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Lexaria Bioscience Corp

Buds & Duds: Cannabis stocks continue to slump but Lexaria Bioscience shares shine on CBD beverage deal

Also on the move were Martello Technologies, CannTrust and TILT Holdings

cbd in lab
Lexaria's DehydraTECH technology can be applied to foods, beverages, oral suspensions, tablets and capsules

Cannabis stocks were faced with yet another tough day on Wednesday, after weeks of losses across North American markets.

The North American Marijuana Index, which tracks the top cannabis stocks in the US and Canada, dropped 2% to 225.5 points on Wednesday. The Horizons Marijuana Life Sciences Index ETF was down 0.7% to C$17.70. The OTCQX Cannabis Index inched up 0.2% at 716.3 points.

Buds

Despite the overall lags, a number of stocks shone on Wednesday.

Lexaria Bioscience Corp (OTCMKTS:LXRP) (CSE:LXX) shares were on the rise after the drug delivery platform signed a five-year deal through its subsidiary Lexaria Hemp Corp with Nic's Beverages Ltd.

Shares were up 2% at C$1.04 in Toronto and up 2.4% at US$0.79 in New York. 

The company will provide its patented DehydraTECHTM technology to Nic's Beverages Ltd for making its CBD-infused beverages to be produced and sold in the US.

"We are currently in discussions with major wholesale houses and are looking to be in the market by the first of October," said Nic's Beverages CEO John Goodpasture. "DehydraTECH technology is perfect in allowing us to deliver CBD from hemp oil with zero impact on our cold brewed coffee's outstanding aroma or flavour. Nic's is extremely excited about our new product lines and our continued growth with Lexaria."

READ: Lexaria Bioscience inks CBD beverage license agreement in US with Nic's Beverages

Another stock gaining ground Wednesday was Martello Technologies Group Inc (CVE:MTLO) (OTCMKTS:DRKOF) up 21.8% at C$0.95 in Toronto and up 39.3% at US$0.71.

The firm has seen significant gains this week after recent rumours the Canadian technology company would benefit from former Canopy Growth Corp (NYSE:CGC) (TSE:WEED) co-founder Bruce Linton, who appears to be spending more time working on Martello. Linton is currently the co-chairman of Kanata, Ontario-based Martello and was its CEO till 2017.

Investors connected the dots after Linton appeared on multiple TV interviews sporting a Martello T-shirt to talk about his departure from Canopy, the company he founded, which is now the largest marijuana company in the world.

In an interview with Proactive, Martello Technologies' CEO John Proctor said he welcomed Linton's continued involvement in Martello.

WATCH: Canopy Growth ex-CEO shines a new-found spotlight on Martello Technologies

"The first thing he did was shine a spotlight on us," said Proctor. "We're this little tiny company hiding in the corner that's suddenly got the spotlight on us and people got to look at us, lift the lid and say 'hey, we think you're a bit undervalued'..."

"Since then, more people have looked at us and have recognized the potential. We've done all the right things. If you look at our two co-chairs, one is Bruce, the other is Terry Matthews, the guy who founded Mitel and Newbridge and Wales' first billionaire. There's a lot of horsepower on the board and on the executive team here as well."

READ: Canopy Growth’s loss is Martello Technologies gain as Bruce Linton’s focus shifts

Duds

Leading the laggard list Wednesday was CannTrust Holdings Inc (TSE:TRST) (OTCMKTS:CNTTF), whose shares continued to drop after the firm was dinged by Health Canada for growing cannabis in five grow rooms that didn't have a licence to operate at its Pelham, Ontario facility. Health Canada is currently investigating. 

Shares dropped 11.8% at C$4.17 in Toronto and were down 11.7% at US$3.18 in New York.

Additionally, analysts from two major Canadian banks downgraded the stock, dramatically lowering price targets as a result of the news. Royal Bank of Canada downgraded the stock from outperform to perform, reducing the target price to C$5 from C$13 and Bank of Montreal analysts downgraded CannTrust from outperform to speculative, slashing the target price to C$6, from C$11. 

Other stocks losing ground Wednesday included TILT Holdings Inc (CSE:TILT) (OTCMKTS:SVVTF), which has had a tough few months after it recorded a US$500 million impairment charge in its 2018 annual results in early May.

The stock dropped 6.1% at US$0.69 in New York.

On Wednesday, the firm released a note to shareholders, saying it is in discussion with discussions with financing groups. 

"In terms of our financing initiatives, I can confirm that we have been in discussions with multiple interested financing parties in the past month, and I look forward to making an announcement of our go-forward capital partner(s) in the coming weeks," noted interim CEO Mark Scatterday, who took on the post less than two months ago. 

Scatterday said the cannabis company is working to fast-track the business towards profitability.

Contact Katie Lewis at [email protected]

Quick facts: Lexaria Bioscience Corp

Price: $0.95

Market: CSE
Market Cap: $74.71 m
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