Capitalizing on Bargains in the Cannabis Stock Space (ACB, MEDIF, MDCL, MMNFF, TLRY, CGC, TLRY)
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If you were to take a quick tour of the cannabis patch, you might start with names like Canopy Growth Corp (NYSE:CGC), Aurora Cannabis Inc (NYSE:ACB), Tilray Inc (NASDAQ:TLRY), and OrganiGram Holdings Inc (NASDAQ:OGI). But the valuation argument in each case is still not where it should be.

We present here names with significantly smaller market caps and the potential for much greater growth: Medipharm Labs Corp (OTCMKTS:MEDIF), Medicine Man Technologies Inc (OTCMKTS:MDCL), and Medmen Enterprises Inc (OTCMKTS:MMNFF).

 

Medipharm Labs Corp (OTCMKTS:MEDIF) is particularly interesting right now. As a major player in the cannabis space, the stock has been outperforming most of its competitors on the charts (except for, perhaps, MDCL – see below) as it continues to present value to the market. To help augment that sense, the company just announced its wholly-owned subsidiary, MediPharm Labs Inc., has entered into a four-year strategic alliance with Loyalist College of Applied Arts & Technology for education, training, development and applied research projects in collaboration with its Cannabis Applied Science program, the first post-graduate certificate of its kind in Canada.

“MediPharm Labs is pleased to partner with the forward-thinking team at Loyalist to help shape the future of the cannabis industry through innovative research and by contributing to the development of the next generation of cannabis scientists and professionals,” says Pat McCutcheon, Chief Executive Officer of MediPharm Labs. “The possibilities for unique product development and further advancements in cannabis processing methodologies and technology are very exciting, made possible by uniting our respective skills and expertise through this unique private/public partnership.”

Medipharm Labs Corp (OTCMKTS:MEDIF) focuses on producing pharma-grade cannabis oil and concentrates in Canada. It also focuses on providing cannabis contract processing services to licensed producers and growers; supplying cannabis oil to companies for sale under its brand; and supplying raw materials and processing for the creation of ready-to-sell cannabis products. The company was founded in 2015 and is headquartered in Barrie, Canada.

Founded in 2015, MediPharm Labs has the distinction of being the first company in Canada to become a licensed producer for cannabis oil production under the ACMPR without first receiving a cannabis cultivation license.

This expert focus on cannabis concentrates from our cGMP (current Good Manufacturing Practices) and ISO standard clean rooms and critical environments laboratory, allows MediPharm Labs to produce purified, pharmaceutical-grade cannabis oil and concentrates for advanced derivative products. MediPharm Labs has invested in an expert, research-driven team, state-of-the-art technology, downstream extraction methodologies and purpose-built facilities to deliver pure, safe and precisely-dosed cannabis products to patients and consumers. MediPharm Labs’ private label program is a high margin business for the company, whereby it opportunistically procures dry cannabis flower and trim from its numerous product supply partners, to produce proprietary cannabis oil concentrate products for resale globally on a private label basis.

Through its subsidiary, MediPharm Labs Australia Pty. Ltd., MediPharm Labs has also completed its application process with the federal Office of Drug Control to extract and import medical cannabis products in Australia.

Traders will note 15% during the past week in terms of shareholder gains in the stock. Furthermore, the company has witnessed a pop in interest, as transaction volume levels have recently pushed 19% beyond what we have been seeing over the larger time frame.

“Loyalist College is very proud to partner with MediPharm Labs,” says Dr. Ann Marie Vaughan, Loyalist College President and CEO. “This alliance demonstrates our capacity to collaboratively support commercially relevant applied research while facilitating student learning experiences. With advanced equipment and analytics, our industry-leading labs support education and training of students and industry personnel, while enhancing innovation, productivity and global competitiveness of industry partners.”

And the stock has been acting well over recent days, up something like 15% in that time. Shares of the stock have powered higher over the past month, rallying roughly 8% in that time on strong overall action.

Medipharm Labs Corp (OTCMKTS:MEDIF) managed to rope in revenues totaling $22M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 0%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($8.6M against $35.7M, respectively).

 

Medicine Man Technologies Inc (OTCMKTS:MDCL) is perhaps the most interesting relative strength play in the cannabis space out there right now. At a time when other pot stocks have been getting slammed, MDCL has held up extremely well. Now, as the space shows indications of green shoots on at least a technical basis, MDCL may continue to outperform, finally unburdened from the sector anchoring.

To add some flesh to the story, the company recently announced its latest binding term sheet to acquire Roots Rx, a cannabis operator with six dispensaries located in the ski and mountain towns of Colorado.

According to the release, the Company will also acquire Roots Rx’s outdoor cultivation facilities located outside of Aspen. This latest announcement comes on the heels of term sheets announced earlier this week to acquire a number of dispensaries, including retail locations using the Starbuds and Colorado Harvest Company brands and a series of independent dispensaries, which will bring the Company’s total dispensary count to 23 upon the successful closing of all the pending acquisitions.

Just after that, the company announced that it has entered into a binding term sheet to acquire four additional dispensaries in Colorado from a leading cannabis retailer. Under the terms of the transaction, Medicine Man Technologies will purchase the group of four dispensaries for $50,096,413, consisting of $25,048,206.50 in cash, the issuance of 4,202,720 shares of its common stock at a price of $2.98 per share, and a deferred cash payment of $12,524,103.25 to be made 12 months following the initial closing date.

Medicine Man Technologies Inc (OTCMKTS:MDCL) is capitalizing on recent changes in Colorado state law (namely, passage of HB 19-1090, which will take effect on November 1, and allow for outside investors, venture capitalists and private equity firms to gain investment access to Colorado’s cannabis industry. MDCL has been a well-respected and successful advisor and consultant to firms in the cannabis industry for many years. But this shift in the legal context has created a new opportunity to consolidate production and distribution under the MDCL umbrella in a roll-up that could produce significant revenue growth for a stock that is already cheap relative to peers in the space.

Here’s the company’s CEO on the new bill: “At a time when cannabis is valued at $1.5 billion and is expected to grow to $2.1 billion by 2022 in Colorado alone, this legislation will serve to accelerate Colorado’s leadership position in the entire cannabis industry, and those entities fortunate enough to do business in our state – including our own. This was a tremendous win for the industry and for Medicine Man Technologies.”

In all, the company has entered into binding term sheet agreements to roll up some bread and butter in the Colorado cannabis marketplace, including 12 cultivation facilities, 7 proprietary extraction facilities, 7 manufacturers of infused products, 33 strategically located retail dispensaries, and a state-of-the-art manufacturing, research and development lab that represents Colorado’s first and only active cannabis research license in the state.

This is part of a strong multi-step roll-up strategy from the company. On that strategy, management has been clear about its motivations. The move to grab Canyon is another great example.

“Our latest series of announcements have been predicated on building out our footprint of retail dispensaries,” said Andy Williams, Co-Founder and Chief Executive Officer of Medicine Man Technologies. “Canyon has been on our radar for several years given its strong following and high quality manufacturing and extraction methods. Its proprietary process using CO2 to extract cannabis oil from plant materials yields flavorful products. From hard candies, capsules, and micro-dosed gummies to its cannabis-infused beverages, the unique products derived from its cannabis oil have gained a deserving reputation and garnered a tremendous customer base. We believe this acquisition is important in furthering the build-out of our infrastructure and diversifying our branded product offerings.”

MDCL has a significant war chest ($4.3M) of cash on the books, One should also note that the company is pulling in trailing 12-month revenues of $10.5M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 24%.

 

 

Medmen Enterprises Inc (OTCMKTS:MMNFF), a few days ago, put in, at the very least, a pretty darn good imitation of a bear market pivot bottom. And, as such, at the very least, the pattern deserves attention. Helping to drive that action, the company just announced the opening of its new location in Jacksonville Beach, Florida.

According to the release, “this is the fifth of 12 locations MedMen plans to open in Florida this calendar year. The Company is licensed for up to 35 retail locations in the state. Florida is the third most populous state in the U.S. with a robust medical cannabis program serving over 270,000 qualified patients as of October 11, 2019.1 Jacksonville is one of the fastest growing metropolitan cities in Florida and a popular tourist destination with the largest urban park system in the nation, with 10 state and national parks. The new location aligns with MedMen’s retail strategy to extend geographical reach within each operational market.”

Medmen Enterprises Inc (OTCMKTS:MMNFF) frames itself as a company that, together with its subsidiaries, operates in the cannabis space in the United States.

The company cultivates, produces, possesses, uses, and distributes/retails cannabis in the recreational and medicinal cannabis marketplace. As of June 6, 2018, it owned and operated 18 licensed cannabis facilities under the MedMen brand name in California, Nevada, and New York.

The company frames itself as “the preeminent cannabis company in the United States” with multiple assets and operations in California, Nevada, New York, and Florida. MedMen owns and operates licensed cannabis facilities in cultivation, manufacturing, and retail, and is one of the most well-recognized cannabis brands in the world today.

Headquartered in Los Angeles, MedMen employs more than 800 workers across the United States. It was founded in 2010 by Adam Bierman and Andrew Modlin, two visionary entrepreneurs who saw not just a tremendous business opportunity in the growing legalization of marijuana, but a chance to re-define our society’s relationship with cannabis. MedMen supports sensible, clear and just drug laws.

The Company is the single largest financial supporter of progressive marijuana laws at the local, state and federal levels, giving directly to pro-legalization groups, industry organizations and political candidates.

The company is headquartered in Culver City, California. MedMen Enterprises Inc. is a subsidiary of The Medmen Of Nevada 2 Llc.

According to the release, “MedMen Buds, the Company’s new loyalty program, will be available to all patients at the Jacksonville Beach location. In addition, MedMen’s recently launched same-day delivery platform will be available to Florida patients before year’s end. Together with loyalty and delivery, the Company’s new store locations align with MedMen’s national retail strategy of providing an industry-leading omni-channel experience.”

The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 18% in that timeframe.

Medmen Enterprises Inc (OTCMKTS:MMNFF) has been pulling in significant revenues, with over $7M in Q1 of this year, representing over 630% quarterly y/y growth on the top line. The company has about $12.2M in cash on the books, which must be weighed relative to a mountain of over $86M in total current liabilities.

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