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Amazon made a huge announcement:
Amazon said on Tuesday that it will stop drug testing many of its workers for marijuana and will instead “treat it the same as alcohol use.” It is also formally joining the movement in support of cannabis legalization and will actively lobby Congress in support of legislation to end federal prohibition.
SHWZ made this guys twitter:
Stifel on @GTIGrows
— Todd Harrison (@todd_harrison) June 1, 2021
🇺🇸 #cannabis 🌿
/position $GTBIF pic.twitter.com/n1YDj7VwFE
That's what I thought too when I was reading the post. Seems so much more flexible compared to the 4 individually owned parcels...or whatever...that make up Los Suenos Farms.
Look at those colas!
MJUS increased their holdings by 7.69% (exact) across all holdings. This brings their new SHWZ share total to 10,981 @ $2.49. I think they sold their position and bought it back because the last time I reviewed (5/21) the they held 10,137 @ $2.62.
5/14 -- 5284
5/21 (increased all holding by 92%) -- 10,137 shares
6/1 (increased all holdings by 8%) -- 10,981
Been checking the SEC page for the 8K. Nothing yet.
California and Kentucky are some of the best places to grow cannabis because they sit on the 37th parallel. Across the Pacific, the 37th parallel crosses the Hindu Kush, where all indica strains originated. Therefore, cannabis plants love the natural light cycles.
Why even bring this up? Because guess what else sits on the 37 parallel?
Huerfano County, Colorado
True, but not far off from the original Los Suenos deal. The current is $11.3M for 34 acres and greenhouses. The Los Suenos deal was $12M for 36 acres and some greenhouses. We locked down the most important part of that connection. Purplebees!
Thanks for the correction, clarification and education. Not a whole lot out there on Starbuds MIPS. I found 14, empty warehouse pictures, from when the building/unit (E) went up for sale, as well as 4 job postings from 4 months ago. I guess now the comment JD made regarding the Bioscience subsidy, and being able to quickly bring products to market, is making more sense. Channelchek question at 43:23 and the "product" part of the answer at 44:02 "we really want to paste this where we have rapid application to product", and 44:38, "...and we see some products coming out fairly quickly on the heels of this".
Nice catch! It looks like the final part of the original $118M deal.
In June 2020 it was announced: "Denver-based Schwazze is set to acquire 14 Star Buds locations throughout Colorado including 13 dispensaries and one cultivation site."
That is when a lot of those other deals started to get terminated....and Justin prioritized Starbuds...apparently breaking it into two main categories: retail and cultivation (oddly I forgot all about the one Starbuds cultivation site...and thought the deal was complete with the 13 retail locations.)
The primary focus being on retail...which was broken into 3 parts: 6 locations in Dec, 2 in Feb and the final 5 in March.
Now he is getting back to completing the cultivation site.
That really breaks down how resourceful and creative Justin was...and props to Brian and company for being flexible with terms. It really does give a whole new, positive, spin on the saying "robbing Peter to pay Paul". It also proves Justin is looking out for shareholder value...and not just saying the words.
Had this been completed by a Canadian LP, they would have paid over 10x for all the acquisitions, even the terminated ones, diluted their shareholders to cover the expense and probably would be in the process of writing off most of the moves as 'good will'.
Steven, I didnt take your statement to mean ALL acquisitions were going to be called off until the stock price was of fair value. I figured you were only talking about the possible 'big fish' acquisition. I have been assuming, with exception of the $5M, all the acquisitions between now and the end of the year were going to be cash-only acquisitions...probably onesie/twosie locations...because I remember Dye making a comment about possibly something bigger, at the end of the year, which would include some larger financing.
That was an observation given the market yesterday. Same as you saying "even $SHWZ turned green!"
And to defend Stevens comment:
If you remember correctly Dye does not want to do deals at this opps as he feels we are severely undervalued.
...while it might not have been explicitly stated, it certainly seemed implied. I interpreted it the same way he did based sole off these two comments:
SHWZ Q1 Earnings Call Q&A:
Nancy Huber: We currently have about -- we have a $5 million commitment on debt for certain asset purchase that we are completing the definitive agreement for. So we have one bit of debt commitment. And then we have $23 million on our cash balance sheet. So we do have enough cash to complete some of the acquisitions that we're looking at. There are some large acquisitions that we are evaluating. And if those come to fruition, then we will be looking both at the equity and the debt or convertible debt market, and we'll use the most cost-effective solution that we can find that's to our shareholders' advantage at the time.
Schwazze Channelchek Q&A:
36:56 -- We'll use cash when we need to, and we'll use stock when our stock is fairly valued. We think we're tremendously undervalued today.
Thank you...and yes, in listening a second time, you are absolutely right. Also, thanks for taking the time to transcribe all of that. I know in the past I assumed the shiney new items were the new states coming online and the limited licensed states. The limited licensed states are the ones that have the ability to corner the market and price gouge consumers. I always appreciated Schwazze for focusing on Colorado and waiting for the dust to settle a little bit. Obviously a move to MSO should bring a new level of excitement to the stock price, but being able to create a profit in a highly competitive, typically lower margin, market will be their golden ticket later on...because they are proving to be successful. The companies going into these limited licensed states are overpaying f0r assets, and basically gambling, assuming that the state will remain limited forever. Most of these states are only medically legal. Larger players are jumping in thinking they will be able to flip their medical to recreational...or have first dibs when the state opens. All those thing are uncertain. Even the amount of licenses. I can see, in time...since the landscape is changing daily...that the govt in the states with limited licenses will start to enjoy their new influx of tax revenue and then think, "hey if we double the licenses, we can double the tax revenue". Great 3min company recognition onCannabis Investing Podcast, posted 2 days ago, starting around the 37:30 mark.
Walk it down...I'll pick up a few more shares sitting in front of it.
41,000 waiting at $2.25. Looks like it is walking its way down.
Since their Schwazze comments were (hell-a) positive, after the podcast, I thought I would check out their website to see if they posted any recent articles. They had one from Oct 4, 2020. I have not read the article yet...but it looks like a lot of real good information. The article definitely contains a lot of numbers.
https://mjresearchco.com/2020/10/04/schwazze-worth-2-74-pf-star-buds-3-30-rootsrx/
This was also written when the stock was $1.18:
"With the stock at $1.18, the conclusion is the same – there is a lot of upside if the company can execute on the acquisition and expand the margins."
I started that one last night and will finish it today. Since I have it playing, the SHWZ comments start around the 37:30 mark. I have chatted with Rena several times. SHWZ has been on her radar for a while now and it has come up a one or two times, by guests, in past interviews. Really hoping she tries to schedule an interview with JD.
Thanks Future. I went back and listened 28:50 mark, of the ChannelChek presentation.
Hardcorehodler, so I found it. It was a Cannainsider podcast, episode 348. In relistening, I realized I paraphrased a little bit and blended the middle part (lower valuation for Colorado) with a a comment at the end (the 2x-3x valuation)...so that was not exactly accurate. The main part, where the guest talks about Colorado having lower valuations due to unlimited licenses starts around the 18:40 mark.
https://www.cannainsider.com/
Let me see if I can find it. I apologize, I listen to a ton of podcasts and might have misstated the wrong one.
I was listening to a Kannaboom podcast and the guest, the CEO from Headset, a Colorado based market intelligence company, was talking about the industry and all the new 'flashy' areas causing excitement. Those areas being up and coming states and states with limited licenses. He stated that places like Colorado arent even looked at...and the companies there only get valued at 2x revenues because it is an unlimited license state. So bigger players arent worried about missing out on locking down future market share in states that they can walk in at anytime. His statement is pretty obvious, but probably applicable so I though I would share.
The plants look great...huge! I find the photo, specifically the size of the guy in reference to the side plants, hilarious. Mainly because it is a vertical grow so plant perspective, in reference to the cultivator, is off.
Have you ever considered that maybe the guy in the picture is just really really small? LOL!
Save these to your favorites:
https://www.sec.gov/edgar/searchedgar/companysearch.html
https://www.sedar.com/homepage_en.htm
These are where the official documents are filed/found.
Right. Everyone knows California cannabis, and probably more specifically, the Emerald Triangle...but most dont know of Kentucky cannabis, and what the FEDs ended up naming the Cornbread Mafia.
One of my favorite podcasts posted an interview with Curaleaf chairman, Boris Jordan. Now Los Sueños Farms was not mentioned, specifically, but Boris claims Curaleaf is playing the game now while looking/preparing 5 years down the road (his assumption, interstate commerce)...and while also working toward their ultimate company endgame. In the interview Boris talks about outdoor grown being the cheapest cannabis followed by indoor grown. He stated that greenhouse grown, or really anything in the middle of those two, is not efficient...stated they learned the hard way. He also stated that he believes that when interstate commerce happens no cannabis will be grown east of the Mississippi (I guess he is not familiar with the central Kentucky region and the Cornbread Mafia). Anyway when I heard this, it seemed to have validated your concerns. Sure Los Sueños Farms might supply wholesale and biomass to Colorado current day, but the whole landscape can change if/when interstate commerce occurs.
https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy9jYmRmYmY4L3BvZGNhc3QvcnNz/episode/NTA4NjYzY2ItZDJkNi00ZDI4LWI1YTQtZGRkYWNiZmFlYTk2?ep=14
Anyone else have a feeling the $5M is set aside for a (renegotiated) deal with Colorado Harvest Company...now known as High Country Supply LLC? I dont remember this name. Were these dispensaries always under High Country Supply LLC or was that something that happened between last summer and early this year?
Hoop, I agree one slightly different read when it comes to the acquisitions. My read on what was said was that no, significant, acquisition will be happening until possibly the end of the year when they will look to use debt...and probably hope the stock is trading at fair value. Now I know that they have continuously said "focus on Colorado" but I feel that end of year debt comment was stated because they have their play/move into another state/states...they didnt want to move toward an MSO simply to claim the title but they also indicated on several slides multi-state. I think what will happen between now and then are the deals that are finalized surrounding only cash buyouts...little, but strategic, Mom&Pop locations. Also, I did get the same read that Dye is enjoying working out these deals. I also enjoyed the several times when Nancy would smirk at some of the things said, because I am sure she is enjoying it too.
Right...and the bioscience division is setup for those products...but specifically to investigate the different percentages/concoctions of cannabinoids/flavonoids to design products specifically for medical purposes.
I joined late, but yes it was! I was listening specifically for 'Easter Eggs'...thought I heard a few. Let's compare notes:
1.) Fundamentally a new company as of March!
2.) Possibility of their own credit card line
3.) "Dense up Denver"
4.) Specifically stated: "conservative revenue estimates" to under promise and overdeliver.
5.) When discussing acquisition financing strategy talked a lot about just cash for smaller operators. Expect to go deep in Colorado, north of 100 stores in the state. Their $500-600M revenue was a several years down the road projection. They want to make acquisitions the "right way with no shortcuts". Comprised of seller notes, equity and cash...thoughtful and careful with dilution that has to be a win-win transaction for all parties...but by the end of the year may look to debt and liquidity.
Interesting article. Personally, I think if they simply embraced the plant and focused on providing better education to the public; not just focusing on scare tactics surrounding THC but the potential medicinal properties of the other components (which the US has been funding in Israel for decades): THCA, CBDA, CBD, CBG, CBN, etc. along with flavonoid content, consumers will ultimately regulate the industry through better decision making. Sure there will be some that just want a potent/powerful high, but I still believe that most of the public is just misinformed. I assume that if people knew more, they would probably gravitate toward product profiles with an intent on addressing underlying conditions, over focusing specifically on THC content and getting "stoned".
Yeah, I was gonna say the same. I was undecided on this news, at first, but this year the weather has been odd. I remember them announcing something in fall 2019...that they were racing to harvest crop, because of an early frost. That frost ended up killing 20K plants and costing them millions of dollars. The local Colorado media was commenting that it might inflate product pricing. I also remember some of the comments on this board. They were discussing how we might get the company for a better deal because the acquisition was based on an end of year revenue value...or something like that. In addition to weather, there are other factors to consider with an outside grow. One is that pollens from neighboring farms can potentially seed the crop and another, huge one, is that cannabis is good at leaching toxins and heavy Earth metals from the soil. If the federal govt eventually steps in they might establish rules and regulations surrounding a tolerable level which could potentially impact ALL your outdoor harvested crop.
I am sure it's a high turnover, labor intensive, business. Granted these are allegations, it could be an interesting summer for the company if the media decides to investigate and report on the 'issue'...especially because Kim Rivers husband is set to go to trial July 12 on racketeering, extortion and other charges as part of a public corruption case. When reading through these, it reminded me of one of the questions Justin was asked:
Do you have any comments on the labor market outlook.
Justin Dye: No. From our perspective, we -- labor is a little bit tight, but we're not seeing any major issues with regards to getting people landed at our retail operations or within our supply chain jobs today. We'll obviously continue to monitor and watch that. But we're certainly for providing a very fair wage, so folks can have a good living standard, et cetera, with their lives. And we continue to see a growth need, and we continue to be hiring as we expand our business. So we'll continue to watch it, but so far, so good.
LOL! That is a good one. This is definitely not that exciting....just never ending.
As always, thanks for the articles. Stuck assisting with a huge work related system upgrade this weekend and have been struggling to find articles, and podcasts, to pass the time. I checked out that new ETF MJUS...I liked the holdings listed...but I also searched Reddit wanting to see comments on the Trulieve/Harvest Health deal. Well that turned into an interesting find. I would have thought the newest post would have been excitement surrounding the acquisition...maybe not from the Harvest side, seems like a lot of Harvest investors feel Harvest was undervalued...but that was not even the interesting thing. The newest post was on how the company has a toxic work environment and has been messing with employee compensation.
https://www.reddit.com/r/FLMedicalTrees/comments/n7iik2/a_message_from_trulieve_workers/
Toward the end there wasnt really much in the way. I think 100 at $2.38 and a 100 at $2.45. I was hoping for a last second drop and pop...but seeing the close at $2.50, made me happy I got in on the last bit of $2.38s. Now let's keep this smile on my face going into tonight, tomorrow and the future.
Great first post. Hope to see more! That was an aspect that I didnt initially consider.
Interesting timing. Did you see the other news that dropped this morning?
https://www.valdostadailytimes.com/news/business/medpharm-awarded-grant-for-first-of-its-kind-study-of-potency-in-full-range-of/article_9eeca776-8a46-58c9-8137-35b33b15f310.html
I will be the first to say it. I like the idea of an R&D division however, I personally think it is too early in the company's growth phase to incorporate an R&D division. R&D is time consuming and costly...and will add a lot of expense to the admin side of the business. If this is a startup division, and not an incorporation of an existing R&D business, then I dont favor the move (at this time) because it is going to divert funds and speed bump the cash flow positive expectation.
DD, I understand the point you were making...but look again...CRON posted $12.6 in revenue for the quarter. The $37.1M was an adjusted EBITDA loss. Their overall net loss for the quarter was $161.6M!