After the legalization of some forms of marijuana in some states in the U.S. and Canada, it seems that the demand for these products is booming. As a result, we saw share appreciations in the marijuana sector in 2017 and continue to see them in 2018 as well.
One clear example of this phenomenon is the group of companies doing research and development related to the medical cannabis industry. Among them, we find THC BIOMED INTL LT (OTCMKTS:THCBF), which seems to be exceptionally positioned to profit from this rapidly growing sector. We will talk about THCBF in this piece.
Check the recent price action before we provide more details. We are sure that this company will interest our readers because the stock returns have been astonishing. From trading close to $0.75 for almost a year, the stock price spiked in December to touch the level of $2.00 in a short period. Additionally, many participants seemed to be interested in the stock, as the amount of volume increased quite a bit as well. We could see as much as 1.5 million shares changing hands some days, which is a one year record:
THCBF was founded in 1982 and is headquartered in Kelowna, British Columbia, Canada. It is a Canadian federally Licensed Producer of Medical Marihuana focused on R&D, plant innovation, and life sciences, with the emphasis on medical cannabis. We could see the company’s name on the website given by the Canadian Government, wherein all the accepted producers are listed.
Regarding the competition in the area, we need to note that there are only 84 accepted producers, and just 18 in British Columbia, wherein the company runs its operations. This is quite interesting, as it seems that the marijuana market is quite big, but there are not many companies operating in this sector. In our opinion, these companies will not be able to cope with the growing demand and will have to grow their activities at a high pace, which should push up their share price.
On the top of it, among the list of 18 companies that can run a marijuana business in British Columbia, there are only a few that can sell, produce, and cultivate like THCBF. We encourage readers to check this information themselves, it will undoubtedly affect the future revenues of the company and represents a fabulous business opportunity.
The most interesting in 2017
The company commenced the year 2017 with an excellent tone. In December 2016, Health Canada had permitted the company to start selling marijuana plants to legally authorized patients under the ACMPR. Thus, in January 2017, the company could commence shipping live cannabis plants to patients. It was noted to the market that the initial price was set at $20 per Clone, plus packaging and shipping, and the clients were able to order from thcbiomed.com.
That’s not all that the company released in January. THCBF also communicated that it offers genetics for sale to licensed producers under the ACMPR. The company plans to provide newly licensed producers the genetics they require to start production. Additionally, we appreciated that the company had already accumulated enough know-how to offer consulting services to new producers. Our take is that the company is a significant player in Canada, and can produce so much marijuana to distribute. Besides, it is helping others distribute. For the readers always looking for a market leader, THCBF is an interesting name to follow.
Something even more exciting was released a few weeks later.
On February 10, 2017, we got to know that the company was also acquiring other businesses to grow at a higher pace. It was released that Clone Shipper LLC was going to be purchased for $1 million. This target company is a U.S. entity specializing in packaging products for the transport of living marijuana plants, which will help THCBF establish its business model in the U.S. The most important is that Clone Shipper knows very well the Canadian, U.S. and international laws governing the transportation of live cannabis plants. THCBF could have learned how to deal with the regulatory framework alone but decided to buy this company. This event shows the financial power of THCBF.
Talking about the financing, we should say that THCBF seems to be very well connected. It can raise capital quickly. The following is a list of the private placements made in 2017:
- On March 16, 2017, it received a capital commitment agreement with GEM Global Yield Fund LLC SCS for $10 million.
- On August 11, 2017, it received $12,000,000 from Alumina Partners.
Regarding the expansion into other markets, it seems that the company will not be constrained to operate in America. On June 23, 2017, it was noted that it had received an order to export Marihuana to Germany. The company seems to try to meet the regulatory requirements to ship to the European Union. The revenues from the international market may be substantial. A report in the Financial Post dated April 20, 2017, estimated the global medical marihuana market to be worth approximately $50 to $100 billion a year.
We needed to wait until August 24, 2017, to see one of the most exciting announcements.
The company released that Health Canada had permitted the company to sell dried marihuana to registered patients under the ACMPR.
“Our inventory is ready. Authorized customers can order from our new website www.thcbiomed.com and have products shipped directly to their homes. Our high quality, organically grown, dried marihuana will be available in 29 strains. Our pricing structure reflects our mandate of supplying good quality marihuana at an affordable price.” said John Miller, CEO of THC.
The regular pricing is $6 per gram for any other company’s 29 available strains regardless of their THC content. Additionally, home growers who started purchasing material from THC Biomed can get the products for only $4.20 per gram.
Finally, on November 20, 2017, the company released an innovation, which, we believe, is entirely new; the creation of THC2GO Dispensaries. The application process to become a cannabis retailer in Manitoba has already started, and the application for retail outlets in each Canadian province is also intended. We believe that this new initiative will bring not only revenues but also brand awareness and recognition. Little information was given, so we will need to be very alert in 2018 regarding these matters.
Currently trading with a market cap of $231 million, THCBF is an exciting story among small caps. With $0.018 million in cash, $5.568 million in total assets and only $3.985 million in total liabilities, the balance sheet also seems stable.
To sum up, there seems to be a lot to like in this company; be sure to follow this name.
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Disclosure: We have no position in THCBF and have not been compensated for this article.
Image courtesy of __ariel__ via Flickr