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Saturday, November 28, 2020

Acreage Holdings Inc (OTCMKTS:ACRGF) Continues to Carve Out a Fresh Low Attempt

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Acreage Holdings Inc (OTCMKTS:ACRGF) just announced that it has entered into a Reorganization Agreement, pursuant to which Acreage will acquire 100% of the equity interests in CCF, and subsequently consolidate their financials.

According to the release, “Closing of the transaction is subject to state approval. With a population of approximately nine million, New Jersey is estimated to generate $317 million in legal medical cannabis sales by 2022, according to Arcview Market Research.”

Acreage Holdings Inc (OTCMKTS:ACRGF) bills itself as a principal investment firm specializing in the cannabis industry.

This is a vertically integrated, multi-state owner of cannabis licenses and assets in U.S. states where either medical and/or adult use of cannabis is legal. With one of the largest geographic footprints of any cannabis companies, it currently owns and/or operates cultivation, processing and dispensary operations. The Company is dedicated to building and scaling operations to create a seamless, consumer-focused branded cannabis experience.

According to public filings, Acreage is the largest multi-state cannabis operator in the United States in terms of number of states with operating licenses, largest total addressable market, and largest serviceable population.  More recently, Acreage announced a transformative acquisition of Form Factory, which will provide the company with the capabilities to become the cannabis industry’s first and only Consumer Packaged Goods company with a national footprint.

Headquartered in New York City, Acreage Holdings is the largest vertically integrated, multi-state owner of cannabis licenses and assets in U.S. states with respect to number of states with operating licenses, according to public filings.

With operating licenses in 19 states, serving a population of more than 172 million Americans, and an estimated 2022 total addressable market of approximately $14 billion in legal cannabis sales according to Arcview Market Research.  Acreage is dedicated to building and scaling operations to create a seamless, consumer-focused branded cannabis experience.

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As noted above, ACRGF just announced that it has entered into a Reorganization Agreement, pursuant to which Acreage will acquire 100% of the equity interests in CCF, and subsequently consolidate their financials.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action ACRGF shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -10% on above-average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Furthermore, the name has registered increased average transaction volume recently, with the past month seeing nearly 110% over the long-run average.

“I’m thrilled to finally welcome CCF into the Acreage family,” said Kevin Murphy, Chairman and Chief Executive Officer of Acreage.  “This reorganization will result in increased access to affordable medical cannabis for New Jersey’s existing patients in short order.  Moreover, we have long believed that upon adult-use legalization, the New England and Mid-Atlantic regions will be the preeminent cannabis market in the U.S. and Acreage is best positioned of any U.S. cannabis company to benefit.”

Earning a current market cap value of $297M, ACRGF has a significant war chest ($84.6M) of cash on the books, which is balanced by about $20.5M in total current liabilities. ACRGF is pulling in trailing 12-month revenues of $46.6M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 501.3%. 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 $ACRGF 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 $ACRGF, either long or short, and we have not been compensated for this article.

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