RE:Interesting Press ReleaseACBMADEMERICH wrote: Why did TGOD have to issue this press release? Seems fishy to me as they had to know the market would react negatively. I don’t see the point of issuing such negativity without knowing and stying what the alternative solution is going to be. Sounds like financing may have been available but theyvweren’tvprepared to accept the terms. Something is going on for sure. This is too strange. For sure there is more to follow.
Good points. Cam B visits 48 North, picks a few buds and leaves. Largest outdoor organic grow op. ACB sells all interest except for warrants in TGOD. Both "organic" companies stock has dropped significantly , 48 is in a holding pattern. BMO after the ACB dumping of shares, bought 30% of those shares in a block at $3 , the rest were scooped up by hedge management funds. Important to note ACB bought Whistler organic , product at that time successfully selling at $13 per gram - in the Cayman Islands and Australia.
What caused ACB to miss guidance was what was predicted long ago - overcapacity. Unable to sell all they produced, They dumped $20 milllion worth of unsold cannabis at a steep discount onto the wholesale cannabis market before financials , then had to compete in market with that low cost product that bore different company`s labels , although it was ACB pot - the issue of overcapacity could have been addressed beforehand and had regulations in place to allow so many kgs to be produced by each LP to level the playing field , creating a fair and equitable marketplace. Instead, they allowed the sector to run amok, allowing millions upon millions of dollars to be pilfered from those who invested hard earned money into a system that was meant to wind up in the position we find ourselves in now.
HC has issued over 100 licenses , most of those have not reached full capacity , as there is no point in doing so , as it will result in more unsold product dumped to wholesale , ultimately driving retail prices down. The MM`s realize that the time has come to put pressure on the sector- a cleansing if you will. Ultimately, insolvencies will occur by eoy , and continue into 2020 imo. The larger firms that are able to produce hundreds of thousands of kgs per year will imo hold on and do anything to stay above the waterline using any facility needed to stay afloat. Some smaller LP`s will fail . Some will survive as a micro brewery type operation - a smaller, but loyal following , others will survive as a lesser known LP but have a demand for quality product as opposed to mass produced product.
It comes as no surprise that this action in this sector was inevitable. With BMO extending a $300 million dollar credit facility to ACB , then buying block shares of TGOD only to see their investment go from $3 per share to where it is now , then a few hours ago making a prediction of $0.75 cents - unsure if that is CDN or USD. This makes no sense at all. As well, TGOD did indeed have credit facilities in place, but those facilities were were pulled when it was made known TGOD would be close to the end of their financial runway when Valleyfield is completed, and wanted a backstop as production ramped up. The agreement was that TGOD would have access to those credit facilities only when construction was completed , and sales into a market were occuring. TGOD does owe some type of explanation as they seemingly went from about $300 milllion in cash on hand last year at this time, now supposedly down to $60 million - still enough to finish Valleyfield , but close to needing a boost until operations have ramped up.
As OP mentioned, there is more to the story - can`t see a takeover, as capacity is not needed. What is needed is less capacity, or less Lp`s for most of these companies to be profitable. Until then, the volatility will more than likely continue until some are driven to insolvency, some selling off un needed assets - greenhouses to vegetable farmers for example , and having to write down debt as we recently saw with STZ and CGC.
Before anyone flames, I am invested here. It is a painful tumultuous time. Remember, it is not a loss unless you sell. With the short positions here , there will soon come a time they will need to cover. Hoping for that and for some type of reprieve from the pain, and relief from the outright pillaging and plundering this sector has seen. Remember that at Christmas time when people can`t buy gifts for their kids. So, to short interests here and everywhere : You have made a ton of money in this sector and the pain is felt by real people, with names, addresses and families to raise and feed , put through school and have lost a good chunk of their kid`s resps, their personal savings, retirement funds - they believed in something that held promise. That promise was taken from them setting some back years of their lives. Sure, money has no conscience. But since you have taken millions of dollars from good people, do one good thing with your earnings. Give to food banks, donate to Children`s charities, drop some toys off at a toy drive. It`s all tax deductible.
We can all get along if we can help each other - at least some of the time.
Good luck to You all. God Bless.
VM