While Christmas rally appears to be coming early on for retail sector stocks, the cannabis sector seems to be losing its effervescence in the month of December post a striking rally witnessed in the month of November. Below are a few stocks that could withstand the prevailing challenges while some that seem to feel the heat in terms of volatility and investors taking profits.
 

Stocks’ Details
 

AusCann Group Holdings Ltd (ASX: AC8)

Received final operational license: The securities of AusCann Group were placed in a trading halt session state at the request of the Company, pending the release of an announcement by the company. The stock surged up 12.5% on resuming trading on December 07, 2017. The group has now got the final manufacturing license for its operations through its strategic partner, Tasmanian Alkaloids, for the joint manufacture and supply of products in Australia. The group will also import its genetics for planting in Tasmania in early 2018. AC8 is the only ASX Listed entity to hold all the required licences in Australia to cultivate, harvest, manufacture and distribute final dose form of cannabinoid medicines. In the immediate term, AusCann will source and supply cannabinoid medicines to Australian patients from its Canadian strategic partner Canopy Growth. In last six months, the stock has moved up 64%, as at December 06, 2017, which is still slightly lower than street’s expectations.
 

Milestone Summary (Source: Company Reports)
 
Given the potential for further upside, we recommend a “Hold” at the current price of $0.765
 

Creso Pharma Ltd (ASX: CPH)

Expanding footprint: Creso Pharma is an Australia-based company engaged in developing cannabis and hemp-derived therapeutic-grade Nutraceuticals and Medical Cannabis products with a range of applications in both human and animal health. Creso Pharma has obtained the necessary approvals to market its hemp based nutraceutical cannaQIX®10 in Switzerland (having a target market size estimated to be CHF 30-40 million for 2022 (~AUD 40-52 million)) as a Food Supplement complaint with Swiss Federal food law. Further, a commercialisation agreement has been signed with a Swiss Pharma Company, Doetsch Grether for marketing and distribution of CPH’s products. The group had recently signed a binding letter of intent with LGC Capital Ltd and Baltic Beer Company Ltd, which will create a bespoke portfolio of unique cannabis and hemp deprived alcoholic and non-alcoholic beverages and is also planning to expand its products offerings into the growing edible and lifestyle markets. It is expected that the first test batches of the terpene beer will reach selected markets in April/May 2018 with commercial sales expected to be ready for shipments in June/July 2018. Creso Pharma has recently reported for oversubscription of placement to issue shares at a price of $1.10 per share. CPH stock has risen 101% in last six months, as at December 06, 2017 but has plunged about 15% in last five days owing to some profit booking. However, given the potential and a promising future, we recommend to “Hold” on the stock at the current market price of $0.925
 

Investment Summary (Source: Company Reports)
 

Stemcell United Ltd (ASX: SCU)

Trading on volatility: Stemcell is engaged in sourcing, producing, marketing and selling of Resina Draco Blume and other medicines. It is a biotechnology company, which focuses on the growth, reproduction, culture and extraction of stem cells for medicinal, health and beauty applications using its technology. In addition, the company has started exploring opportunities in the medical cannabis as a new product line. During the year, the group recorded a loss of $3,631,079 against a revenue of $31,619. The majority of the loss was due to an impairment of $2,791,874 of the group’s intangible asset. The stock has moved up 55.6% in last six months, as at December 06, 2017 but fell 30% in last five days. The stock was again up 4.7% on December 07, 2017. We recommend a “Hold” on the stock at the current price of$0.044
 

MMJ PhytoTech Ltd (ASX: MMJ)

Updates from Harvest One: MMJ Phytotech aims to commercialise medical cannabis and high value cannabis-based therapeutics to the rapidly growing international market with regulated medical cannabis laws. The Company controls operations across the entire medical cannabis value chain through its 59% interest in TSX-V listed Harvest One Cannabis Inc. Harvest One has lately upsized its previously announced bought short form prospectus offering of convertible debenture units to $17.5 million. Meanwhile, MMJ has been continually focussing on cost-effective, fast-to-market oral prescription drugs. Further, MMJ’s first clinical trial highlighted the favourable bioavailability of the capsules in comparison to Sativex – a market-leading, commercially available cannabinoid oral spray produced by GW Pharmaceuticals. Last month, the group advised that Dr Daphna Heffetz, Chief Executive Officer of the Company’s 100%-owned Israeli-based subsidiary PhytoTech Therapeutics Limited has tendered her resignation. Given the sector driven volatility and MMJ’s stock dropping by about 14% in last five days (as at December 06, 2017), we put an “Expensive” recommendation at the current price of $0.420
 

The Hydroponics Company Ltd (ASX: THC)

License Agreement with National Access Cannabis: THC is at the forefront of developing a leading, diversified worldwide cannabis business, focused on the development and delivery of medicinal cannabis, manufacturing and distribution of hydroponics equipment, materials and nutrients. Recently, THC entered into a License Agreement with National Access Cannabis (NAC), Canada’s best practices leader in delivering secure, safe and responsible access to legal medicinal cannabis, for transfer of technology and IP for 10 years in Australia and New Zealand. The group has also evaluated optimal paths to market medicinal cannabis in Australia. THC has outlined a target to achieve revenue of greater than A$15m and NPAT of A$3m by 2018.Less than a week after signing an agreement with European supplier Endoca, THC reported it has teamed up with Israeli medicinal cannabis company BOL Pharma to supply BOL Pharma’s cannabinoid products in Australia.
 
 
Timeline chart (Source: Company Reports)
 
The Hydroponics Company’s stock price has moved up 153.45% in last six months (as at December 06, 2017) and was up 8% on December 07, 2017. Given the run-up, we put an “Expensive” recommendation at the current price of $0.795
 

Zelda Therapeutics Ltd (ASX: ZLD)

Approval for first medicinal cannabis trial: Zelda has an exclusive access to comprehensive patient data that has demonstrated therapeutic success using cannabinoid-based treatments and the group has leveraged this to commence pre-clinical research in breast, brain and pancreatic cancer, with plans to commence human clinical trials along with a number of other disorders including insomnia and dermatological conditions such as eczema. They also have access to USA and Chilean patient data. In November, the group received the approval for first medicinal cannabis trial for insomnia from the Therapeutics Goods Administration and Human Research Ethics Committee (HREC), and this helped in boosting the stock price.ZLD stock was up 37% in last one month but lost 17% in last five days (as at December 06, 2017) and was down 9% on December 07, 2017. It is to be noted that the recent movement is also related to ZLD responding to ASX price query and stating that the approval on protocol was sought in June 2017 while health approvals and final approval after multiple amendments were granted at the end of November 2017 and the group has not faltered on the ASX listing rules. Given the sentiment, we put a “Hold” recommendation on the stock at the current price of $0.091

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