One of the most obvious dynamics in play right now in the cannabis space is the aggressive deployment of cash by the big fish in a mad scramble to own a dominant slice of the overall production capacity “pie” in the space, a dynamic once again exemplified this week by Choom Holdings Inc (OTCMKTS: CHOOF), a minnow with “rising talent” potential that is suddenly on everyone’s radar.
The company just announced a non-brokered private placement for gross proceeds of up to $10,000,000, including a $7,000,000 lead order from Aurora Cannabis Inc (OTCMKTS:ACBFF). According to the release, “the private placement will consist of up to 14,084,507 common shares at a price of $0.71 per share and is expected to close on June 18, 2018.”
Choom Holdings Inc (OTCMKTS: CHOOF), together with its wholly-owned subsidiary, Medi-Can Health Solutions Ltd., a cannabis production license applicant under Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR), intends to develop a unique lifestyle brand for cannabis for Canada’s emerging cannabis market
Moreover, the company engages in cultivating and selling cannabis for medical purposes and related products under the Choom brand name.
The company was formerly known as Standard Graphite Corporation and changed its name to Choom Holdings Inc. in November 2017. Choom Holdings Inc. was incorporated in 2006 and is based in Vancouver, Canada.
According to company materials, “The Choom brand is inspired by Hawaii’s “Choom Gang”- a group of buddies in Honolulu during the 1970’s who loved to smoke weed—or as the locals called it, choom. Evoking the spirit of the original Choom Gang, our brand is synonymous with cultivating good times with good friends. We are focused on delivering an elevated customer experience through our curated retail environments, high-grade handcrafted cannabis supply, and a diversity of brands for the Canadian recreational consumer.”
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“We are delighted to have the confidence and support of one of the world’s leading cannabis companies as we move forward with our retail cannabis strategy,” states Chris Bogart, President and CEO of Choom™. “With the legalization of adult use cannabis in Canada on track, Choom™ is positioning itself to be one of the leading premium choice brands for Canadian consumers. This investment by Aurora accelerates our corporate strategy of delivering a true seed to sale experience through an offering of high quality cannabis to Canadian consumers across the country.”
We’ve witnessed 60% piled on for shareholders of the listing during the trailing week, a rally that has pushed up against longer standing distributive pressure in the stock. Furthermore, the stock has seen a growing influx of trading interest, with the stock’s recent average trading volume running exceeding 550% over what the stock has registered over the longer term. It pays to take note of this fact given the stock’s very limited trading float of 21.1 million shares.
“Our investment in a consumer-focused brand with a strong retail strategy offers Aurora additional growth opportunities through supply, retail and distribution to the adult consumer use market, once legalized,” said Terry Booth, CEO of Aurora. “We’re excited to strengthen our relationship with the team at Choom and help amplify their market reach as they continue to execute on their differentiated craft growing philosophy and their unique retail strategy.”
At this time, carrying a capital value in the market of $71.2M, CHOOF has a significant war chest ($7.7M) of cash on the books, which compares with about $2.3M in total current liabilities. The company is pre-revenue at this point. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $CHOOF 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 $CHOOF, either long or short, and we have not been compensated for this article.