MMJ's four significant holdings make excellent investment options

Published Nov 6, 2020 10:00 a.m. ET
iStock / Adam Simpson

The insight into which stocks to invest in is something that not all cannabis investors possess. However, if you have done some homework, you will be well aware that MMJ has four significant holdings moving upwards in a positive direction. The broader marijuana sector saw a decline in September, but MMJ was seeing a positive uplift in October's early weeks. In Canada, the total marijuana market size is 2.8 billion dollars, and the black-market conversion to legal herb is about 25%.

Stocks to invest in

Let’s look at the four significant holdings.

1. Embark Health Inc.

This holding is a privately held extraction company. Embark Health Inc. originally invested in 2018 and was held by way of warrants and shares.

  • One facility in Woodstock, Ont. and the other in Delta B.C have spent 18 months securing a Health Canada processing license while building their facilities.

  • Woodstock has progressed to a facility. After having a completed building frame, the foundation has been laid. Hopefully, the facility will be licensed and completed within the next 6-9 months.

  • The Delta location is currently operating a water extraction process, and the C02 extraction process will begin in a few weeks. The company is being noticed for organic solvent-less water extraction. Embark Health has completed testing, and several large producers with purchase orders in hand will be coming within the next several weeks.

  • Embark is expected to be cash-flow positive as early as November when Embark will list on a Canadian exchange by early 2021.

2. Harvest One Cannabis Inc.

The publicly listed marijuana company is currently in a transition mode to focus on marijuana consumer brands. MMJ investments are long term and held via warrants and shares.

  • The proceeds from the Duncan facility's sale of about 8.2 million Canadian dollars have helped to solve capital issues for the time being.

  • Harvest One focuses on becoming a consumer brand company and finding new areas to reduce the monthly output.

  • The sale of the Duncan facility saw MMJ repaid its 2 million. As part of the repayment, MMJ received 0.5 million Canadian dollars worth of warrants and interest on the loan.

  • The company is turning around, and MMJ sees that the business is moving forward and bringing costs in line with the current market realities. The transformation is expected to be completed in the early part of the new year.

3. Weed Me Inc.

The privately held Toronto based indoor cultivator was initially invested in 2018

  • Lemon Z and Cindy Jack are the main products consistently moving at the retail level.

  • Monthly sales for Weed Me are reported to exceed 900k Canadian dollars monthly. Last year the numbers were 100k Canadian dollars per month.

  • Last year MMJ rescued this struggling company by providing a one-million-dollar Canadian convertible debenture. It has now repaid 750,000 Canadian. MMJ deferred the last 250,000 for two months to enable the company to purchase the needed product to meet the sales orders.

  • MMJ expects this company to eventually go-public within the next year.

4. WeedMD Rx Inc.

The publicly listed, Ontario based, large scale, outdoor and indoor cultivator initially invested in 2019 through convertible debentures.

  • Thanks to the outdoor grow program, the cost per gram remains the lowest in the industry.

  • The company's key-challenge is to find end markets for the large quantity of marijuana produced. The company is typically left with a large inventory position and a monthly cash burn.

  • WeedMD secured a 30 million-dollar Canadian loan from the largest customer and shareholder, the LiUNA labour union. This new capital enabled the company to ramp up sales through medical channels and to address costs.

  • The additional pressure on the capital structure is not an issue for MMJ, who is comfortable with its position on the cap table by way of convertible debentures.

Final words

Cannabis investors moving forward into a new year may benefit from MMJ and the four significant holdings that have been listed. MMJ's Investments span across most of the hemp and cannabis value chain. Do your research when looking for stocks to invest in to ensure that you receive a profitable return.

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