I’ve recently doubled my position. The value opportunity was too compelling. Production capacity for both plants is 42.3 boe/d gross. So, applying a 20% discount means the current production capacity is about 33.8 boe/d net * $19 net backs (using Q3 net back #) * 360 days = $231M FCF. Assume a high annual capex of $75M (best return on capital) and a realized 50% tax rate, the company can earn $78M or .33c per share based on 237M f/d shares. A p/e of 12 would mean a sp in the $4 range, roughly 3.5X from today’s closing price.

The risks to the above scenario playing out are management’s tarnished credibility after several years of disappointing the investor community by failing to come close to delivering on production timelines and projected output. As a result of this, they set the bar very low for themselves this year and so far appear to be on track to aggressively drill the development wells, tie them in and ramp up production. To get the egg off their face, the best strategy is to stop with the “wall of cash” quotables and just drill the wells, tie them in, prove out the resource and put up the eye-popping numbers this resource can deliver. Whether scaling up to full production takes 18 months or 3 years remains to be seen but at some point a big re-rate will occur. All imo.

I’ve been buying the stock recently. After disappointing investors for a good while, the company is finally under promising and hoping to over-deliver in 2024. The chart appears to have bottomed out with weekly MF divergence and has also formed a bullish flag on the daily. Lots of derisking to do this year behind the drill bit but optimizing the 2 CAS wells should hopefully generate better fcf than the results exiting 2023. The stock appears very cheap relative to the potential fcf their production capacity can produce. But they gotta “fill it”. Once they derisk and prove out the concept the rerate should reward the longs imo.

They need cash. That is why the stock price is so weak. They are selling Cansativa and the remaining Portugal assets along with using the at the market public shelf offering to try and buttress the balance sheet. The operational expenses are simply way too high and have been that way ever since the company went public. If they can grow cannabis that customers actually want for a change and they have success with flower exports then they could feasibly turn the corner in 2024 but management has an atrocious reputation at basically only knowing how to do one thing: squander enormous amounts of investor capital. A company could buy Clever just to use their enormous write offs.

Yeah the company is selling their remaining holdings in Cansativa. They sold the last tranche in early 2022 and if you compare the shares sold and net proceeds you’ll see the Cansativa holdings are down 66% since the last sale. But they need the cash and have said they intend to rationalize all non core assets. I’ve been arguing forever that they should also sell the Herbal Brands subsidiary as well and just retain an exclusive agreement with them. They don’t need Herbal Brands, they need cash and selling HB at maybe .75x sales could net them close to $9M.

There has been extreme selling volume since the reverse split (daily volume by price chart says it all). Good old shady as hell Canaccord, CLVR’s sales agent for the at-the-market offering, has apparently tagged in the shorts/mm’s to dump into the bid with impunity and cover with the cheaper ATM shares. Until regulators step in and stick Canaccord and similar players with huge punitive fines, instead of tiny slap on wrist $100k fines, these games will never stop to the complete dismay of most retail investors. From the volume chart, I am estimating about 700K shares have been shorted or sold via the ATM since the share reversal. Let’s see where the stock trades once the dust settles and that should give us a clue of how much dilution is currently occurring. Based on my calculations using the latest cash position (7.8M) + estimated remaining Portugal assets to be sold ($1.5M) confirmed 2023 revenue and ebitda guidance and ongoing opex, I suspect they need another $3 - $4.5M to shore up all liquidity needs through Q2 2024. With that in mind, I am going way out on a limb and guessing we are going to see the share count go from 1.5M to 2.5 or even 3M in the near term, meaning significant dilution, which they were incapable of orchestrating prior to this r/s. Been watching this stock unravel since the ipo and unfortunately still holding some virtually worthless warrants.

Well the tablet re-formulation ended up being very costly from both a time and money perspective, so this pivot/re-formulation really better pay off with stellar p2 results. Hopefully we get the readout data prior to the end of Q2 2024. I still see this as a strong risk/reward setup, it’s just been the opportunity cost of having tied up the funds. Interest in the share price should pick up heading into Q1.

Very quiet here. I’m still holding half a position. Fully diluted share count is now 150M, which is rather high, especially considering the pre-commercial status of their blue sky opportunities with fertilizer and SCM. While Steve is very informative with his YouTube presentations, what is really missing for investors to connect the dots is the company’s current capacity available for legacy vs blue sky businesses and how expensive would it be to scale up?
Steve had said the pozglass pilot plant could cost $10M just to test if it’s economically viable. But there’s not enough cash/cash flow, so how can this plant be funded without further dilution?
The collaboration with PYR is exciting if it bears fruit. Hopefully they can offer results on those tests prior to YE. We should also get a better idea of the fertilizer potential once trial results come back before YE. Lots of irons in the fire but for now the market is really just giving value to the legacy business and virtually none to IP or blue sky potential and I’d guess this is due to the likelihood of further dilution.

Yeah I don’t quite see it that way. Verde’s ceo has a tendency to be overly promotional, putting out news well before t’s are crossed. This flaw is commonplace in the mining sector so it’s forgivable and thankfully for us longs, his fiscal prudence is a notable anomaly. Let’s see what we get when the credit sales start getting finalized along with the details he provides on the quarterly call. I’ve followed this company long enough to remember that the hype can die an ugly death, most recently in 2022, which was an egg all over face year for the company.

Lots going on with this company and apparently still no interest from investors. Let’s see what kind of credit price they’re able to lock in on this upcoming carbon credit sale. The timing on this deal coming together in Q3 is ideal since potash prices are stuck in the low to mid $300 range during the peak sales quarter while farmers are reluctant buyers, which bodes quite poorly for profitability.

Most small players in California will be bankrupted or acquired. California bureaucracy and insane regulatory red tape paired with a virtual lack of enforcement toward rampant illicit growers has meant only very deep pocketed highly efficient operators can survive. It’s useless to expect Federal regulatory changes anytime soon (Schumer just proved that) so it’s looking more and more likely that it could be a legal challenge that forces real change but who knows when that will be.

Yes George needs to further elucidate what he means. The proprietary machinery is thus far only working in California, so they cannot feed 35’s across state lines without drawing legal action and jeopardizing the business; ironically the 35’s only work economically in California currently with the dramatically compressed unit economics.
The Licensee model has so far really only been for the legacy products, which have faced major headwinds based on the last several quarters reporting.
The 35’s definitely appear to be gaining major traction albeit his production/expansion plans are still incremental and it’s unlikely this product alone can shore up the cash burn from the rest of their operations, at least in the near term.
They need to answer the liquidity issue (again). Until they do I’m mostly on the sidelines with this one.

Just because there’s an article discussing challenges to a dormant clause on interstate commerce does not mean Lowell is crossing state borders with product. Let’s stick to facts. The licensee model is the only current legal and unchallenged path to out of state sales.

This board is a ghost town.

My take on thecurrent situation with Antibe:

With a current $25M CAD m/c I think the risk/reward setup here is about 20% risk for 300%+ reward leading up to the phase 2 acute otena readout by late 2023. Worthy of a on of due diligence since there’s been a lot of costlyhiccups with this company but the shares are currently trading as though none of the underlying fundamentals matter at all.

The company has more than enough cash to fund the ph2 trial. They have pivoted from chronic to the acute pain market which, while smaller annual peak sales, offers a far more de-risked pathway to positive ph2 readout results and inevitable commercialization/buyout post ph3. The IP reformulation also demonstrably helps de-risk the results with a more rapid onset and significantly reduced dosing regime. This could enable them, once funds allow, to go back to chronic otena for a ph3. But the sweet spot is here and now for those with funds and about one year of patience.

What I’ve learned with biotechs is know your company very well but as important, know the cycle of when time and money are on your side or when they’re against you. All in my opinion.

Yes lots of court challenges out there due to the ridiculous out-dated policy but frankly litigation attempting to alter Federal cannabis policy is probably going to move at a similar snails pace as the current FDA/HHS review of Federal scheduling policy per Bidens recent request. Near term what Lowell needs is cash or to be bought out.

Yes I too have followed for some time. I bought when it was still Indus right before George re-capped the company several years ago. I was lucky enough to get in near the lows and sell between $1 to $2 and have now recently reloaded. Lowell is one of my very few successful investments in this sector and whether I’ve held shares or not, I’ve followed developments closely because George is a standout leader in the space. So despite the share structure going from 38M to now 400M f/d I’m back in with a full position.

I agree mostly with your criticism of the MSO strategy but I’d say in general access to capital is the key and they’ve got it. If they wanted they could mop up some of the bigger players in Cali for 1/10 the valuation from a few years ago so from that standpoint they’ve played Cali very cleverly thus far. Look no further than Cresco’s disastrous acquisition of Origin House and subsequent write off for an example of what happens when an MSO chases the Cali market.

In terms of Lowell, if you break down their 3 core segments sales and margin trajectory in the TTM it’s easy to conclude that the 35’s are absolutely crucial to the success of this business. Everything rests on whether they can do huge volume with this product.

My notes and takeaways from the recent presentation:

Lowell owned 5% of CA preroll market with legacy products.
Launched 35’s on 9/29 in 16 stores - in 4 weeks went from 5% baseline to 13% for prerolls (up to 19% in some stores).
Minimal cannibilization on legacy side, early repeat buying data is solid.
Launch pace limited by product availability but by end of Oct expect to be in 100 stores.
Capacity expansion will continue to ramp through mid 2023.
Also planning to expand 35’s via licensing outside CA with boots on ground in 23 (is New York wishful thinking?).

Extraordinary value proposition for target consumer:
35’s pricing - below 88% of all flower in CA and priced Below 98% of all prerolls in CA.
Going after the heavy cannabis user highly price/quality sensitive.
Growth vector going forward: Increase output capacity and drive efficiency.
Win on quality, convenience and price.

Two questions jump out:
1) does product have staying power in a crowded and competitive market once “novelty” of 35s wears off?
2) if answer to #1 is yes then how do well capitalized competitors respond to losing significant share?

Exciting times to be a Lowell shareholder!

https://www.virtualinvestorconferences.com/events/event-details/kcsa-cannabis-virtual-investor-conference-2?utm_source=agenda&utm_medium=press+release&utm_campaign=1022cannabisVIC&utm_id=1022cannabisVIC

This guy lacks all credibility. I’ve seen a few of his previous presentations and his due diligence is extremely sloppy probably due to him analyzing far too many companies.

If he did any homework on CLVR he would know that a path to profitability has not been forecast by the company. The cash burn rate is forcing significant ongoing dilution via the ATM shelf offering which he didn’t even mention. Share count was 42M at last count and I expect it to be at least 46M+ when they report Q3 results. Also, the short position is updated every 2 weeks on Nasdaq and is averaging roughly 1M shares. That’s not a lot of short fuel for a rally.

I do agree that if SAFE+ passes in the lame duck session CLVR could double to $1 but make no mistake, if that happens, the company will be dumping new shares into the market as fast as they can.

Stifel on 🇺🇸 #Cannabis 🌿

"shares have the potential to increase up to 3x from current levels in short order. Longer term potential to improve OCF by 50-250%...we could be on the cusp of a secular cannabis bull market."

position / advisor $MSOS pic.twitter.com/5rwEsLsfjW

— Todd Harrison (@todd_harrison) October 7, 2022

I continue to nibble. Admittedly it’s a gamble. With all segments floundering the 35’s success is crucial to the company’s future. These things need to fly off the shelves and become the gotta have it item George is aiming for.

Germany has much bigger problems than pushed out cannabis legalization plans. A disastrous and self defeating 20 year long energy policy just blew up in their face. The next 2 winters will see severe hardships and my guess is civil unrest along with the ouster of anyone irrationally “green”.

Reduced my position considerably after disappointing YE results.
Significant margin compression due to inflation pressures..
Now I understand why the owners sold. Margin erosion began during Covid and accelerated recently in a big way. The APL team lacked adaptability.
Despite recent warrant acceleration, Cash is the near term concern so Q1 results (out soon) should answer some questions.
Bigger picture potential is still there especially with Q3 tolling rev potential and as we get further details on SCM commercialization plans.
Shares out plus a large number of warrants has the f/d shares near 150M or a 45M market cap for a company with barely $20M sales trying to claw back gross margins toward 20%. That’s very overpriced imo… investors are giving too much valuation premium to unproven uncommercial IP. So I’ll hold a few and watch for the market to come to its senses. But insiders are strong supporters of the stock so that’s a big plus and certainly buttresses the share price

That was a good interview with George. With the cash raise question out of the way I’ve been cautiously getting long again. The overall market backdrop is terrible, so I am adding carefully. Q3 will show little of the 35’s revs and it’s clear from this interview that cpg margin compression is ongoing but no doubt the Q3 call will be a lot about the 35’s early showing and market penetration potential beyond early rollout.

The Lowell story and George as visionary pitch man are a compelling story of a possible brand titan in the making. This industry has historically been where capital goes to evaporate, rewarding smart momentum traders and trapping/frustrating buy and hold investors. I liked George’s response to the possibility of Lowell just being bought out and merely a bolt on asset for an MSO. That’s the fiery tenacity of a leader who knows they have a team and brand that’s too special to become a cog in a wheel. Definitely rooting for these guys!

On a technical note, the weekly chart is showing the same divergences as back in early 2020, which is a good sign. The caveat being a whole lot of cannabis stocks have been flashing these same divergences for months and yet the bleeding continues.

Yes that’s why they want interstate commerce delayed and will only pay lip service to desired legalization while not backing it up with big lobbying dollars. Prior to real reform that collapses their “protected moat” system, the MSOs will have acquired their low cost supply assets or obtained access wherever the highest quality cheapest product is grown. California is obviously near the top of that list. From this standpoint, Lowell with its LFS platform (along with the greenhouse which still appears to be economic), should really make them an ideal bolt on asset.

And let’s not forget the MSOs that have their limited license moats built up around state lines have a vested interest in postponing decriminalization and interstate commerce for as long as possible. Once they’ve leveraged their positions accordingly and bought the discounted or bankrupted companies that have been annihilated by this fractured draconian system with over 2/3 states legalized vs Federal illegality, then the MSO’s will throw their weight and capital behind real federal legislative reform. Until then the big fish want to get bigger while the little fish starve for capital and are forced to sell out for pennies on the dollar. These guys could care less which side of the aisle takes the blame for all this.

Hopefully Lowell 35’s are a big winner heading into end of year and allow the company to turn the corner.

Doubled my position at .25 last week. Thought perhaps I could get even more at lower prices near .20 during the warrant acceleration period but the buying window quickly closed. Anywhere near .30 and I’ll add more if given the opportunity. I’d prefer the market continues to sleep on this one for a while longer.

I expect a sizable revenue increases going forward with solid margins as the integrated APL acquisition opens up the rock phosphate tolling opportunity in a big way. Success in the SCM market is going to take more time to materially prove out and be commercialized but with increasing cash flow from operations and ongoing warrant accelerations to bring in additional capital, the company can pay down the debt and self fund their growth and expansion plans. And just as importantly: STOP diluting shareholders with dirt cheap warrants to friends and family insiders. The share structure has grown rapidly in the last 12 months so I want management to be far more prudent going forward.

Yes Columbia is ironically proving to be the most level headed and progressive country in the world wrt its cannabis regulatory framework and legalization plans. They don’t ban imports like Canada or change their framework on a dime like Israel and are well on the path to a fully regulated de-stigmatized thriving homegrown industry. Arguably, CLVR has a leg up on new domestic players entering the market but the earnings results have yet to prove that out. So far CLVR has proven to run one of the most expensive farms on the planet with a minuscule lumpy cannabinoid revenue stream. I re-read the earnings transcript and I’m amazed by Pablo’s optimistic price target and overall outlook. This team comes across as complete amateurs. Every quarter the “show me” story gets kicked down the road further. Meanwhile, some form of momentum liquidity has come back into the sector with many stocks up 40 to 50% which apparently is an ideal time for scammacord to dump ATM shares by the block killing all trader momentum. Apparently $1 a share is a great price to dilute ad nauseam by these purported financial stewards of capital.

Q2 numbers are out and after reading through the sec filings and listening to the cc, I dumped my commons for a small loss and will just keep my significantly underwater warrants in the back drawer as a just in case this team finally start to earn real cannabis revenue one day and meaningfully decreases the enormous quarterly cash burn rate. Plus SAFE+ passage could light a speculative fire in the sector, so at least I’ll have the warrants to capitalize if that occurs.

It’s clear from the Q2 report that this company is learning hard lessons on the backs of investors and an inordinate amount of blown capital, (well over $60M just since despac)…with these ongoing inventory provisions, write offs, reorgs, optimization plans, right-sizing, and pivots, etc, etc. oh and let’s not forget how they’ve just recently brought Intercure in and magically the entire Columbian operation is sans harvest for the quarter! Reading between the lines, I think Intercure toured their facility in March, reviewed output, potency and genetics and took the CLVR team to school, said let’s pull out most of the plants and do it right. Management knew about the Columbian flower export decree last summer and they pivot in Q2 22? It just doesn’t add up and investors are not being given all the facts. Again.

Share structure continues to grow. The ATM offering was used post Q2 for another 2.8M shares sold at average price of $1.07. And they still have $23M left on the shelf offering. The shorts and algo gaming institutions clearly were “informed” by cannacord of the latest dilution because short interest almost doubled from July 15 to 30th after not really changing much for several months prior to this. The games these sharks play…and completely out in the open (flashing that big cocky smile to the toothless SEC).

That’s my rather cynical take after watching this one very closely for over 18 months and feeling quite the fool for buying Kyles original sales pitch.

Illicit is undoubtedly a big problem so it’s great to see them going after the cartel and ruthless criminal elements within the illicit market.
I still like Lowell’s chances a lot. The brand has staying power and George is ideally suited as its ambassador and champion. I’m waiting on how near term liquidity issues are handled, they’re on cash fumes while bulk, cpg and LFS segment s are not generating the margins they need to self fund much longer. They probably need $5 or $6M to shore up near term cash constraints.

The quarter was quite disappointing across the board despite an incredible 12k lb harvest. Current liquidity concerns along with what has turned out to be a viciously competitive California market where both wholesale and retail margins have collapsed caused me to rethink my position for now. I’m back on the sidelines and want to see some recovery in CPG and licensing revs along with details of a probable private placement. It’s becoming clear in my mind that the 35’s are the make or break product for this company or else they’re just going to probably limp along in the low velocity premier brand pileup. George was very protective of his strategy on the cc showing just how cut throat competition has become. I will continue to keep close tabs on Lowell’s progress and updates from George and hopefully get back in as an opportunity presents itself. I agree, he’s a truly unique leader in this industry.

To add to that guys comment, I think if George is able to scratch together just a little capital over the next few quarters, he will acquire at least one of these under-funded branded players. Lowell’s greenhouse and LFS platform feeding industrial scale equipment means they can radically alter marginal unit costs of any acquired competitors. Having said that I appreciate how intensely discerning he is with this process. “Miles of bad road in California cannabis…”. Look no further than the disastrous example of TPCO for an example of how plugging together assets can backfire.

The ongoing hypocrisy of federal scheduling vs the state legalization rush and the griner outcry vs tens of thousands of imprisoned Americans for similar “offenses” certainly speaks to an untenable situation but the problem is with a very well-moneyed agenda supporting the stonewall, it’s anyones guess when the wall finally crumbles. Best case for 22 appears to be SAFE + which depending on what’s included could light a fire. Unfortunately, even if the US were to deschedule and open up interstate commerce (I’d guess MSO’s are secretly lobbying against that happening anytime soon), imports might still be blocked - look no further than Canada’s double standard legalization policy with local and export suppprt and imports blocked.

Analyst initiates coverage just a week prior to earnings - I don’t recall ever seeing that before. I’d imagine he must have gotten a positive off-line update from Andres recently to put this out. The company has made some commercial strides recently in Germany and Israel but still there are a lot of unanswered questions with such an enormous cash burn rate. $27M in additional ATM issuance ideally offered in the $2.50 to $3.50 zone should theoretically shore up cash needs through Q3 23 while retaining a respectable share structure.

As long as you have such a disparate approach to legalized weed with protective “moats” by state line and high wholesale prices, these grow ops that can produce for $100 to $200 a pound in Cali or OK will continue to pop up wherever they can and then dump their product into these pricier markets. It’s good to see law enforcement go after these guys, especially the violent and dangerous cartel types, but it’s just an ongoing game of whack a mole as long as wholesale prices in some states are $3k a lb. The incentive is just too appetizing. At some point the greedy MSOs will be finally be aggressively lobbying for federal legislative reform as their margins are going to continue to compress.

Thanks for posting that article. I had no idea there were so many varying cartels in Cali. I’d always assumed most illicit growers were just locals with small legacy farms who couldn’t afford all the regulatory fees required to go legal. It’s ironic that it’s taking a water shortage for law enforcement to finally go after these operations but whatever it takes.

It’s way more nuanced than this tweet. The reality is that illicit is growing and will steal more and more share from inefficient over-taxed MSO’s who think their state line “moats” protect them and foolishly believe they can retain those fat wholesale and retail margins. Margins are already eroding and will continue for these guys. This is the reason for Lowell’s pivot and I expect the far more expensive Lowell smokes sku to be extraordinarily overshadowed by Lowell 35’s once they hit the market. This is a velocity game. Listening to George’s take on this industry you really do get a sense of just how battle tested California players are. Stealing share from the legal and illicit competition ain’t easy.

Excellent interview. Considering how tight Lowell is with Ascend, let’s hope they’re already in early discussions on an expansion into the NY market. Legal interstate commerce is sounding like it may be another 2 to 4 year wait and Lowell just doesn’t have the capital to properly enter NY, so the licensee model appears to be the cheapest most expedient path to expansion.

We can agree to disagree on this. While I appreciate your optimism the reality is cannabis is still a political football being kicked around. Schumer’s far left bill is as out of touch with reality as the far right and their “refer madness” idiocy. Political will is barely closing in on modest incremental reform at the federal level. That’s just the reality. The very best case scenario is Schumer’s bill is expeditiously voted down and they can get enough votes behind SAFE prior to the midterms. But I’d love to end up being too pessimistic about all this. Either way CLVR appears cheap and should at minimum trade closer to PCLO market cap since these are closely comparable peers.

Schumer’s bill is still a laughable non starter just as it was last year. Extraordinarily high excise tax rates that will further strengthen the illicit market over legal companies and a significant social equity over-reach that repubs will never allow. Let the states handle expungements and design a fair social equity platform. Design a fair tax structure in line with that of alcohol so that the illicit competition can be beaten on price and quality. But this is all just noise - Schumer’s bill was merely designed to appease his base. Only piecemeal reform stands a chance. Get some form of SAFE banking done prior to November because once Mitch takes back the reigns of the Senate, there’s absolutely no chance anything for the cannabis industry goes through. Schumer should know this and rush toward a compromise once his bill is officially declared dead, which won’t take long.

Schumer’s bill is a farce. Incremental reform is the only possible path through uncompromising gridlock.