Marijuana Company Of America Inc (OTCMKTS:MCOA) is an interesting play in the cannabis patch. After a massive spike higher into the November 8 vote, the stock has been consolidating in a very wide sideways range featuring multiple large rallies and declines. The company’s most recent update suggests a greater focus on the “real estate as a service” side of the business. Specifically, the company announced that it has entered into a non-binding Letter of Intent while performing due diligence to finalize a joint venture agreement with Bougainville Ventures, Inc. for the purpose of “housing tenant growers engaging in the cultivation, processing and commercial availability of legal marijuana in the State of Washington.”
According to the release, MCOA will invest up to $1 million in cash in a newly formed entity and receive 50% equity ownership and 50% share in net profits produced by the joint venture. Bougainville Ventures, Inc. will contribute its expertise in establishing facilities related to the production, processing and management for tenant growers utilizing an I-502 Tier 3 license, with leased property, established partnerships, licensing agreements and marketing relationships.
Marijuana Company Of America Inc (OTCMKTS:MCOA) trumpets itself as a marijuana marketing and distribution company. It intends to distribute a range of marijuana, CBD, and related products in the United States and internationally.
The company was formerly known as Converge Global, Inc. and changed its name to Marijuana Company of America, Inc. in December 2015. Marijuana Company of America, Inc. was founded in 1985 and is headquartered in Bonsall, California.
According to the Company’s press materials, “MCOA plans to distribute marijuana and products related to marijuana as well as CBD and hemp, using a variety of marketing approaches to distributing on a global basis.”
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Note, the partner firm here, Bougainville Venture Inc., is in the core business of converting irrigated farmland that was traditionally used to grow marginally profitable feed crops, to greenhouse-equipped farmland used to grow luxury crops with a primary focus on marijuana. Bougainville offers fully built out turnkey solutions to licensed I-502 tenant-growers and luxury crop growers who will lease the facilities for production and processing.
They have the already established intellectual property and expertise, while MCOA is playing the part of capitalist. Management for both sides weighed in on the deal:
Donald Steinberg, MCOA President and CEO said, “We are looking forward to getting seed in the ground and ramping up this partnership with Andy Jagpal and Bougainville Ventures. This partnership further strengthens our supply chain and enables MCOA to produce the highest quality products at the lowest possible prices.”
“We couldn’t be happier than to have aligned ourselves with the outstanding team at MCOA,” said Jagpal, President of Bougainville Ventures, Inc. “With the management expertise that the highly skilled professionals at MCOA bring, we have insured the certainty of expanding our Washington State Greenhouse Campuses while achieving our revenue and profitability goals.”
The key here is the transition, because that’s what this is for MCOA. They are moving in the direction of essentially being something analogous to a cloud play: they will own the resources for cultivation, and someone can come along and outsource that part of the equation, paying a fee, and then reap the rewards of the harvest.
As such, they are in competition with several other firms offer a similar service package. Execution will be the key here.
“Knowing how to manage the many individual cannabis markets effectively and simultaneously will be the key to success for MCOA’s national rollout,” said Steinberg. “By integrating and aggressively harnessing the collective resources of our companies, we are confident that we will be making a significant impact on sales and distribution in Washington State.”
Currently trading at a market capitalization of $88.6M, MCOA has virtually no cash on the books, which compares with about $108K in total current liabilities. One should also note that debt has been growing over recent quarters. The company is pre-revenue at this point, but has begun to move in a direction that may represent a genuine path to market provided there are no hiccups from here with this deal. For continuing coverage on shares of $MCOA stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!