Goal:
Fully integrated cannabis grower, producer, retailer with long-term potential.
Target:
Vivo Cannabis (TSX: VIVO)
Licensed producer and seller: Under the Vivo brand has 3 brands; Beacon (Medical grade); Fireside (high quality), Lumina (lower quality).
Selected by Ontario, BC and Alberta as preferred growers and producers. (I.e. store space etc.)
Subs:
Harvest Medical (H Med): A patient oriented/ specialty medical cannabis clinic. Growing steadily for the last 3 years. Physical locations in Calgary, Edmonton, Toronto, Moncton and Halifax) as well, have a new telemedicine platform that allows PRESCRIPTIONS anywhere in Canada. Which has been a huge hit cause you literally just phone in to get prescribed medical shit.
Canna Farm: Bought for 133M in August 2018; premium producer and grower. On its own had EBITDA of 3M in 2017; 2018 have yet to be released. Canna is commonly referred to as a craft grower; ie. Many different strains etc. which is looked for in the recreational space.
Recent events (copy paste)
On March 22, 2019, the Company announced that the Company’s wholly-owned subsidiary, Canna Farms Ltd., had received approval from Health Canada to begin cultivation in the expansion of its Yale Road facility in Hope, B.C., resulting in a doubling of the Company’s cultivation capacity in B.C. The expansion includes production and product development space, along with automated packaging equipment expected to be incorporated into the facility and brought on-line mid 2019. Cultivation in the expanded area is expected to commence in May 2019.
April 25, 2019 — VIVO Cannabis Inc. (TSX-V: VIVO, OTCQB: VVCIF) (“VIVO” or the “Company”) today announced its wholly-owned subsidiary, Canna Farms Limited (“Canna Farms”), has received local municipal approval for its Phase 5 expansion which will add an incremental 2,500 kilograms of indoor capacity to its facility in Hope, B.C.
Canna Farms’ Phase 5 expansion, originally slated to begin construction in 2020, is now expected to be completed in late 2019 or early 2020, pending regulatory approval. The expansion consists of 10,000 square feet of cultivation space, with expected capital costs of $3.5 million and is expected to bring VIVO’s total internal production capacity to 13,500 kilograms by early 2020.
Additional Point – Could see the market differentiating between cheaper regular strains (Lumina) and craft (Canna Farm). This is a huge potential as the big dogs (TWEED and Aroura) both targeting the upper end market of regular strains. Nobody is going to give a fuck when they realize the oil process (for example) is the exact same and produces the exact same product regardless of the quality of the weed. Only difference being THC and CBD content. What this means; Vodka is vodka, regardless of how the potato was grown. (No turps you can’t triple distilled oil to get grey goose, it is always just oil).
Opportunity:
Most recent financials released are December 31, 2018; prior to the consolidation of the two subsidiaries and their income (both positive EBITDA items).
Now here is the thing; I think everyone is expecting there to be some huge increase in EBITDA for VIVO from their acquisitions. I just don’t see it making that big of a difference yet. Shit just got legalized, there is no strategical gains to be seen yet (integration savings) etc. etc. Add to this; hype is generally falling on these stocks, earnings overhyped etc. etc. still a year away from big earnings booms.
Earnings release – expecting there to be disappointment in the market. Stock will either not move or fall.
My guess is following the next earnings release is your buy period. This thing is a long-term play for the upcoming earnings news.
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