Canadian stocks levered to the emerging cannabis industry have been on watch after the Canadian Federal government tabled the Cannabis Act last week.
This legislation will create a legal recreational cannabis market in Canada before July 1, 2018. Following the introduction of the Cannabis Act, the market has seen series of significant company developments as these companies work to put themselves in a position to capitalize on this multi-billion-dollar opportunity.
The Green Organic Completes Financing and has 2,500+ Shareholders
The investing community is very excited about the opportunities within this sector. One of the best examples of this is the Green Organic Dutchman Holdings.
Yesterday, the company closed its previously announced non-brokered private placement on March 24th. The Green Organic increased the size of the offering from C$10,000,000 to C$21,957,984 due to the significant demand. On Monday, the company closed a brokered private placement of C$6.3 million and raised $28,350,567 million in total.
The Green Organic Dutchman is one of most highly anticipated initial public offerings of 2017 due to the following reasons: 1) The company has 100-acres of licensed property, 2) It is led by a top-notch management team who has secured some of the world’s biggest companies as its strategic partners, 3) The company is focused on producing high-quality craft style organic cannabis, 4) After raising more than $40 million, the company is well positioned to execute on its business plan, 5) It has an attractive financial structure following the completion of two oversubscribed private placements, and 6) The company already has more than 2,500 investors, which is an incredible feat even for a public company.
Namaste Builds on Agreement with Leading Canadian Cannabis Producer
Namaste Technologies (N.CN) (NXTTF) built on the previously announced MOU with Canopy Growth with its entrance into a services agreement with the licensed producer. The agreement represents the execution of Namaste’s objective to actively migrate medical cannabis consumers to a licensed producer.
The purpose of the agreement is to outline the responsibilities of Namaste and Canopy with respect to the provision of education and awareness regarding safe and legal access to medical cannabis. Namaste’s responsibilities include, but not are limited to: providing information on its websites and blogs outlining how to obtain medical cannabis from legal licensed producers including details on what is legally required under the ACMPR
Namaste President and CEO Sean Dollinger said, “Our Company has successfully built one of the largest and most global client relationship databases in the cannabis industry and we view broadening our strategic alliances to the benefit of our customers and shareholders. Consistent with our strategy to partner with leading companies that hold themselves to the highest standards, Canopy represents the ideal partner for us to roll-out this strategy alongside. Going forward, we see multiple opportunities to expand this strategy globally.”
True Leaf Close to Major Milestone
According to a press release from True Leaf Medicine Inc. (Mj.CN: CSE) (TLFMF), more than 100 companies are currently in the review stage for a production license (Health Canada received 1,630 applications) by under the ACMPR.
This piece of information was included in an update covering True Leaf’s its International division which is only two steps away from completing the process to receive a production license from Health Canada. This development comes two years after True Leaf submitted its application to Health Canada and is now in the review stage (fifth stage)
Although this process has been expensive and time consuming, True Leaf has seen significant growth from its pet division, True Leaf Pet while going through the licensing process. True Leaf Pet has been marketing hemp-based supplements for pets since 2015.
The global pet care industry is a $104.9 billion business and True Leaf Pet is taking market shares through its line of hemp-focused pet chews and supplements marketed through natural pet health and veterinary channels in Canada, the United States and Europe. We are favorable on this approach as it provides the company with a revenue stream levered to a less saturated market while it works toward becoming a fully licensed cannabis producer
Aurora Starts to Sell Cannabis Oils
Today, Aurora Cannabis (ACB.V: TSX Venture) (ACBFF) announced a major milestone as it started selling a new product line of ingestible cannabis oils called Aurora Drops.
The product line consists of three different types of cannabis oil and each will be sold for $115 a bottle ($80 for clients in Aurora’s compassionate pricing program). The product line offers patients the choice of a high THC Sativa oil, a high THC Indica oil, and a high CBD oil from Aurora’s flagship CBD strain, Temple.
This launch comes follows the completion of an agreement between Aurora and Radient Technologies (RTI.V). Under the agreement, the companies jointly work on the development and commercialization of cannabinoid extracts by utilizing Radient’s proprietary extraction technology.
If the technology works as expected, Aurora will become a leading high-volume, low cost producer of cannabis derivatives. Radient’s technology should significantly shorten the harvest-to-market process and this would make it easy for Aurora to mass produce cannabis oils. Due to the higher cost and better margins associated with cannabis oils, we think this is an important development to watch.
Aurora’s subsidiary operates a 55,200 square foot production facility in Alberta and is currently constructing a second 800,000 square foot production facility. Aurora also acquired and is working on the completion of a 40,000 square foot production facility near Montreal. Aurora also recently made a significant investment in Cann Group Limited, the first Australian company licensed to conduct research on and cultivate medical cannabis (owns 19.9%).
Aphria Raises $100 Million to Fund Continued Expansion
Aphria Inc. (APH.TO: TSX) (APHQF) further strengthened its balance sheet after it reported that it has secured a $100 million raise, including a $75 million bought deal equity financing and $25 million in debt financing through a five-year term loan. This is the first time Aphria has raised both debt and equity simultaneously.
Aphria expects to use 50% of the net proceeds for the unfunded portion of its Part IV Expansion. The remained will be allocated for strategic investments and to support the working capital required by the firm once the expansion is complete.
The Part IV Expansion is expected to be completed in 2018 and will increase Aphria’s capacity from 300,000 to 1 million square feet. The expansion will also increase the company’s infrastructure to more than 250,000 square feet as it will be necessary to service the 75,000 kilograms expected to be harvested per year.
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Source: Technical 420