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Thursday, December 3, 2020

Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) Expands Productive Capacity Yet Again

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Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) caught an inflection bid following the stock’s dip under the $3.75/share level last week. The move challenged support pivots recorded at December and January lows as well and rebounded with strong promise. That inflection gained strength on Monday, with a gap and run move that took shares up through the key $4.50/share level. Fueling the move was the company’s announcement that Health Canada has issued a Cultivation License for its co-owned Delta 3 greenhouse operation under Canada’s Access to Cannabis for Medical Purposes Regulations.

According to the release, “this optimally-designed 1.1 million square foot cannabis growing facility is located in one of the best growing climates in Canada in Delta, BC, and is conservatively projected to produce 75,000 kg of quality cannabis annually at full production.” Expansion has been a major theme for the company in 2018, and this latest announcement reinforces that narrative.

Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) trumpets itself as a licensed producer of medical marijuana under the Access to Cannabis for Medical Purposes Regulations, which allows the company to produce and sell medical marijuana and cannabis oils to clients and other licensed producers.

Individuals may become clients of the company by registering with the company through its secure online portal or via telephone after the individual has received a medical document signed by a licensed health care practitioner setting out the daily quantity of dried marijuana, in grams, that the practitioner authorized for the person.

According to company materials, “Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) operates through Emerald Health Botanicals Inc., a wholly owned subsidiary and Licensed Producer under the Access to Cannabis for Medical Purposes Regulations. Botanicals is authorized to produce and sell both dried medical cannabis flower and medical cannabis oil in Canada. Botanicals currently operates an indoor facility in Victoria, BC, and is progressing on expansion plans for a 32-acre property in Metro Vancouver and a partnership with Village Farms, called Pure Sunfarms, utilizing a 25-acre existing greenhouse complex in Delta, BC. Botanicals is one of Canada’s most medically focused licensed producers, with a team highly experienced in life sciences product development and large-scale agribusiness. Its vision is to be a leading provider of cannabis products through its production capabilities, proprietary genetics, value-added products and branding, and superb customer experience. Emerald Health Therapeutics is associated with the Emerald Health group, which comprises multiple companies advancing diverse botanical, nutraceutical and pharmaceutical products that may provide wellness and medical benefits by interacting with the body’s endocannabinoid system.”

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“Our Joint Venture is well positioned to be a leading supplier in the imminent legal adult-use Canadian cannabis market, with potentially significant benefit to each of our companies and our shareholders,” said Avtar Dhillon, MD, Executive Chairman of Emerald. “With Emerald’s in-depth cannabis expertise, Village Farms’ know-how based on innumerable crop cycles over 30 years of large-scale greenhouse growing, and working with global agricultural leaders and high-tech facilities and systems experts, we configured this greenhouse for continuous weekly harvesting year-round, maximum operating efficiencies, and flexibility to adapt to an evolving market. We are accomplishing this on a very capital-efficient basis.”

“Growing any agricultural crop on a large scale and repeatedly delivering expected quantities and consistent quality, with full regulatory compliance, at a competitive price is an extremely challenging proposition for even the most experienced agricultural producers.  The goal is for the Joint Venture to set the standard in this regard in the Canadian cannabis industry and establish itself as a preferred supplier for both the short- and long-terms,” said Michael DeGiglio, CEO, Village Farms International.  “In addition to production ramp-up, in 2018 the Joint Venture will focus on product development and developing its marketing strategy to become a vertically integrated leader in the Canadian cannabis market.”

At this time, carrying a capital value in the market of $427.8M, EMHTF has a significant war chest ($22.8M) of cash on the books, which compares with virtually no total current liabilities. EMHTF is pulling in trailing 12-month revenues of $783K. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 331.8%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $EMHTF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $EMHTF, either long or short, and we have not been compensated for this article.

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