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Idea: Will it happen in Sri Lanka too: Registered Cannabis companies go for equity financing - Daily Bell

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StockGuru

StockGuru
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

High Alert's focus at the moment is on the legal use of medicinal and recreational cannabis – and there is great news on this front. For me personally it even includes the opportunity of helping to create jobs in Nova Scotia, my original Canadian home province, where the company's initial operations are to be located.

Our recent financial partnership with a highly promising, early-stage cannabis company may be our most exciting venture yet. The company is called Vida Cannabis Corp., and you will be hearing a lot more of it in the days and weeks to come.

Negotiations to purchase a vast and historical production plant have put this company in a position to create what could become Canada's leading domestic and export cannabis brand.
The company has successfully closed an initial seed round equity financing of US$ 1,000,000, mostly subscribed for by the company's directors and officers – always a good sign! High Alert also participated in that financing in addition to the founders round of equity and introduced other value-added angel investors as well.
While no doubt there will be a corporate takeover and consolidation of the industry eventually, these are early days and the race belongs to the swift; those who can set up a company and create a strong product line stand a good chance of positioning themselves for greater opportunities that lie ahead, no matter the consolidation.
The company's CEO is Greg Wilson. I've known him most of my life, as he's someone I met shortly after university. A couple of years ago we reunited, and I introduced him to Dr. Michael Stocker – the CEO of a private biotech company I invested in and provided consulting services to.

When Greg developed the idea of building a global cannabis company, Dr. Stocker was quick to see the potential. Soon the three of us were strategizing about developing a world-class company that could maximize the marijuana trend while minimizing any downside risk exposure.

High Alert's in-house people, such as Ricardo Faria, our CTO, also recognized the opportunity. He was instrumental in systems development for both Dr. Stocker and Greg Wilson in the biotech company in which they met and also leads a programming effort that develops and manages the backbone of High Alert's publishing and CRM efforts. In the end, the consensus was that the opportunity was too good to pass up.

Even High Alert's Chief Legal Counsel, Christine Fard, decided to become involved, and was soon appointed Chief Legal Counsel of Vida Cannabis Corp. ("Vida Cannabis") as well as a director for the company.

After High Alert entered into a formal Financial Partnership Agreement with Vida Cannabis, which included pre-emptive financing rights and the ability to appoint up to 40% of Vida's board of directors, both Ron Holland and Dan Hunter were nominated and joined the Vida team.

Today, pretty much all of High Alert's team is involved to varying degrees. Our communications person handles Vida's media relations, at least for now, our Investor Services people are assisting with providing investor-oriented communications and so on. Like most other things we do at High Alert, once we are committed to helping make something grow – ideas or otherwise – when we are in, we are all in. And Vida Cannabis is one company where we are, indeed, all in.

I consider this a once-in-a-lifetime opportunity to take advantage of a rare government deregulation in a significant economic sector. And the wave of opportunity in this global sector is only just starting to build. To say the sector has legs – long legs – is an understatement, in our opinion.

The use of cannabis and hemp is no doubt as old as the human race, but after so many years of prohibition it's hard to believe we're finally discussing its legalization – given the disinformation and outright lies that have been spread about one of nature's most useful and helpful plants. Nonetheless, here we are.

We have the opportunity to do well by doing good ... and that's one powerful trend!

In this month's edition of The High Alert Trends & Sector Report (available with a FREE Investors Edge Membership – Click Here to subscribe now) I'll be presenting Vida Cannabis in greater detail. I believe this company has great potential to deliver exceptional returns in the rapidly developing global industry. The challenges are many, yet risk-assessed returns through globally-focused lenses yield exceptional possibilities.

In our upcoming issue, I offer my perspective on the company's global positioning. When I say "my perspective" I should really say "my team's perspective" because there are a lot of good analysts and consultants with varied experience who are extremely important in assisting High Alert as we conduct due diligence and structure value-added financial partnerships.

You'll be able to read about this and much more in our upcoming High Alert Trends & Sector Report, scheduled to be issued on Monday, March 10. Don't miss this issue. It will explain in detail what's going on and why you should watch developments closely – and consider participating in upcoming financing opportunities, if appropriate (accredited investors only).

A look at just a few of the facts and numbers presented in High Alert Capital Partners' Medicinal and Recreational Cannabis sector report – prepared by two other integral members of the High Alert Capital Partners team, Research Analyst James Osbiston and Director of Institutional Research, Joseph Hogue, CFA – will make clear why I refer to this as a "once-in-a-lifetime opportunity."

Canada's regulatory environment for marijuana production for medicinal use is set to dramatically change effective April 1, 2014, opening the way for large-scale grow operations. Licensing requirements are extensive and there will be considerable competitive advantages to those producers that can achieve scale.
As of September 2013, Health Canada reported that there were 37,359 patients who had medical marijuana licenses in Canada, up from 477 licenses in 2002. The Government of Canada estimates there will be 58,000 licensed medical users in 2014 and up to 450,000 by 2024.
The market for medicinal use in Canada is estimated at $144 million in 2014 and expected to grow by 23% a year to $1.3 billion over the next 10 years.
[In Canada] this represents a compound annual growth rate of 24.5% in sales and 22.7% in registered patients.
Total revenue of listed marijuana companies was $69 million during January through September 2013.
As of January 2014, 21 U.S. states permit the use of cannabis for medical purposes under a doctor's direction, and 9 states have legislation pending for the year. Colorado and Washington both decriminalized the use of marijuana for adult recreation in 2012.
Similarly, the Winnipeg Free Press reported, "Sales projections for the new [medical marijuana] industry by 2024: $1.3 billion a year" in a September 2013 article, "Cannabis a predicted cash cow."

This week, NORML reported at its blog:

CNN Chief Medical Correspondent Dr. Sanjay Gupta is "doubling down" in his advocacy for patients to have legal access to cannabis as a therapeutic agent.

In a commentary featured on the CNN website today, Gupta writes: "I am more convinced than ever that it is irresponsible to not provide the best care we can, care that often may involve marijuana. I am not backing down on medical marijuana; I am doubling down."

Gupta is not the only one who realizes the significance of what's going on with cannabis, of course. Marijuana Business Daily reports, in "Mainstream Investors Finally Starting to Eye Green Rush":

The dam holding back massive pools of investment money from the marijuana industry hasn't burst yet. But cracks are starting to emerge, and millions of additional dollars could start flowing into the industry as the year progresses.

The newest – and perhaps most significant – crack: An increasing number of established investment firms, wealthy individuals from the mainstream business world and even politicians are starting to pump money into cannabis companies.

Earlier this week, we reported that a marijuana-focused angel investment network – The ArcView Group – has seen a 50% spike in membership over the last three months. What's more, its ranks have ballooned more than five-fold in a year.

The growth alone is impressive. But it's who has joined that is turning heads.

ArcView members now include Tom Bollich, co-founder of online social gaming giant Zynga; New York Assemblyman Steve Katz; and Douglas Leighton, founder of Dutchess Capital, a New York-based investment firm that manages $125 million in assets and has invested more than $200 million in companies across the globe.

Initially, this sort of industry growth is lightning fast and chaotic, as we are seeing now. At this point, startups are appearing very quickly – with or without the vision, business plan and team in place to carry it out over the long term. But gradually, as mainstream investors and corporations enter, smaller business are either squeezed out or merged.

We have acted quickly, too, and thus are in a premier position to benefit from this burgeoning sector.

Exciting opportunities are possible for a group that is "first in." You are also an "early adopter" because you are here at this website and reading this editorial.

If you're interested in finding out more about our cannabis opportunities and are prepared to conduct your own self-directed due diligence, please take advantage of a free Investors Edge membership to download the sector report on Medicinal and Recreational Cannabis. Investors Edge members can review it by clicking here. A free membership will enable you to read all our other research reports and newsletters, as well, including this one upcoming on our major moves in the marijuana field. If you have not yet registered as an Investors Edge member, please do so here.

Happy reading ... And please check out the upcoming High Alert Trends & Sector Report to learn more.

- See more at: http://www.thedailybell.com/editorials/35093/Anthony-Wile-The-Marijuana-Trend-Proceeds--Introducing-High-Alerts-Early-Stage-Investment-Idea--Vida-Cannabis-Corp/#sthash.jNpSZnMf.dpuf

StockGuru

StockGuru
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

Marijuana Sector Update - March 4th 2014
March 05, 2014
Joseph Hogue, CFA
It still feels a little odd writing the words marijuana and sector together, as if it were a well-established and legitimate investment sector. It seems that in just a few months the sector has evolved from joking fancy to the hottest idea in the capital markets.

While last year lit the powder keg with legalization in two U.S. states, this year is pivotal as public opinion shifts in favor of legalization. A recent article on The Daily Bell provides a pointed history of the marijuana legalization meme. The article contends that the history of marijuana legalization has been directed by powerful forces that want it in the mainstream, that the path has already been decided and it is only a matter of time.

Directed or not, the moneyed interests are certainly flowing to the lobbying groups. The Marijuana Policy Project reported expenses of $4.5 million in 2012, with $151,000 spent to lobby state legislators and $1.9 million spent on initiatives in Colorado, Arkansas and North Dakota.

The movement to decriminalize and legalize marijuana is even stronger on an international level. The World Intellectual Property Organization (WIPO) reports that 309 of the total 606 cannabis-related patents filed have been by Chinese firms.

Uruguay's economic minister, Mario Bergara, gave an interview recently to Bloomberg on the country's inflation, growth and status as first nation to legalize the marijuana sector from production to usage. The new legislation is a watershed moment for a lot of emerging countries that have historically been racked by drug violence and could offer a way out through legalization and regulation.

Public Markets

Publicly-traded shares continue to be extremely volatile with double-digit price swings common on a daily basis.

Advanced Cannabis Solutions (CANN) announced February 20th that it had signed a consultancy deal with a Canadian investor group for a large production operation. The company filed the Form 8-K with the SEC outlining the deal, which includes a $20,000 fee and $20,000 per month for a minimum of six months. Shares surged 62% on Wednesday as investors rushed in after the announcement.

mCig Inc. (MCIG) filed a Form 8-K for its spin-off and pro-rata dividend of VitaCig to shareholders. The board of directors approved a one-to-one share dividend to mCig shareholders and an expected launch date for the new company of April 15th, 2014. Shares climbed gradually throughout the week and ended higher by 30% by Friday.

Cannabis Science (CBIS) raised $1 million through a private placement to satisfy current capital requirements. Pricing of the deal was set at $0.25 per share for 144 restricted shares and a one-year warrant for $0.50 per share. The $131 million cannabis-based pharmaceutical development firm has earmarked part of the funds for fast-tracking cancer initiatives and observational studies for its existing CBN patent filed last year.



Enterprise valuations and price multiples have not changed materially since our Medicinal and Recreational Cannabis Report was published but we are following several developments across the sector and will continue to provide regular updates on investments.

Sector News

Despite a change in federal guidelines, two of Colorado's largest banks are still drawing a hard line on accepting clients within the marijuana business. Wells Fargo (WFC) and FirstBank (FBMI) have made the decision not to offer property loans to owners leasing to marijuana businesses. The new guidelines still leave room for prosecution if banks do not monitor clients to make sure activities do not break priorities like sale to minors. Bankers are afraid that property backed by loans could still be seized if illegal activity is conducted on the premises.

Medical marijuana advocates in San Diego were able to get 2011 zoning and operating guidelines rescinded but the new laws may be even more restrictive. New guidelines passed by the city council require that dispensaries apply for multiple permits and are limited to no more than four per district.

The shops will not be allowed to operate within 1,000 feet of public parks or playgrounds, churches, schools, residential care facilities, child care facilities or other dispensaries. The zoning law also provides for a 100-foot buffer from residential zones and dispensaries are prohibited from having a medical professional on-site.

In Canada, Vida Cannabis is set to buy what could potentially be one of the largest medical marijuana production facilities in the country. The company is set to close April 15th on the $500,000 deal for the 315,000-square-foot Clairtone building in Stellarton, Nova Scotia. Local authorities are supportive of the plans and the building looks tailor-made for the strict security requirements set by Health Canada for production licensing. As our recent report points out, the permitting requirements and economics of medical marijuana production in Canada give large-scale growers a significant advantage. Provided Vida Cannabis can obtain the license, it could prove to be the major player in Canadian production.

When volatility of 30% or more in the prices of public shares is common and business model-changing news flow can happen on a daily basis, investors need to be ready to sit out some gut-wrenching ups and downs. While valuations are extremely high on profits that still may be years away, the marijuana meme is just getting started and has built the critical speed to self-sustain.

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