Canopy Rivers Jumps As Portfolio Partners Ink Supply Deal

Benjamin A. Smith

This morning, Canopy Rivers Corp (CVE:RIV) displayed why its business model lends itself well to visibility advantages few companies can match.

Before the bell, Canopy Rivers announced that portfolio partners PharmHouse Inc. and TerrAscend Canada Inc.—a wholly-owned subsidiary of TerrAscend Corp.—have entered into an offtake agreement to supply cannabis products from 20% of the flowering space at its 1.3 million square foot greenhouse facility until December 31, 2021. The companies are two of eleven current members of Canopy Rivers’ portfolio roster, each at various stages of corporate development. PharmHouse is currently awaiting its cultivation licence with Health Canada, before commencing plantation under its newly built greenhouse infrastructure under glass in Leamington, Ontario.

The big takeaway for RIV, however, is not necessarily the news itself. It’s the fact that Canopy Rivers has demonstrated the power of collaboration and integration within its portfolio to generate positive optics directly benefiting its share price.

Unlike most publicos that generate individual news flow extraneously, Canopy Rivers has the influence to arrange synergistic material activities between portfolio partners, generating positive de facto news flow organically. Although the company is not a direct benefactor of the agreement between TerrAscend Canada and PharmHouse, it’s able to reap the rewards such positive news flow entails. Call it prosperity by association, irrespective of the longer term benefits to RIV’s portfolio such a deal provides.

The company itself is overtly attempting to communicate this fact with investors. In the final presser paragraph, the company states, “Fostering opportunities for collaboration throughout the Canopy Rivers ecosystem is a key element and differentiator in the Company’s value proposition. This Agreement is another great example of the portfolio partners leveraging their respective areas of specialization within the cannabis value chain…”

Bruce Linton, Chairman and Acting CEO of Canopy Rivers, chimed-in with a similar narrative, stating:

“We are seeing promising synergies develop within the Canopy Rivers portfolio. We set out to create an ecosystem of complementary cannabis companies that can strategically support one another.”

We certainly agree, as today’s news overtly manifested itself in the stock price—especially off the open.

RIV jumped ↑10.52% (6.30/share) within the first 10 minutes of morning trade, before settling back towards the $6.00/share range. Meanwhile, direct benefactor TerrAscend Corp. continues to power higher, showing no signs its blue sky breakout is slowing down. Shares of the biopharmaceutical and wellness company are currently up $2.28 to $12.84/share (↑21.59%). TerrAscend shares have now surged ↑77.10% since we profiled the company on October 3rd.

While today’s announcement is primarily about PharmHouse and TerrAscend Corp., the big takeaway is that Canopy Rivers benefits whenever its portfolio partners enter the news cycle. That’s an under-appreciated advantage most individual companies cannot bank on, and ensures Canopy Rivers is never far away from anyone’s radar.

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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