Invictus MD Strategies Corp (IVITF)

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Invictus MD Completes First Harvest & Breaks Ground on Expansion

http://www.cannabisfn.com/invictus-md-completes-first-harvest-breaks-ground-expansion/

Canada’s cannabis industry is projected to reach C$22.6 billion over the coming years, according to Deloitte Canada, driven by the legalization of medical and recreational cannabis nationwide. While there are many opportunities for investors interested in the space, the best companies provide a high level of geographical and business diversification to maximize risk-adjusted returns over the long run.

In this article, we will look at Invictus MD Strategies Corp.’s (TSX-V: IMH) (OTC: IVITF) (FFT: 81S) progress in building out its presence in Canada’s licensed producer marketplace, as well as its successful ancillary businesses.

Initial AB Labs Harvest

Invictus MD Strategies’ 33% owned AB Labs is a 16,000-square foot purpose built concrete and steel facility in Hamilton, Ontario with 1,000 kilograms of annual production capacity. In addition to this approved capacity, the company is actively seeking adjoining properties for direct expansion into the existing facility. The facility is initially focused on strains that have varying levels of tetrahydrocannabinol (THC) and cannabidiol (CBD).

On July 13, the company announced that AB Labs completed its first harvest four weeks ago and anticipates a monthly harvest moving forward. These activities should begin generating significant revenue for the company moving into the second half of the year, which will scale up as the company increases production capacity over time. Management anticipates about 250 kilograms of production in 2017 before scaling up to 1,000 kilograms in future years.

Expansion Opportunities

Invictus MD Strategies has been making tremendous progress in advancing its other cannabis production facilities across Canada. With a $30 million capital outlay, the company plans to build out 147,550 square feet of production that’s capable of generating 16,850 kilograms per year of cannabis. The company’s share of the production from non-wholly-owned subsidiaries will be approximately 14,513 kilograms per year.

AB Ventures – a subsidiary formed to develop a second licensed expansion facility in Hamilton, Ontario – is forging ahead with planning its Phase I expansion. The initial fully-funded $5.5 million expansion will be a 21,000-square foot purpose built facility capable of producing 3,000 kilograms per year. Management plans on completing this initial phase by the end of the year with plans to build an additional 21,000 square foot building envelope.

Acreage Pharms received a development permit for Phase II and has broken ground for the 27,800-square foot purpose built, multiple room production facility. The contracts and supplies necessary to complete the project have been scheduled and the company is prepared to invest $6 million toward the cost of constructing the production facility. The Phase III expansion will be a 76,750-square foot facility capable of producing 9,210 kilograms per year.

Ancillary Businesses

Invictus MD Strategies differs from conventional licensed producers with its diversification into related equipment and nutrient businesses.

Future Harvest is an 82.5% owned manufacturer and distributor of hydroponic and indoor growing equipment. With over 20 years of history in the industry, the company provides more than 40 proprietary products that account for about 95% of what it sells. Management anticipates revenue to grow from C$2.5 million in 2017 to more than C$5 million by 2019 with C$750,000 in EBITDA, which will contribute meaningfully to its bottom line.

In the past, the company has generated significant returns from acquiring and selling these kinds of ancillary businesses. For example, the company acquired a 100% stake in Cannabis Health for $45,000 that it sold for $275,000 in just 10 months. Management also sold off the Sunblaster assets from Future Harvest for $3.75 million after acquiring a 75% stake in the company for just $900,000 just under a year ago.

Looking Ahead

Invictus MD Strategies Corp. (TSX-V: IMH) (OTC: IVITF) (FFT: 81S) represents a compelling opportunity within the Canadian cannabis industry. With a growing presence in the licensed producer space, the company is already generating revenue with approved facilities while targeting significant expansion opportunities ahead. The company also offers investors exposure to the equipment and nutrients side of the business via Future Harvest.

http://www.cannabisfn.com/invictus-md-completes-first-harvest-breaks-ground-expansion/