The Canadian medical cannabis producers we prefer include but are not limited to the following:
Canopy Growth Corp (WEED.TO) (TWMJF)
Aurora Cannabis (ACB.TO) (ACBFF)
Aphria (APH.TO) (APHQF)
Organigram Holdings (OGI.V) (OGRMF)
Emblem Corp. (EMC.V) (EMMBF)
Cronos Group (MJN.V)
CanniMed Therapeutics (CMED.TO) (CMMFDF)
Invictus MD Strategies (IMH.V) (IVITF)
Emerald Health Therapeutics (EMH.V) (EMHTF)
Supreme Pharmaceuticals (FIRE.V) (SPRWF)
Canada plans to legalize recreational cannabis before July 1, 2018, and this has created opportunities for both companies and investors.
Although this opportunity is significant, investors need to focus on companies that are led by a management team with a proven track record, that are well capitalized and can fund previously announced growth initiatives, and that act in the best interest of shareholders.
In late June, we urged caution on a relatively new publicly traded Canadian cannabis firm that was up more than 250% in the last month.
Earlier that month, the company, MYM Nutraceuticals (MYM.CN) (MYMMF), announced an exclusive deal with the Municipality of Weedon, Québec to build a 1.5 million-square-foot cannabis production facility.
Although we were excited by this announcement, we did not buy into the hype. The small town and MYM do not have the capital to complete a project like this. The buildout is expected to cost $200 million.
The market does not seem to be buying to the hype and like us, seems to be looking for clarity from the Municipality on how this project will be funded and how the revenues will be split. MYM previously said that Weedon will exercise that option and then donate the 329-acre property to the project (subject to certain requirements).
A Careless Misstep
While we tend to give cannabis companies the benefit of the doubt, MYM has made simple mistakes that leaves us cautious. Typically, companies that can secure a deal with a city do not makes these mistakes.
Yesterday, the Investment Industry Regulatory Organization of Canada (IIROC) asked MYM to retract the projected gross revenues from its press release earlier that morning. IIROC is a non-profit, national self-regulatory organization that oversees all investment dealers and trading activity on debt and equity markets in Canada.
Also, companies with this much upside potential typically do not see insiders selling stock. This leaves us wondering why Erick Factor, a director, sold 40,000 shares last week.
credit:420intel.com
