Although the Canadian cannabis market has been the hottest place for investors, Canadian cannabis firms have their sights set on the rapidly growing cannabis market in the United States.
Over the last year, we have noticed a trend of Canadian cannabis firms investing in United States based companies and this trend has shown no signs of slowing down.
We have highlighted three companies focused on this opportunity to provide insight into how this trend is progressing.
Aphria Crushes Earnings due to its U.S. Investments
On Friday, Aphria (TSX: APH.TO) (APHQF) released its first quarter financial results for the period that ended on August 31st. During the quarter, Aphria recorded $15 million in net income and the company benefited from its investments in the U.S. cannabis market.
From Arizona to Colorado, from cultivation to technology, Aphria is levered to some of the most attractive cannabis markets in North America. Aphria first invested in the United States through an intellectual property (IP) transfer agreement with Arizona-based Copperstate Farms, LLC. The company purchased a 40-acre greenhouse facility and is one of the largest medical cannabis facilities in Arizona.
Copperstate owns approx. 1.7 million square feet of greenhouses on its 40-acre property in Snowflake, Arizona. The company plans to start producing medical cannabis on approx. 348,000 square feet in the fall. Copperstate estimates that its expanded operations can produce approx. 18,000 kgs every year.
Aphria has benefited from this investment and we expect Copperstate to continue to pay dividends for the Canadian cannabis producer. Aphria said that the largest increases in the strategic investment portfolio relate to the increase in fair value of the investment in Copperstate Farms Investors and we continue to view Aphria as one of the top long-term investment opportunities.
iAnthus Expands into Florida
Last week, iAnthus Capital Holdings, Inc. (IAN.CN) (ITHUF) announced a $3 million investment in one of Florida’s authorized medical marijuana treatment centers. iAnthus purchased 2,925,003 Class B Shares of GrowHealthy Holdings, LLC, representing approx. 6.1% of the issued and outstanding shares. iAnthus also issued a $3 million unsecured one-year note to GrowHealthy. The loan is due on October 11, 2018 and has an 8% interest rate.
In 2014, GrowHealthy Holdings was formed to apply for a license as a Dispensing Organization in Florida. Their affiliated partner, McCrory’s Sunny Hill Nursery, was licensed as a Dispensing Organization by the Florida Department of Health in December 2016, and then subsequently licensed on July 5, 2017 to cultivate, process, transport, and dispense medical cannabis.
iAnthus is a Canadian company focused on the United States cannabis market and we are favorable on its leverage to this opportunity. Although it may take some time for iAnthus to reap the rewards of its investments, this is a company investors need to watch.
BCC to Expand into Nevada and Change its Name
Last week was a busy for The Canadian Bioceutical Corp (BCC.CN) (CBICF). The cannabis firm made a significant acquisition and announced a name change to MPX Bioceutical Corp.
Through its wholly-owned subsidiary, CGX Life Sciences, BCC entered a definitive membership interest purchase agreement to acquire 99% of GreenMart of Nevada NLV. The total cost of the acquisition is $17.82 million (USD) and is payable through the issuance of a $9.32 million, non-interest bearing promissory note, and $8.5 million in units issued at $0.75 per unit (one common share and one-quarter of a share purchase warrant).
GreenMart has developed a cultivation facility and is working toward having one harvest per week. Furthermore, GreenMart operates best-in-class extraction technologies, which enabled MPX to win the coveted 2016 Jack Herer Cup for best hybrid concentrate.
credit:420intel.com