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Will McKesson Make Maricann Canada’s Next Unicorn Stock?

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Now you can add McKesson to the list of major corporations taking a stake in the legitimate marijuana industry with a recent deal to partner with medical marijuana grower Maricann (CNQ:MARI).

Suddenly, the formerly quiet grower that didn’t even have a stock market listing until this April is becoming the most talked about company in Canada’s medical marijuana universe.

The McKesson deal is just one of the major events pushing it into the spotlight, but it’s the one that has immediate upside potential.

McKesson, with $199 billion in annual sales, is the largest pharmaceutical distributor in the US and Canada. Its McKesson Canada division controls about 20% of Canada’s pharmacies. Ultimately the Maricann deal, which was announced quietly in August, will make Maricann the exclusive grower to supply medical marijuana products in McKesson’s five retail pharmacy chains.

Maricann Prepares to Take a Big Slice of the Market

Dundee Capital predicts that Canada’s medical marijuana sales will reach $3 billion by 2024.

Maricann is already selling direct to patients. That was a $4 million business last year, when the company first got approval from Health Canada. The company projects sales at $23 billion business next year (2018).

Now, with the McKesson venture, Maricann is preparing to sell product through regular pharmacies as well. This is likely to attract patients who prefer to buy medical marijuana near where they live, just as they do with their other medical supplies. With the two strong distribution channels at its command, you can see why Maricann stands ready to take a sizeable slice of Canada’s medical marijuana market.

The McKesson deal wasn’t the only startling news lately.

This fall, Canaccord Genuity named Maricann as its “Top Pick” among marijuana stocks

In the young marijuana business, a Canaccord blessing is like having angels proclaim its greatness. Canaccord is one of the three most influential investment banks in Canada’s marijuana industry. Its in-depth industry reports are widely read and followed. In the past, Canaccord has thrown its weight behind companies like Canopy Growth, Aurora Cannabis and Aphria—all of which have reached “unicorn” status, as companies with $1 billion or higher market caps.

That the Cannacord “Top Pick” rating came before news of the McKesson deal should give you an idea how strongly industry insider feel about Maricann’s outlook.

The real hint that Maricann was about to join the big leagues, though, came in June.  That was when MJIC added Maricann to both the North American Marijuana Index (35 public companies) and the Canadian Marijuana Index (18 companies). That’s very high profile.

And all this was hardly digested before news broke the next bombshell….

Maricann Is Fast approaching a 10X Canadian Expansion  

Maricann is definitely taking its place among the big growers already.

At present, it is operating from a 46,000 sq. ft. facility in Langton, Ontario that can produce about 2,200 kg of marijuana per year. But this is increasing rapidly.

Maricann is another 800,000 sq. ft. of growing space at that site. At full expansion, the Langton facility will be capable of producing 100,000 kg of marijuana.

The first phase of this expansion should be completed this winter.  That means that within six months, Maricann will be capable of adding another 25,000 kg to its annual production—about 10X what it’s growing now.

All systems are go. On Nov. 8, Health Canada lifted Maricann’s growing limitations at the Ontario operation and the new Maricann license increases its permitted capacity to 6,250,000 grams of marijuana on site at any one time.

This upgrade presents a 480% increase in production capacity for Maricann—above the full extent of the expansion that is currently being built, that is.

Germany Is Maricann’s Differentiator

Maricann stands out from the pack on several counts, but none more than its foray into the European markets.

In Germany, MARI has an option to buy an existing facility near Dresden that it will  convert to an indoor grow house. It’s a huge space—a 1.5 million sq. foot building in excellent condition that was formerly a Cargill meat packing plant.

The new German facility is almost twice as large as the Ontario expansion plans, and it should be ready to use within months.  If Maricann can achieve the same yields per square foot it is getting in Canada, the German operation could add another 47,000 kg to annual production–more than 20X what MARI produced last year.

Germany only recently approved medical marijuana, but there were no German companies ready to produce. Maricann, with its experience will likely be the first approved company to produce medical marijuana in Germany. This is a lead it’s likely to keep, too, because Germany only plans to issue 11 growing licenses. One of them will certainly have Maricann’s name on it.

Maricann Competes Hard on Cost, Too

As it builds out its added capacity, Maricann is perfecting its growing system so that it will be able to position itself as one of Canada’s lowest-cost producers. The company expects it will be able to produce high-grade medical marijuana at just  $1.34 per gram ($38 per ounce).

Even as medical marijuana prices fall, Maricann will easily remain profitable and very capable of undercutting most, if not all, its competitors.

 

Looking Ahead… A New Drug, More Growth, Enormous Value

The McKesson deal, Cannacord’s blessing, approval for more production…. All that should be more than enough to interest any investor, but the news just keeps coming.

In August, Maricann agreed to acquire NanoLeaf Technologies, a biotech that holds a number of licenses for pharmaceuticals and cosmetics. What that brings to MARI is the potential to market the first ever marijuana in a gel cap with verified standard dosages.

Nobody else has that. Maricann expects that the gel caps will be ideal for medical delivery of cannabis oils, which it produces at its Ontario facility.

But perhaps the most compelling reason for investors to load up on Maricann is that this well-financed, strongly growing company is also deeply undervalued. Based on revenues, it is selling at a 50%-60% discount to its marijuana industry peers.  On earnings to economic value basis, it’s at a 47% discount.

Cheap stock, strong growth, and industry respect—there’s a lot to love about Maricann.

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Green Organic Dutchman Holdings (OTCMKTS:TGODF) To Review Financing Alternatives For Construction Purposes

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Green Organic Dutchman Holdings (OTCMKTS:TGODF) has, over the years, been focusing on the production of premium organic cannabis products. The business guru has today disclosed details about its credit financing. According to its spokesperson, the company needs to complete the construction of a number of its business facilities. The facilities are in Ontario, Ancaster, and Phase 1a at Valleyfield, Quebec. Lately, the business has been reviewing some financial alternatives to see the ones to settle for.

The turn of events

In a statement, the company has revealed that the market conditions have been very dynamic and thus need from proper planning. It has, in the past, held discussions regarding some commercial bank facilities and equipment leasing in a bid to identify what would work. The company admits that the discussions were fruitful since it was able to chart the way forward. However, the main point of the discussion wasn’t arrived at. That was because most of the financing sources turned out to be inappropriate. The company says that most of them did not match the required timeframes. It says it had no otherwise but to start reviewing other alternatives.

Plans moving forward

The completion of these facilities is a costly undertaking, but the company seems quite determined.

An official working with The Green Organic Dutchman Holdings but who wanted his identity kept anonymous has made a point. He says that the company, at the moment, has no debt. However, it has about $56.7 million available in cash in Canada. It also has some $40.2 million that will take care of the company’s capital expenditures. The construction activities at the Ancaster are almost reaching completion according to sources. The business giant says that in a matter of about 6-weeks, it will have completed the construction activities here.

Green Organic Dutchman Holdings is optimistic it will get the financing that it requires. In that particular regard, it will channel the funds towards accelerating its commercial production. The goal is to increase its revenues by a significant margin.

So far, the company has gotten into several supply agreements. Some of them are with Alberta, British Columbia, and Ontario. The deal is to engage in the distribution of products on a nationwide scale.

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HEXO (OTCMKTS:HYYWF) Expects To Post Net Revenues Of $16.5 Million in Q4 2019 And $48.5 Million For FY 2019

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HEXO (OTCMKTS:HYYWF) expects to post net revenues of up to $16.5 million in Q4 2019. The company is hoping to post revenues of up to $48.5 million for FY 2019. It has withdrawn the previously announced outlook for FY 2020.

Q4 results below the estimates

Co-founder and Chief Executive Officer of Hexo, Sebastien St-Louis, said the net revenues of Q4 missed the forecast mainly because of reduced sales. He said the company is not happy with the results and will change operational and sales strategies to boost sales in the future.

The company is engaged in re-configuring the operations in the last quarter and would focus on high selling strains. Hexo began a new sales strategy to improve performance in the coming quarters.

Withdraws outlook for FY2020

A delay in getting the nod from government departments for the products extracted from cannabis together with store rollouts at a slower pace and pricing pressures are felt nationwide. A sluggish opening of retail stores has limited the reach of Hexo to significant customers in the market. It also sees an unpredictability to ensure the availability of cannabis-derived products because of delays in jurisdictional decisions and uncertainty in regulatory approvals in Canada. Therefore, Hexo decided to remove the previously announced forecast for FY 2020.

CEO said it is painful to withdraw the outlook for FY 2020. The company decided to withdraw the outlook because of the prevailing uncertainties in the market. Hexo is evaluating its operations and plans to improve efficiencies and achieve profitability. The company is focusing on strategic priorities to offer rich dividends to the shareholders in the long-term.

Hagens Berman alerts investors

Hagens Berman warned investors of an investigation into Hexo on violation of security laws. The firm informed investors to file a loss-form to find out if they qualify to recoup investment losses they have suffered in Hexo. The investigation team will check whether Hexo has misled the investors by exaggerating about its business model and the sales of cannabis products through the retailers.

Chief Finance Officer of Hexo, who joined the company a few months back, resigned abruptly. Following the exit of CFO, Christopher Carey, an analyst at Bank of America, has downgraded the stock to underperform.

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LeafBuyer Technologies Inc. (OTCMKT:LBUY) Reports 59% YoY Growth In Revenue Following Optimization Of Its Platforms

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LeafBuyer Technologies Inc. (OTCMKT:LBUY) has announced that its annual revenue for FY 2019 grew by 59%, reflecting the revenue booked this year against last year. This growth is above the industry average that currently stands at 24%.

Leafbuyer optimized platforms to be competitive

Kurt Rosner, the CEO of Leafbuyer, stated that they had spent the year optimizing their platforms to have the edge over competitors. He added that they were determined to provide unrivaled tech solutions for the fast-growing cannabis industry. Rossner said that the sales team has continued to execute the company’s strategy, and it is maintaining the momentum as fall approaches.

Over the past year, the company greatly expanded its reach to several states, including Oklahoma and California, among others. Thus has allowed the Leafbuyer to reach a wider audience and enabled targeted sales initiatives. In June this year, the company opened a satellite office in Los Angeles, which provided a centralized and reachable hub for the company’s West Coast customers. The Los Angeles office has sufficient staff to allow the Denver based sales representatives to focus on selling in the East Coast and Midwest regions.

Leafbuyer has expanded its marketing platform

Besides conventional online listing, the company has also enhanced its marketing platform, and now it includes texting as well as loyalty products. The CEO said loyalty had been the company’s fastest-growing segment, and they are optimistic that it will maintain that growth momentum going to 2020.

In August, the company stated that it is in a path to profitability, and that will achieve its goal in the first half of next year. The company’s aggressive growth strategy focuses on user acquisition, and they hope to double its organic growth by the end of this year. The company’s management team is expecting some acquisitions with robust synergies going forward. The company recently acquired Greenlight Technologies, which is an application development company based in California. Currents the management is in negotiations for the acquisition of CBD.io, a Las Vegas-based trade show.

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