Monday Price Standouts: SugarBud Craft Growers, National Access Cannabis, SOL Global Investments

Benjamin A. Smith

It was a fairly uneventful day in Canadian weedstocks on Monday, as the heavy-hitting news flow emanated down south. The Horizons Marijuana Life Sciences Index ETF (HMMJ) finished up modestly (↑1.29%), taking its cues from the major U.S. indexes.

But as usual, a handful of sector standouts took shape. Midas Letter recaps the non-Village Farms movers that most caught our attention.

SugarBud Craft Growers

A modest $0.025 rise (↑31.25%) for a stock that trades in deep penny stock territory is not something we’d usually highlight. However, SugarBud’s volume profile caught our attention. With 10.14 million shares trading hands, SUGR attained record high volume since converting from an oil & gas company to cannabis LP last October.

While Sugarbud’s news cycle has been scant, they’re gearing up to receive their cultivation license shortly. On March 6th, the company announced the submission of its Affirmation of Readiness and Video Evidence Package to Health Canada. The government agency now owns the last-mile process of dishing out a cultivation license in respect to Sugarbud’s Stavely, AB facility.

Phase 1 is comprised of 29,800 total square feet of floorplate. SugarBud estimates that at full throttle—with four layers of flowering canopy—the facility will have up to 37,000 sq. ft. of production capacity. At a metric of 50 grams per square foot of flowering canopy per crop—five crops per year—the company expects to yield approximately 9,250,000 grams of dried cannabis flower on an annualized basis.

National Access Cannabis

Again, the big story here is volume rather than actual eye-popping aggregate gains. While META did finished a solid $0.13 (↑18.06%) higher, volume chimed-in a its second highest level over the past year (2.91M shares)—ending at session highs.

The impetus for today’s gain appears to be tack-on momentum from a press release issued by National Access Cannabis last Thursday. In it, the company said it was successfully executing on its growth strategy—doubling sales to over $20 million in 140 days of operation since legalization, with cumulative gross margin of over 30%. With 23 stores in Alberta and Manitoba, NAC currently owns the biggest retail footprint of any cannabis operator in Canada. That includes all Tier-1 licensed producers. National Access Cannabis plans to add an additional five locations throughout Manitoba by the end of Q2 2019, as well as a planned expansion to Saskatchewan.

Despite the substantial growth and relatively modest market capitalization, META trades 55.29% below its all-time high of $1.32/share achieved last July.

SOL Global Investments

Although its news cycle had been on overdrive recently, SOL Global Investments latest release finally hit the mark with investors.

SOL Global Investments CEO Brady Cobb describes the company as the “smart money in cannabis.”

The company received approval from the Florida Department of Health for the sale and transfer of the 3 Boys Farm LLC license from CannCure Investments Inc. to SOL Global. The approval includes the transfer of all operations and assets, including farms and dispensaries. In October 2018, SOL had previously entered into of a definitive share purchase agreement to acquire all of the issued and outstanding common shares of CannCure, which in turn indirectly owns 60% membership interest in 3 Boys Farms.

With 3 Boys Farms intending to open eight Florida dispensaries by the end of the fiscal year, SOL is getting into the retail cannabis business.

Furthermore, SOL owns a significant stake in Verano Holdings—approximately 28% interest directly and indirectly—which looks quite prescient after Harvest Health & Recreation purchased Verano for USD $850,000,000 in an all-stock transaction valued at C$8.79/share. No details on private round unit pricing have been released publicly.

SOL Global Investments surged $0.33 to $3.40/share (↑10.75%).

Benjamin A. Smith

Benjamin A. Smith

Ben is a research analyst and capital markets professional with nearly 20 years of experience. His areas of expertise are broad-based, and include extensive knowledge of macro economics, stock/derivative trading, commodity complexes, cryptocurrencies and technical/quant analysis. He also maintains an particular affinity for U.S. politics and the macro-regulatory environment facing...
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Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

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