StockGuru2k17 wrote: Baby Monster Cannabis Corp
You will forgive me if I lead with an example of a company in which I own a substantial number of shares, but it is precisely the enormous potential inherent in this asset package that is the reason I involved myself with this company in the first place.
Cannacure Corporation is a late stage private applicant who expects to receive their cultivation license at some point in Q2 this year. What differentiates Cannacure from other late stage applicants are two things: 1) It has executed an option to purchase a 3.4 million square foot greenhouse facility in Leamington, On, in an area proven to be a great place to produce cannabis in a greenhouse. Aphria has been producing cannabis here for the last two years, and with a valuation currently above CA$2 billion, the proof is very much in the regional pudding. Leamington is Canada’s southernmost locale, and therefore, receives an abundance of light relative to more northerly jurisdictions.
The second leg in the Cannacure stool that will support the future valuation of this unique company’s value proposition is its possession of a 122,000 square foot former GMP pharma facility that once produced dozens of SKU’s of generic drugs for export to the United States. The company is in discussion with financial partners to finance the refurbishment of the GMP pharma plant back to GMP status.
But in this day and age, what good is a plant to produce consumer products derived from cannabinoids without a channel into which to sell them? Cannacure may have quite the ace up its sleeve in that respect, but you’re going to have to wait until the company becomes a publicly traded entity to see what that is.
Nobody can say with any certainty what the supply-demand scenario is going to look like post-recreational. Certainly the trend, vapid and conflicted predictions of many investment bank analysts notwithstanding, is toward a tremendous oversupply.
This is a reality most ACMPR producers prefer not to acknowledge. But we already know that there is an affinity for optimistic accounting among LP’s. That habit will continue until the spec trade is finished with the sector and the balance sheets detyermine valuation. But don’t worry, we’re still at least a year away from that ugly reality.
But bashing LP accounting aside, my point is that its the LPs with sales channels that are going to be the last ones standing. Fortune 500 entry into the space as demonstrated by Constellation Brands Inc. (NYSE:STZ) in their purchase of 10 percent of Canopy is a case in point.
Producing a million kilograms of marijuana is one thing – selling it reliably and consistently in the upcoming price war environment will turn out to be another thing entirely.
In many respects, we are talking about a commodity crop here that will ultimately be subject to commodity pricing pressures.