Medical Marijuana Update: Tap, tap.. Is this thing on?

It’s been a while since I’ve penned one of these babies, mostly because NOTHING IS HAPPENING in the world of weed. Well, there’s stuff, but it’s not earth-shattering stuff, especially while oil is down under $40 and the Chinese are treating their public companies like Donald Trump treats women and the Dow has ebola.

So let’s work our way through the pack and see who’s doing what now in the dot bong world.

TWEED (TSXV:TWD, Forum) - Long my whipping boy, the Tweedsters have been getting their act well together of late, moving into cannabis extraction quickly, opening seven new drying rooms, and making great use of their BEDROCAN (TSXV:BED, Forum) acquisition. In fact, so quickly is the company expanding into new areas now that the board has decided to rename Tweed Marijuana Inc. as Canopy Growth Corporation, while retaining the well-known Tweed brand. Latest financials land on August 31 and, if previous quarters are anything to go by, should show strong growth.

I take back nothing I said about Tweed V1.0 and its propensity for screwupability. But the shit has now passed through the fan and is now coming together on the other side.

Considering how poor things were back when the stock was a regular $2.50 hitter, and how much better the company is now while it’s hovering around $1.50, if you ever had a notion to get in on TWD, this is a good starting point, in my opinion. If it hits $1.30, I won’t be able to hold off.

Speaking of Bedrocan, they got their domestic production facility fully licensed yesterday, including 34 vegetative and growing rooms, shortly before they announced the Tweed purchase has been approved by shareholders. So, like I said, these guys are getting it done.

PHARMACAN (TSXV:MJN, Forum) has had a rough time of it over the last year. A company that, curtly, told me ‘we will have no trouble building a market for our stock’ nearly a year back has, frankly, had a lot of trouble building a market for its stock, with the share price now at half where it began and volume trailing off to nothing.

But it too is getting things moving. The company took out $750,000 of bridge financing in June to keep things rolling and today announced it will be selling up to 80% of In The Zone to New World Cannabis for $3.5 million (with another million due if it hits certain milestones), which will sufficiently ease the financials, repay the mortgage taken out to perform work on the facility earlier in the year, and show a result Pharmacan can point to when negotiating with potential acquisitions..

With the current political climate, I’m not sure of the value of running a fund that aggregates licensees and applicants, but should the Conservatives lose the next general election and Health Canada start doing its job of licensing once more, Pharmacan will be in good shape moving forward.

ORGANIGRAM (TSXV:OGI, Forum) - Word on the street a few weeks back was OGI was being shopped for a takeover by METTRUM (TSXV:MT, Forum), and for a nice premium. I got word on that pretty early in the process and was politely asked to keep schtum on the deal, but I’m told by an insider now that the buyers look unlikely to complete. “No chance in hell” was how it was described to me, but hey, third party, you never know.

This won’t be the first time Organigram management has come close to an exit, only for it to fade as things got real, but the important thing to note here is just how eager management is to exit.

Looking at the Organigram chart for the last 12 months, it’s clear the company has put next to no effort into building a market for its stock. CEO Dennis Arsenault told anyone who would listen, way way way back when he first joined the company that, and I quote, “I don’t give a shit about share price.” History has proved that true as the stock is as low as it’s ever been, and almost two thirds below the PP price leading into its public listing. That’s no mean feat, considering it opened at a 3x multiple to that financing price and was, at least back then, considered one of ‘the big three’.

I went to the wall for Organigram and called them, way back then, ‘my favourite play’. But they haven’t delivered on that early promise and, frankly, I regret the endorsement.

Fast forward to now and the stock chart looks like a relief map of Alberta rolling east to Manitoba.

Will the company grow its userbase over time? Maybe. But one thing I know is they won’t do a damned thing to grow their investor base, and that’s a shame because at one time it was my favourite, a business that to me looked like they were going to do it right on all fronts and show Tweed what was up.

Organigram IR man Bret t Allan seems happy though, being as he reportedly turned up to Ryan Fletcher’s memorial service in shades and a Hawaiian shirt, talking about what a great year he’s having.

Last time I saw Allan was at a weed conference in Las Vegas, where Jason ‘The Wolf of Weed Street’ Spatafora came looking for him at the Organigram booth and loudly vowed to drag OGI through the shit publicly if it didn’t pay his long outstanding bill for marketing services.

I should probably mention OGI owes money to at least one other marketing company, and doesn’t return my calls. And, just as full disclosure, they backed out of another promised marketing deal with Stockhouse months ago. And now they’re facing a lawsuit. So yeah. Totally a buy.

ROSS’ GOLD (OTO:GHIL, Forum) is so far from a company getting its act together, it’s like they’re actively engaging in outsider performance art.

The company, helmed by Olympic snowboarder Ross Rebagliati, released a press release yesterday claiming it was sorry for the downtime users were experiencing on its website but that it was completely unprepared for the spikes in usage it had received after products were seen in a couple of YouTube clips.

YouTube clips like this one:



Credit where it’s due – I’m no bong aficionado or anything, but that’s a pretty stonking piece of glass. Or at least it would be, if it didn’t have Rebagliati’s name all over it. Talk about a buzzkill…

So how much traffic did it take to crash the Ross’ Gold website? A million uniques? 200,000 consecutive users? Maybe 5,000? Nope.

“1500+ per day,” according to the news release, which is about how much traffic we get on Stockhouse.com every five minutes.

Seriously, Ross? 1500 people hit your site in a day and it dies? What was it hosted on, Windows 95? Are the pictures done in ASCII art? Was Compuserve too expensive?

Dude, Squarespace will give you a site for $20 per month and I’m pretty sure you’ll be able to get to a million uniques before you have to upgrade. I don’t know what your current Geocities account is capable of but, really, if you’re going to run a public company, you need to have a website that doesn’t fall over dead whenever a family of four land on it.

The new website might be really nice, but I have no idea because you can’t get near it unless you confirm your age using Facebook. No thanks.

Stepping back, it’s clear what GHIL were doing with this news release. The whole thing was obviously an excuse to point people to the YouTube clips, which wouldn’t have been important enough to bother with a news release, so they’ve come up with the whole ‘apology for our massive traffic surge’ to justify it. Ross’ Gold is famous for their bizarre press releases and this is hardly the weirdest. There was the one where you could win an afternoon with Ross smoking a bowl. The one where they said their brand would be the Greygoose of weed. The one from over a year ago where the company said it would move to full reporting (any day now). The famous reality TV show pitch… Bless them, every one.

INMED PHARMACEUTICALS (CSE:IN, Forum) is bringing aboard Paul Brennan to the Board of Directors. You might recall him from such hits as being Senior VP of Biz Dev at Arbutus Pharma/Tekmira, or as CEO of Altair Therapeutics. Before that? AstraZeneca.

To paraphrase the Wu Tang Clan, InMed’s board ain’t nothin’ ta f**k wit’.

I’d tell you more about InMed but they don’t write, they don’t call, they don’t invite me out for Friday patio beers anymore..

NEXT GEN METALS (CSE:N, Forum) = Not dead yet.

Got a call from Harry Barr, he of the famously pioneering GreenRush conference, which caught a bit of a wave during the whole ‘mining to weed’ era last year. Barr’s not done yet, and is planning another conference soon…

AFFINOR GROWERS (CSE:AFI, Forum) - Remember them? Well, turns out all the things I said about them weren’t incorrect and the share price is now down to $0.07 (down from the $0.50 range back when their fans were coming at me like spider monkeys, swearing I was wrong about the company while management was dumping its COO in a jealousy rage and collecting dead LOIs).

Still waiting on those amazing strawberries, but I’m not going to lie, there does actually seem to be something moving at Casa Brusatore, if recent news is anything to go by.

They convinced esteemed scientific pointyhead Hyder Khoja to roll over from InMed as the group’s new Chief Science Officer, they got former Loblaws head of produce procurement Gary Lloyd on the board, and now they’re raising half a million to finance future endeavours, at $0.05 with a $0.15 warrant.

Negatives? This is a bad price to be raising money at. The company badly needs an actual product out there and there’s a certain amount of toxicity left behind around anything Brusatore touches (CSE:GNM, Forum), (CSE:ATT, Forum). But if the plan was to do nothing at all other than continue to pay themselves, bringing Khoja and Lloyd on would appear to go against that plan.

Could Bruiser Brusatore finally be putting down the guitar and getting a company together? Keep an eye on him, Bosslady.

NATURALLY SPLENDID (TSXV:NSP, Forum) stock continues to languish as the company continues its push into pet products (which are a hard sell to the markets) and not deliver on its plan to establish plentiful deals with third parties that could use their tech and facilities.

Scratch that – I’m sure there are plentiful deals on the way, but only one has been pushed public and it just wasn’t what the market was expecting.

Right now, NSP is crazy oversold and, as an investor, I’ve been adding to my stake on the reg. Too many big brains on that board, too much potential for it to stay at half the price of what it was when all it owned was the Natera hemp products line. Now you’ve got a big fat facility, Natera kicking on, a deal with Laguna Blends to provide formulations for its hemp coffee ($100k already banked), and the deal with POS Biosciences to pillage its customer base.

What’s missing? Execution.

But one company that is quickly executing is LAGUNA BLENDS (CSE:GAD, Forum), which didn’t really exist a day before their deal with NSP went public but has quickly formulated a ridiculously great hemp protein coffee product that I will stock in my kitchen, without any shadow of doubt.

I drink coffee, but more for the energy benefit than the taste. It’s bitter and (if you get it at Starbucks) burnt and most people drown it in sugar and cream and pumpkin spice to make it palatable.

Laguna’s product is not that, at all, and it’s not even close to ‘hempy’. It’s buttery, if anything. It’s smooth and tasty, easy to drink and with the hemp protein addition, plays right into a whole host of diets (such as Four Hour Body, which I’m a big fan of).

I do a protein shake in the morning, then a coffee. If I can combine the two, big win, and with the Laguna product you can do exactly that.

And just to be sure I’m not an idiot with no taste, I swiped a bunch of product samples from their office a few weeks back and shared them around to friends and family. Every person has said they’d buy it.

Well they’re going to get their chance – Laguna is going to be using multi-level marketing to quickly get out to a global audience, and they’ve already signed up a swathe of big movers in the MLM scene, who have existing sales networks into the tens of thousands, to make it happen.

Don’t like MLM? Hey, not a fan of people who invite me over for dinner and spend all night trying to sell me Tupperware either, but some people are. In fact, in the developing world, MLM is how people who live in areas without steady food supply do business. Not everyone has a Safeway at the end of the block. It’s why Avon has thrived for decades. It’s why Nature’s Sunshine did $350m+ in global revenue last year. It’s why Amway just. Won’t. Go away, and does $47b in global revenue. It’s why Herbalife keeps earning billions even though it’s constantly being accused of being a pyramid scheme.

There are people selling legal services through MLM platforms (LegalShield!), cutlery (Vector!), phones (CAN!), custom jewelry (Origami Owl!) and beauty products (OriFlame! $1.6b last year!) – it’s time to understand that this is a thing, and with retail dying a hard death, people are increasingly getting their products sold directly to them, either through the companies themselves or sales agents.



I get clothes sent to me each month from Five Four Club. I get healthy snacks from SPUD. I get socks from the night market – ten pairs for $8! I used to get my razors from the drug store, now I get them from Dollar Shave Club.



So if you have a great product, and you can sell it directly to me each month without my needing to go face a grocery store, and you’re going to cut me a deal on price for doing so, I’m in. I’m so freaking in.

Laguna is finalizing their packaging now, and they’ll be producing shortly, with sales set to begin around September. The deal is done. It’s happening. I’ve sat at the board table and poked the model and it works. And they’re making it happen on the marketing side:



On the MLM support side, they’re going above and beyond. Normally, when you sign up to sell for an MLM company, they send you a presentation deck and maybe some documentation, then you jump on a conference call with 8000 people and it’s a mess.

This is what Laguna has been developing – a Second Life-style virtual environment where sellers can do their business, get information, gather for updates, sign up… it’s pretty wild.



This is great news for Naturally Splendid, which will do well out of the deal on the supply side, and has the ability to scale up production if it goes global, fast.

What will happen if it does go global? Well, let’s look at some comparables; Kannaway sells hemp products through MLM, started last year, and is doing around $10m in global revenue today. Organo Gold has been at it for five years selling gourmet beverages, and it does $214m in global revenue. Laguna is selling a gourmet hemp beverage, so I’m prepared to assume it will sit somewhere in the middle pretty quickly. When it trades, it’ll be doing so in a shell that currently has a $5.1m market cap and a tight 16m share structure.

It’s not trading yet, but I think I’ll be buying in when it does, depending on how things land at the open. I look at it as a backdoor NSP buy, and since I already own NSP, why not collect ‘em all?

Full disclosure: Neither Stockhouse nor myself are engaged in any commercial way with Laguna, though NSP is a Stockhouse client and the Laguna folks did invite me out to watch some tennis last week wherein they bought me a beer. If that’s a conflict, then consider me conflicted – and sunburned.

This may well change in the weeks ahead as the company nears debut and decides to get its message out more widely but, as of now, I’m high on this company because of the opportunity it presents, and the opportunity alone. Do your own due diligence.

CHLORMET (CSE:PUF, Forum) is a company I haven’t talked about for a long time, mostly because they’re just in that dead zone of waiting for Health Canada to do its job and address their MMPR application already. But a recent AGM removed the ‘interim’ word from Yari Nieken’s CEO title and approved all the usual stuff, so it appears the people in the know are happy with how things are being handled.

Volume is non-existent. Market cap is criminally low. But if they get their license… boom, to the moon.

TRUE LEAF (CSE:MJ, Forum) got a Canada wide distribution deal in place for their hemp pet chews, which is good business and moved the share price up nicely. In fact, it’s been a three-bagger in the last month.

But the better publicity may have come from a story summarizing the current state of the medical marijuana industry by the Vancouver Sun’s award-winning uber-journalist Lori Culbert, in which True Leaf’s Mike Harcourt is richly quoted.

The story, “Medical Marijuana No Gold Rush“ digs pretty deep into the three areas of weed in Canada right now – the black market, the grey and the legal side, and how Health Canada’s set-up is fueling the wrong end of that roster.

I had the pleasure of working alongside Lori for five years at the Sun and her extensive rolodex made this a very interesting story when one considers the number of ex-Premiers, police chiefs and even ex-Prime Ministers who have made their way into the business, only to be stymied by Health Canada and the Reefer Madness-touting Conservative government.

SATORI RESOURCES (TSXV:BUD, Forum) consolidated their shares on a 10:1 and raised $170k for working capital and ‘next steps’ as it looks for something to jump into. Bruce Reid is now the CEO, on a no-salary basis, as the company restructures. With a tight 6.1m shares out, this may be the most positive Satori news release in some time.

SUPREME PHARMACEUTICALS (CSE:SL, Forum) also ran a financing recently, this one raising $600k, extensively from locals who want to see the facility running and employing, and contractors who feel like the facility will kick outrageous ass when it’s allowed to.

The money puts Supreme in a much better position, as it won’t run out of cash any time soon, but at present market cap, it’s really at facility re-sale prices. If John “T-1000” Fowler decided to grow micro-greens and forego the MMPR altogether, it’s a good deal at the current share price. If he decided to just sell the facility to someone else who wanted to use it for veggies, he’d get his money back, more than likely. However, if Health Canada (again) does what it has been told to do and actually inspect facilities for licensing, Supreme stock would be an ultra-value buy the moment an inspector shows up.

The company has done everything to be expected of it. All that it stopping them from doing business is bureaucracy.

I’m not holding, but I’m watching it very closely. It was a stupid great deal at $0.20; at $0.13 with an election coming up? Wow.

The worst press release of the past month, in my opinion, was the boner that came out of NUTRITIONAL HIGH (CSE:EAT, Forum) when the National Hockey League, as expected, asked that they change their ticker symbol to something that doesn’t involve the letters NHL.

Realistically, the new C.EAT ticker is better than the C.NHL ticker so the company should have just sucked it up and maybe said ‘we’re making the change to avoid confusion.’ Instead, they took a weird passive aggressive line that didn’t impart wisdom and maturity.

Nutritional High CEO David Posner said in the release, titled ‘National Hockey League sees room for just one grinder’: ”We're honored to follow in the footsteps of the Nordiques, who were also asked to change their name upon their move from Canada to Colorado. The Avalanche won the Stanley Cup that year, so we figured why fight a winning formula? While we don't believe anyone would confuse our respective products, we decided to make the symbol change to avoid possible legal costs, despite being on solid legal ground.”

Posner posted an update in late July saying the company was moving into an outsourced supply deal to create chocolates and candies with CBD for market faster than initially planned, and stated that the company’s Pueblo, Colorado facility is progressing as expected, which is all good stuff but has been ignored by investors.

C.EAT *really* wants to get into the extracts business in Canada and has been jostling for position, and the market would really like to see something positive on that front but, right now, the catalyst to send Nutritional High stock back where it came from is missing.

If it were me? I’d be posting pictures of the Pueblo progress. The difference between a plan and reality is imagery that demonstrates the latter. If that should come, watch C.EAT quickly surpass the NHL in user interest.

MATICA (CSE:MMJ, Forum) reports its graphite property in Nevada, right nearby the Tesla Gigafactory, is showing 3-7% flake graphite, confirming that what you’d want to be found next to Tesla is in actual fact being found. Meanwhile, they’re waiting for Health Canada..

Of course, that graphite property was spun off a few months ago… right?

Wrong. Matica has decided to cancel the spin-off and keep that graphite play in house, adding diversity to a stock that, to this point, has been ultra-reliant on Health Canada playing nice. Good move for investors, and a stock that needed a boost.

LIFESTYLE DELIVERY SYSTEMS (CSE:LDS, Forum), AKA: Cannastrips, has no news, but I’m expecting quarterly results any day now. Have heard from a couple of companies that are talking to them about licensing deals but very interested to see how that looks in real life.

Also expecting news from Invictus MD Strategies (CSE:IMH, Forum), which has been so quiet lately, volume has dried up to ‘what the guys in the office are buying during their lunchbreak.’ I own some and have been topping up regularly. Numbers will make it go, I think.

And that’s all. Not bad for a story that started out as ‘there is no news to speak of’, eh?

Oh wait – one other thing, though not weed related: Athletic apparel play RYU (CSE:RYU, Forum) is nearing the moment where it has long promised it will be relaunching its lines, and a new flagship store just a stone’s throw from the Kitsilano Lululemon store.

Here’s where it gets interesting: RYU has halted trading, and has been halted for two days now. I’m told they’re set to announce a ‘big partnership’, though I have no details to share beyond that, other than the fact that company stock ripped upwards just before the halt.

MEZZI (TSXV:MZI, Forum), another Vancouver fashion play that has been on the move in both directions share price-wise recently, told me a few weeks back that they’re making some moves in new verticals, with one of the possibilities mentioned being athletic apparel.

Mezzi king Keir Reynolds has previously been involved with RYU in a loose way, and he holds the reins on an endorsement machine that has previously brought in big name celebrities like Kim Kardashian, Cristiano Ronaldo and the like to companies he was involved with.

An RYU designed line, produced by Mezzi, endorsed by a mega athlete, would blow the minds of investors of both companies. Total speculation here and I could be completely wrong, but that’s my prediction. Watch this space.

--Chris Parry
https://www.twitter.com/chrisparry

FULL DISCLOSURE: Supreme, Mezzi, RYU, True Leaf, InMed, Geonovus, Naturally Splendid, Invictus MD Strategies, and Nutritional High are all Stockhouse Publishing marketing clients. The author holds shares in Naturally Splendid, Invictus, and Lifestyle Delivery Systems, and is now a consultant with LDS.