Cannabis is this year’s cryptocurrency. The product has continued to give even when other segments of the market fail. This year alone, investors have received returns in the hundreds of percentages, a factor which has led to more and more investors venturing into the market segment mainly due to the fear of missing out. As a result, more and more investors continue to enjoy some of the highest capital gains the market has to offer.
Unlike cryptocurrencies, however, cannabis overlays the basic economic theory of demand and supply and in this case, the demand side keeps growing at an amazing rate. As a result of this being both a drug which can be medically and recreationally used, its market remains very large and keeps growing by the day. With the continued legalization of cannabis across the market across countries such as Canada and across states within the United States, firms have realized that the potential associated with this – Canada alone presents the market with over $43 billion revenue upside upon federal legalization of recreational cannabis on 17th October. This figure is topped by the United States which enjoys a significantly larger population than Canada and which is currently using cannabis as a medical drug in place of the current opioids.
With investors looking at this segment, therefore, remain confident that their capital gains will continue to grow. As a result, more and more investors continue to flock the segment, with such an investor being Marapharm Ventures Inc (CNSX:MDM).
Unlike many investors, however, the past year has seen the firm scour through a bearish run. The firm’s share price which began the year at $1 per share closed September while trading at $.1 per share, a 90% capital loss to investors. This goes against what has been happening in the industry, especially with the aforementioned capital gains which have previously been witnessed by most cannabis investors.
See the chart below:
However, the past month has seen them go through a recovery as their shares nearly tripled in price. From a price of $.1, their share price is currently trading at $.242 which is a slight decline from their previous high as explained by the chart below:
The resulting conclusion is that the firm has finally begun realizing its potential and set in motion plans to ensure this is achieved. We thus opted to look at MDM and assess how this has been happening as well as its future impact.
History of MDM
A subsidiary of Whitewater Resources Ltd, Marapharm Ventures Inc was founded back in 2007 and incorporated in Kelowna, Canada. Back then, the firm was known as Capital Auction Market Inc, a name which changed to its current in 2014.
With the name change came a change in its operations. The board decided to change their strategic orientation to the cannabis field. Currently, therefore, the firm engages in both the cultivation and production of marijuana across both Canada and the United States. Furthermore, as a result of developing and owning Maragold, the firm distributes hemp-based products to these markets. Due to the latter, they have carved a niche for themselves and created a brand on which they continue to flourish.
Recently, the firm took to two main roles: an acquisition and raising additional capital.
In terms of the acquisition, the firm signed a definitive agreement back on 25th September which would see them acquire all the outstanding securities of Full Spectrum Medicinal Inc. this acquisition would see them obtain all the 88.1 million common shares at a deemed price of $.31.
This acquisition will see Full Spectrum Medical Inc construct the 10 fully-funded 10,000 square foot facilities – bio-secured – in addition to implementing their cutting-edge organic cultivation methods which are expected to revolutionize the cultivation of cannabis through reduced carbon footprint, reduced production cost thus increased profitability.
The above acquisition is therefore meant to enhance synergies between the two firms and will see them grow into a higher profit entity.
In a bid to raise capital, MDM announced their interest to place a bid for C$1.5 million through debenture financing. The firm is expected to enter a contract for the above amount at a 10% interest rate payable upon maturity – will be maturing on 30th September 2019. This debenture will be convertible at $.2 per share with warrants exercisable at $.5 per share within 1 year.
Investors in this option are expected to benefit greatly from this move. Already the firm’s share price is trading at $.2 which makes the convertibility option worthwhile for the debenture holders.
With the firm also having the backing of an advisory board which was set out to ensure that the firm implements their strategy in a timely manner, there is a lot which they can back their hopes on. Their positive outlook towards being the global leaders in the cannabis sector puts them on a pedestal as they work towards achieving this goal.
With the options for the firm seeming better and better by the day, there is a lot to be hopeful for. We thus remain positive about the future of MDM.
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Disclosure: We have no position in MDM and have not been compensated for this article.