Abattis Bioceuticals (
CSE:C.ATT,
Stock Forum) is going to run a private placement offering to bring in $2 million at $1 per share, according to a news release Thursday.
According to the company, ‘Proceeds from this offering will be used for acquisitions, joint venture opportunities, research and development, working capital, general corporate purposes and in identifying opportunities to expand the Phytalab.com brand and to set up or acquire labs in States where marijuana is legalized.’
Okay, cool. So let’s talk about Abbatis.
This is a company in the early stages of an aggregator business plan that hopes to get themselves involved in every part of the medical marijuana business, from growing to research to processing and sales, with several partnership deals,
share swaps,
acquisitions and
LOIs out there right now. It owns the Abattis Biocube Green Grow Systems IP, and the Nature’s Juice organic feed products line, and is putting together a Canada-based lab for future research and development.
I haven’t written much about Abattis because to date because, like Creative Edge (
OTO:FITX,
Stock Forum) and Enertopia (
CSE:C.TOP,
Stock Forum), several weed stocks have a business plan to get a small piece of a lot of pies, and simply investing in weed companies is exactly what you people reading this are doing. There’s little need to invest in a company so it can invest in other companies.
That said, Abattis and FITX are increasingly demonstrating that they’re more interested in vertical integration of medical marijuana than owning a dot.bong investment fund or filling out a Yahtzee card of joint ventures.
Let’s break it down: If you own retail weed outlets, you know your retail weed products will have somewhere to be sold. If you produce retail products, you know your processing plant will do good business. If you’ve got a healthy processing demand, you’ve got somewhere to send your crop.
And if you can toss in fertilizer products and grow systems, and research and development of new strains and products, it’s all one big perpetual motion machine.
But here’s the thing: while a vertical integrator with all cylinders firing can be a beautiful thing, the downside of vertical integration is it only takes one faltering piece to bring the rest to a screaming halt.
And, right now, there are a lot of questions around due diligence of acquisition targets and partners (as Creative Edge found out when it seemingly correctly
threw Growlife under the bus recently), and whether companies currently being given the twice over by Health Canada will get a license, and what the rules might be going forward regarding exports, distribution channels, even local municipal zoning bylaws.
Vertically integrating in a distinctly immature sector is a risky business. But it can have massive rewards if done well. Tweed is a monster player in Canada through little more than the agriculture side of things; If a single company can ‘Tweed’ research, grow systems, fertilizers, distribution, even doctor referrals, there’s big money to be had.
The object of the exercise is for a listed company to become the Canadian Tire of cannabis or the Procter and Gamble of pot products and, because these two companies are fast out of the gate, they have first stab at building a brand that will become a household name.
Or, at the least, a mom’s basement name. Or a treehouse-with-Pink-Floyd-posters name.
Speaking of big names,
Tweed (
TSX:V.TWD,
Stock Forum) has brought in a
bought financing deal worth potentially $19.5 million for 'facility expansions and general corporate purposes', at $3.20 per share.
The company, which is taking orders, backfilling with old-system-bought product, and generally dominating the scene with nearly 200,000 sq. ft of grow space, has no shortage of capital and a lot of US-based investor interest.
But with companies like the soon-to-be-public Bedrocan, not to mention a host of smaller players, nipping at their heels, any move to stay liquid and plan for growth isn't silly thinking. Investors may fear the stock dilution coming from the deal, but with only 35.1 million shares out there, there’s a lot of room for future financing.
Though Tweed had definitely become less volatile in the weeks since it launched, I still think because of its first mover advantage and US penetration, anything under $4 is value for the stock – but I also wonder about the long term viability of grow-only plays as US exports become increasingly likely and home growers continue to enjoy the current grey licensing period.
Speaking of viability –
Growlife (
OTO:PHOT,
Stock Forum) put out a somewhat cryptic newser today that hints at the expectation of a large increase in investor contact in the days ahead, as it has opened a shareholder hotline “to address increases in shareholder questions.”
“The additional staffing will allow GrowLife to better provide available information to investors in coming days when call volume is expected to be higher than usual following the Company's temporary suspension from trading.”
Shareholder Support Hotline:
(866) 632-3111, or:
shareholdersupport@growlifeinc.com
Growlife isn’t promising more information than what has already emerged, but they “Want to have more resources available as more information emerges,” according to
CEO Sterling Scott.
Affinor Resources (
CSE:C.AFI,
Stock Forum) has
appointed sports optometrist and glaucoma expert Dr. Alan Boyco to its board of directors, adding
another starting slugger to its
deep bench of
bigbrains. I may start referring to it as Academia Resources.
Global Hemp Group (
CSE:C.GHG,
Stock Forum) stock was up today, again, following
my deep dive into the silliness of ignoring large scale industrial hemp as an investment option.
Today the company announced it has
started trading on the over-the-counter market in the US, opening up investor potential south of the border and leading to a 30% jump, to go along with the 30% jump yesterday.
I can’t take all the credit for the $0.085 to $0.13 spike in a little over 24 hours, but I will say a bunch of you fast moving bastards owe me a steak lunch.
The company will now be listed under the ticker GBHPF, along with its Canadian and German listings.
UPPERS:
Global Hemp Group led the day with a 30% jump (
Prominex Resources rose 40% on supremely low volume, so they don’t count).
Papuan Precious Metals (
TSX:V.PAU,
Stock Forum) jumped 18%, continuing its daily daytrader bounce, and
Spearmint Resource(TSX:V.SRJ,
Stock Forum) came back from yesterday’s plop to rise 14.2%.
I wish Papuan would change its name already. Every time I see V.PAU, my mind goes back to this one-hit 80's band.
I don’t generally play on the purchasing end of this sector because it restricts what I can write about (I own Chlormet, for example, which is trade-halted and news-free, and lately I’ve picked up some Papuan Precious, which I’ve since only trash-talked), but I tried to buy
Southbridge Resources (
CSE:C.SOU,
Stock Forum) again today, with no luck.
Tried at $0.45, no takers. Someone picked some up at $0.50, up 13.6%, so I upped my offer to that price, but too late, nothing left. At $0.52 my bid sat like a redheaded stepchild at Christmas lunch, unloved, unwanted and unfulfilled, staring at the $0.60 asks and wishing someone would just come show some love.
This is the third time I’ve tried to buy Southbridge but
NOBODY IS SELLING unless you’re prepared to post the kind of bid that sees the company posting “we have no idea why our stock is selling so high” news releases the following day.
If you own Southbridge stock, I think I speak for everyone else when I say, quit being a dick and share your treasure.
DOWNERS:
Jourdan Resources (
TSX:V.JOR,
Stock Forum) had a bad day today, losing 25% of its stock price on a 1c dip.
Someone who owned some
Terra Firma Resources (
TSX:V.TFR,
Stock Forum) decided they really wanted to get rid of their holding, so they did the only thing you can do in that situation and hit the bid, dropping the share price by 25% in the process.
Satori Resources (
TSX:V.BUD,
Stock Forum) lost 14.2%, and
Supreme Pharmaceuticals (
CSE:C.SL,
Stock Forum) dropped 10%.
Speaking of Supreme, a little inside Stockhouse info for my regular readers: The
Supreme Pharmaceuticals Bullboards are the most active over the last 24 hours, just ahead of Fission Uranium and Poet Technologies. Not necessarily an indicator of upward share movement, but a good indicator of investor interest levels. Next best weed stock on the active list is Tweed, just outside the top ten.
Most of the down weed stocks today didn’t really see a lot of volume, so I wouldn’t get too worked up about the amount of red on our watchlist.
IN BRIEF:
Premier Brands (
OTO:BRND,
Stock Forum) has revealed a little more detail about their weedco plans. They’ll launch
two initiatives: Joint Ventures, in which they’ll look for joint ventures to work on new products, and New Cannabis Products, in which they’ll make new products, “including nutraceuticals, beverages and personal care products.” Stock down 36% on the news because, yawn.
The stock price of US-based
Vape Holdings (OTO:VAPE) has been getting killed lately, down from $24.25 a month ago to $2.36 yesterday. Today it doubled on the back of news the company had $100k in sales in April, with $250k of back orders, sitting at a happy $4.72. To me, still over-priced.
THE MOVERS:
BONUS CONTENT:
WINNERS AND LOSERS SINCE WE’VE BEEN COVERING THEM:
SYMBOL
V.SEW |
START
0.025 |
NOW
0.340 |
UP/DOWN
1,260.00% |
| V.EEC |
0.025 |
0.250 |
900.00% |
| C.SOU |
0.05 |
0.500 |
900.00% |
| V.MSC.H |
0.07 |
0.230 |
228.57% |
| V.MGW |
0.025 |
0.070 |
180.00% |
| V.PAU |
0.025 |
0.065 |
160.00% |
| V.CMT |
0.29 |
0.465 |
60.34% |
| V.WER |
0.035 |
0.050 |
42.86% |
| V.NSP |
0.22 |
0.300 |
36.36% |
| C.GHG |
0.105 |
0.130 |
23.81% |
| V.GSW |
0.14 |
0.080 |
-42.86% |
| V.AWH |
0.14 |
0.080 |
-42.86% |
| C.ATT |
2.10 |
1.140 |
-45.71% |
| V.TFR |
0.03 |
0.015 |
-50.00% |
| EAPH |
0.07 |
0.033 |
-52.86% |
| ROSV |
0.10 |
0.043 |
-57.00% |
| V.PFE |
0.19 |
0.070 |
-63.16% |
| C.TOP |
0.92 |
0.335 |
-63.59% |
| PMXO |
0.21 |
0.028 |
-86.71% |
| BRND |
0.02 |
0.002 |
-88.00% |
Check back daily for the latest news in this sector.
For more stories on this sector, see our
Medical Marijuana section.
Follow me on Twitter at @ChrisParry
Send tips, news, suggestions to chris(dot)parry(at)stockhouse(dot)com