Investment Alert: Is ABcann Global (TSX.v ABCN) the Country's Strongest Cannabis Producer?

Investment Alert: Is ABcann Global (TSX.v ABCN) the Country's Strongest Cannabis Producer?
Investment Alert: Is ABcann Global (TSX.v ABCN) the Country's Strongest Cannabis Producer?

Medical marijuana is the rare new industry where startups can grab millions in revenues immediately.  But while, it’s easy for a licensed producer (LP) to make money in Canada, it’s hard to get in the game. Our next great investment pick, ABcan Global  (TSX.v ABCN), is one of Canada’s major legal producers… and investors are finally going to get a crack at it this spring.  
 

You won’t get hundreds more chances to cash in on Canada’s booming marijuana market at the ground floor. In fact, ABcann could be one of the few virgin opportunities left for you to go all the way with a pot company.
 
Since 2013, more than 1,600 companies have applied to Health Canada to become a licensed producer (LP) of medical marijuana.  But only 5 companies won coveted LP status in 2013, just another 14 made the cut in 2014.
 
Getting an LP license is like winning the lottery. Investors already know several of those early companies very well…. And you remember how well they did, right?
 
Canopy Growth ( TWMJF / WEED.cn  ) ran 711% from its IPO.
 
Aphria Inc (APHQF / APH.cn) is another one. It has ran up 938% since it hit the public markets.
 
Aurora Cannabis (ACBFF / ACB.cn) climbed 887% after its IPO.
 
SupremePharma (SPRWF / SL.cn) has soared 1364% from its IPO.
 
ABcann (TSX.v ABCN), is NEXT - at it’s current valuation, has all the makings of joining them. 
 
ABcann, which won LP approval (2014!) alongside these early champions will come to market in April, and it could be the biggest winner yet.
 
ABcann is poised to leapfrog past the market’s best marijuana stocks in 2017! It’s elementary… let me tell you why
 
1. ABcann’s path to growth is protected by law!

2. Barriers to entry are too high for mass competition—

Canada’s not like the “Wild West” system in some US states like Colorado where almost anyone can get in the business somehow.  Canada’s MMJ growers enjoy the next best thing to no competition! It’s that hard to break in.  Since 2013, Health Canada (think Canada's FDA) has approved less than 2% of applications to grow MMJ commercially.

In fact, MMJ supplies will probably be 25% lower than demand for years to come thanks to Canada’s tough regulatory gateway.
 
3. ABcann is a technology powerhouse—
Here’s where ABcann stands out among Canada’s 38 legal MMJ producers—technology. Yes, it’s a low-cost producer like Aphria. Yes, it’s a high-quality producer like Tweed (Canopy). But its competence is unique! ABcann can grow every one or its 14 MMJ strains to exact specifications for precise THC and cannabidiol (CBD) balances. Every plant, every time.    And it can scale up to infinity. ABcann can replicate its proprietary growing system for any MJ strain anywhere.
 
4. This is the most perfect wash, rinse, repeat model in the MMJ business
ABcann’s ultimate goal is dominance. It want to be the first company to have repeatable products in multiple continents. From its home in Ontario, ABcann plans to expand in Canada to Saskatchewan and British Columbia. It is also competing for a license in Hawaii, supplying research-grade marijuana to an Israeli pharmaceutical company, and working on prospects in Australia and Germany.  
 


No doubt about it—Marijuana is the world’s newest, hottest business
 
Canadian patient lists for MMJ are growing more than 200% a year.  But that could be just a fraction of eventual sales. The Canadian government is moving toward legalizing recreational pot as well.
 
ABcann has the perfect infrastructure to grow, expand, brand and commercialize its product if that happens. Everything is controlled—the soil mix, air, organic feed, humidity… Its LED lighting cycles (for intensity, timing, and duration) can mimic any natural climate and geographic location in the world where marijuana species thrive.
 
Canaccord Genuity put to the potential for total medical and recreational sales in Canada at $5.2 billion by 2021.[i]
[i] Canaccord Genuity report, p.7
Dundee Capital, looking farther out, puts the total at $9 billion by 2024.
 

Canada’s total MJ business could exceed tobacco, wine, or beer sales within five years!


ABcann’s phenomenal 30% a month sales growth—already higher than average—is due to explode…maybe as much as 20X higher in 2018!
 
ABcann is going public for the best reason—“rapid strategic buildout.”  
 
That’s why we say ABcann is about to leapfrog its way to the top of its industry in production and space—soon, too. Do you see what we see? ABcann is about to dwarf the rest.

Canada is tightly controlling who can enter the business and how much they can grow. Companies that miss out early on this early set-up period may miss out altogether.
 
ABcann isn’t going to allow this window to close on its future.  Next year (2018), ABcann plans to bump up MMJ production capacity to 20,000 kilos a year…. A 20-fold leap from its current 1,000 kilos per year in 2016-2017.  
 
This is ambitious. Look at these pictures! The aerial photo on the left shows the current Vanluven Road site (14,500 sq ft). It’s impressive in the industry, but tiny compared to the Kimmett Side Road expansion. ABcann will add 150,000 additional sq ft in the first phase at Kimmett—and they already own the land!
 
Ultimately, the ABCANN'S Napanee operations will encompass 65 acres and potential 1.2 million sq ft of growing space.   
 

Capabilities now and into the future

All of it organic, prescription quality product.

 

ABcann has the right people in the right place 

We don’t usually fawn over company bios—because the business should speak for itself. But with MMJ, reputation is indispensable, and experience is priceless.
 
No one with a questionable background can get through the Canadian approval process. But that’s not enough… Because all the companies in this business are new; they are all in competition to stand out from the pack.
 
ABcann has tapped world leaders in cannabis research in its advisory board. Dr. Ralph Mechoulam of Hebrew University in Jerusalem was the first scientist to isolate cannabidiol in 1963. The following year he and his research team were first to isolate and synthesize THC (the psychoactive component). 
 

Dr. Mike Dixon of the University of Guelph is the world’s leading researcher in plant and microbial interactions. He knows more about indoor growing than anyone in the business. He took an active role in designing ABcann’s super-clean, organic growth system. Other well-connected board members include Dr. Paul Lucas, former CEO of GlaxoSmithKline in Canada; Darryl Kramp a former MP; and Dr. Michael Shannon who retired from the Canadian Forces as Deputy Surgeon General of Canada.
 
ABcann production potential due to grow as much as 20-fold in the next year.

Market valuations likely to triple over the next few years

Privileged companies holding a coveted LP licenses will very likely attract buyout offers from tobacco or pharmaceutical companies med
Money flowing in! 

1,000 kg/year production potential in 2018 X median price $10/gram = $10,000,000 million per year gross sales
 
An opportunity you’d be crazy to miss! 
 
 
 
Today, ABcann has about the same space in production as Emerald Health, which has a $112 million market cap.

In two years, it will have more space than Aurora Cannabis, now with a market cap at $555 million[i]. 
 
That’s nearly a 400% spread…. About what we think you could reap in the next year as ABcann ramps up production.
[i] updated values from MarketWatch. Differ from company PP presentation slide 26.

Like we said. An opportunity you’d be crazy to miss. 

ABcann’s precision grown strains—so dependable a doctor can write a prescription for exactly
the right components, to match the medical condition being treated.


Valuations are Growing, Opportunities are Closing!
 
In the next five years, we believe Canada’s MMJ industry will be divided among the leaders emerging now. At that point, new entries will be forbidding—unless aspirants want to buy a company like ABcann, at a steep premium.
 
We look for rapid valuation improvements to turbo-charge MMJ share prices as the companies grow.  
 
It’s a natural progress, but for MMJ it’s happening at warp speed. Investors tend award low valuations to business groups with low margins, heavy capital investment, and dubious futures. Today’s MMJ commercial licensing just started in 2013. But already we   know how fast a company can recover its buildout costs, how completely supportive the Canadian government is. 
 
Bottom line: MMJ stocks should rise from 2X EV/Revenues, where Dundee Research places them… and the likely landing spot is somewhere between drug companies and tobacco and liquor businesses. That means market caps about 5-6X annual sales per share.
 
What This Means for You, Investor
 
Everything is lining up for a 10-bagger with a little patience. Or a fast double or triple if you’re in a hurry.


Check out ABCN's News
ABCann Medicinals CEO Aaron Keay talks to Cantech Letter

These three Canadian marijuana LPs could become important exporters, says PI

ABcann: Going Public with Standardized Pharma-Grade Cannabis


The NEXT Big Name in Canadian Cannabis
 

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[1] Canadian Cannabis Industry Overview. Report from Canaccord Genuity Equity Research, Nov. 28, 2016, p 5.
[1] Canaccord Genuity report, p.7
[1] updated values from MarketWatch. Differ from company PP presentation slide 26.
Images from ABcann Corp. Presentation

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