A new lucrative partnership between two large Canadian companies in the marijuana-related sector is turning heads in the industry.
Marijuana stocks companies Tetra Bio Pharma (TBPMF) and Neptune Technologies and Bioresources (NASDAQ: NEPT) have formed an alliance.
Both Canadian companies shifted focus toward cannabis products in recent years. In turn, each company’s marijuana stocks market cap has risen over the years to exceed $100 million from their beginnings in penny stocks.
The announcement came Monday, after which Neptune’s marijuana stocks shares rose nearly 14% by the end of the day.
The potential for choosing these marijuana stocks to buy is exciting given the collaboration between Tetra, a leading biopharmaceutical company focused on research and development of cannabinoid-based products in the health care sectors, and Neptune, a wellness product specialist. The companies came together for the purpose of developing and commercializing purified CBD oil to sell in veterinary markets for the treatment of pain and inflammation in pets, as well as natural health markets.
Tetra and Neptune turn the heads of those seeking marijuana stocks to invest in during a recent merger announcement.
In the words of Tetra CEO, Bernard Fortier, “We are proud to partner with a company like Neptune. Their know-how in extraction, performed in a state of the art GMP facility, is a great asset to have for the cannabis medicinal/pharma oil market. This combined to Tetra’s expertise in the development of products for the prescription drug and pharma retail market, makes this partnership truly one of a kind. Leveraging our complementary expertise in research, regulatory affairs, science, formulation, and delivery forms, we intend to commercialize these new products in preparation of the forthcoming retail cannabis market in Canada, and a RX veterinary North American market.”
Sharing a Canadian base has no doubt bolstered the share values for both marijuana stocks companies. With Canada poised on the brink of an open retail market for adult use cannabis, location is strategically vital. In the meantime, cannabis-based products are permitted for a few limited uses in veterinary practices in the U.S. and Canada.
Given the lucrative potential of this business partnership, investors in marijuana stocks must remain aware of several cautionary flags.
With the hot trajectory of marijuana stocks over the last year, often following regulatory changes for cannabis products in the U.S. and Canada, it can be hard for investors not to be swept along in the current. Newfound opportunities are continually being created for companies in the industry and it may benefit investors to employ traditional financial analysis as they evaluate these potential investments.
In the case of Neptune and Tetra, both companies are out to prove themselves and have much space to do so, particularly the former. Revenues reported in the recent fiscal quarter by Neptune Technologies showed only $6.7 million in revenue, with losses continuing on the record. Neptune may have healthy profit margins, nearing 20%, yet, it remains a far cry from profitable – even cash-flow-neutral – operations. The announcement of partnership was a step in a positive direction, but, investors would do well to remember that Neptune may have a number of quarters before producing results when looking for marijuana stocks to buy.
(For more recommendations on the best marijuana stocks to invest in, read The Best Marijuana Stocks for Long Term Investing).