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Buds & Duds: Cannabis stocks start slow but Nextleaf picks up steam on Health Canada processing license win

Nextleaf received its Standard Processing License from Health Canada, which will allow it to begin production of its intellectual property portfolio, centered around the industrial extraction of cannabis oils

cannabis leaf
Also on the move were XPhyto, Isodiol, Tilray and CannTrust

Cannabis stocks had a slow start to Monday, with shares broadly flat across US and Canadian markets. 

The North American Marijuana Index, which tracks the top cannabis stocks in the US and Canada, was down 0.8% at 189.9 points. Elsewhere, the Horizons Marijuana Life Sciences Index ETF dropped 1.4% at C$14.99, while the OTCQX Cannabis Index inched up 0.1% at 687.5 points.

Buds

Nextleaf Solutions Ltd (CSE:OILS) (OTCMKTS:OILFF) shares were on the rise Monday after news that the Vancouver-based company received its Standard Processing License from Health Canada, which will allow it to begin production of its intellectual property portfolio. 

The company has four patents issued and 25 pending, which are centered around the industrial extraction of cannabis oils and the purification of cannabinoids, such as tetrahydrocannabinol (THC) and cannabidiol (CBD). 

Shares of Nextleaf jumped 8.2% at US$0.53 in New York, up 3.1% at C$0.66 in Canadian trading. 

"Our vision is to develop technology to revolutionize extraction throughput, yield, and purity to enhance cannabis oil economics across the globe," CEO Paul Pedersen said in a statement. "We are beyond excited to begin commercializing OILS' intellectual property portfolio for industrial-scale extraction and purification of CBD and THC."

READ: Nextleaf wins Health Canada Standard Processing License, plans to begin cannabis oil extraction

Also gaining Monday was XPhyto Therapeutics Corp (CSE:XPHY), which announced its German subsidiary Bunker Pflanzenextrakte GmbH has signed an exclusive cannabis research and development agreement with the Technical University of Munich.

Shares were up 1% at C$1.35 in Toronto. 

The research agreement will target various approaches for the use of cannabis plants as well as testing the chemical-physical compatibility of cannabis materials with various food and beverages.

"Given the commercial potential for CBD-infused beverages in Europe, XPhyto is very pleased to have secured such a strong development partner right here in Bavaria," XPhyto VP of European Corporate Development and Bunker Managing Director Robert Barth said in a statement. "We are excited to work together and we are particularly looking forward to the development of cannabis-infused fermented beverages and sports drinks."

READ: XPhyto Therapeutics' Germany subsidiary inks R&D agreement with a Munich university and brewery

Also gaining Monday was CBD manufacturer Isodiol International Inc (CSE:ISOL) (OTCMKTS:ISOLF) up 4.4% at C$0.36 on no new news. 

Duds

Tilray Inc shares were up in premarket but lagged midday Monday, despite news that the cannabis producer has signed a merger pact with its largest shareholder, Privateer Holdings. 

Tilray shares were down 4.7% at US$30.54.  

The move extends the lock-up period and means Tilray will issue up to 75 million Tilray shares to Privateer's equity holders while canceling 75 million shares owned by Privateer. The shares represent 77% of Tilray’s total shares outstanding and will be released over an extended two-year period. 

“We appreciate the long-term confidence that Privateer has in the Tilray business and we look forward to having their investors as part of our stockholder base,” said Tilray CFO Mark Castaneda. "We believe this transaction will give Tilray greater control and operating flexibility while allowing us to effectively manage our public float."

READ: Tilray signs deal to extend shares sale lock-up in acquisition of largest shareholder

The regulatory scandal surrounding CannTrust Holdings Inc (TSE:TRST) (NYSE:CTST) has continued to spiral after news that the company knowingly procured cannabis seeds from the black market and added them to its legal grow operation, flouting Health Canada rules.

The firm recently laid off 20% of its employees, around 180 people, as it aims to “restructure” the company’s workforce given its recent regulatory challenges. 

“We have made the extremely difficult decision to restructure our workforce to reflect the current requirements of our business,” said Robert Marcovitch, CannTrust’s interim chief executive in a statement late last week. “These changes also position the company to better serve our patients and customers with high quality, innovative products in the future,” he added.

Shares of CannTrust dropped 4.3% at C$2.23 on Monday midday. 

Contact Katie Lewis at [email protected]

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