MARAPHARM VENTURES COM NPV (OTCMKTS:MRPHF) is one of several major developing stories in the next phase of an evolving mania playing out among Canadian cannabis stocks. The key catalyst is the developing narrative around the Canadian Prime Minister, Justin Trudeau’s promise to Canada to see to it that pot is legal for recreational use some time during 2017.
According to a recent Bloomberg article, that could lead to more explosive upward action for the group. A massive black market for marijuana in Canada that Canaccord Genuity analysts believe, if brought into legal channels, might bring about sales of 400K kg, or nearly 900K lbs, of cannabis in year one. If legalization occurs along expected timelines there will be about 3.8 million legal recreational users of marijuana across Canada by 2021, according to the note. Demand for medical cannabis is growing at a significant pace and by 2021, combined annual demand for medical and recreational cannabis will be about 575,000 kilograms, the Canaccord report said.
MARAPHARM VENTURES COM NPV (OTCMKTS:MRPHF) is one of several plays that would see likely attention as that story plays out further. The company is a development stage play in the broad marijuana space in Canada and the United States. The company recently announced the purchase of automated cannabis machines which will be branded “Marapharm ACM”. The ACM system provides for point-of-sale transactions, inventory management, secure product storage, enhanced availability of product, privacy, and a reduction in labor costs.
“Initially, ACMs will be located within retail outlets or dispensaries in Washington and Nevada. ACMs will stock and only sell Marapharm products in states where Marapharm owns the cultivation facilities and is permitted to act as a retail dispenser. In other areas, the machines will be leased to growers or will occupy floor space in retail outlets and dispensaries under revenue participation agreements.”
AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) is another strong play in a similar station in the marketplace, and a likely target for investment flows as the institutional market starts to pick and choose where it wants to crowd into the growing cannabis story in North America.
Perhaps the most important revelation for this company was its recent announcement that its wholly owned subsidiary, CanvasRx, Canada’s largest network of cannabis patient counseling centers, has now surpassed 13,000 patients registered with Licensed Producers, including more than 2,500 patients registered with Aurora.
“We continue to fire on all cylinders, reaching more patients, continuing to integrate industry-leading technology, and further building our operational capabilities from a position of unprecedented financial strength,” said Terry Booth, CEO.
To highlight that fact, the company just announced that it has broken ground, and initiated construction on an unprecedented 800,000 square foot production facility. To be known as “Aurora Sky”, the new hybrid greenhouse facility, with a footprint larger than 16 football fields, is expected, on completion, to be the largest, most advanced and most automated cannabis production facility in the world. Situated on 30 acres of leased land in Leduc County, Alberta, management anticipates Aurora Sky to be capable of producing in excess of 100,000 kilograms of high quality, low-cost cannabis per year. The location of the new facility provides unrivaled access to transportation, industrial infrastructure, power, water, gas, and courier services.
CANOPY GROWTH CORP COM NPV(OTCMKTS:TWMJF) is another remarkable play in the space. The company has developed some of the largest cannabis production resources on the planet. It also boasts a fortress balance sheet, with a significant war chest of cash on the books at over $33M, offset by a relatively manageable $5.51M of total accumulated debt. Trailing revs already coming in at $17.78M. In addition, the company is starting to see major topline growth, with quarterly y/y revs increasing at 245%.
Canopy Growth just announced on Thursday that it will acquire all of the issued and outstanding shares of Mettrum Health Corp., creating a world-leading diversified cannabis company with six licensed facilities, and a licensed production footprint of approximately 665,000 sq. ft., with significant acreage for expansion.
The total transaction is valued at approximately C$430 million and will be satisfied by the issuance of common shares in Canopy Growth. Under the terms of the Arrangement Agreement, Mettrum shareholders will be entitled to receive 0.7132 common shares of Canopy Growth for each common share of Mettrum, representing consideration of C$8.42 per Mettrum common share based on the closing price of Canopy Growth common shares on the Toronto Stock Exchange on November 30, 2016. Upon completion of the Arrangement, existing Canopy Growth and Mettrum shareholders are expected to own approximately 77.7% and 22.3%, respectively, of the pro forma company.
The Game is On
According to the Bloomberg piece, Canada’s push to legalize marijuana could be a “game changer” for the recreational pot industry with the potential to reach C$6 billion ($4.5 billion) in sales by 2021. Those companies that can tap into the narrative that will surround this evolving story may continue to run as more established capital starts to migrate into the space.