Invictus MD Strategies: Cultivation Sets Stage for ‘Unicorn’ Potential
Ryan Allway
April 12th, 2017
News, Top News
The Canadian cannabis industry is expected to surpass $20 billion in size over the coming years. With just 41 licensed producers, investors have an opportunity to invest on the ground floor of the market as recreational legalization goes into effect. Some companies have already surpassed $1 billion in market capitalization, but others remain relatively undervalued and could be attractive for investors in the space.
In this article, we will look at Invictus MD Strategies Corp.’s (TSX-V: IMH) (OTC: IVITF) expansion into cultivation and why it represents a compelling opportunity.
Canada’s Burgeoning Market
Canada’s cannabis industry could reach $22.6 billion over the coming years, according to Deloitte, with a retail market worth up to $8.7 billion. In addition to a strong domestic market, the country has become an important cannabis exporter to countries that don’t permit the domestic cultivation of cannabis. The growing acceptance of medical marijuana around the world could translate to significant international expansion opportunities for licensed growers.
With the limited number of licensed producers, there’s a monopoly of sorts on the market for cultivating cannabis for both recreational and medical purposes. The process of obtaining a license also takes several years and involves a very strict set of requirements that are both time-consuming and expensive to meet. Early licensed producers have an opportunity to capture users as recreational legalization goes into effect and build further barriers to entry.
This potential opportunity for licensed producers hasn’t been lost on investors. For instance, Canopy Growth Corp. (TSX: CGC) (OTC: TWMJF) became the first cannabis ‘unicorn’ with a valuation of more than C$2 billion. Many other publicly-traded licensed producers trade with market capitalization of more than $100 million, which is significantly higher than Invictus MD Strategies’ modest $50 million market capitalization.
Moving into Cultivation
Invictus MD Strategies has made tremendous progress in growing its cultivation portfolio throughout March and set the stage for growth in April and beyond.
The company closed a $16.2 million over-subscribed private placement on March 2 and committed C$2 million of that funding to acquire 33.33% of AB Laboratories Inc., a licensed producer with a 16,000 square foot facility located in Hamilton, Ontario, on March 14. The company also has first right of refusal to arrange any initial public offering, reverse takeover, or other going public transaction for AB Labs – a significant caveat of the deal.
Invictus MD Strategies also acquired a 33.33% stake in AB Ventures, a newly incorporated company developing a second licensed expansion facility through its common ownership with AB Labs. A 100-acre acquisition is scheduled to close on May 1, 2017 where the company will develop an initial 42,000 square foot cultivation facility along with an additional five production facilities totalling 100,000 square feet of space.
Earlier in the year, the company signed an option agreement for the acquisition of OptionCo, and on March 30 OptionCo received its license to cultivate as Acreage Pharms Ltd. Invictus has 30 days from that date to finalize the 100% acquisition and intends to do so. The terms of this agreement include an issuance of 21 million shares of Invictus, $4 million in cash to the current shareholders of Acreage Pharms and 3 million warrants exercisable at $1.50 per share.
Invictus MD has also committed $6 million from its treasury for building expansion at Acreage Pharms, which has already built and begun cultivation in a 6,800 square foot production facility. The expansion plan calls for an additional 30,000 square feet with an option to add 20,000 square feet at a mezzanine level on 150 acres of land in Edson, Alberta. Alberta has low costs of production due to lower energy and water costs.
By 2020, Invictus expects to have more than 50,000 kilograms of annual capacity, which could make it one of the largest licensed producers in the country.
Looking Ahead
Invictus MD Strategies Corp. (TSX-V: IMH) (OTC: IVITF) represents a compelling investment opportunity within Canada’s burgeoning cannabis sector. With only 41 licensed producers, investors have the chance to invest on the ground floor of the cannabis industry as recreational legalization goes into effect later this year. Invictus MD Strategies may be significantly undervalued given its entry into the space and modest $50 million market capitalization.
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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