Many investors are looking for stocks levered to the California cannabis market…
One company focused on this opportunity is American Cannabis Company (AMMJ). Today, the company announced that it secured a consulting contract with Cloud 9 Apothecary in California. In conjunction with the consulting agreement, the company will acquire an equity stake in Cloud 9’s project that is currently non-operational and in the development stage.
This project, to be built-out and completed in Desert Springs, California, will comprise a closed-loop greenhouse containing a 22,000 square foot canopy of premium cannabis cultivars. With the construction of this facility, Cloud 9 Apothecary’s plans focus on wholesale cultivation and product manufacturing. Plans to shift into a fully integrated business model, complete with dispensing solutions, will be made soon as Cloud 9 plans to scale up operations organically.
An Opportunity to Watch
We are favorable on this development and the structure of the agreement. When it comes to analyzing cultivation projects, American Cannabis Company has significant experience…it is pretty much their job.
We believe American Cannabis Company has identified a marijuana operation that is well positioned to capitalize on California marijuana market. Although the operation is in its developmental stage, we think this presents a unique opportunity.
This agreement is different from previously entered agreements as it provides a different source of value to American Cannabis Company, which is in the form of equity. We are monitoring how this development progresses and investors should keep an eye on this.
Shares Have Come Off Recent Highs
Yesterday, AMMJ edged lower and the shares are trading at $1.14. AMMJ has come well off its highs and the shares are no longer trading at overbought levels. AMMJ has previously found support at this level and we will monitor the shares from here.