Toronto weedco fans, I’ll be at the Greenrush Conference
in your town on June 26, which is hosted by the fine folks at Next Gen Metals
, Stock Forum
). Unsure if Stockhouse will have a booth there or if I’ll just be winging it solo, but I will be giving my updated presentation on ‘The Dot.Bong Bubble’, including my take on how companies, investors and service providers can make money in the sector, which companies I like a lot, and why Health Canada wishes flaming lesion-covered death on everything in the sector so it can get back to telling seniors that fixing a broken hip is elective surgery.
I may take the chance to go talk to some east coast CEOs and look over a facility or two while I’m out there. More likely I’ll just get drunk on expensive vodka drinks and ruin a good suit. But we’ll see.
The Benzinga crowd is putting on a show at the end of the month in Denver, Colorado. The first annual Weedstock Conference
will take place on June 29-July 1. I know there are plans to hold a Canadian weed stocks panel which I’m hoping I can get out to moderate, schedule (and border guard drug dog) permitting. The last day of the conference coincides with Canada Day, so what better way to celebrate than to explain to US investors how we do things in socialistville?
Creative Edge Nutrition
, Stock Forum
) will be there, among other companies, so it will be nice to catch up and challenge CEO Bill Chabaan to an arm-wrestling contest. He’s got the supplement advantage, while I’ve got the convict past-derived meanstreak.
Interesting to note that FITX has climbed a little after our stoush last month, but settled in at a lower point than it was in May. The new base puts the company, for mine, closer to where it should be as a speculative punt. If it drops below $5, hype or not, it might be value. Depends how you personally value a mid-tier production play that will unlikely be selling product before year end (as opposed to ‘the largest grow op in the world which will open when it gets its license in a few weeks’).
I still see talk on iHub occasionally that I’m going to be sued by FITX for the stories I’ve written about them, which is comically silly. I write about a lot of companies, and many take their kicking with grace, understanding that if you can’t reply to honest and hard questions, it’s a corporate failing – and if you can, it’s a marketing opportunity. What’s up, Satori Resources.
But hey, the last guy that sued me found himself defending a 32-page quarter million dollar countersuit, and that didn’t present nearly as many opportunities to have fun writing about it as a FITX fight would, so I’d suggest the cult of Bill should be careful what it wishes for.
On the topic of Satori Resources
, Stock Forum
), I spotted CEO Jennifer Boyle walking the floor at this week’s Cambridge House Investor Conference, and I collared her for any news she could share on that company. She didn’t have anything for me, but said there’s plenty happening under the covers and hinted that the next month might prove interesting. BUD is at a three month low right now, and presents a pretty cheap buy-in. At its new base of $0.045, any half-cent upward move is a nice return and there are a lot of people waiting for news, so playing the maybes with your spare change might prove interesting.
One company making a move today is Global Hemp Group
, Stock Forum
), which has joined forces with some interesting South African entities
in its bid to create an African hemp producer.
One of those is House of Hemp, which is the sole private company permitted to grow hemp in SA, with another being House of Mandela Agricultural Holdings.
That company was founded by Dr. Pumla Makaziwe Mandela, the sole living daughter of Nelson Mandela and his first wife, Evelyn Mase. There are lots of Mandela’s around, but this one is legit. She’s big on the mining and petroleum circuit, has worked with the Development Bank of Southern Africa, and brings political heft to the group.
Hemp – eventually – will leave medical marijuana in the dust. It’s a legitimate supercrop that has been, ridiculously, limited in its use for a century by its association with marijuana, even though it won’t get you high and provides a huge fertility boost to fields where its grown, and can grow in drought areas.
GHG hasn’t ridden the bubble run in MMJ because hemp ain’t sexy, but as marijuana loses its shackles, hemp will own all. If GHG can get it growing quickly and cheaply, Africa will become the world center of it and the economics of that region change forever.
Sometime in the next week I plan to throw some grocery money at that stock and not think about it again for a few years. Then, on Canada Day 2017, I’m going to buy you all a beer with the proceeds.
Maple Leaf Green World
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) put out a news release today announcing they had “catapulted the company to the forefront of the rapidly emerging Canadian medical cannabis (MMJ) space
” by leasing a greenhouse facility in Telkwa B.C.
Let’s be clear: They’ve done no such thing.
Yes, they have signed a lease on some greenhouses, but in order to be at the forefront of anything they’ll have needed to get themselves MMPR approval (they admit they’re months away from even stage one approval), they’ll need more than Tweed’s 150,000 sq ft or so of facility space, let alone the 342k sq. ft. Supreme Pharma is playing with (they have leased 80k sq. ft. according to their release), they’ll need to have strains in their hands (the release says they have ‘50 different strains in their target selection’, which translates to them having the same number of actual strains my back has when I sleep funny), and/or a distribution channel (which, right now, pretty much nobody has).
Now, the Telkwa greenhouse is nice. It has a retractable roof, the greenhouses have environmental control systems in them, they have blackout curtains. That’s all fun.
But here comes the boom – they’re not pharmaceutical grade. They’re not secure. They’re clad in polyethylene material, which I’m pretty sure I could slice through with a box cutter. There’s 52 of them, so whatever you spend securing one, you’ll need to spend securing another 51.
MLGW has nearly thirty years of experience in growing, that’s not in question. But that time has been spent growing reforestation seedlings, not prime purple head explosion ganj in a pharmaceutical grade setting with government compliant inventory tracking systems.
Nobody is busting into a greenhouse – or even a field – to scoop an armful of reforestation pine. Nobody’s going to do that for strawberries. But for weed? I can’t see how Health Canada would ever permit the operation that you can see here
to be licensed to grow marijuana without an extensive retrofit that would, frankly, cost more than it would ever be worth.
Now, that’s just my opinion, and while I admittedly have no experience growing weed, it seems neither do the people at Maple Leaf Grow World.
I’ve been saying loud and proud for a while now that grow operations are going to be seeing a reckoning at some point soon, as the bulk of them realize they’re not licensable – or profitable – especially considering their target market is people on disability that will pay $500 to get a doctor’s note and pay $8 a gram for their medicine instead of just growing their own in the toolshed.
The company says they think getting through ‘the remaining stages’ of the MMPR process after they get their stage one approval should be “pretty straightforward.”
For mine, that’s like hitting a homerun in Single-A ball and thinking that it should be “pretty straightforward” to get to the majors – especially considering Maple Leaf Green World is already throwing around phrases like “has catapulted the company to the forefront of the rapidly emerging Canadian medical cannabis space.”
They’ve catapulted the company to taking a lease out on a nursery. That’s all.
Lettuce-growers with no license and a facility that presents a crazy expensive build-out with no distribution channels and no strains and a high likelihood that motorcycle enthusiasts will drive in and clean them out… What could go wrong?
Also in ‘What could go wrong’ country is Green and Hill Industries
, Stock Forum
), which had to put out an embarrassing release today to counter claims being made by a newsletter promoter that the company is a must-buy slam dunk.
The writer of the newsletter, Eric Dickson of Breakway Stocks, reportedly says he was paid by Development Solutions to write the letter. GHIL says they don’t know who these entities are.
Breakaway Stocks charges
users $495 a year for their hot tips.
From the release
The Company further advises that there are numerous false statements in the newsletter including:
Inference that a huge profit and giant sized returns might be made from trading in the Company's stock
Inference that Ross' Gold will be sold in USA where in fact, the Company has no plans to enter the USA marketplace
Inference that Ross' Gold is a marijuana company where in fact it is a licensing and branding company
Inference that the Company is the first publicly traded Marijuana Company in Canada
Inference that the Company's CEO made money for outside investors as a real estate developer where in fact no money was made for outside investors
Inference that there is NASDAQ.com report, to wit the Company is unaware.
Inference that the Company could be the subject of a buy out where in fact the is no buyout or planned buyout
The BC Securities Commission pushed the issue with GHIL and, to their credit, GHIL responded in the right way. The company says it did not trade in the stock during the promotional activity in question, though it did recently put out a press release
that claimed success at a trade show drove a massive spike in volume, saying, in part, “Green and Hill Industries […] saw its share volume skyrocket on June 3rd with 399,146 shares exchanging hands, 74 times higher than its three month daily average volume of 5,392 shares.”
Huh. That’s some low average volume for a company with a market cap of $113m and 101m shares out.
I can’t see GHIL maintaining that market cap. It’s a long way from revenue and a much longer way from the sort of revenue that warrants a $100m play.
Let’s talk Supreme Pharmaceuticals
, Stock Forum
). They’ve closed the acquisition of their 342k sq. ft grow space
. I’m okay with that. And if growing MMJ turns out to be a gangbusters great business, they’ll win it all, because they’re working toward a massive footprint. Goodo.
But I’ve been accused by some commenters of being biased against Supreme because I don’t write about them much. Here’s why I don’t cover their every move:
cover their every move.
Nobody promotes their news like Supreme does. They look at a grow space, there’s a news release about it. They sign an LOI to lease it, news release. They sign a lease, news release. Close the deal? News release.
What can I add to that?
I worry about Supreme’s all-in on growing. I worry about their taking on debt of those setting up facilities that aren’t necessarily license-ready. I worry about the massive buzz on them last month making them a too fast, too soon deal.
But I don’t hate the company. In fact, I have had it in my presentations at various conferences where I say, if you’re looking for a grow play, they’re right up there.
I just don’t see the grow play as being where I want to be. There’s already downward pressure on prices – what was being talked of as $12 a gram market six months ago is now a $7 a gram market, with cheaper on the street. Add all this mega-capacity and a really tight bottleneck on the patient end, and I can’t see where all this weed is going to go.
Now, if a company plans to grow weed to feed its own value-adding products downstream, that makes sense to me because it secures quality, consistency and price for that company. And if weed gets cheaper in that scenario, you can always quit growing and just buy up everyone’s excess for your product.
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), to me, is a great demonstration of this in action.
Worth noting: Affinor is hedging its bets on growing Mary Jane, and is going to start out growing strawberries. That’s called diversifying your business plan and giving yourself an out if things get hairy.
This is part of the reason that Affinor has exploded upwards since mid-March, going from sub-$0.05 to twenty times that at $1.03 today. It’s a spec deal like anyone else, but with downside safety built in.
Does Supreme have that out?
If exports become a reality, then it won’t need one. If recreational use becomes a reality, it won’t need one. If it rolls up the Tweed’s and Creative Edge’s somehow, it won’t need one.
But for now? I worry. The company is delivering on what it has promised. But I wonder if that promise is a good long term play.
Here’s what I will say about Supreme: It’s a straight up, blow your hair back, empty your pension BUY based on current market cap if the market caps of GHIL or FITX have even a shred of common sense to them.
I’ll talk to the Supremos soon and get their take on what I’m missing, and I’ll be happy to report back if they make their case well. It would be nice for a grow play to establish a solid business plan from seed to sale, and I hope C.SL is the company that can do it. If only so the comment trolls will quit the conspiracy theories.
In good news, Cannabis Technologies
, Stock Forum
) listed on the OTCQB
two days ago and exploded. If you followed my reporting earlier in the month and bought in, you’ve basically doubled your money.
YOU ARE WELCOME.
NOTE: Next Gen Metals and Cannabis Science are Stockhouse Publishing marketing clients. They have not paid for coverage in this column, nor do I own the stock. As a rule, I don’t own any stocks that I write about. If I trash your deal, it's because you need to do better, not because it'll send my kid to college.
Find more marijuana sector coverage at http://www.stockhouse.com/discovery/marijuana
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