The Canadian cannabis stocks on our list continue to bolster their cash reserves as they prepare for recreational legalization in October
SmallCapPower | September 21, 2018: As recreational legalization in Canada fast approaches, cannabis companies have taken advantage of a bullish market by executing favourable financings. Today, we have identified four small Canadian cannabis stocks listed in Canada that have raised funds in the past few weeks. As with any rapidly-growing industry, these companies are likely to burn through cash. As a result, it is imperative these companies have sufficient working capital moving into the unknowns of post-legalization.
Canada House Wellness Group (CSE:CHV) – $0.19
Canada House Wellness Group provides several solutions to the medical cannabis market, including consulting and supporting patients. The Company promotes the use of medical cannabis as an alternative to traditional prescription medicine. On Sept. 20, CHV announced a draw-down equity facility of up to $25M with Alumina Partners, a New York-based private equity firm. The agreement is for one common share plus one warrant – for the common, the discount ranges from 15-25% to market price; and for the warrant the exercise price will be at a 50% premium. The Company intends on using the proceeds to complete construction of its indoor facility, and for general corporate purposes.
- Market Cap: $30.5 Million
- 1 Month Return: -7.5%
- Cash on Balance Sheet (as of latest filing): $8.95 Million
Cannabis Growth Opportunity Corporation (CSE:CGOC) – $1.95
Cannabis Growth Opportunity is an investment firm that seeks to strategically allocate assets towards undervalued public cannabis companies, employing a combination of fundamental, technical, and behavioral analysis to position its portfolio. Holdings include Canopy Growth, C21 Investments, Hexo Corp, and Planet 13. On Sept 17, 2018, the Company announced its intent to raise between $10,000,000 and $25,000,000 through equity offerings on a best-efforts basis, to be used for general corporate and working capital purposes.
- Market Cap: $30.3 Million
- 1 Month Return: +12.7%
- Cash on Balance Sheet (as of latest filing): $32.19 Million
iAnthus Capital Holdings Inc. (CSE:IAN) – $8.20
iAnthus Capital Holdings operates cannabis cultivation and dispensary facilities in the U.S, including in New York, Massachusetts, Florida, and Vermont. On Sept 13, 2018, the Company announced a $30M bought deal at $6.65/share. Funds are expected be used for capital expenditures and working capital purposes. The U.S. cannabis market is anticipated to quadruple in the next five years, as per the 2017 Cannabis Industry Annual Report by New Frontier Data.
- Market Cap: $423 Million
- 1 Month Return: +26.2%
- Cash on Balance Sheet (as of latest filing): $35.7 Million
Golden Leaf Holdings (CSE:GLH) – $0.25
Golden Leaf Holdings produces and distributes cannabis oil and flower products, with operations in Canada, Oregon, Nevada, and California. The Company recently acquired California and Nevada assets from Tahoe, in a transaction valued at $52M. The acquisition will further solidify Golden Leaf’s presence in California and is expected to be earnings accretive immediately. On Sept 10, 2018, the Company announced a private placement of convertible debentures for $15M with a 12% (10% after 2019) coupon and a conversion price of $0.30/share (36-month maturity). The funds are to be used to working capital and general corporate purposes.
- Market Cap: $145.5 Million
- 1 Month Return: +4.2%
- Cash on Balance Sheet (as of latest filing): $20.65 Million
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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