moderate-drinking groups.

The finding has been used as the basis for developing interventions for the entire population rather than on strategies designed for the heaviest-using subgroups.

"At this time, we don't know if the same pattern exists in relation to cannabis as it does for alcohol," Callaghan said.

The team was made up of researchers from UNBC, the University of British Columbia, the Centre for Addiction and Mental Health and the Canadian Institute for Substance Use Research at the University of Victoria.

Certain people in the cannabis business are more prone to carpal tunnel syndrome than others who work in the industry. Just like professions that require their workers to type, cook, or use a cash register all day, marijuana trimmers suffer due to the detailed, repetitive nature of their work.

The carpal tunnel is a thin tube in your wrist, pretty much from elbow to palm of the hand, that houses the median nerve, which becomes inflamed when the syndrome kicks in. Fortunately, cannabis is here to save the day yet again.

The NSAIDs or corticosteroids that are commonly used to treat the pain associated with carpal tunnel have side effects that range from weight gain and easy bruising to osteoporosis. On the other hand (no pun intended) cannabis’ side effects are short term and include an increase in appetite, dry mouth and the potential for giggles. CBD has no side effects at all. However, depending on the severity of your carpal tunnel, you still may need to wear a splint to bed in order to combat the numb, tingling feelings.

Another problem with using the anti-inflammatories like NSAIDs and steroids is that your body builds up a tolerance to them over time. This can lead to stronger painkillers, more discomfort and an increased moodiness. Cannabis is a known anti-inflammatory and though you may build up a tolerance if you’ve never tried it before, it evens out pretty quickly. Let’s say in a matter of weeks, though it certainly varies from person to person.

Cannabis is a natural remedy for inflammation in soft tissues, for nerve damage and for joint pain—all associated with carpal tunnel syndrome. It makes the most sense to use a substance that’s able to relieve the three symptoms of carpal tunnel and that has additional benefits like mood elevation and the alleviation of other aches and pains. If you’re using a topical cannabis product, however, it will be non-psychoactive, but it will work wonders.

THC or CBD Topicals are the best bet for workers who fear drug testing and the products work even better in conjunction with CBD tincture, gummies and/or vape pens. If you’re able to get a bit lifted, though, using an edible or smoking/vaping a good strain for pain, like Girl Scout Cookies, will provide deeper relief.

It’s no fun having a syndrome that makes what you’re used to doing either impossible or limited, but there is relief to be had. Incorporating cannabis into your wellness regime may be the difference between a good day and a bad one, a good night’s rest or an awkward tossing and turning to keep your wrists in position. Cannabis is an excellent medicine, especially when it comes to inflammation, and its potential to help mitigate carpal tunnel syndrome is no small miracle.

Rhode Island employers may be justifiably confused as to whether and how to implement policies concerning their employees’ use of marijuana.  Despite its continued federal classification as a Schedule 1 drug, marijuana has been increasingly legalized by several states.  Dozens of states, including Rhode Island, now allow for the sale and/or use of some form of medical marijuana.  More recently, some states have begun to legalize the drug’s recreational use.  Nine states have passed laws permitting some form of recreational marijuana, including Rhode Island’s New England neighbors of Massachusetts, Vermont, and Maine.  Recent bills introduced in the Rhode Island legislature suggest that Rhode Island is also moving towards legalizing recreational use of marijuana.

Although Rhode Island has not yet legalized recreational marijuana, several components of state government have taken a more permissive view towards the drug.  In a decision that may have broad implications, the Rhode Island Superior Court held that The Edward O. Hawkins and Thomas C. Slater Medical Marijuana Act prohibited an employer from refusing to hire a potential employee solely because that potential employee held a medical marijuana card.  Thereafter, Governor Raimondo signed legislation permitting people to petition courts to expunge criminal records stemming from crimes that have since been decriminalized.  A press release from the Rhode Island General Assembly announcing the law cited the state’s decriminalization of small possessions of marijuana as an impetus for the change.  Additionally, the Rhode Island Department of Health has approved a petition that permits doctors to prescribe medical marijuana to children with autism.

Bills have also been introduced in both the Rhode Island House and Senate regarding recreational use of marijuana.  Senate Bill 2895, entitled “An Act Relating to Food and Drugs – Adult Use of Cannabis Act” would replace prohibition of recreational use of marijuana with regulation and taxation if it is enacted.  In the House, Bill 7883 would submit a non-binding referendum to the state’s electorate regarding the legalization of possession and use of marijuana by persons 21 and older.  Although the Senate Bill has been adjourned indefinitely and the House Bill has been held for further study, their introduction suggests a changing tide with respect to Rhode Island’s official views on marijuana.  Recreational legalization did not move forward this year despite the Governor’s initial proposal, but the state’s 2020 budget includes funding for tripling the number of Rhode Island compassion centers.  Furthermore, Rhode Island Attorney General Peter Neronha recently joined 20 of his fellow state attorneys general and sent a letter to Congress that supports a bill that would prevent the federal government from interfering with state marijuana programs.

Employers should respond to this shifting landscape by revisiting, or considering for the first time, their recreational marijuana policies to minimize their legal risks in the event that Rhode Island ultimately legalizes recreational marijuana.  Depending upon the type of business, is recreational marijuana and drug screening an activity that the employer wants to undertake?  If so, what test results will result in what types of consequences for employees and potential employees?  If an employer conducts business in multiple states with different marijuana regulatory regimes, should they treat employees in those states that permit recreational use differently?  Does an employer want to maintain a strict zero-tolerance policy in accordance with federal laws?  How should off-duty consumption effect employment status?  How does an employer treat recreational marijuana users vis-à-vis medical marijuana card holders?  These are just some of the questions that employers need to address now, and will need to revisit as Rhode Island’s marijuana laws continue to evolve.  

Canada might have been the second country in the world to legalize recreational cannabis, the Netherlands the first to tolerate it, but the state of California takes first place as being the leader in embracing what it truly means to be cannabis-forward. Not only is recreational cannabis legal in California, but it has very quickly matured into a viable and mature consumer market.

Having recently spent some time there, I found the way they have seamlessly integrated cannabis into everyday life incredibly inspiring. In particular, the way in which premium retailers and brands are normalizing a cannabis lifestyle through sophisticated design and experiential culture provides an interesting glimpse into the future for the Canadian industry.

Perhaps this isn’t surprising given California’s long and storied history in cannabis growth and cultivation. Admittedly, they may have had a head start, and Angelinos tend to be leaders in all things cool. From seed to sale, California’s recreational cannabis industry is moving at breakneck speed. Indicators of market maturation like brand and market development, retail dispensaries and lounges, trade shows and events are at a level commensurate with other consumer lifestyle products.

Unlike most Canadian cannabis trade shows where scantily clad women dance on stage or Canadian flags are rendered with pot leaves rather than maple leaves, Hall of Flowers in San Antonio, could easily have been mistaken for a cutting-edge fashion/lifestyle show. The thoughtfully executed experience was located in an outdoor venue comprised of several exhibit halls, outdoor and indoor lounge and café spaces, as well as a dispensary. The juried exhibitors were each provided with the same exhibit structure thereby creating a sense of curation and visual homogeneity.

Whether flower or oil, edibles or topicals — brand is big. Market segmentation is even bigger. Cannabis companies in California are clearly understanding that the key to success in this industry is market differentiation: Highland Pantry targets women 50 plus; Foria, women’s health and wellness; Shrebrinsky’s, the cannabis cannoisseur.

A favourite retail axiom is to simply give the public what they want. We are adults, after all. Product that is locked up behind glass cases and masked branding reminiscent of the Soviet Union, are nowhere to be seen here. Instead, in shops like Medmen, the Apple of cannabis, brands are provided with their own thoughtfully designed space where they can proudly tell their story. In Erba, a cannabis supermarket, brands set up their own shop – in – shops. Micro-dose cannabis pen producer dosist has opened its own experiential wellness boutiques in Abbot Kinney, LA. And last month, cannabis producer and retailer Lowell’s opened the first cannabis consumption lounge in West Hollywood. Apparently, there’s already a 30-day waiting list to get a table.

With an established market of consumers hungry for unique experiences in cannabis, it’s no wonder that LA is also home for the first leg of Weedmaps Museum of Weed. While chalk-full of highly Instagrammable moments, Weedmaps Museum of Weed is not just an immersive experience for your feed, but an educational journey through the complex history of cannabis in the U.S. Increasingly, cannabis consumers are looking for meaningful experiences to explore both the plant and its culture, and those needs are being met in California.

With U.S. federal legalization seemingly only a matter of time, the increasing refinement that the Californian cannabis industry is demonstrating is likely to become a nationwide thing. And if this is a sign of things to come when legislation relaxes and an industry begins to mature, then Canada, look out.