A new license for the operation of a cannabis extraction facility in Portland might as well be the catalysts that will shore up Golden Leaf Holdings Ltd (CNSX:GLH) prospects in the market. After a stellar start to the New Year, the stock came under pressure, as short sellers assumed control, fuelling a sell-off wave that has seen the stock shed more than 50% in market value.
While the stock has bounced back from its one-year lows of $0.15 a share, it remains susceptible to further declines, given the underlying long-term downtrend. The stock is currently flirting with a key resistance level at $0.18, waiting to see if the new catalyst has what it takes to prevent further implosion.
A rally followed by a close above the $0.19 mark should open the door for the stock to make a push for the $0.22 mark, seen as the next resistance level. A breach of the $0.14 on any sell-off should reaffirm the long-term downtrend, which could see the stock dropping even further despite the recent pullback.
About Golden Leaf Holdings
Golden Leaf Holdings is a Canadian Cannabis company engaged in the cultivation, production, and distribution of cannabis products. The company operates in multiple jurisdictions not limited to Canada, Nevada, and Oregon. It distributes its products through branded Chalice Farms retail farms as well as third-party dispensaries.
Golden Leaf Holdings has bounced back on serving a catalyst that seems to have eased negative sentiments in the market. A high turnover in shares traded is what is needed if the stock is to continue bottoming out from the current lows.
Renewed investor interest after the recent sell-off, follows the announcement that the company is set to begin extraction operations following the issuance of permits by the city of Portland. The company production team is to begin operating extraction equipment, which should get the company on course to start distributing products in pursuit of revenues.
“We have a good idea of what they are capable of producing, and we just want the hard facts and data. Once the verification process is complete, we will have a stronger line of sight to production capacity that our sales team can rely on to make market penetration and competitive pricing decisions,” said William Simpson, CEO, and Golden Leaf Holdings.
Golden Leaf Holdings has also moved to diversify its revenue streams by announcing the introduction of several cannabis product lines in the U.S. With the help of its Greenpoint Nevada subsidiary, the company is hoping to take a piece of Nevada fast growing cannabis market that is set to generate $120 million in revenues by mid next year
The company’s products are currently being sold in dispensaries in the state. With the new extraction facility set to come online, the company should be able to sell more products allowing it to generate more revenues.
Some of the products that the company is selling in Nevada include Golden Tinctures, Golden private distillate vape cartridges as well as CBD product lines.
“Production Greenpoint allows Golden Leaf to bring our proprietary extraction and production methods to Nevada, stay at the forefront of emerging consumption trends, and offer these innovative products through the finest dispensaries in the state,” said William Simpson, CEO of Golden Leaf.
Golden Leaf Holdings has also set its eye on the Canadian Cannabis market having applied for a sales license under Health Canada. The company’s Medical Marijuana Group Subsidiary has products in the pipeline awaiting distribution on the approval of the much-needed license.
MMG adds yet another distribution layer that will help Golden Leaf Holdings target two markets at a go. Canada has already approved recreational use, with the market set to come online in October, expected to provide yet another distribution channel.
What Next For Golden Leaf Holdings
Golden Leaf Holdings has without a doubt underperformed the overall market if a 50% plus slide in share price is anything to go by. However, it is not all doomed for the stock on the company’s improving fundamentals.
The company has done a great job in diversifying its operations in the U.S and Canada. A dip in value in recent months thus presents a unique opportunity to get involved in a stock that has every reason to rally as the company moves to pursue growth opportunities in Canada and the U.S.
A recent surge in trading volume, which has helped push the stock from this year’s lows provides a glimpse of what could happen as investors take note of improving fundamentals.
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Disclosure: We have no position in GLH and have not been compensated for this article.