Green and Hill Industries (OTO:GHIL
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) has one prized asset, in the name of Ross’ Gold CEO and minor local celebrity Ross Rebagliati, Canada’s infamous 90’s Olympic stoner. He brings some name recognition, a ready-made media hook, a face, a story and – investors hope – a brand.
But Rebagliati may also be the company’s biggest problem.
Green and Hill put out a press release today
that, unlike previous press releases, largely avoided huge claims and ‘what if’ scenarios. There were no comparisons to other huge brands and promises to be just like them. It was a good, solid outlook on a business plan that, you know, might actually make sense.
“Partner growers will be tasked to grow the strains that we have chosen from their existing inventories, and the Ross' Gold mandate is to create demand through branding in conjunction with our JV partnership [with a private distributor],” said the company. “For growers without seeds/clones, the JV supplies proprietary clones from a contracted nursery. The growers take the clones at 8 weeks and grow them through harvest at about 16 weeks where the JV purchases the 'finished' product.”
All fair enough. And where the plan gets interesting is in a small corner of the Health Canada weed regulations that limit companies from being able to advertise themselves. This is why Tweed (TSX:V.TWD
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) is reportedly planning to spend $20m ‘educating doctors’ rather than marketing to customers… they’re simply not allowed to market weed as a product. At all.
Green and Hill continues: “As Ross' Gold is not a licensed producer, it is able to market itself and its brand through mainstream media and advertising channels providing it does not directly advertise medical marijuana. All licensed producers under Health Canada regulations may be listed on the official Health Canada website, and are extremely limited to doing any promotion or advertising as per section 2 of the Narcotic Control Regulations in Canada, Section 70 whereby ‘No person shall publish or cause to be published or furnish any advertisement to the general public respecting a narcotic’. ‘Advertisement’
means any representation by any means whatever for the purpose of promoting directly or indirectly the sale or disposal of a narcotic."
Ross’ Gold will seek to use its branding and marketing plan to become a medical marijuana name brand without falling afoul of the no-advertising restriction for license-holders.
I’ve been disparaging of Green and Hill previously, but this is a smart plan. In fact, it’s kind of a big deal – if they can execute.
And that’s where we come to Green and Hill’s biggest problem: It’s CEO and public face.
I’m sure Ross Rebagliati is a nice guy. He could sure snowboard. But he’s been bumping around various entrepreneurial projects for a while and hasn’t particularly shown a great deal of business acumen in doing so, despite his ‘international celebrity’ status.
And, frankly, the only part of the Green and Hill news release that wasn’t aces for me was where Rebagliati opened his trap and started pumping like Laura Ingalls on butter churning duty.
"With our partnerships, we intend to become the Amazon of Medical Marijuana in Canada,” trumpeted Rebags, opening the show with the kind of baseless, empty statement that every company could make, but doesn’t because it’s, you know, stupid.
“Ross' Gold has the only full vertical market business model in Canada with strong branding and marketing expertise,” was the next line, something I would suggest at least five companies would laugh at.
“Our partnerships take the product from seed/clone through to the end patient by leveraging the expertise of our grower partners, our team strengths and the super-brand we have created called Ross' Gold,” he continued.
Really? Super-brand? You haven’t sold an ounce yet but you’ve got a super-brand? Does selling $8,000 in t-shirts and losing $180,000 over the last two years make yours a super-brand?
“We have instant brand-name recognition, talent and a broad base of marijuana users in Canada who have been following our story making us the number one brand in North America."
The number one medical marijuana brand in North America? Dude! Are you STILL high? You haven’t sold anything yet!
I mean, the ridiculous claims being made by Creative Edge Nutrition (OTO:FITX
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) over the last few months, where they’re going to build the world’s largest medical marijuana facility but haven’t asked the town if they can yet, and don’t have the money to do so, pale in comparison to the contemptible, ridiculous, clearly wrong claims spewed out as a news release by this amateur hour CEO.
Rebagliati appears to be the weak link in this operation that, by my thinking, appears to have good people behind it making a smart play. Branding will be key, and figuring out how to brand without blundering into a lawsuit will be the difference between shareholder value and tank time.
But Rebagliati… holy cow. Has he suffered a minor stroke?
Surely there must be a bigger name than this, somewhere in Canada, who actually understands that the CEO of a public company can’t make outlandish claims without something to back it up. Maybe it’s better if they just give Rebags a small office out back where he can chill, smoke out, gnarl down some Kraft Dinner and watch Two and a Half Men while the big boys do the actual work.
The previous news release from Green and Hill also took a sad turn
down the road to baseless claims of grandeur, when it said, “Ross's Gold is poised to be the first super premium BRANDED medical marijuana, launched in tandem with the Canadian government's changes in legislation. Think about it: Advil, Tylenol, Grey Goose etc- brands are all around us, and provide the consumer with confidence. The Company is positioning Ross' Gold to shift, and ultimately dominate the pain management market that is about to erupt with legitimized medicinal marijuana.”
Think about it! Apple! Google! Five Guys Burgers and Fries! These brands are all around us!
No word yet on whether the company has had any luck with the reality TV series it has been pitching around town, but I’m sure that will be compelling as Ross works hard to make his t-shirt line the next Fubu and poses the question, “Why u so mad bro?” as he orders a chicken gyro and tries to pay for it with stock.
Oh yeah – Green and Hill Industries has a market cap of $133.5 million… and that’s after
it lost two-thirds of its share price since April 1. Put that in your pipe and smoke it, market watchers.
Speaking of companies that would take issue with Rebagliati’s claims that his outfit has “the only full vertical market business model in Canada with strong branding and marketing expertise”, Tweed
announced today they’ve closed $15 million in bought deal financing
The offering went down at $3.20 per share, which will piss a few financiers off, being as it currently trades at $2.91, but I’ve no doubt shares will hang between the current price and $3.20 for a while, at least until hard financial results emerge.
Tweed was up 8.1% today.
Creative Edge Nutrition
did not have a good day today, ending the show down 7%. It was down around 12% in early trading as more questions are being asked about CEO Bill Chabaan’s claims the company will open the ‘world’s largest marijuana factory’, leading many existing shareholders to buy on the dip. That pushed the stock back to a minor slip on the day but as trading continued and true believers ran out of juice, it moved further into the red.
I asked Chabaan, through the company Facebook page last night
, whether he’d like to answer my allegations that his plan isn’t possible under the current agreement with the town of Lakeshore, offering him space to discuss where detractors have it wrong, and his response was to delete my posts and ban me from the page.
He later told followers “there’s no zoning problem,” which was no surprise, since I wasn’t suggesting there was a zoning problem, but rather a city planning, engineering, infrastructure and permitting problem, as per remarks from the Mayor of Lakeshore himself. Zoning had appeared to be the one thing FITX didn’t have to worry about.
Funny thing; while Chabaan was claiming there wasn’t a zoning problem, the mayor of Lakeshore was talking to another reporter and saying the opposite
. And that FITX would have to face public meetings to get their business happening. And that a rezoning process was likely.
Chabaan later released a statement on Facebook, which he decided not to share with the newswires, saying "We continue to work hand in hand with the Town of Lakeshore to address any future concerns. They have been amazing throughout this process. I thank the Mayor, Deputy Mayor, Council and all administrative staff who have been harassed by people fishing for problems which simply don’t exist. Thank you for being shareholders. GOD Bless Canada. GOD Bless America."
I’ve taken a lot of crap from long holders of FITX over the last few days, most of whom don’t appear to want to question their lord and savior, CEO Chabaan, and think anyone who does has some ulterior motive beyond not wanting companies to be able to get away with rampant pumping.
Bill Chabaan’s response, however, isn’t to quell the masses and detail things incorrect in my article, but rather to start selling t-shirts
to his investors (I kid you not) that are emblazoned with the phrase “Bill-ieve!”
His company has shed some $50m in market cap since my piece Monday
began people asking questions about the world domination plan, which would motivate many CEOs to get out there and correct the story, if indeed it is incorrect. Chabaan appears to prefer to huddle with his Facebook pals and sell t-shirts.
At this stage, I can’t even feel bad for bagholders. You have all the information you need, if you still want to buy in, may God have mercy on your soul.
By the way, this private company looked at the Lakeshore facility
Creative Edge bought and is currently building out, before FITX came along, and decided not to proceed with the project in that location “because it would require rezoning.” They’ve set up in Tecumseh, under a “site specific industrial” zoning permit, and waited until they received their permits before building.
Norm Marcoux, from ECGreen, tells me “I dealt with Kirk [Foran] and Steve Salmons in Lakeshore and they are class people, doing a great job. They helped me navigate this process all last spring and summer and I know exactly what CENB will have to go through to get proper zoning and planning approval and I don’t think it’s possible … surely not without an OMB hearing and lots of delays.”
He adds, “Under the current zoning of 'value added agriculture', the site would not work, for the exact reasons (and more) that Kirk Foran mentioned in your article.”
More: “We decided to find a building in a Manufacturing zoned area, as directed by the Township planning and zoning experts, then put a conditional offer on the building and applied for a change to the 'permitted use' of this location to include the operations stated in the MMPR regarding MMJ. Our zoning approval met no resistance and was in fact unanimously supported by the Town of Tecumseh. Putting the horse before the cart, where it is supposed to be seems like the logical way to proceed.”
Pan American Fertilizer
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) has been trade-halted due to its inability to get its 2013 finances audited
. It’s an embarrassing situation
that was no surprise when it happened. The company will remain halted until it can satisfy the exchange that numbers can be released. Investors in the $750,000 private placement deal
a month ago must be a little concerned.
West Point Resources
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) is trade halted in expectation of news. Nothing else to add.
I’ve been pushing it back because of all that’s been happening with Creative Edge, but I’ll be talking later this week to Twitter-based online stock buying group leader The Wolf of Weed Street
, who leads a merry band that is 20,000 investors strong, making him an important player in the weed market.
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) has joined the weed train, albeit a bit late. Up 12.5% on the news.
"We feel it is incumbent that we, as management, look at any and all potential opportunities to create shareholder value," states GeoNovus president Mike England in a news release today
A solid day for the sector today with Supreme Pharmaceuticals again moving up. A lack of news has Papuan Precious on a general downward slide, while big players Abbatis and Tweed ran solid numbers.