It’s time to take a step back from the medical marijuana investment ruck and see what’s happening in weed on a grand scale. I’ve spoken to just about every company in the space worth a nickel or more in the last few weeks and, rather than focus on news, I figured it might be a nice change to see where a big basket of companies are at in their plans. From the top:
BEDROCAN (
TSX:V.BED,
Stock Forum): Met with CEO Marc Wayne this week and the company admits it has been slow to get its story out. A desire to not be ‘promotional’ and let real business dictate the public perception of the firm is laudable, but as I suggested to Wayne, if you’re not telling your story, your competitors will tell it for you. Expect the company to start an active communications push to let investors know what they’re doing, starting with plans to do business in other countries now opening up their medical marijuana markets. Bedrocan has around 1300 active patients, has been selling consistently for months, has an import license that others don’t have access to and a Dutch parent that will ensure quality, consistency, and streamlined operations when their plant is ready to go at year’s end. Right now, I’d say Bedrocan is not only among the most important players in the space, but ridiculously undervalued and soon to be swinging elbows.
ORGANIGRAM (
TSX:V.OGI,
Stock Forum): The big push for OGI right now is into the US investor space, as the company puts some of that fat financing cash into growth. I know they’re looking to scale up quickly and perhaps even into a new vertical or so, but low volume has been the thing sliding the stock of late. When there’s no volume, every time a small holder sells the stock drops, but it’s important to remember that it works both ways – any positive news should see a decent upward spike, and that’s likely soon. With so much stock tied up for the next few months, getting a little daytrading happening will be important for the company, and another financing round will likely come soon to inspire holders to stay long. I went in on that last financing and I’m not going anywhere.
TWEED (
TSX:V.TWD,
Stock Forum): I’ve said plenty about Tweed’s failings in the past, but I’m hearing about changes afoot at the board level that don’t inspire confidence in what’s next, and I’m not referring to bigwig Chuck Rifici’s resignation last week – although his ‘
effective immediately’ one-line resignation with no explanation should be reason in itself to wonder. Tweed’s stock price continues to hold reasonably steady so there are plenty of true believers out there. There are eleven strains for sale at Tweed right now, which is a big step up from months of no stock and returned product. Lowest price option sits at $5 per gram, and contains no CBD at all. Something to consider: All MMPR’s are one year deals that have to be renewed annually, and Tweed’s first license is coming up for renewal in the months ahead. Health Canada has said they’ll be harder to keep than get – Is Tweed ready?
SUPREME PHARMACEUTICALS (
CSE:C.SL,
Stock Forum): There have long been conspiracy theories going around that I’m working for Supreme (those theories largely come from supporters of a stock that I think is trash, so grain of salt), which is kind of silly since they’re one of the few companies that hasn’t been a Stockhouse marketing client to date, beyond a one-off trial earlier in the year. That changes today; Supreme has been gearing up for big things and now feels it has a story to tell and, frankly, it’s a doozy. Expect details in this space soon, but I’ve seen communications from a large brokerage that recently sat with company management and came away beyond impressed. They’re calling it best of breed. Whatever your preconceptions about Supreme’s plan to grow a lot of weed and sell it cheap, they’ve built the absolute A-list of everything in their Ontario facility and had Health Canada twice ask to come out for final inspection. The company has refused those requests because it has more improvements it wants to make so it comes out of the gate sprinting, not limping. Full disclosure: My consulting partner has been doing some work for Supreme for the last few weeks and tells me with full confidence they’re doing everything the right way, and with people who are all business. The final tranche of the company private placement has been moved forward to a Friday closing because the stock is on a run. If you’re not in today, you’re not getting in.
WILDFLOWER (
CSE:C.SUN,
Stock Forum): Remember that whole thing where Wildflower’s neighbours south of Parksville BC were up in arms at the prospect of a weedco at their idyllic burb?
That. Protest. Has. Died. I sat with management a few times over the last few weeks to talk about it and it appears several factors have come in to play. 1) The protest never really had grounds to be taken seriously as the company had sat with the regional government and got its ducks in a row legally early on. Their land is in the ALR and the government says marijuana cultivation is agricultural, so... 2) When the regional board told residents they’d write a letter to Health Canada objecting to the project, they opened themselves up to legal action from the company, which has invested heavily in the area based on the board and staff previously having told them they were clear to do so. The region clearly cannot afford a legal action and the company, while not threatening one (yet) is making it clear they’re assessing damages should things stall. 3) Tilray, one of Canada’s leaders in the weedspace, lives 8km away and had a job fair in the last few weeks that was heavily attended, while another two facilities are moving forward around nearby Nanaimo so clearly the area digs the sector. I guess there’s a 4) The only business expertise on Vancouver island over the last 50 years that came anywhere close to profitable has been the growth of weed. Objecting to weed from the island is like objecting to salmon from the Fraser River. The company will need to demand closure from the regional board so they can move forward confidently, but expect Wildflower to fly hard once the whole ‘we’re scared the neighbours will stop it’ story disappears from broker thinking.
T-BIRD PHARMA (
TSX:V.TPI,
Stock Forum): Another undervalued LP, T-Bird made a mistake early on in focusing on the square footage of their current grow area, rather than what they can grow into. With investors hearing ‘6k sq. ft’ while other companies are talking about square footage in the hundreds of thousands, the story got a little harshed. But most companies are using far less grow space than they have licensed, and some of the top players are producing revenue from T-Bird like area metrics. There is a
real steady hand at the helm on this one – they’re keeping costs low, scaling up responsibly and not chasing share price but, by god, watch this space. As a long play and a value play (and a tech play, just quietly), I like how this one is now forming.
GEONOVUS (
CSE:C.GNM,
Stock Forum): Lots of people asking me about this one and, as I have a consulting arrangement with them, I’m in a good position to tell what’s up. The elevator pitch here is, they own Uruguay. If a company wants to do research on weed or industrial hemp that can’t be done in North America due to rules on THC content and/or possessing product, Uruguay’s recently deregulated scene allows GeoNovus to handle that research in a third party deal, either for cash, rev share or royalties down the road. As an example, local hemp is THC removed, and thus it’s a pretty dire crop compared to unfettered hemp. You can use natural hemp for far more than you can use the local stuff for (such as polymers, construction materials and the like), but to do that research, you’re going to have to go off-shore. GeoNovus is putting together a
Uruguayan ‘dream team’ of academics, scientists, and
arrangements with government bodies that allow them to hit the ground running. They’re also looking at human trials of cannabinoid products (again, not something you can do here) and have doctors and growers lined up for that purpose, and their recently acquired farm facility will allow them to grow and export hemp products for near term revenue. When I first started working with the GNM team, it was really struggling to figure out the best business plan. Now it’s coming together nicely and volume is revving up. Expect them to continue building out their team and facility quickly as word has emerged George Soros and Warren Buffett are both looking heavily at Uruguay as an investment option. Not cash rich but raising money currently.
CANNABIS TECHNOLOGIES (
CSE:C.CAN,
Stock Forum): So I’ve long been a fan of this puppy, but it has been tied to a bit of an anchor over the last few weeks as a large stakeholder has been dumping it. To the credit of the company, when I talked to them last they were remaining calm, sticking to their plan and pointing out that the sudden drop gives new investors a real opportunity to ride things back to where they should be soon. The company will change its name shortly (goodbye ‘cannabis’ which they say has held them back a little when non-weed opportunities have arisen – also not helping in that regard is the competitor that recently retitled themselves Cannabix Technologies), and there’s been several solid days of green now that promise good things ahead.
INEXCO MINING (
CSE:C.IMC,
Stock Forum): Relative market unknown that has recently announced a proposed acquisition of Worldwide Marijuana, which has a purchase option on a 46k sq. ft building for $2.2m. The building was appraised at $6.4m recently and built for more than that for government ag research. But, to me, that’s not where the real flava of Inexco comes from. What they’re looking to do is accrue some ridiculous corporate power and looking to become an aggregator of quality sector companies. That’s something that has been long coming, and some have tried to do it on a small scale (think Enertopia for example), but early investors in this one are a who’s who of big dogs. Ultra-tight float, low cap: Watch closely.
MATICA ENTERPRISES (
CSE:C.GRF,
Stock Forum):
Chlorine Dioxide tablets are not exactly the sexy sector of the market right now, but I’m told Matica, having already done internal testing that made them happy, is about to begin testing their product with an academic institution to prove out their claim that their product will get rid of spider mites without the need for fungicides and pesticides – a real problem for growers that can cost a considerable amount when they take hold. Also has two LOIs on joint ventures on the growing side. Buy it for the weed possibilities;
get the graphite mines for free. Currently halted.
CHLORMET TECHNOLOGIES (
CSE:C.PUF,
Stock Forum):
Me likey. Actively trying to get a larger stake in its Ontario-based AAA Heidelberg grow play while locking down “8 or 9” potential licenses in Washington State. This is a company that wants revenue soon and to keep costs low on the set-up side, which (if you’re going to be a grower) is where you want to be. Real low market cap for what’s planned, and a tight share structure. Had a vertical grow tech deal in the works with Affinor, I was hearing last week. This week I’m hearing rumblings that the deal is off, but that’s unconfirmed so do your own due diligence. Affinor, meanwhile, has cancelled two planned livestreams over the last two weeks and Abattis, who had previously licensed their vertical grow tech for weed use, has gone silent.
CREATIVE EDGE NUTRITION/CEN BIOTECH (
OTO:FITX,
Stock Forum): What a mess. I mean, I’ve been calling the shot on this one for months but I find it hard to revel in what has become an unmitigated mess of a project. Let’s forget the CEO
making threats against Seeking Alpha bloggers who don’t like the company. Let’s ignore the
lawsuits (recently dropped) against that same blogger. Let’s ignore that millions of shares dumped at the open almost every day for months now. Let’s even ignore the statements that the company would be building ‘the world’s largest medical marijuana facility’ when it was going to get its license months ago. Let’s just focus on the CEO long telling shareholders that the town was on board and they were good to build and move forward which, it seems, was (as I said it was) completely false. I said that wasn’t the case months back and had the Mayor and staff quoted saying as such, and had no end of hectoring from both the CEO and shareholders subsequently, saying I was a liar, a paid basher, a hack etc etc. Well, turns out I was right. From the
company’s own news release, the town of Lakeshore has passed a resolution to write a letter to Health Canada to ask it to hold off on issuing a license. FITX has tried to stall final votes on the project and
asked for several town hall meetings, possibly so it can get its hands on an MMPR and grandfather itself through Lakeshore’s objections rather than get permission first. Either way, the company said the city was on board. The city is not on board. It said it would have a license months ago, it has no license. The company has posted pictures of healthy marijuana plants on its Facebook page, but the town says its facility is empty. It said it would build the largest facility in the world, and it has nothing remotely close. Oh, and it also led shareholders to believe that, because an inspector had recently visited, an MMPR was close. Now it has disclosed Health Canada actually told them, “...the applicant (CEN BioTech Inc.) will be ready and able to meet the requirements of the MMPR provided the deficiencies addressed during the inspection debrief meeting were addressed." The company has not disclosed what those deficiencies are. Maybe they’re small, but I would suggest if that were the case, we’d be hearing about it. Stock has dropped like a stone in the last few weeks and now sits at a six-month low. I tried to tell you, bagholders.
GREEN AND HILL RESOURCES (
OTO:GHIL,
Stock Forum): From $4.50 to 5c inside six months. Called it as a dud at $2.50. News now dried up. Good-bye.
VERDE SCIENCE (
OTO:VRCI,
Stock Forum): Former spokesdude Paul Pelosi now talking to other companies and looking to jump ship. Stock tanked. If you read my stuff, you saw it coming. Management says it wants to be the next Medijean, but if you know anything about Medijean, you know that’s no strong boast.
NOT TALKING ABOUT:
Affinor: Have said enough.
Prescient: Long halt, big talk.
Umbral: I tried but they’re not talking.
CAN’T SHARE DETAILS BUT SOMETHING’S COMING FOR:
Abattis. Bedrocan. Vodis. Organigram. Wildflower. Naturally Splendid. Papuan Precious Metals. Highmark.
REGULATION UPDATE:
Jamaica is
moving to decriminalise marijuana. Of course, nobody in Jamaica isn’t holding, so this is really a push for the establishment of an export market. Which would drives prices down locally once the inevitable NAFTA and WTO lawsuits start dropping demanding an open marketplace.
Colorado is trying to figure out if employers should be
forced to eliminate drug-testing for marijuana. Presumably it will depend on the job – not sure I’d want forklift operators and air traffic controllers vaping between shifts.
Florida is engaging in a
high stakes lobbyist war over pro and anti-legalisation bodies. Pretty much nowhere else is.
Private
paramilitary forces are being used to drop from the sky in military choppers to eradicate unlicensed grows in California. For real. Camo gear, AR-15 assault rifles, the works.
A mom is
facing jail in Minnesota for giving her ill son medical marijuana to stop his seizures. This despite a law having been passed that would permit exactly what she did starting from 2015. And the fact that, while traditional medicine wasn’t helping her kid, cannabis oil did within an hour of first using it.
The College of Family Physicians in Canada has done what they’re supposed to do, and
set out guidelines for doctors in prescribing medical marijuana. The Canadian Medical Association, meanwhile, still apparently feels you should buy Doritos stock and that nobody takes weed for anything but high times. The Arthritis Society doesn’t share the old fogey brigade’s mocking tone, and is planning to fund competition in research into the possibilities of the drug.
Researchers in Australia have announced
teens that use pot are more likely to have dropped out of school and/or tried suicide, completely ignoring the ‘correlation does not equal causation’ scenario, where one thing may be a result of the other, not the cause of it. Sure, more kids who are considering suicide have tried weed. They’ve probably also tried Advil. Alcohol. Binge eating. And any number of other things to help ease the stress they’re feeling. Every time I’ve ever woken up with a hangover, the sun has risen in the east. But I’m pretty sure my hangover isn’t making the sun rise, you know?
CHART UPDATE:
Including Highmark, Inexco in our weed charts from here on. Eliminating Terra Firma Resources, which is down to half a cent and not moving, and Rostock Ventures which, frankly, I’m not even sure is a company anymore.
Full disclosure: T-Bird Pharma, GeoNovus, Wildflower, Cannabis Technologies, Chlormet Technologies, Organigram and Supreme are Stockhouse Publishing clients. The author owns Cannabis Technologies and Organigram stock, and has a consulting arrangement with GeoNovus. Parters within the author's consulting firm have a consulting arrangement with Supreme.