From January 1, 2018, Marijuana is legal in California for adults; 21 and older. Additionally, individuals can have up to six plants and own up to an ounce of cannabis. It is a significant announcement, widely expected by growers and industry specialists in the U.S., which will, for sure, bring a lot of revenues to the cannabis companies.
Here comes the next problem for new consumers, and for the industry in general. Specialists are expecting that the current amount of marijuana companies will not be able to cope with the enormous demand that the new regulatory environment will create. The issue is that the amount of licenses given by the U.S. Government is still very less, so only a few vendors will be able to reach clients legally. Read the following from a well-known marijuana website:
“But finding a retail outlet to buy non-medical pot in California won’t be easy, at least initially. Only about 90 businesses received state licenses to open on New Year’s Day. They are concentrated in San Diego, Santa Cruz, the San Francisco Bay Area and the Palm Springs area.” said thecannabist.co
In our opinion, those early adopters who were able to foresee the new stream of revenues from the industry should profit. It is the case of MAPLE LEAF GREEN W (OTCMKTS:MGWFF), which holds business interests in California and has seen how its share price has gone from approximately $0.50 to hit the one-year highs of $1.50. For those who need a calculator, this share price move represents more than 200% in a very short period. It is astonishing even for a microcap stock. Additionally, we could see how the trading volume also spiked to more than 1 million shares exchanged. It shows that many in the market were expecting the move.
We don’t know how long the upward trend will last. There are excellent reasons for sustaining the share price appreciation, so it is difficult to get to know when the market will stop pushing up the price. Have a look at the recent share price action before we provide more details about the stock:
MGWFF was founded in Alberta, Canada, and is currently headquartered in Calgary. It is also listed in the TSX Venture Exchange under the ticker symbol MGW.V. With previous expertise in the eco-agriculture and renewable energy, the company took the savvy decision of seeking medical cannabis opportunities that include obtaining the license to produce and sell marijuana in the States of California and Nevada in the USA.
We believe that MGWFF started earlier than other competitors in the industry. In March 2014, the company engaged a professional consulting group to help it obtain the License from Health Canada. The first agreement was signed, only a month later, with Woodmere Nursery Ltd. to lease 80,000 square feet of greenhouse space, located in Telkwa, British Columbia, at $3 per square foot per annum from Woodmere.
The work with the Government of Canada commenced in July 2014 when the company applied for the License. Since then, the process seems to have been quite long, because the Government required substantial information from the company. In December 2015, the company was able to progress to Stage 4 of the process, in which Health Canada reviewed all officers and directors of MGWFF. In January 2017, after the resignation of one of the directors, who was not living in Canada, Health Canada noted that the company had progressed to the review stage. As of today, the company has not received the final approval to sell marijuana. However, we need to note that it has been working for more than three years in the process, so we expect that the license will be received soon. Other competitors may start the process now. MGWFF will be more prepared than them.
In September 2014, the company engaged Mr. Brian Patterson, Mr. Marc Montoya, and Mr. Dillon Patterson to commence operations in California, USA. Thus, we believe that the work in this state began a long time ago as well. The accumulated expertise of operating in the sector at this point of time will be an asset that will protect the business from new entrants. It is very positive.
To grow the business in the US, the company signed a Letter of Intent to form a Joint Venture Agreement with Emerald Farm Collective. The companies are building a nonprofit mutual benefit corporation with about 250 lawful membership patients, who receive quality cannabis for a discounted price. Additionally, the agreement says that MGWFF will build a growing facility “6 cold frames” in Southern California with the capacity to house about 400 cannabis plants in two phases. Additionally, among other terms included in the contract, we believe that the fact that the company will be funding $500,000 is significant. It shows the financial power of MGWFF.
What happened in November and December 2017?
The most significant share price increases would in November and December 2017. Thus, we will assess what was released in that period.
On November 22, 2017, the company released that Woodmere Nursery Ltd. had obtained a Foundational Building Permit from the Regional District of Bulkley-Nechako related to 30 acres of land leased to Maple Leaf. As a result, the grounds, buildings, and structures at the Telkwa Facility are permitted for agriculture use, which is exactly what the Maple needs. The company will still require the approval of the Access to Cannabis for Medical Purposes Regulations to cultivate marijuana, but it is the first step.
On December 12, 2017, the company also announced regarding the Telkwa Facility that the foundation construction will be completed in January 2018. On the top of it, on December 22, 2017, the market got to know that foundation construction had commenced for the cultivation facility. Undoubtedly, it was this announcement, which made the market push up the share price.
Currently trading with a market cap of $182 million, MGWFF is an exciting story among small caps. With $3.869 million in cash, $6.378 million in total assets and only $0.275 million in total liabilities, the financial position is another thing to like.
To sum up, be sure to follow this name; it should continue surprising to the market.
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Disclosure: We have no position in MGWFF and have not been compensated for this article.
Image courtesy of WR Greens via Flickr