As we get nearer to legalization Aleafia is a highly speculative investment. Late to the game, it has been playing “catch up” since its inception. They’ve done lots in a very condensed period of time. But much more remains to be done before they can be considered a viable industry player. And much of those plans are premised on many ifs and whens.
It remains to be seen how and when their planned joint venture into retail cannabis with the Serruya family pans out. Under the brand name One Leaf, the plan calls upon the retail expertise of the Serruyas and their Second Cup franchises to create an “instant” retail presence. By all accounts, this is increasingly looking unlikely, as the Ontario government’s new plan is that LPs AND THEIR AFFILIATES will only be allowed to control ONE retail outlet. In addition, many reports state online retail will probably make up a large portion of this segment. I’ve yet to read anything regarding Aleafia’s efforts into this area.
A lot is being made of their application to be listed on NASDAQ, with many believing this will lead to a surge in share price. First, there is no guarantee they will be accepted. And secondly, even a listing, while increasing their public profile and investor reach, will only lead to success if the business fundamentals are in place and operating.
Much of Aleafia’s business plans are future looking with the large majority not coming “online” until 2019 or 2020. Because of their late start, facilities and crop production remain in early development. And while it’s now widely acknowledged current LPs will not be able to initially meet the expected increase in demand, will Aleafia’s even later increased production capabilities cause it to lose market share that can never be recovered?
Certainly, every Canadian cannabis business faces many questions and challenges. And those won't suddenly disappear once legalization occurs in a couple of weeks. The above are simply questions I ask myself about Aleafia and how it’s going to find its place in this new business world. And while Aleafia is highly speculative, if it does what it’s planning to do, and does it right, and timely, I’m confident it’ll be highly rewarding for early investors.