Articles > Harvest One Cannabis Is Quickly Becoming An Execution Story And Gaining Investors Attention
Custom Search 1
After recording some volatile price movements last week, the Canadian cannabis sector has been in rally mode and we are bullish on this trend.
This volatility was primarily the result of United States Attorney General Jeff Sessions rescinding the Cole Memorandum, which provided protection to cannabis business that operate in states where marijuana is legal.
We continue to believe that Canada will be one of the greatest beneficiaries of the roadblocks facing the United States cannabis industry, which makes us even more bullish on this emerging sector.
Today, we have highlighted a company that continues to execute and is trending higher. The company, Harvest One Cannabis Inc. (HVST.V), operates a unique and attractive business model that controls operations across the entire cannabis value chain through three business units. We are favorable on this structure and believe that the divisions can create value for each other as well as improve the value proposition of the entire company.
Harvest One to Launch Retail Sales in February
Harvest One received a favorable response from the market after its subsidiary, United Greeneries, announced the launch of retail sales commencing in February. The company received its sales license from Health Canada in October and has more than 325 kg of dried cannabis currently in stock for immediate sale.
In February, United Greeneries will launch a new online retail platform for medical clients under the ACMPR. The initial offering will consist of two distinct cannabis brands, providing patients a wide range of different strains and cannabinoid profiles.
We are favorable on this announcement and will monitor how the company continues to execute. Harvest One has focused on increasing capacity and we are favorable on this initiative as consumer demand is expected to significantly increase when Canada legalizes recreational marijuana later this year.
Swiss Subsidiary Announces an Important Milestone
After announcing plans to launch retail sales in February, Harvest One announced that its Swiss subsidiary, Satipharm AG, received an initial import license to Canada for its unique Gelpell Microgel capsules. The capsules are currently available for sale over the counter as a dietary supplement throughout pharmacies in the European Union and by special prescription in Australia.
Upon successful importation into Canada and passing of domestic quality control procedures, Satipharm’s Gelpell capsules will be added to United Greeneries’ ACMPR retail distribution. The company expects to be able to make this unique product available to Canadian consumers during the second quarter of 2018.
The capsules are unique and differ from what is currently available to consumers. The capsules are manufactured according to pharmaceutical production standards in Switzerland and contain GMP produced CBD isolate with no detectable levels of other cannabinoids.
Satipharm’s products have undergone a successful Phase 1 Clinical trial for safety and bioavailability and are currently being utilized in two Phase 2 Clinical Trials for refractory pediatric epilepsy and pain and spasticity in Multiple Sclerosis patients.
Laser Focused on Increasing Production Capacity
Canada plans to legalize recreational marijuana before July and we are bullish on the effect this will have on Harvest One. In late 2017, United Greeneries signed a letter of intent with a third party to lease a property to accelerate and expand production capacity.
The facility is well suited to be retrofitted into an indoor cannabis cultivation facility. Due to the facility’s existing infrastructure, United Greeneries expects to commence cultivation activities in 2018. The initial facility design can produce approx. 8,000 kilograms per year and is fully funded with the company’s current cash balance.
We are favorable on this development due to the existing infrastructure and size of the property. The letter of intent provides an option to expand by 8 more acres on the property, which will significantly increase production capacity when fully built out.
Raising $40 Million to Support Growth Initiatives
Yesterday, Harvest One the company entered a revised engagement letter with Mackie Research Capital and a syndicate of underwriters that included Haywood Securities and Eight Capital to increase the size of the previously announced bought deal.
Under the new agreement, Harvest One will sell $35 million worth of units. The offering can generate more than $40 million in gross proceeds if the underwriters exercise its over-allotment option. The company intends to use the net proceeds for the expansion of strategic indoor growing facilities, further development of its Satipharm GelPel products, and for working capital and general corporate purposes.
We are favorable on the upsized offering and believe that it will provide Harvest One with the capital it needs to execute on its growth initiatives.
An Execution Story that Investors Should be Watching
Over the last month, Harvest One has rallied more than 80% and we are favorable on this move higher. This marijuana producer is well positioned for above-average growth and is barely in the first inning of a major growth cycle.
We are favorable on Harvest One’s leverage to international markets and believe that the stock has been flying under the radar. The recent developments have significantly advanced the company’s fundamental story and we will be closely watching how it executes from here.
Harvest One has several major growth catalysts and we are bullish on the shares.
One of the biggest potential catalysts will be Health Canada granting a Dealer’s License. We are favorable on this opportunity as it will significantly enhance the company’s fundamental story.