Canadian Weed!

[JohnCM]

5 Headlines That Impacted Shares This Week

October 20, 2017

Marijuana stocks have come off their recent highs and we are monitoring this recent pullback. This drop has taken place on lower volume and we are keeping a close eye on how this trend continues.

As momentum pulls back, stock prices have been under pressure and many investors are wondering where the market goes from here. We expect to see a little more consolidation before cannabis stocks swing higher and continue to prefer companies that are executing on its strategy.

We have provided five company updates below and highlighted some important developments that were recently announced.

Maricann: CEO Takes a Leave of Absence

Today, Maricann Group (MARI.CN) (MRRCF) made several important announcements and we are going to monitor how the market responds to these developments. Highlights from today’s update include:

Maricann insiders will purchase $7 million of the convertible debenture units from its previously announced private placement. The convertible debentures purchased by insiders will also be subject to a higher conversion price ($1.68).

Maricann issued an update on its planned acquisition of NanoLeaf. The licensed marijuana producer working with NanoLeaf to determine whether the VESIsorb technology is compatible with both THC and non-THC cannabinoid products. The closing of the NanoLeaf acquisition is expected to occur concurrently with the closing of the offering.

Maricann experienced a construction delay and is going to incur higher-than-expected expansion because of it. The delay will be a maximum of 65 days due to the environment permits required and was caused by ground water encountered during the build. Maricann expects to meet its first production target from its expansion in the second quarter of 2018.

Maricann CEO Ben Ward has taken a leave of absence until November 13th to address a personal health issue. President Terry Fretz has assumed the duties of CEO on an interim basis, through the duration of Ward's leave.

Plus: A Leading California Edibles Investment Opportunity

Plus (Pre-IPO Opportunity), the cannabis infused products manufacturer, announced that it closed its $2 million Series A preferred stock financing. The financing was led by The Green Opportunity Funds (TGOF) and after it was completed, Matt Schmidt of TGOF joined Plus’ Board of Directors. Plus will use the net proceeds for general corporate purposes and for the development of an automated production line.

Plus was founded in 2015 and is a cannabis infused products manufacturer that is focused on providing healthy, tested and consistent cannabis experiences. In 2016, Plus launched its first product, Plus Gum, and has since expanded its portfolio of cannabis products to include Plus Gummies.

Plus CEO and Co-founder Jake Heimark said, “Since launching Plus Gummies this spring, we have been overwhelmed with requests to continue to broaden our product line. We’re excited to explore new opportunities with the same emphasis on innovation, consistency and testing that we have applied to Plus Gum and Plus Gummies.”

TGOF Corp. President Matt Schmidt said, “We are at an inflection point in the cannabis industry in California as recreational sales are set to begin next year. New consumers are starting to enter the market, and Plus has already demonstrated they have the right product portfolio to cater to these new entrants. I’m thrilled to join the board as Plus continues to grow rapidly.”

MassRoots: Where Does it go from Here?

MassRoots (MSRT) has continued to trade in a volatile manner after the company filed an 8-K that disclosed the termination of the merger agreement with CannaRegs. This termination followed the removal of Isaac Dietrich as CEO.

Earlier this week, MassRoots announced the release of its new dispensary finder service with 6,000 entries that catalogue all medical, recreational and delivery-based dispensaries in nine state. MassRoots launched its service together with Sweet Leaf, a medical and recreational dispensary chain with over 20 locations in Colorado, California and Oregon.

While we were favorable on the recent update, we remain cautious with MSRT in the near-term and will monitor how the shares continue to trade. MSRT have come off its daily lows following the recent developments, but the shares continue to pullback. We will keep an eye on how this trend continues.

Emerald Health: A Long-Term Canadian Cannabis Opportunity

Earlier this week, Emerald Health’s (EMH.V) (EMHTF) wholly owned subsidiary submitted license applications to Health Canada for approval of two new growing sites. Emerald is preparing for the large-scale production of cannabis for the recreational market when it opens next year.

In September, Emerald filed an application to Health Canada for its Pure Sunfarms’ Delta, BC facility, which is a partnership with Village Farms (VFF.V). Emerald and Village Farms are retrofitting a 1.1 million square feet greenhouse facility from tomato growing into a configuration optimized for large-scale cannabis cultivation (can expand by an additional 3.7 million square feet).

In October, Emerald submitted its application for its own Richmond, BC, facility, for which Emerald is initially constructing 150,000 square feet of hybrid indoor and greenhouse growing space to produce cannabis in conjunction with legalized recreational use. This 32-acre site can be expanded to 1 million square feet.

In early October, Health Canada granted approval of Emerald’s second site application related to its Saanich facility, which is currently producing medical cannabis for sale as dried flower and oils, and serves as Emerald’s research and product development facility. Once the district approves the buildout, the operation will expand by an additional 7,000 square feet.

We are favorable on Emerald Health Therapeutics due to the management team’s continued execution, the strategic partnerships, the visible growth opportunities, and the company fundamentals. This is a stock to watch!

Medicine Man: Continues to Execute and Expand

Earlier this week, Medicine Man Technologies Inc. (MDCL) received a favorable response from the market after the cannabis consulting firm issued an update on international client and partnership activity.

Medicine Man entered a contract for cultivation support with a German-based applicant competing for up to seven of the ten tender bids related specifically to growing medical cannabis in Germany. MDCL will be providing support to the client in advance of the issuance of any final award, including indoor GMP-compliant facility design services, operating plan guidance, and cultivation standard operating procedures, among other deliverables.

This client was referred by an Israeli group with whom the company plans to develop an independent partnership for further international expansion of its services, in particular focusing on GMP based indoor and greenhouse cultivation facility design and deployment.

Medicine Man also formed a working relationship with Orion GMP Solutions which should help ensure that the cultivation facility designs meet GMP standards where required. The agreement further expands its international presence that includes Canada and South Africa. Medicine Man is actively exploring additional international opportunities with prospects from both South America and Australia.