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ABcann Goes from RTO to $43 Million in Cash in 3 Months

Ryan Allway

August 2nd, 2017

News, Top Story

Many licensed producers have spent years acquiring their cultivation, extraction, and sales licensing from Health Canada under the Access to Cannabis for Medical Purposes Regulations – or ACMPR. After some licensed producers expressed concerns about a supply shortage, the regulatory agency promised to expedite the process. As a result the pace of new approvals has accelerated and there are now 52 approved licensed producers.

ABcann Global Corporation (TSX-V: ABCN) (OTCQB: ABCCF) capitalized on these trends by going from a reverse takeover transaction on May 4 to an operating licensed producer with $43 million in cash by July 26. With a modest C$90 million market capitalization, the stock also represents a compelling value in an industry where valuations have become stretched. Investors may want to take a closer look at the stock given these dynamics.

In this article, we will look at ABcann’s tremendous progress and where the company is headed over the coming quarters.

High Quality Product

ABcann has spent considerable resources on developing consistent pharmaceutical-grade products that are organically grown without pesticides. This avoids many of the recall issues that other licensed producers have experienced involving the use of banned pesticides. At the same time, the company’s $1.5 million, three-year investment in research and development has helped it double industry average yields to cultivate products at a very low cost per gram.

In a recent conversation ABcann CEO Aaron Keay said, “We have spent years mastering our proprietary growing techniques to avoid the use of pesticides. This has led to a repeatable, standardized product the public can trust. Not only that, as our reputation grows in the patients’ eyes the word has spread to where we will be expanding our business – globally. Our dedication to provide a pesticide free, organic, standardized product has resulted in inquiries from industry leaders, competitors, celebrities, and governments.”

The high yields of pesticide free, standardized product are especially important when comparing various licensed producers. Production capacity is of course an important metric, and ABcann’s proprietary growing methods mean that the company can get much more product out of much less space. Additionally, sizable recalls due to pesticides have impacted several producers’ bottom lines, but ABcann removes that possibility by using no pesticides at all.

Rapid Expansion Strategy

ABcann is investing the cash on its balance sheet into an ambitious expansion strategy, which should limit shareholder dilution and accelerate its growth rates. With its proprietary growing technique, the company is in a great position to deploy capital and production knowledge on a massive scale, while competing on both price and quality.

On July 26, the company confirmed that plans to commence construction at its Kimmett facility in the third quarter remain on track and the previously announced plans for a 71,000 sq. ft. Phase I plan have been expanded to 100,000 sq. ft. The company also announced an immediately expansion and construction effort at its production facility in Vanluven to double production capacity and serve its growing patient base on an expedited timeline.

The company believes that its $43 million cash position will be sufficient to complete both the Phase I 100,000 sq. ft. Kimmett facility and the expansion at Vanluven. The Vanluven expansion should begin producing results in Q1’18, while the Kimmett facility should come online by Q4’18. The near-term revenue from these expansion efforts should be sufficient for financing future expansion efforts as recreational legalization goes into effect next year.

Looking Ahead

ABcann Global Corporation (TSX-V: ABCN) (OTCQB: ABCCF) represents a compelling opportunity in Canada’s burgeoning cannabis industry. With a proprietary grow process that provides higher yields and organic product, the company is well positioned to deploy its $43 million cash position to generate significant long-term shareholder value.

For more information, visit the company’s website or CannabisFN’s company profile.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

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