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Preparing for Green Wave 3.0: The Shopping List (HEMP, CGRW, GTEH, CGC, TLRY, MJNA)

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You know it’s coming. It’s just a matter of when, not if.

Stocks in the hemp, CBD, and cannabis space are oversold, overly beaten down, and sorely undervalued on a macro basis given the big-picture process underway driving the mainstreaming of this formerly niche market. This is 5th grade arithmetic. It doesn’t take an Ivy League MBA to see the inevitability of the long-term trend.

The only real drama here is whether it starts this month or in April, or June.

We’re talking about an end-market that is set to grow by triple-digit percentage leaps every year for the next half decade at least. This is the sound of inevitability. And that sound needs an investor shopping list. We submit the following: Hemp Inc (OTCMKTS:HEMP), Cannagrow Holdings Inc (OTCMKTS:CGRW), GenTech Holdings, Inc. (OTCMKTS:GTEH), Canopy Growth Corp (NYSE:CGC), Tilray Inc (NASDAQ:TLRY), and Medical Marijuana Inc (OTCMKTS:MJNA).

 

Hemp Inc (OTCMKTS:HEMP) just announced that its wholly-owned subsidiary, Industrial Hemp Manufacturing, LLC (IHM), is now fulfilling a $1 million dollar sales agreement for its DrillWall, the company’s proprietary kenaf-hemp blend natural Loss Circulation Material (LCM) product for the oil and gas well drilling industries.

According to the release, “the Company has executed a sales agreement to sell $1 million worth of DrillWall(TM) over the course of one year. According to Hemp, Inc. CEO, Bruce Perlowin, IHM received its first $30,000 payment and shipped the first batch of DrillWallTMout about a month ago. Yesterday, another $60,000 payment was received for the second batch of DrillWallTM. IHM is based in Spring Hope, North Carolina, and is the production facility for DrillWall(TM), along with other industrial hemp products.”

Hemp Inc (OTCMKTS:HEMP) was founded in 2008. The company has a reputation as one of the more controversial enterprises, even by the standards of either the OTC or the cannabis patch, which certainly paints a picture.

In any case, the company is making strong strides toward reshaping its image as a legitimate emerging leadership play in the industrial hemp space. Hemp Inc understands its mission to be a provider of “green solutions that help make the world a better place to live. We support products that are eco-friendly, organic, healthy and solutions that replace many petroleum-based products.”

“Hemp Inc.’s wholly-owned subsidiary Industrial Hemp Manufacturing, LLC purchased the largest decortication plant in North America, which is located in Spring Hope, North Carolina. The plant is housed in a 70,000,000 square foot warehouse on 9 acres. The company will start producing fiber, loss circulation materials (LCM) and absorbents from kenaf and later from hemp.”

That narrative continues forward to include the concept that “Hemp, Inc. will produce a product for drilling rigs called “lost circulation material” (LCM), which is used for maintaining the seals when drilling for water, oil, gas, and any other liquid or gas. This product alone is capable of producing millions of dollars in revenue since some of the largest oil companies in the world will be our primary customers.”

 

Cannagrow Holdings Inc (OTCMKTS:CGRW) recently announced that Category One Botanicals, LLC (C1B), the licensed grower at the Colorado Buffalo Ranch Grow Facility, has undergone a change of ownership. Dr. John P. Janovec, Ph.D., has acquired 100% ownership of C1B. This acquisition by Dr. Janovec includes the State Cultivation License, the current sub-lease agreement with CannaGrow Holdings Inc., and all equipment owned by C1B.

Delmar Janovec, CEO, stated, “This change of ownership with our tenant, Category One Botanicals, is another step in a carefully thought out master plan. Dr. Janovec’s production, processing, and team leadership expertise has placed him at what many view as the top of the Cannabis Industry in the State of Colorado. Under his direction of operations rooted in a scientific outlook, the production, yield, and quality of C1B product at the Colorado Buffalo Ranch Facility have reached the top tier.”

Cannagrow Holdings Inc (OTCMKTS:CGRW) trumpets itself as a company that develops, designs, and builds grow facilities for the legal cannabis industry in the State of Colorado.

It offers design, permitting, development and construction, site management, staffing, research, and other professional services.

CGRW has had a rough past week of trading action, with shares sinking something like -12% in that time. That said, chart support is nearby and we may be in the process of constructing a nice setup for some movement back the other way.

Cannagrow Holdings Inc (OTCMKTS:CGRW) managed to rope in revenues totaling $275K in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 20.3%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($16K against $4.8M, respectively).

 

GenTech Holdings, Inc. (OTCMKTS:GTEH) is a likely candidate for surprise of the year in the CBD space in 2020. The company is just about to launch its new subscription premium and CBD-infused coffee package product offering. That space is potentially huge and rapidly growing based on the research at this point. And there really isn’t any obvious and defined market leader – which means that GTEH is a candidate for precisely that role.

One of the other key points to make here is that the company just announced a contractual partner capable of helping GTEH ramp up its subscription coffee package without taking balance sheet risk up front. According to the release, the company announced the signing of a contractual deal with a leading West Coast CBD Food and Beverage company to handle storage, preparation, packaging, and shipping of all coffee products associated with the Company’s exciting new “Secret Javas” premium coffee subscription package.

“This contractual relationship will allow us to deal with rapid subscriber growth without having to scale up recklessly or inefficiently as the orders start to come in,” remarked David Lovatt, CEO of GenTech. “They have the capacity to handle that rapid growth. They also have the facilities to work with our premium coffees, which means we don’t have to compromise on quality or customer experience as the number of subscribers grows. The terms of this arrangement present our shareholders with tremendous value and no frontloaded balance sheet risk along the way.”

GenTech Holdings, Inc. (OTCMKTS:GTEH) will pay a minor monthly fee to the Contract Partner, who will also keep 8% of total sales and several pennies per package shipped. GenTech will keep the rest of the proceeds. GenTech will supply the coffee. The Contract Partner will provide storage, preparation, packaging, and shipping to accommodate all customer subscription orders.

“We know this is a huge and rapidly growing market, and we want to leverage that growth to drive shareholder value,” continued Lovatt. “But at the same, we don’t want to introduce new dilution or balance sheet risk to achieve that goal. This contract means we don’t have to invest heavily in the warehousing and setting up of a location to package and box and ship our monthly subscription orders. Given we are expecting there to be many thousands of subscribers, we didn’t want to scale up too quickly. This is an ideal arrangement to jumpstart growth in this segment.”

 

Canopy Growth Corp (NYSE:CGC) recently announced that it has submitted its final documentation for its beverage facility to Health Canada in late June 2019 and subsequently received the license in late November 2019.

According to the release, in the seven weeks since receiving the license, the Company has made meaningful progress towards scaling the production process for its cannabis beverages from lab scale to commercial scale.

“Canopy has had seven weeks to work with THC in the brand new beverage facility to scale processes and IP it has developed in the R&D environment,” said David Klein, CEO, Canopy Growth. “In order to deliver products that meet our customer’s high standards we are electing to revise the launch date while we work through the final details.”

Canopy Growth Corp (NYSE:CGC) engages in growing, possession, and sale of medical cannabis in Canada. Its products include dried flowers, oils and concentrates, softgel capsules, and hemps.

According to its own materials, the company offers its products under the Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, and Foria brand names. It also offers its products through Tweed Main Street, a single online platform that enables registered patients to purchase medicinal cannabis from various producers across various brands.

CGC managed to take in revenues of over $90M in its most recent quarterly data – which represents a rate of top line growth of nearly 250% on a year/year basis. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($3.2B against $372.8M).

 

Tilray Inc (NASDAQ:TLRY) has moved to expand its global senior leadership team with two strategic hires: Jon Levin as Chief Operating Officer, who was formerly with Revlon, and Michael Kruteck as Chief Financial Officer, who was formerly with Molson Coors and Pharmaca.

The fortification of its executive leadership team is welcome news given the company’s clear failure to execute over the past 18 months – a period featuring more than a 95% drop in the value of the stock due to skyrocketing debt-servicing costs relative to unimpressive organic growth and a sense of unfulfilled hype.

According to the company’s release, Mr. Kruteck’s appointment will be effective immediately after filing the Annual Report on Form 10-K for the year ended December 31, 2019. Mark Castaneda, Tilray’s current CFO, will take on the role of Strategic Business Development and continue to advise the company and assist in Kruteck’s transition.

Tilray Inc (NASDAQ:TLRY) has been hit on debt-servicing costs, but short interest appears high and a return of momentum in the CBD theme should pay off here.

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.

Tilray Inc (NASDAQ:TLRY) pulled in sales of $51.1M in its last reported quarterly financials, representing top line growth of 408.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($122.4M against $130.2M, respectively).

 

Medical Marijuana Inc (OTCMKTS:MJNA) is one to avoid like the plague as a dilution monster that massively overhypes its model and makes wild and wholly unsubstantiated claims about its financial performance without ever producing regularly audited financials or uplisting off the pink sheets despite many years of apparently “raking in millions”. None of that makes any sense at all. As we said, avoid this stock like the plague.

To add to the story, the company just announced that Daniel Miller has joined its subsidiary Kannaway. According to the release, Miller, in partnership with Kannaway as their new spokesperson, has created the world’s first cannabis fitness program and is developing a new fitness-based product line to support that program.

Medical Marijuana Inc (OTCMKTS:MJNA) casts itself as an investment holding company that operates in the medical marijuana and industrial hemp markets. Its products range from patented and proprietary based cannabinoid products to seed and stalk or isolated high-value extracts manufactured and formulated for the pharmaceutical, nutraceutical, and cosmeceutical industries.

MJNA’s subsidiary, Kannaway, LLC, is a network sales and marketing company specializing in the sales and marketing of hemp-based botanical products. Kannaway currently hosts weekly online sales meetings and conferences across the United States, offering unique insight and opportunity to sales professionals who are desirous of becoming successful leaders in the sale and marketing of hemp-based botanical products

MJNA licenses its proprietary testing, genetics, labeling and packaging, tracking, production, and standardization methods for the medicinal cannabinoid industry. It engages in the research and development of cannabinoid-based pharmaceuticals; and marketing and distribution of cannabidiol hemp oil-based products.

In addition, MJNA provides management support and services to cooperatives, collectives, health and wellness facilities, and medical clinics; and consulting and securities services to businesses and individuals in the legal cannabis industry. Further, it focuses on the treatment of pain and other medical disorders with the application of chewing gum-based cannabis/cannabinoid medical products, sportswear and more.”

Business

Acreage Holdings Inc (OTCMKTS:ACRGF) Inaugurates A Medical Dispensary – The Botanist In Spring Hill, Florida: Larissa Herda Resigns From The Board of Acreage

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Acreage Holdings Inc (OTCMKTS:ACRGF) inaugurated The Botanist in the Spring Hill, Florida. It is the first medical cannabis dispensary of Acreage in the state. The company now holds consulting and management services and other accords that include pending takeovers for thirty-two operational dispensaries in thirteen states that comprise fourteen The Botanist branded dispensaries. Acreage invests in cannabis industries.

The Botanist Brand

The Botanist Brand, which is developed by Acreage, is a product and retail brand with deep roots in wellness and health. It helps individuals to maintain healthy lifestyles using the holistic power of cannabis. The Botanist provides a wide gamut of products derived from cannabis. It also features a retail design – the science meets nature, which is reminiscent of the nineteenth-century botanist laboratory. The Botanist in the Spring Hill boasts its signature green foliage wall and a private consultation room and provides an environment for enthusiasts like you to know about the healing properties of cannabis plants from the trained specialists in patient-care.

Larissa Herda resigns from the board

According to a communiqué from Acreage, Larissa Herda has relinquished as a member of the board. Kevin Murphy, Chief Executive Officer and Chair of Acreage said the company conveyed thanks for her exceptional services all along its journey since joining the board in November 2018 and wished success in her future endeavors.

Closes previously announced credit facility

Acreage has successfully closed the previously announced credit facility of $100 million. It has drawn $21 million from this credit facility. The subsidiary of Acreage – IP Borrower has also borrowed $22 million from IP Investment Company LLC.

Acreage has agreed to make monthly payments at an annual interest of 3.55% on the first advance, 1.85% on the second advance, and 1.55% for the third advance for the first year. It will negotiate interest rates for the second year. IP Borrower provides a guarantee for the credit facility. It will also provide security of $22 million from the loan transaction. The amount of $22 million will be blocked in the account as a safety to the Institutional lender.

The Borrower needs to provide cash collateral to draw the balance amount of $78 million. However, the institutional lender will not hold any security in the subsidiaries of Acreage or Acreage.

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TerrAscend Canada Inc, A Subsidiary Of Terrascend Corp (OTCMKTS:TRSSF), Enters A $80.5 Million CAD Loan Financing Accord With Canopy Growth Corp (NYSE:CGC)

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TerrAscend Canada Inc, a subsidiary of Canopy Rivers Inc (OTCMKTS:CNPOF), has entered into an $80.5 Million CAD loan financing agreement with Canopy Growth Corp (NYSE:CGC). As per the terms of the deal, Canopy Growth has received 17.8 million common shares purchase warrants from TerrAscend.

Well-positioned to capitalize on opportunities

CEO and President of Canopy Rivers, Narbe Alexandrian, said it shows the confidence in TerrAscend’s capability to implement the strategic mandate for domestic and international markets. He said the team at TerrAscend is well-positioned to leverage the flourishing opportunities in the regulated jurisdictions using its network and resources. Narbe is pleased with the support extended by Canopy Growth for its portfolio company – TerrAscend.

Proceeds for general corporate purposes

TerrAscend Canada will use the proceeds to fund the Canadian operations and for general corporate purposes. It will also use the funds to repay indebtedness and to support global expansion and its Arise Bioscience U.S. hemp division.

Receives a permit to cultivate medical marijuana

TerrAscend has announced the receipt of a permit from the New Jersey Department of Health to cultivate medical marijuana. Its subsidiary TerrAscend NJ will commence the cultivation immediately at its facility situated in Boonton Township, northern New Jersey. It is the second entity in New Jersey among the six applicants selected in December 2018 by the Department of Health. TerrAscend NJ can commence manufacturing after the receipt of dispensing and additional processing approvals. It can manage up to three dispensaries in the northern area of New Jersey.

66,000 patients’ gains access to the medical marijuana program

More than 66,000 patients have gained access to the medical marijuana program as of January 2020 in New Jersey. The registered medical patients’ count has almost tripled since early 2018.

TerrAscend has purchased a sixteen-acre site in Boonton Township. It commenced the construction on an area of 227,000 Sq. Ft. under the first phase to cover cultivation, support space, and processing on 80,000 Sq. Ft. The first phase will become operational in H1 2020.

TerrAscend will supply the wholesale customers and its dispensaries by sourcing the cannabis products from its scaled cultivation capacity. It also expects to meet the demand for fifteen new retail dispensaries using cannabis from the scaled cultivation facility.

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Medipharm Labs Corp (OTCMKTS:MEDIF) Expects To Begin Supply Of Pharmaceutical-quality cannabis oil products in Australia

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Medipharm Labs Corp (OTCMKTS:MEDIF) will supply pharmaceutical quality cannabis oil products in Australia. It is on the backdrop of a two-year agreement signed between Compass Clinics Australia Pty Ltd and MediPharm Labs Australia Pty Ltd.

Provides education and consultation services

Compass Clinics provides education and consultation services to Australian patients who look to access medical cannabis products. The company inaugurated its first two clinics last year in Australia. It will now commence the sale of its own branded products. Compass Clinics expects to inaugurate additional clinics in 2020. It offers consultation services for the patients, who want to get medical cannabis products via SAS (Special Access Scheme) or Authorized Prescriber pathways, in Australia. The company also uses the services of third-parties to sell cannabis oil and cannabis products.

Complies with minimum requirements to import cannabis

Chief Executive Officer of Medipharm Labs, Pat McCutcheon, said the company is excited to work with leading players like Compass Clinics to provide high-quality cannabis products to medical patients in Australia. The partnership with Cannabis Clinics helps the company to comply with the minimum requirements set by the Australian Government to import cannabis products.

Recently received import licenses, and Australian GMP certification helps the company to increase demand for its Pharma quality products. It also helps to expand its presence in the emerging worldwide markets and Australia.

Distribution of cannabis oil products in Australia

Medipharm Labs Australia will commence the supply of white-labeled cannabis oil under the trademark of Compass Clinics. The company will start receiving the formulated cannabis oil products from the Canadian TGA GMP certified facility of Medipharm Labs. It will distribute imported cannabis oil products to Compass Clinics in Australia.

President of Compass Clinics, David Martyn, said the company is pleased to offer GMP certified best-in-class, and pharmaceutical grade gel caps and cannabis oils to the growing patient base in Australia. He said Compass Clinics will benefit from its association with a leading producer of cannabis products – Medipharm Labs in serving its prevailing patient base. It also helps to expand its footprint in the surging medical cannabis space worldwide.

New scheduling status for CBD

The Australian authorities expect to consider a new scheduling status for cannabidiol. It expects to ensure the availability of CBD in low dosages early this year. The TGA is currently reviewing the safety of lower dosages of CBD.

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