Today was a very good day for VFF. I am no technical trader but I know we closed above the 20 DMA and I know today was a TREND CHANGE. Hope all the real VFF investor are loaded with shares and call options or have been loading.
WHY?
We all know news is coming. We know they have $135M Cash and we all are dyeing to know what the plan is. Trend change, News Coming, Earnings Coming? Medical Sales coming? 2.0 Sales Coming. The question we all have is what are we doing with the $135M. Here are some thoughts I've seen discussed and mentioned all over the internet and just wanted to share them with those here in case they had not seen these:
The USA now has a Democratic administration including the Senate, Mike may take the plunge that FDA regulations on CBD will soon be straightened out either by legislation or Biden/Harris appointees. There should still be very good potential margins in US CBD - price compression on the retail side is coming but VFF has lots of experience with that.
VFF $135M Plans:
1. $15M goes to EMH to pay off the promissory note on the deal to gain 100% ownership of PSF.
2. $10M to completely finish interior conversion of Delta 2.
3. $10M to restart outdoor hemp CBD growing in 2021 under Village Fields venture, and for a 3rd party extraction company to process VFF's hemp biomass grown in 2019 and currently in storage. It's been over a year since the crop was harvested and running out of time to pull value out of it. Maybe they wholesale the CBD oil if they don't want to put the VFF name on it yet.
4. $30M to build a state-of-the-art extraction facility in the US for hemp CBD, probably in Georgia under the Village Fields venture. Starting construction now on what is a 1 year or more project could enable them to hit the ground running after red tape has been cut. Duplicate the extraction equipment design they recently installed in D3, knowing the lessons learned from that construction. Storage and packaging would be integral to the facility. Could do 3rd party extraction for other customers also.
5. $10M to complete conversion of Texas Monahans greenhouse to be fully readied to move to hemp or cannabis production. 1/2 of that facility has already been converted. The company previously said they would also add extraction operations to that facility. If they get a Georgia extraction facility going, would seem to make sense to use it in short term until Texas CBD and cannabis legalization is on stronger footing.
That leaves $50M for other things. Some possibilities:
- A JV with Agroparque de Yecapixtla in Mexico to grow cannabis for the Mexican market (to be legalized there soon). VFF would play the role that Emerald played in the Pure Sunfarms JV by providing money to build or convert AdY greenhouses. Also knowledge and lessons learned from PSF in environmental control and with branding expertise.
- Build, or buy and convert, a large scale greenhouse in a state other than Texas. Hearing Mike elaborate on growing climate in the investor conference call on Wednesday, its un-likely VFF would take on a greenhouse in a northern state requiring supplemental lighting and lots of heating costs during the winter - not competitive strategy in long run. His 1st vegetable greenhouse was in Pennsylvania and he sold that one. Mike will try to avoid growing in a gulf coast state with so much humidity. So that leaves California, Arizona, and New Mexico. Only California seems viable to me until we have full federal cannabis legalization and interstate commerce. If VFF completes a California greenhouse prior to federal legalization, do they grow tomatoes in it until that happens?
- Buy a bigger stake in Altum.
- Hold onto the remaining cash.
Feel free to add your own speculations for us all. GO VFF I am ready for my 100% return on investment in 2021.
