The last time we looked at Emerald Health Therapeutics Inc (OTCMKTS:EMHTF), we reiterated how it represented one of the success stories in the medical marijuana space. As it turns out, we were spot on as the stock’s share price has more than doubled and is showing no signs of slowing down.At the time of the last review, Emerald Health Therapeutics was trading at the $2.26 handle. Since then it has spiked to all-time highs of $6.64 and pulled back to the $5.75 handle. The more than 150% surge has made some investors a lot of money. EMHTF Daily ChartThe stock has been on an uptrend since September according to the chart below. However, it has pulled back in what appears to be a minor correction pending a further move on the upside. Given that the strength of the upward momentum, it is only a matter of time before it rises to the $6.48 handle, a critical resistance level.On the downside, the stock faces immediate support at the $4.2 handle below which it could drop to the $3 handle.The company has followed last year’s impressive run with a string of investments which continues to strengthen investors’ confidence in the stock. But before we look at what is likely to push the stock higher, let us look at what the company does in pursuit of shareholder value.Business OverviewEmerald Health Therapeutics is a licensed medical marijuana company. The company together with its subsidiaries produces and sells medical marijuana products as well as cannabis oil. The company was founded in 2007 with the aim of venturing into the medical cannabis industry as a subsidiary of Emerald health Sciences.It has since evolved and is aggressively pursuing growth opportunities not only in North America but around the world. However, the company is focused on the Canadian market where demand for medical marijuana products is on the rise.With the market being valued at $22.6 billion, it goes without saying that gaining a piece of the pie will go a long in guaranteeing substantial returns for investors.Emerald Health Therapeutics Growth Prospects Doubling Production Capacity Emerald Health Therapeutics is developing a 1.1 million square facility in Delta British Columbia, as it looks to take its marijuana production capacity to 75,000 a year. The first phase of the project should be complete by March with an additional 500,000 ft. expected to be in operation by the end of the year.The company plans to trim its production capacity by next year which would put it on top of the production ladder, at a potential 300,000 kg annually. Emerald Health Therapeutics production facility will also allow it to pay more emphasis on extraction and cannabis oil.Cannabis oil production is the soft spot of the sector given that it boasts a much higher price than dried cannabis and has higher margins.While the plans may sound expensive, the company has already raised a significant amount of money that should allow it to bring its production facility online, without any significant hurdles.$15 Million Capital Raise Early this year Emerald Health Therapeutics completed a prospectus sale to a Canadian institutional investor. Under the deal, the company issued 3 million units at a price of $5, for gross proceeds of $15 million.The company has also elected to exercise its right to accelerate the expiry of $2.60 common shares purchase warrants, issued on April 20, 2017. The company is waiting for its share price to close above $3.5 for two consecutive days to exercise the notice.The capital raise provides the much-needed firepower needed to accelerate production of medical marijuana products. Also, it should allow the company to finance research and development projects needed to accelerate the next phase of growth.AcquisitionLast year, Emerald Health Therapeutics acquired a controlling stake in Northern Vine for $2.5 million. The acquisition has expanded the company’s ability to carry out broader research and development. The company is also a licensed Dealer under the Canadian Controlled and Substance Act, which paves the way for Emerald Health Therapeutics to pursue international business opportunities.Also, Northern Vine provides Emerald Health Therapeutics with exposure to the recreational marijuana market.
“A Licensed Dealer has a significantly broader license than a Licensed Producer to carry out research and development and to import and export cannabis oils and other controlled substances,” said Avtar Dhillon, MD, Executive Chairman of Emerald. “Our acquisition of control of Northern Vine will set the wheels in motion on a number of strategic business opportunities we have been nurturing.”
Bottom Line It goes without saying that Emerald Health Therapeutics has strategically positioned itself for accelerated growth in the fast-growing industry. The acquisition of Northern Vine should give it a head start in the legal recreational market, once the necessary legislation is passed in Canada.However, the icing on the cake will be its production facility coming online, given that it will allow it to mass produce marijuana products for two fast-growing markets.There is nothing stopping Emerald Health Therapeutics from being a dominant player in the industry, which can only lead to more value for shareholders.We will be updating our subscribers as soon as we know more. For the latest updates on EMHTF, sign up below!Disclosure: We have no position in EMHTF and have not been compensated for this article.
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