Village Farms - Slow and Steady Little doubt that VFF valuation is out of sync with some of the high flying high profile players in Canada. That is understandable given their JV with Emerald Health is very much misunderstood, and I am not even sure I understand it, but if they had gone it alone, the share price would be substantially higher than where it sits today.
When you consider the billion $ market caps of WEED, ACB, ACH etc. One could argue they are either extraordinarily overpriced or VFF is hugely undervalued or is it? VFF has billed itself as a low-cost grower, but their positioning as a low-cost grower looking to commoditize out the market sooner rather than later has IMO accounted for the substantial discount. So they are rightfully being penalized for not playing the hype and noise and get no respect for being the only player with over 30 years growing experience that sets them far apart from the competition who are learning on the fly. How many of these high flyers have already had crop failures?
Back to VFF, no doubt they will be a long-term player in the Canadian market, but if they are going to get a higher profile, they must articulate a plan and outline a strategy that is going to make them attractive to larger players and I am not referring to the over-hyped/valued Canadian Cannabis Stocks, I am referring to the large food and beverage (alcohol) players who are sure to lose market share to marijuana-infused products. Just think about the impact non-caloric infused beer, wine, drinks are going to have on buyers? There has been a lot of talk and speculation on US decriminalization given President Trumps evolving views on Marijuana. This is becoming pervasive across the US and now that Canada is going legal on Oct 17th, 2018, it is only a matter of time before the US follows suit. I do not see full legalization in Trump's first term, but I do see it in 2020-24 for sure. In the meantime, it will be decriminalised, and states will be moving quickly on the medical marijuana approvals while taking a go-slow approach to full legalization. Colorado is the poster child for all other States to follow and its just a matter of time before other States see the benefits of Cannabis from a medical, black market and tax perspective. It is a no-brainer.
So let's talk VFF and their 5.5M sq ft of growing capacity in the ideal climate for growing high-quality Cannabis, Texas. The Texas legislature is going to decriminalize possession, and I am confident they will approve medical marijuana. What is not known is the timeline for full legalization, but when it happens, and it will, VFF will not have a $300M market cap, it will be multiples. If you want an option on US Cannabis legalization, VFF is your free ride option.