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The Canadian cannabis sector remains one of the hottest opportunities for cannabis investors and we are bullish on the sector ahead of the legalization of recreational marijuana.

Over the last year, the Canadian cannabis industry has recorded incredible growth and we expect this trend to continue as these companies continue to invest in and capitalize on new opportunities.

Today, we have highlighted 5 cannabis stocks that are levered to the Canadian cannabis market and think that investors need to keep a close eye on these opportunities.

EVIO: Announces a Major Milestone

As new legal marijuana markets continue to open and existing markets continue to mature, demand for testing services continues to increase. This is a trend we expect to become more prominent over the coming quarters and have been closely monitoring this opportunity.

One of the companies capitalizing on this emerging opportunity is EVIO, Inc. (EVIO) and we are bullish on the company’s leverage to North American market. From California to Canada, recreational marijuana has become a major topic and EVIO is capitalizing on both of these burgeoning markets.

On Friday, EVIO received a favorable response from the market after announcing the establishment of a new wholly-owned subsidiary, EVIO Canada, to serve as the parent company for the company’s Canadian operations.

Concurrently, EVIO Canada entered a binding agreement to acquire 50% of Keystone Labs Inc., a privately-held, independent contract-testing laboratory specializing in quality testing for regulated industries located in Edmonton, Alberta. Founded in 2005, Keystone Labs provides a full array of high quality analytical and microbiological analyses to pharmaceutical, biotechnological, medical device and natural health product industries according to Good Manufacturing Practices (GMP). We are bullish on this acquisition which is expected to close on or about May 1st.

From a valuation and execution standpoint, we find EVIO to be an attractive opportunity and investors need to monitor this cannabis stock. As the marijuana testing company continues to execute, fundamentals will continue to improve, and we think the market is significantly under-appreciating this opportunity.

Choom: A High-Quality Execution Story

M&A activity continues to accelerate within the Canadian cannabis industry and we are favorable on this trend. Over the next year, we expect this trend to become more significant and continue to monitor the companies benefiting from this.

Last week, Choom (CHOO.CN) (CHOOF) recorded mixed movements after entering a definitive agreement to acquire Island Green Cure Ltd, an advanced-stage applicant under Health Canada's ACMPR. Island Green Cure is at the Confirmation of Readiness Stage in the application process and are favorable on this acquisition.

When it comes to event-driven catalysts for Canadian cannabis companies, two of the most significant opportunities are the granting of a license from Health Canada (i.e. cultivation, sales, cannabis oils, and dealer’s license) and an increasing amount of fully funded production capacity.

Over the last year, we have seen several Canadian cannabis stocks breakout and record significant gains after making an announcement pertaining to these topics. We are favorable on the potential catalysts for Choom following this acquisition and will keep an eye on how the shares continue to move.

Based on the price movements recorded by Choom’s peers, we expect the shares to trade considerably higher after being granted a license from Health Canada. This is a significant opportunity to capitalize on an event driven catalyst and one that investors do not want to miss.

Isodiol: Positioned for Huge Growth After Closing a Major Acquisition

Isodiol International (ISOL.CN) (ISOLF) is one of the Canadian cannabis companies capitalizing on the recent uptick in M&A transactions and we are favorable on the moves the Global Bioactive CBD innovator has made.

Last week, Isodiol announced a significant milestone and completed the acquisition of Biosynthesis Pharma Group (BSPG) and commenced construction on a state-of-the-art processing facility in China for the extraction of cannabinoids and terpenes from organic hemp. In 2017, Isodiol entered a agreement to acquire BSPG, which produces cannabinoids through proprietary extraction methodologies that are used in pharmaceutical applications.

This acquisition is massive and will allow Isodiol to produce significantly more product. On a daily basis, the new facility can process more than 15 metric tons of hemp biomass for the extraction of cannabinoids and terpenes for use in medical, nutraceutical, food, and cosmetic industries. Isodiol believes that this will facility has the highest capacity for processing CBD in the world and expects the facility to be completed by the first quarter of 2019.

Isodiol is focused on capitalizing on a global opportunity and we are bullish on the company’s leverage to several burgeoning markets. In 2018, Isodiol has been under considerable pressure and the shares have fallen approx. 30% during this time. We think this weakness is overdone and see considerable upside to current levels. Isodiol has been nothing short of an execution story and this is a stock that investors need to watch. 

Harvest One: An Undervalued Canadian Cannabis Firm

There has never been a more important time to focus on cannabis companies that are trading at attractive valuations, represent acquisition targets, or are underappreciated by Wall Street. Finding companies that possess these traits is important if you want to discover a stock that has significant potential but has not made its run yet.

One company focused on capitalizing on this opportunity is Harvest One (HVT.V) (HRVOF). The company operates a unique and attractive business model that controls operations across the entire cannabis value chain through three business units. We are favorable on this structure and believe that the divisions can create value for each other as well as improve the value proposition of the entire company.

One of the most exciting aspects of Harvest One is the company’s Vancouver Island-based subsidiary, United Greeneries which was granted a ACMPR Cultivation and Sales license from Health Canada. This was a significant milestone as it allows the company to cultivate and sell medical cannabis in a federally regulated environment. Another exciting aspect of the story is the Switzerland-based subsidiary, Satipharm which is a pioneer in the development and distribution of medical cannabis based pharmaceutical and nutraceutical products.

So far this year, shares of Harvest One have fallen more than 50% from its January highs and we are monitoring the shares for a bottom. With a market cap that is below $150 million, Harvest One represents an attractive acquisition target for any large licensed producer that is looking to increase production capacity and acquire strategic assets.

Emerald Health: Aims to be Leading Low-Cost Global Cannabis Leader

When it comes to Canadian licensed producers, investors want to focus on companies that can produce high-quality cannabis at a low-cost, are led by an elite management team, have secured strategic partners, have strong a balance sheet (fully funded production capacity), and are executing on growth initiatives. 

One company that meets this criteria is Emerald Health Therapeutics (EMH.V) (EMHTF), which has been nothing short of an execution story. The licensed producer meets the criteria for a long-term investment opportunity and investors need to keep an eye on this one. The shares have come off its mid-April highs and we remain bullish on the shares after Emerald’s joint venture (JV) with Village Farms was granted a cultivation license.

The JV owns a 1.1 million sq. ft. cannabis growing facility and is conservatively projected to produce 75,000 kg of quality cannabis annually at full production. The JV immediately started producing cannabis following the transfer of existing starter plants and expects to receive its ACMPR sales license by July 1st. Village Farms and Emerald aim for the JV to be one of the most consistent and reliable global suppliers of cannabis to wholesalers, distributors and retailers, with the goal to be the low-cost producer at an all-in production cost of less than $1.00 per gram at full production.

We are bullish on this relationship and believe that Emerald Health represents an attractive opportunity long-term opportunity and see significant upside to current levels. The company is working towards becoming a global leader and has secured strategic partners to help this make a reality.