Cannara Biotech: An Undervalued Growth Story

Although 2022 was a challenging year for the cannabis sector, we believe the selloff was overdone and expect the industry to report record sales numbers in 2023.

The last few weeks of 2022 were especially challenging for the cannabis sector and we attribute the weakness to the Secure and Fair Enforcement (SAFE) Banking Act being excluded from a large-scale spending bill.

We expect 2023 to be the year where cannabis legislation is passed in the United States (US) and consider this to be the most significant potential catalyst for the sector. As part of our series on North American cannabis companies that are flying under the radar, we want to highlight Cannara Biotech Inc. (TSX Venture: LOVE) (OTCQB: LOVFF) (FRA: 8CB).

Reports Impressive Quarterly Financial Results

Earlier this week, Cannara Biotech released first quarter financial results and recorded impressive growth during the period. When compared to the same quarter last year, revenue increased by more than 50% and the company recorded its seventh straight quarter of positive Adjusted EBITDA.

During the first quarter, Cannara Biotech generated more than $10 million of revenue and we expect this number to increase as the management team continues to open additional grow zones at its Valleyfield facility. When combined with its Farnham facility, the company can currently produce approx. 23,500 kg of premium-grade cannabis per year.

As of November 30^th, Cannara Biotech reported to have $27.1 million in working capital and $6.8 million of cash on hand. We believe the company has the resources needed to further expand the business and increase production capacity. As a result, we expect Cannara Biotech to continue to record strong growth on a going forward basis and want our readers to be aware of this.

A Company With Catalysts For Growth

During the last year, Cannara Biotech has been executing on a multi-faceted growth strategy and has been consistently reporting profitable quarters. Besides for these facts, we are bullish on the business due to the following:

1. Cannara Biotech has been steadily increasing the number of operational grow rooms at its state-of-the-art Valleyfield facility. Currently, the company is cultivating in 8 of the 25 zones (each zone is 25,000 sq. ft.) and we expect this number to increase this year
2. In late 2022, Cannara Biotech filed a form with the TSX Venture Exchange to purchase up to 15,000,000 of its common shares. The development indicates that the management team considers the business to be significantly undervalued.
3. We consider Cannara Biotech to be a business which has significant potential catalysts for growth and believe this aspect of the story is not appreciated by the market
4. At current levels, the Canadian cannabis company has a compelling valuation and a favorable risk-reward profile. We believe the market is not assigning value to certain aspects of the business and we expect this to change over the next year

When compared to other Canadian cannabis companies, we believe Cannara Biotech is undervalued and expect this trend to change as the story continues to advance. We are of the opinion that Cannara Biotech has significant upside potential and has room for multiple expansion as the business continues to hit key milestones.

From increasing the number of SKUs that are available for sale to capturing additional market share in key provinces in Canada, we believe Cannara Biotech is in the early innings of a major growth cycle. As the management continues to execute on a calculated growth strategy, we expect the market to become more favorable on the stock and want our readers to be aware of this.

If you are interested in learning more about Cannara Biotech, please send an email to support@technical420.com with the subject “Cannara Biotech” to be added to our distribution list.

Company Relationship Disclosure

T420 is responsible for the T420 opinions provided in this disclosure except all sources or information provided by other parties were not verified or authenticated and T420 does not undertake to confirm or substantiate or be responsible for such information provided by other parties.

Any Content posted regarding a Profiled Issuer is not a solicitation or recommendation to buy, sell or hold securities. We cannot and do not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. All information should be independently verified. We are not responsible for errors or omissions in our publications, and any opinions expressed are subject to change, without notice. We do not, nor are we under any obligation to undertake due diligence or investigation or authenticate and verify whatsoever regarding Profiled Issuers or any Content posted in relation thereto and we do not receive any verification from the Profiled Issuer regarding the Content we disseminate. Similarly, while we endeavor to facilitate the provision of quality information, we are not responsible for any loss or damages caused or alleged to have been caused by its use nor verify or authenticate or update such information.

Pursuant to an agreement between Spotlight Media Corp and Cannara Biotech (LOVE) we have been hired for a period of 30 days beginning on January 1, 2023 to publicly disseminate information about Cannara Biotech including on the Website and other media including Facebook and Twitter. We are being paid $3,000 for one month by Cannara Biotech and were paid “ZERO” shares of unrestricted or restricted common shares. We plan to sell the “ZERO” shares of Cannara Biotech that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of Cannara Biotech in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

This article contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs regarding future performance are “forward-looking statements”. Forward-looking statements can be identified by the use of words such as “expects”, “does not expect”, “is expected”, “believes”, “intends”, “anticipates”, “does not anticipate”, “believes” or variations of these words, expressions or statements, that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, will occur or will be realized. Such forward-looking statements involve risks, uncertainties and other known and unknown factors that could cause actual results, events or developments to differ materially from the results, events or developments expected and expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, dependence on obtaining and maintaining regulatory approvals, including the acquisition and renewal of federal, provincial, state, municipal, local or other licenses, and any inability to obtain all necessary government authorizations, licenses and permits to operate and expand the Company’s facilities; regulatory or policy changes such as changes in applicable laws and regulations, including federal, state and provincial legalization, due to fluctuations in public opinion, industry perception of integrative mental health, including the use of psychedelic-assisted therapy, delays or inefficiencies or any other reason; any other factor or development likely to hamper the growth of the market; the Company’s limited operating and profitability track record; dependence on management; the Company’s need for additional financing and the effects of financial market conditions and other factors on the availability of capital; competition, including that of more established and better funded competitors; the impact of the Russia-Ukraine conflict on the global economy; the continued impact of the COVID-19 pandemic; and the need to build and maintain alliances and partnerships, including with research and development companies, customers and suppliers. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. Despite the Company’s efforts to identify the main risk factors that could cause actual measures, events or results to differ materially from those described in forward-looking statements, other risk factors may cause measures, events or developments to materially differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. The Company does not undertake to revise forward-looking statements, even if new information becomes available as a result of future events, new facts or any other reason, except as required by applicable laws

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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