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Innovation Has Cronos (CRON) Looking Ready To Shake Up The Cannabis Industry

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The marijuana business is maturing nicely, but the stocks are still keeping it exciting as we round into the last half of 2018.

Blue chip Maricann (OTC:MRRCF, CA:MARI), for instance, is down 50% this year on news of maybe-shady former director doings. Even though the company is executing its plans perfectly.

Meanwhile, pink sheet Namaste (OTC:NXTTF) has doubled simply for growing sales from fair to modest. Even though its about 17th in revenues among US and Canadian MJ companies.

But there’s one theme investors should watch for long-term success: international expansion. And there are three good companies, Cronos, Tilray, and Canopy Growth that are the best bets to excel in this area.

Cronos

Good news keeps coming out of Cronos (CA:CRON; Nasdaq:CRON). Expansion plans are so ambitious, Cronos is establishing itself as a world leader for marijuana plant genetics. It’s turning that into an international asset, too. So far, it has growth facilities in Canada, Australia, Columbia and Israel. Those are all traditional field or indoor growing facilities. It’s the thing its doing differently that has investors excited.

Cronos is the first grower to announce it’s undertaking a radically different approach to meeting market demand for high quality cannabidiols. Call it the microbrewery model. Cronos is partnering with Gingko Bioworks to produce cannabidiols from genetically engineered strains of yeast.

The experiment, which just might work, would drastically streamline production. Growing whole plants is time consuming and expensive. Fermenting yeast isn’t.

This model has the potential to upend the entire medical marijuana industry, which is becoming radically more sophisticated. A few years ago, the only cannabinoids of interest to most buyers were THC (the one that makes you high) and CBD (cannabidiol, the non-high one use to treat children with seizures and many other ailments).

Those two cannabinoids are predominant in the plant, but others may be even more powerful or better suited to different purposes. The drawback is that CBG, CBN, CBC, CBE, CBT, THCA, THCV and more occur in small amounts making them expensive and difficult to extract in quantity.

One analyst has banged Cronos for its high R&D spending. But that is how this company became the leader in plant genetics. Its spending is on strategic target. The problem here is that investors have gotten ahead of themselves.

Cronos’ market cap is now $2.04 billion. That puts it in the company of industry giants with much greater sales and better cash flow.

This irrational exuberance shows up in its enterprise value muliutples: EV/Rev 34 and EV/EBITDA 174 X.

A few other marijuana companies are just as astronomically priced, throwing the averages off a bit. But the median number for those valuations in the marijuana universe are EV/Rev 25 and EV/EBITDA 34.

So, judged among its peers, Cronos is seriously overvalued. In turn, the whole marijuana sector carries much higher valuations that other growth industries like information technology and computer design.

Many investors are hoping that the strong sales growth, ambitious expansion plans and yeast experiment will make CRON attractive to a buyer. The name Diageo is often whispered.

Chill on that. It could happen for CRON. But a buyout could happen for any of the good marijuana businesses.

We suggest letting the price settle a bit. The share price met resistance around $8 earlier this year. That level should now be its new support. The stock may not go all the way back to that level, but anything under $10 would be a fair price now.

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Cannabis Control Commission Grants License To Curaleaf Holdings Inc (OTCMKTS:CURLF) To Inaugurate Retail Dispensary In Massachusetts

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Massachusetts Cannabis Control Commission has granted final license approval to Curaleaf Holdings Inc (OTCMKTS:CURLF) to inaugurate an adult-use cannabis dispensary at 124 Street in Ware, Massachusetts. The company expects to schedule the post-final inspections to inaugurate adult-use location by early March this year.

Opened first adult-use location in November 2019

Curaleaf has inaugurated its adult-use retail cannabis location in November 2019 in Oxford, Massachusetts. On January 29, 2020, the company opened the second adult-use location in Provincetown. It also established medical use cannabis facility in Hanover.

Reliable and high-quality medical use products

Chief Executive Officer of Curaleaf, Joseph Lusardi, said the company’s main strategy is to provide reliable and high-quality medical use cannabis products to the customers and patients in Massachusetts. The company is pleased to open a third adult-use retail cannabis dispensary in the commonwealth of Massachusetts.

Adds twenty new jobs

Patrick Jansson, President of Curaleaf Massachusetts, said the company will add twenty new jobs and contribute to the local economy. It yearns to establish a positive and impactful relationship with the local community. The company is pleased to bring its business to the Ware, Hampshire County. Curaleaf operates 53 dispensaries in the US.

Announces Expiration of waiting period for Grassroots

Curaleaf said the waiting period under the HSR (Hart-Scott-Rodino Antitrust Improvements Act of 1976) has expired to take over GR Companies, Inc. (“Grassroots”). Both the firms will work together to obtain state and regulatory approvals and complete the transaction in spring 2020.

Joseph said the company is excited to achieve milestones because it strives to acquire Grassroots. Following the takeover, Curaleaf expects to establish a strong presence in the Midwest. The customers and patients can get access to its industry-leading brands. Curaleaf will continue to focus on executing its strategy and enjoy the benefits of brand recognition and greater scale in the new and existing markets.

Grassroots is engaged in the sale of reliable cannabis products that improve the lives of people from all backgrounds. The customers can enjoy a unique, education, and wellness-focused dispensary experience. It holds facilities in Maryland, Michigan, Vermont, Ohio, Oklahoma, Pennsylvania, Nevada, Illinois, Connecticut, Arkansas, and North Dakota.

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Starseed Medicinal Inc, A Subsidiary Of WeedMD Inc (OTCMKTS:WDDMF), Becomes A Preferred Supplier Of Medical Cannabis To myHSA Program Participants In Canada

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Starseed Medicinal Inc, a subsidiary of WeedMD Inc (OTCMKTS:WDDMF), has become a preferred supplier of medical cannabis to the myHSA program in Canada. Around 51,000 people take part in this program. myHSA operates a digital wellness and reimbursement program with the help of more than 8,500 employers. The digital platform of myHSA provides an easy to navigate and interactive menu.

Employers ensure healthy living of employees

Several employers have recognized the need for ensuring healthy living for their employees. Chief Executive Officer of WeedMD, Angelo Tsebelis, said the company is excited to enter into a pact with myHSA because it looks for access to quality cannabis for more than 51,000 participating members. The eligible participants of myHSA can now access the patient portals of WeedMD and the full patient medical cannabis program. myHSA’s participants can claim reimbursement.

Top-quality products to employees

Chief Executive Officer of myHSA, Tim Kane, said the company needs to ensure that its employees are in full control of their wellness journey. Hence, it partners with Starseed, which offers high-quality cannabis products, to provide top-quality products to its employees. The company has developed a platform that allows the participants to prudently spend their dollars on wellness benefits.

Receives award for best places to work 2020

WeedMD has received an award from the London Inc. Magazine for best places to work in 2020 among the largest businesses. Editor and founder of London Inc. Magazine, Gord Delamont, said these awards are presented to employers in the Southwestern Ontario region in recognition of their efforts to creating the best working environment. It congratulates WeedMD for promoting a trusted and positive work environment that motivates the employees to produce quality products.

Shareholders give nod for $25 million investment

WeedMD is pleased to announce that its shareholders gave the nod for the subscription receipts exercise from LiUNA pension of Eastern and Central Canada and the private placement for $25 million gross proceeds. Hence, the subscription receipts will be converted into 23.079 million common shares of WeedMD. Executive Chairman of WeedMD, George Scorsis, said the shareholders’ approval and for the equity investment of $25 million has strengthened the balance sheet.

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Innovative Industrial Properties Inc (NYSE:IIPR) Acquires Toledo, Ohio processing facility And Leases Back To Green Thumb Industries Inc (OTCMKTS:GTBIF)

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Innovative Industrial Properties Inc (NYSE:IIPR) has acquired Toledo, Ohio processing facility from Green Thumb Industries Inc (OTCMKTS:GTBIF) in a deal valued at $2.9 million. The company will lease back the facility to Green Thumb under a long term accord. Green Thumb will continue to operate the facility.

Green Thumb to improve production capacity

Green Thumb will make improvements to the facility to enhance the manufacturing facility. In return, Innovative Industrial will make a payment of up to $4.3 million. Therefore, Green Thumb will receive a total amount of $7.2 million from Innovative Industrial. It is the second transaction of Innovative Industrial with Green Thumb. The company already purchased and leased back property that comprises cannabis cultivation/ processing facility based in Danville, Pennsylvania to Green Thumb in November 2019.

Uses funds for capacity expansion

Chief Executive Officer and founder of Green Thumb, Ben Kovler, said Innovative Industrial offers a real estate solution, which is flexible, to meet its expansion requirements at the Toledo processing facility. Green Thumb will use the funds for capacity expansion and strategic initiatives.

Green Thumb operates four Rise Stores

Green Thumb also owns and manages four Rise stores in Lorain; Cleveland; Lakewood; and Ohio in Toledo. The company expects to inaugurate another store in Lakewood in Q1 2020. It already commenced sales of medical cannabis in Ohio last year. The company maintains a patient base of 80,000 as of December 2019. More than eight thousand caregivers are registered in the medical cannabis program in the state. It has clocked sales of $60 million in the first year. Green Thumb is dedicated to ensuring well being of the patients by providing safe and high-quality cannabis products.

Chief Executive Officer and President of Innovative Industrial, Paul Smithers said the company is pleased to join forces again with Green Thumb as a real estate partner for the medical cannabis processing facility of Green Thumb. Innovative Industrial is pleased with the commitment and strength of Green Thumb to local communities. According to Green Thumb, over two hundred equity applicants took part in its LEAP (Social Equity Licensing Education Assistance Program).   The branded cannabis products of Green Thumb comprise Rhythm, Dog Walkers, Incredibles, Beboe, and the Feel Collection.

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