Heritage Cannabis Holdings Corp (OTCMKTS: HERTF) is at a crucial juncture after a gigantic rise to highs last seen in 2018. While the stock is up by more than 300% for the year, it has pulled lower in what appears to be a minor correction pending further upside action.
Heritage Cannabis Holdings Price Analysis
The spike to 2019 highs comes on Heritage Cannabis Holdings confirming the acquisition of two extraction systems as it seeks to ramp up cannabis extraction operations. The Company has also closed a previously announced bought deal and consequently raised $17.3 million.
With the new finances, the Company intends to increase cannabis extraction capacity. Management has also confirmed plans to carry out strategic investments as a way of strengthening the portfolio of existing companies.
After spiking to the $0.53 level, the stock has pulled lower in what appears to be a minor correction. The stock is currently flirting with support at the 0.40 level, from where a bounce back to this year highs, could come into play.
Above the $0.40 mark, Heritage Cannabis remains bullish and likely to continue powering high in continuation of the emerging uptrend. Conversely, a breach of the $0.40 support level could attract short selling pressure that could see Heritage Cannabis plummeting back to the $0.30 level seen as the next support level.
What Does Heritage Cannabis Holdings Do?
Heritage Cannabis is a vertically integrated cannabis provider engaged in the distribution of cannabis products. The Company is a licensed cannabis producer through its two subsidiaries Voyage Cannabis and CannaCure. As the owner of Purefarma Solutions, it also offers cannabis extraction services. BriteLife Sciences is the Company’s subsidiary that offers cannabis-based medical solutions.
Ramping Up Extraction Capacity
Shares of Heritage Cannabis have taken a flight on the confirmation that the Company has secured a $17.3 million financing through a bought deal. With the revamped balance sheet, the Company remains well positioned to pursue growth initiatives all in the effort of generating shareholder value.
There are already plans to strengthen the Company’s cannabis extraction capacity as Heritage Cannabis looks to make good use of strong demand in the industry. In April, the Company confirmed the acquisition of two Vitalis Q9 extraction systems slated for delivery to a CannaCure Corporation facility in Fort Erie Ontario.
Once installed, Heritage Cannabis will have six Vitalis Q90 Machines, which amounts to one of the largest extraction footprints in the industry. With the robust extraction capacity, the Company should be able to process its own hemp supply as well as compete for a toll processing jobs from other licensed cannabis operators,
“With this purchase, we will double our extraction capacity at our Fort Erie facility by this summer. We continue to prepare our infrastructure for the upcoming changes to the Cannabis Act to include vaping, edibles and infusions. Our extraction team continues to grow as Purefarma Solutions trains more technicians to be deployed across our network,” explained CEO Clint Sharples.
Even as Heritage Cannabis Holdings continues to boost its cannabis extraction capacity, it is also eyeing new partnerships all in the effort of securing new distribution and sales channels of its products. Its wholly owned subsidiary Voyage Cannabis has signed an agency agreement with Cannavolve.
Under the terms of the agreement, Voyage is to gain access to various provincial cannabis boards. The Company also stands to leverage Cannavolve distribution network in a bid to get its cannabis product s in front of retail distributors across Canada.
“With the network support and expertise behind Cannavolve we believe Voyage can become a top brand within the adult use cannabis industry. Cannavolve provides us with a pathway for widespread retail exposure, which will complement our own medical offerings,” states Debra Singer, CEO of Voyage.
Heritage Cannabis Holdings has achieved significant progress in its bid to become an industry leader in cannabis extraction. The acquisition of extraction equipment with plans to acquire new ones leaves the Company well positioned to enjoy economies of scale and make good use of strong market demand.
The Company is also increasingly strengthening its retail footprint as it seeks to target a broader target market for cannabis products.
Price action indicates the stock has bottomed out and poised to continue registering higher highs given the improved fundamentals.
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Disclosure: We have no position in HERTF and have not been compensated for this article.