Any time one junior company is responsible for
more than half of the trades on an exchange, it’s time to reflect. When that company pulls that move off
twice in its first two days of existence, it’s time to explore.
But when that same company explodes even higher in volume on day three, with no US trading (yet), and on an exchange that even some Canadians don’t have an easy time trading on, it’s time to get out the wallet and start making some financial decisions, stat.
As I write this, there have been 13.7m shares traded on the CSE Wednesday at 10am Pacific. Nutritional High (
CSE:C.NHL,
Stock Forum) has been responsible for 8.2m of those, or 59% of all trades.
Here's the
CEO on BNN.
The stock is a daytrade superstar, but also consistently moving up in price as speculators who see the potential for a big payday when the American listing hits (reportedly within four weeks) load up, and long holders who feel the edibles market is a big undeveloped MMJ play join in.
Nutritional High, right now anyway, is the perfect storm.
Will it deliver big revenues in two years? Don’t know. And, frankly, right now I don’t care. What I care about a lot is, is the thing likely to be higher tomorrow than it is today? And will it ramp up for the next month while it’s still a private Canadian investor club?
The chance of C.NHL becoming a bubble is not insignificant. As we saw on several other ‘value add’ weedcos over the last few weeks (InMed and Naturally Splendid being too great examples, both of which I hold personally), when the rise becomes too hard and fast, shorters come out of the woodwork to take advantage of any profit-taking turns.
When the first mining zombies started jumping into the weed game early last year, I told anyone who would listen that the spike would be short lived and that ‘value adding’ is where the industry would really kick off the training wheels.
Growing is nice. I wouldn’t light fire to free share certificates for just about any publicly-traded LP, but ideally I don’t want to be investing in wheat farms, I want to own the bakeries. And that’s where we’re seeing the real buying action right now.
Long term, I really like what Nutritional High is planning to do – that is, supply the 800-dispensary strong Colorado edibles market with an automated food production set-up that delivers something that market is very short on right now; consistent dosage.
An investigation by the Denver Post found some Colorado edibles brands delivered almost no THC at all, despite advertising 100mg per serve. Some delivered half, others still produced excessive dosages. Even Dixie Elixirs, considered the big brand in edibles, failed tests, delivering only 60% of the promised dose.
The Colorado market is ripe for the picking, and C.NHL’s Cordin Bleu chef already has an edibles cookbook on shelves, and the marketing machine is working on kick ass branding. The margins are killer. The set-up costs dwarfed by those in the grow game, with a far shorter road to revenue.
And then there are other US states, such as Illinois, where the company has been granted permission to enter the final phase of dispensary licensing. California has 3000 dispensaries. Any state that isn’t thinking about adding to those numbers is a state you probably wouldn’t want to travel to.
And all this is recreational. Forget Canada’s landscape of bureaucrats tying entrepreneurs in knots with Apollo Program-level security and quality control standards, while they advertise to the public that the product will kill your brain and prevent LPs from doing advertising of their own.
This is Colorado. Colorado digs pot like a broker’s girlfriend digs a Maserati.
The US listing promises to be huge. In fact, Twitter stock tout The Wolf of Weed Street just sent out a tweet naming it as being the next big thing.
Which is why, yesterday, I bought in. I mean, why should you rubes have all the fun?
Naturally Splendid (
TSX:V.NSP,
Stock Forum) is also looking to do business in the US, with their exclusive hemp omega processing tech that turns hemp oil into water soluble powder, thereby making it usable in, well, just about anything you can put into your body. Or your dog. They’re loading up with heavy hitting board members and advisors who have
previously racked up billion-dollar sales in the beverage scene, and others from pharma giants like Pfizer and GlaxoSmithKline, and their share price launched as a result.
InMed (
CSE:C.IN,
Stock Forum), the scrappy Canadian biotecher that consists of a room full of the biggest brains around and an exclusive software platform that mines ingredients in FDA-approved drugs to find which of them share elements found in medical marijuana, thereby creating fast-tracked MMJ therapies, is also heavy into the ‘phase II’ of the marijuana wave – the value-add phase. They received word this week that they were okayed for an exemption under section 56 of the Controlled Drugs and Substances act, which means
they can buy and use weed for research. This is a big deal as they move toward human trials for their glaucoma and arthritis therapies.
All three of these companies, C.NHL, C.IN and V.NSP, are Stockhouse clients. If you’re a cynic, you can take that as a warning that everything nice I say about them shouldn’t be trusted.
But I also own stock in all three. Check that: I BOUGHT stock in all three. Nobody shoved certs under my door and said ‘go be nice to these guys’, I went deep on all three as a part of my Stockhouse duties and liked what I saw so much that I purchased them on my own, crappy, reporter-level, child support-depleted dime.
Why? Because they’re the tip of the spear when it comes to what I think is the real value in the marijuana business. Margins on growing should be great. Margins on buying cheap weed (and it’s not going to get any more expensive as more growers come online) and turning it into much needed medicine, or retail products, or recreational edibles? That’s MONEY.
Another company moving into this space is another Stockhouse client (hey, I can’t help it if they all come to us eventually), Wildflower (
CSE:C.SUN,
Stock Forum).
If you’ve been keeping up with the Wildflower story, they were humming along nicely with their plan to grow weed on Vancouver Island in a pair of off-the-grid locales when a nosy neighbour realized one of their applications was a ways down the road and spent a few months of her obviously all-too-free time signing up NIMBY seniors to say ‘not in my quiet piece of the ALR, thank you very much…’
And the Regional powers that be, rather than explore the issue, reacted with their political gut and fired off a letter to Health Canada saying they didn’t want Wildflower around. These would be the same powers that be that had previously given Wildflower the thumbs up. Because, jobs.
That all caused Wildflower stock to crater at a time when, frankly, everyone was in freefall anyway.
Since then, Wildflower has facepalmed the Region, secured a better location two miles away from the last but just over the border into progressive-thinking Parksville, for which they don’t need to pay rent until they have their MMPR approval, and today released news that they had secured an agreement with a Washington State company to license the Wildflower name for edibles, bringing 20% of revenues back to C.SUN for, well, nothing more than use of their logo.
Well, a little more than that. The US group will need about 500k in shares and cash up front to help get set up, and $1.1m in working capital down the line. Wildflower just finished a raise for the first part of that equation, and will need another for part two.
But their stock is up 30% today, nearing its 52-week high, so that may not be difficult.
In essence, the Wildflower deal (which wasn’t a C.NHL ‘me too’ – they have been working on this deal for months) gets them to revenues faster than Nutritional High, with less capital laid out, and no cost going forward. That’s a pretty nice deal for a company that needed a boost, and that has less than a quarter of the shares outstanding of C.NHL.
At the other end of the market – the grow space – things are getting iffy for some.
Private grower Tilray, which has prided itself on not being like those shonky guys who get their product recalled… had a product recall. Bacteria was the culprit and Health Canada inspectors caught it.
“We are undergoing a top-to-bottom, rigorous review of our sanitation practices and procedures,” Tilray CSO Joshua Eades
told the Globe and Mail. “And we’ll be doing a root-cause analysis to understand what caused these results.”
There have been no reports of bad reactions to the weed.
Tilray gave customers the Health Canada approved disposal method of choice – that is, dumping water on it and mixing it with cat litter and coffee grounds before tossing it in the trash. Then Tilray will credit customers for a replacement purchase.
I’m guessing nobody destroys their weed, bacteria or not, but hey.
At least Tilray is a real company. Creative Edge Nutrition/CEN Biotech (
OTO:FITX,
Stock Forum), on the other hand, is a straight out fraud that continues to be perpetuated in a brazen manner that apparently comes with no warnings, trade halts or… even investigations? .. by the SEC.
I encourage all to read Grant Robertson’s
incredible breakdown of not just brazen insider trading at the company around 30 minutes before Health Canada announced the company would not be getting its MMPR approval, but the bullshit-heavy incredible tales being spun by the CEO who *CLEARLY* has no shits to give about the SEC coming calling.
To summarise: Health Canada released a statement on March 11 at 4:30pm Eastern, just after the close, saying CEN Biotech would get no license because it is a ridiculous gong show (I’m paraphrasing here). In the fifteen minutes before trading closed for the day, there was a massive sell-off of CEN stock with 7.9m shares dumped (41% of the entire day’s volume) in just minutes.
When the news was made public, the company stock dropped another 30%. But by then, the insiders had their money.
Disgustingly, the company didn’t decide to release a statement about the Health Canada refusal until March 12, even as it acknowledged CEO Bill Chaaban had been served the refusal by Health Canada on March 11, more than 24 hours earlier.
Chaaban’s excuses for all this are too mind-numbingly brazen and stupid to repeat here.
Go see Robertson’s piece. An example:
“[Chaaban] said the late-day rise in trading volume was not significant, because trading activity tends to pick up at the end of the day.
“Many trading days exhibit volume that is much heavier in the last half hour before the market close,” Mr. Chaaban said.
If he’s not wearing prison orange inside a year, there are no rules and we should all just run pump and dumps forever and buy condos in Vegas.
UPDATE! The Ontario Securities Commission is officially investigating FITX, but won't say whether the SEC is involved or how long the investigation has gone. Champagne corks!
In other news, Inexco Mining (
CSE:C.IMC,
Stock Forum) has completed its acquisition of Worldwide Marijuana, the venture backed by Commander Bob Marsh that looks to help companies navigate the MMPR system in return for a piece. The company will transition to being called Worldwide Marijuana and I’m told trading should resume soon, as early as the end of the week. Ticker symbol: C.WWM.
I’m also led to believe the company is actively pursuing the acquisition of an existing license, but that’s a long road with many turns. With a ton of stock in escrow, my info has it that the float is around 12m shares, which should make it nice and bouncy when it trades again.
As for which direction it bounces after a long halt? I do not know.
Disclosure: I own some, and they’re a Stockhouse client.
Papuan Precious Metals (
TSX:V.PAU,
Stock Forum) came out of cotton wool this week and exploded upwards in price, from $0.01 up to the ‘ready to finance’ $0.05 mark. This on news it was moving forward on an iron ore project. No mention of weed in Pauville anymore, and I’m told former weed go-to guy Drew Milburn is off working with other companies now.
PAU holders will receive one share of the new spinco
Pioneer Pacific Finance Corp, which owns the letter agreement to take over a Colorado dispensary, but no news on that for some time.
Highmark Marketing (
CSE:C.HMK,
Stock Forum), which
spun off everything but the office furniture earlier in the year, was crushed today with a 28% drop on no news I could find. Normally I’d try to find a reason to take advantage of that big a drop on small volume as a buying opportunity, but the HMK crew are so quiet, I have no idea what’s going on.
Supreme Pharmaceuticals (
CSE:C.SL,
Stock Forum) is bleeding out on the charts, as those waiting for Health Canada to dispense its license to the company grow tired of watching their cash tied up while C.NHL accelerates. I sold my Organigram stock this week for Nutritional High play money, so I’m sure this is hurting all LPs in the public space, but clearly Supreme is being beaten up more than most.
There is literally no news from the company, and any news they could put out would only be an obvious time-filler. President John “T-1000” Fowler says the company is in cotton wool for now, just watching the clock and waiting for its ‘thumbs up.’
I’d like to see the company using that massive facility to grow tulips or something in the meantime, just to help get the kinks out of the process and keep the team busy, maybe even earn some revenue, but Affinor Growers may have tainted that pool of potential with their never-ending promises that one day they’ll grow strawberries that Japanese businessmen will pay $1000 each for and, ‘look, a shiny thing over there!’
Regular readers may recall back in the day I met with Supreme’s supremos and told them they needed to roll their stock back. Some investors hated that call while others saw the sense in bringing the share float back to manageable levels. Well, if that rollback hadn’t happened, the stock would be at $0.03 today, commonly known as ‘uh, no, your private placement is refused’ territory.
I can’t tell you when Supreme will get its final approval. But I can tell you the market cap right now is RIDICULOUSLY low. When you’re done daytrading, you can’t not consider the longer term opportunity there. I’m *this close*…
My most ‘favourited’ tweet of the last few weeks: ‘Abattis (
CSE:C.ATT,
Stock Forum) is
raising $250,000 to pay for acquisitions, research, and general working capital. The last raise apparently went to pay for cars.’ If you see former CEO Mike Withrow around town in his Maserati, give him a wave and ask him which tire you paid for.
Rumour mill: Tweed has rats in the Hershey plant. Or had them. I’d ask about it, but I’m still waiting for my last request to be seen to.
‘Oh, So That’s What You’re Doing’ section:
Met with the folks from Global Hemp Group (
CSE:C.GHG,
Stock Forum) this week and heard all about what they’ve got planned going forward. In summary: Blue sky and distractions.
The blue sky is the very real potential of straight up industrial hemp grown in the emerging world for pennies and turned into serious industrial and retail products. And by ‘potential’, I’m referring not to the fact that one day that might happen – it’s happening now in that the company has exported 1.4m lbs of Alberta-grown hemp to South Africa to be turned into products and used in field trials, and has
processed 42 tons of hemp seeds for oil. I’m referring to the potential of what happens when those trials, now in their third year, end and actual commercial planting begins.
The company is, I’m told, in talks with Jamaican entities about growing there. They’ve got ample room to scale up production in Canada presently, and their Canadian farmer is happy to share his knowledge with others that might grow elsewhere.
I loved the potential for global hemp production and sales
a year ago when GHG first piped up about it, but they kind of disappeared from the scene for a while and hemp took its time to dig in.
But it’s go time on this thing now and I love the potential of fields of flowing green that doesn’t get you high but could be used to build low cost housing.
Yes, housing. Hemp housing is a thing, and governments in Africa and Asia want the hell out of it. This is where GHG is going.
It’s also going into consulting, which I’m certain it is well equipped for and could make some money on, but ‘we’re going to consult’ is a shell game a lot of companies with less going on often play to make it seem like they’re bigger than they are.
Also, GHG is buying Skunk Magazine, a print mag for the weed crowd that it says it will bring online and use to push its greater story that hemp is the real deal. That deal is incentive loaded, so it won’t cost a lot up front, but they have set aside half a million for the relaunch of the thing. I’ve been through a lot of such editorial shifts before and they’re perilous if not done right.
GHG is not a client, though I have offered myself as an eye on that Skunk retooling if they need it. Their share price has been on a long, slow uptick this year, and I like what they’re doing. It’s not sexy enough for a lot of investors, hence the extra avenues of revenue they’re looking at.
Personally, I think hemp is sexier than Charlize Theron seducing Christina Hendricks and, frankly… Wait, I’m sorry, I just lost my train of thought for a moment.
Stay tuned for Bullboarder Chefboy69, who usually comments negatively on every story I post about what a pumper I am, suddenly deciding that I’m awesome because I’m writing about something that
he’s neck deep in. Have at it, Chef. Are we besties now?
One of the stocks I have been most prodded on through Twitter and private messages by people clearly invested in it, is Umbral energy (
CSE:C.UMB,
Stock Forum). I’ve never taken the bait. Looking at the chart over the last six months, I’m glad for that. That said, there’s some real volume on that stock lately, after they announced an
NDA regarding a potential hemp deal.
Appearance news! I’ll be running a panel at the next Vancouver Cambridge House show. Some interesting dudes/dudettes lined up to appear. The last one we did included the last public appearance of Verde Science’s (
OTO:VRCI,
Stock Forum) then advisor Paul Pelosi, who rambled and failed to inspire the crowd to invest in Verde. This is a good thing, because it’s crap.
I’ll say this: CEN Biotech CEO Bill Chaaban, if you or one of your many online fake identities are reading this, open invitation to come sit on the panel. Let’s Thunderdome this thing.
Lastly, and while on the topic of Cambridge House, Jeremy Martin, one of the Martin clan that started that group, has moved on from his role of Executive Producer of that show to take a spot at SoMedia Networks (
TSX:V.VID,
Stock Forum), the Uber of video production. That company has struggled to get its story out for some time, but it’s killing it right now with the backing of Hamza Thindal Capital, the group that recently cranked it on T-Bird Pharma (
TSX:V.TPI,
Stock Forum – a Stockhouse client), and the spiking VANC Pharmaceuticals (
TSX:V.NPH,
Stock Forum).
Good luck, Jeremiah.
LATE UPDATE: Australian public weedco PhytoTech has annnounced it is taking MMPR applicant
MMJ Bioscience down to the ASX in the second big money crazy times deal announced by the 'needs to find justification to exist while weed is still illegal in Australia' company.
This one amounts to $21m, says the press release. Jacob Securities ushered in the deal. Again.
I'm going to go ahead and call that a well overpriced deal, but it bares out what I wrote last week, that Canadian companies can get inflated valuations now that
Australian cash is looking for a home following PhytoTech's big debut.
--Chris Parry
https://www.twitter.com/chrisparry