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Has the Trap Sprung for Tilray Inc (NASDAQ:TLRY)?

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While market analysts talk of a “weed bubble”, it might be better understood as a Tilray Inc (NASDAQ:TLRY) bubble. The stock has clearly rewritten the record book as far as valuation standards, perhaps matching up unfavorably with past historic bubbles at this point. The movement has been built of powerfully hyped news stories, a very small float, and a possibly cruel share lock-up. Nonetheless, the company continues to put out headlines that can pass as currency on the internet among those looking for thumbs-ups and reposts by the momentum crowd.

The last such announcement as the company’s release noting that it has received its sales license from Health Canada to sell cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR). According to the release, “the license will allow High Park Farms to supply and sell finished cannabis products within the ACMPR as well as sales in anticipation of the launch of the adult-use market in Canada upon its legalization on October 17, 2018.”

Tilray Inc (NASDAQ:TLRY), currently trading at a market capitalization of $12.87B, engages in the research, cultivation, processing, and distribution of medical cannabis.

The company offers its products in Argentina, Australia, Canada, Chile, Croatia, Cyprus, the Czech Republic, Germany, New Zealand, and South Africa. Tilray, Inc. was incorporated in 2018 and is headquartered in Nanaimo, Canada.

According to the company’s IPO announcement, “Tilray, Inc., a vertically-integrated and federally-licensed cannabis cultivator, processor and distributor, today announced the pricing of its initial public offering of 9,000,000 shares of Class 2 common stock. 6,524,000 shares of Class 2 common stock will be offered in the United States and certain other countries except Canada at a price to the public of US$17.00 per share for a total offering size of US$110,908,000 and 2,476,000 shares of Class 2 common stock, which we refer to as Subordinate Voting Shares, will be offered in Canada and certain other countries except the United States at a price to the public of CAD$22.451 per share for a total offering size of CAD$55,586,200. Based on current exchange rate1, the total combined offering size is approximately US$153,000,000.00.”

One of its key subsidiaries is High Park, which was launched to produce and distribute world-class cannabis brands and products for the Canadian market. Based in Toronto and led by a team with deep experience in cannabis and global consumer brands, High Park has secured the exclusive rights to produce and distribute a broad-based portfolio of cannabis brands and products in Canada, subject to applicable laws and regulations.

In addition, High Park has developed new brands and products for the Canadian market. Upon the coming into force of federal legalization of cannabis for adult-use and corresponding provincial legislation, High Park anticipates fulfilling adult-use supply agreements and purchase orders in Quebec, Ontario, British Columbia, Manitoba, Nova Scotia, Prince Edward Island, Northwest Territories and Yukon on October 17, 2018.

 

Priced In?

As we outlined in our introductory section, the company just announced that it has received its sales license from Health Canada to sell cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR).

“This license marks a milestone for High Park as we aim to solidify our position as a leading provider of adult-use cannabis in Canada,” said Adine Carter, Chief Marketing Officer of High Park. “We look forward to supplying provinces and territories with a variety of world-class cannabis brands and products in anticipation of the launch of the adult-use market on October 17, 2018.”

Tilray Inc (NASDAQ:TLRY) has a weak balance sheet, with a total debt-to-equity ratio of 1.55. One should also note that debt has been growing rapidly over recent quarters. TLRY is pulling in trailing 12-month revenues of $28 million, while the company continues to lose money overall.

Nonetheless, this is a high-momentum story, even if it might be wildly overpriced even by cannabis – or tulip circa 1637 – standards.

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Phoenix Life Sciences International (OTC: PLSI)

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In the healthcare sector, Phoenix Life Sciences International Limited operates as a Biotech and Pharma company. It engages in research on organically produced plants such as cannabis and manufactures and distributes adaptive healthcare solutions. Its natural healthcare solutions are targeted at a wide array of conditions including diabetes, pain, cancers, and gastrointestinal problems. For the next five years, the company aims to expand its services to at least 2.5 million patients around the world.

The shares of the company are available for trading over the counter (OTC) under the ticker symbol “PLSI.” It has its headquarters in Denver, Colorado.

Industry Overview
The healthcare sector has been traditionally stable. Companies in the biotech and pharmaceutical industry especially have experienced tremendous advances in recent years. The fast-growing cannabis industry has contributed in many ways to the growth of pharmaceutical and biotech firms. Many of them are investing millions in the medical cannabis market to develop cannabinoid products.

The prospect in the cannabis market is great and should be explored. And Phoenix Life Sciences International Limited is doing that.
P
LSI: A Successful Product of Strategic Partnerships
The most recent of Phoenix Life Sciences International Limited’s (PLSI) deals came through on June 4, 2019. The company announced it had signed an exclusive 25-year Diabetes Management Program deal with the Ministry of Health of the Republic of Vanuatu.

As part of the deal, it would also be granted a global medical cannabis export license. Vanuatu is estimated to have over 50,000 Type 2 diabetics and an expected 50,000 high-risk pre-diabetics. This deal is in furtherance of the company’s strategy of international market expansion.

Financials Indicate Long-Term Growth
For the nine months ended November 30, 2018, Phoenix Life Sciences International Limited did not report its revenues. However, it recorded a net loss of $3.3 million mainly due to an increase in operations expenses. Basic Earnings per Share (EPS) also decreased during the same period.

Following the 2018 merger and consolidation, to realise its plans to uplist to the OTCQB market, the company recently filed its 2017 and 2018 quarterly reports, and will also be subsequently making filings to stay current with its reporting requirements with the SEC. Uplisting will enable the company to access more funds for the execution of its next developmental stages.
Conclusion

The fundamentals of Phoenix Life Sciences International Limited are not presently attractive. The company is being burdened with rising operations expenses. This is expected as the company just passed through a major restructuring process and is focused on expanding to international markets.
The international expansion efforts should result in increased revenues. The uplisting would also create more access to funds. Both would contribute to long-term growth.

Moreover, at the current market price of $10.24, the company (OTC: PLSI) is trading far away from its 52-week high of $48.25, meaning a lot of upside potential. Hence, for the long-term investor, this might be a good time to buy.

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MARKETS

The Bounce Takes Hold in Medmen Enterprises Inc (OTCMKTS:MMNFF) on Geographic Expansion

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Medmen Enterprises Inc (OTCMKTS:MMNFF) has been one of our favorite ideas in the cannabis space in this pullback because the company’s strong geographic diversification in the US marketplace. As a case in point, the company just announced that it has signed a definitive agreement to acquire control of Kannaboost Technology Inc., giving the company a stronghold in the Arizona market.

According to the company’s most recent press release, “Level Up holds licenses for two vertically-integrated operations in Arizona, which include retail locations in Scottsdale and Tempe, as well as 25,000 square feet of cultivation and production capacity in Tempe and Phoenix. As part of the transaction, the Company will also receive a 40 percent stake in top-selling brand K.I.N.D. Concentrates (“K.I.N.D.”), which is currently distributed in over 90 percent of the dispensaries in Arizona.”

Medmen Enterprises Inc (OTCMKTS:MMNFF), together with its subsidiaries, operates in the cannabis space in the United States.

MMNFF, more broadly, is a leading cannabis company in the U.S. with assets and operations across the country. Based in Los Angeles, MedMen brings expertise and capital to the cannabis industry and is one of the nation’s largest financial supporters of progressive marijuana laws.

The company cultivates, produces, possesses, uses, and distributes/retails cannabis in the recreational and medicinal cannabis marketplace. As of June 6, 2018, it owned and operated 18 licensed cannabis facilities under the MedMen brand name in California, Nevada, and New York.

The company frames itself as “the preeminent cannabis company in the United States” with multiple assets and operations in California, Nevada, New York, and Florida. MedMen owns and operates licensed cannabis facilities in cultivation, manufacturing, and retail, and is one of the most well-recognized cannabis brands in the world today.

Headquartered in Los Angeles, MedMen employs more than 800 workers across the United States. It was founded in 2010 by Adam Bierman and Andrew Modlin, two visionary entrepreneurs who saw not just a tremendous business opportunity in the growing legalization of marijuana, but a chance to re-define our society’s relationship with cannabis. MedMen supports sensible, clear and just drug laws.

The Company is the single largest financial supporter of progressive marijuana laws at the local, state and federal levels, giving directly to pro-legalization groups, industry organizations and political candidates.

The company is headquartered in Culver City, California. MedMen Enterprises Inc. is a subsidiary of The Medmen Of Nevada 2 Llc.

Moreover, the company operates as a cannabis company in the United States. The company cultivates, produces, possesses, uses, and distributes/retails cannabis in the recreational and medicinal cannabis marketplace. It owns and operates 19 licensed facilities in California, Florida, Nevada, and New York. The company is headquartered in Culver City, California.

 

Onward and Upward

As noted above, MMNFF just announced that it has signed a definitive agreement to acquire control of Kannaboost Technology Inc. and CSI Solutions LLC, collectively referred to as “Level Up,” in a cash and stock transaction valued at $33,000,000.

The stock is up on the news. Overall, shares of MMNFF have rallied about 20% over the past week. That sets up an interesting context for the action tomorrow. Shares of the stock have powered higher over the past month, rallying roughly 42% in that time on strong overall action.

“We have worked tremendously hard to build a company that puts the needs of patients in our local communities first,” said Michael Colburn, co-founder of Level Up. “This marks an exciting new chapter for our brands and for the medical marijuana patients who have supported us,” added Daryll DeSantis, Level Up co-founder.

Medmen Enterprises Inc (OTCMKTS:MMNFF) has about $12.2M in cash on the books against to a mountain of over $86M in total current liabilities. The company has been pulling in significant revenues, with over $7M in Q1 of this year, representing over 630% quarterly y/y growth on the top line.

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MARKETS

Medmen Enterprises Inc (OTCMKTS:MMNFF) Levels Up with New Acquisition

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Medmen Enterprises Inc (OTCMKTS:MMNFF) shares ripped on Thursday to break above the stock’s 50-day simple moving average. The move came apparently in response to the company’s announcement that it has signed a definitive agreement to acquire control of Kannaboost Technology Inc. and CSI Solutions LLC, collectively referred to as “Level Up,” in a cash and stock transaction valued at $33,000,000.

According to the release, “Level Up holds licenses for two vertically-integrated operations in Arizona, which include retail locations in Scottsdale and Tempe, as well as 25,000 square feet of cultivation and production capacity in Tempe and Phoenix. As part of the transaction, the Company will also receive a 40 percent stake in top-selling brand K.I.N.D. Concentrates, which is currently distributed in over 90 percent of the dispensaries in Arizona.”

Medmen Enterprises Inc (OTCMKTS:MMNFF), together with its subsidiaries, operates in the cannabis space in the United States.

MMNFF, more broadly, is a leading cannabis company in the U.S. with assets and operations across the country. Based in Los Angeles, MedMen brings expertise and capital to the cannabis industry and is one of the nation’s largest financial supporters of progressive marijuana laws.

The company cultivates, produces, possesses, uses, and distributes/retails cannabis in the recreational and medicinal cannabis marketplace. As of June 6, 2018, it owned and operated 18 licensed cannabis facilities under the MedMen brand name in California, Nevada, and New York.

The company frames itself as “the preeminent cannabis company in the United States” with multiple assets and operations in California, Nevada, New York, and Florida. MedMen owns and operates licensed cannabis facilities in cultivation, manufacturing, and retail, and is one of the most well-recognized cannabis brands in the world today.

Headquartered in Los Angeles, MedMen employs more than 800 workers across the United States. It was founded in 2010 by Adam Bierman and Andrew Modlin, two visionary entrepreneurs who saw not just a tremendous business opportunity in the growing legalization of marijuana, but a chance to re-define our society’s relationship with cannabis. MedMen supports sensible, clear and just drug laws.

The Company is the single largest financial supporter of progressive marijuana laws at the local, state and federal levels, giving directly to pro-legalization groups, industry organizations and political candidates.

The company is headquartered in Culver City, California. MedMen Enterprises Inc. is a subsidiary of The Medmen Of Nevada 2 Llc.

Moreover, the company operates as a cannabis company in the United States. The company cultivates, produces, possesses, uses, and distributes/retails cannabis in the recreational and medicinal cannabis marketplace. It owns and operates 19 licensed facilities in California, Florida, Nevada, and New York. The company is headquartered in Culver City, California.

 

A Boost

As we discussed earlier, MMNFF just announced that it has signed a definitive agreement to acquire control of Kannaboost Technology Inc. and CSI Solutions LLC, collectively referred to as “Level Up,” in a cash and stock transaction valued at $33,000,000.

“This acquisition strengthens our presence in one of the top cannabis markets in the U.S.,” said Adam Bierman, MedMen chief executive and co-founder. “We will continue to identify highly accretive transactions in core states and remain laser-focused on executing our retail playbook.”

MMNFF has responded well, rallying about 11% over the past five days, with this news clearly driving the action. Shares of the stock have powered higher over the past month, rallying roughly 34% in that time on strong overall action.

“We have worked tremendously hard to build a company that puts the needs of patients in our local communities first,” said Michael Colburn, co-founder of Level Up. “This marks an exciting new chapter for our brands and for the medical marijuana patients who have supported us,” added Daryll DeSantis, Level Up co-founder.

Medmen Enterprises Inc (OTCMKTS:MMNFF) had no reported sales in its last quarterly financial data. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($0 against $0, respectively).

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OTC: PLSI

The Next Big Global Cannabis Trade


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OTC: PLSI

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