In late July, we suggested that Emerald Health Therapeutics Inc (OTCMKTS:EMHTF) shares may have found a key bottom after falling under the $2 level off the stock’s January highs above $7.50/share. At this point, we have indeed seen a nice bounce, with shares of the stock up as much as 35%.
To help fuel the action, the company just announced that it has completed the purchase of the remaining shares of Northern Vine Canada Inc. from Abattis Bioceuticals Corp. (OTC: ATTBF) for $2 million in cash and 1,093,938 common shares of Emerald. According to the release, “This transaction, announced on July 19th, increases Emerald’s ownership of Northern Vine from 65% to 100%. Northern Vine is a Licensed Dealer under the provisions of the Canadian Controlled Drugs and Substances Act.”
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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As noted above, the stock has been on the mend, holding key support and moving sharply higher. We’ve witnessed 25% piled on for shareholders of the company during the trailing month, but this action is running counter to the larger trend in the name.
In addition, the listing has registered increased average transaction volume recently, with the past month seeing 21% above its longer-run average levels.
According to the release, “The dealer license allows Emerald to participate in the growing market for cannabis analytical testing, which Emerald expects to grow in conjunction with increasing cannabis production volumes in Canada. Northern Vine will operate independently of Emerald and is committed to serving all clients, including Licensed Producers and patient-growers. Legalization of cannabis for medical purposes and the upcoming legalization of cannabis for recreational purposes is expected to drive demand for analytical testing services to assess potency and concentration of toxic materials.“
At this time, carrying a capital value in the market of $300M, EMHTF has a significant war chest ($89.5M) of cash on the books, which must be weighed relative to virtually no total current liabilities. EMHTF is pulling in trailing 12-month revenues of $1.1M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 85.4%. This may be a very interesting story and we will look forward to updating it again soon. 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.