The Cannazeitgeist, June 11th 2019

The HMMJ Canadian Cannabis ETF has been hanging out just under its moving averages for more than a month, but the chatter hasn’t died down much among investors. They’re still out there, still believing, and there’s enough casting about for value for us to assume they aren’t yet tapped out. Just getting a bit cranky about it.

Credit? Forget it.

Ian Dawkins, founder of Cannabis consulting biz Althing Consulting reports via twitter that many of his clients are having trouble opening Canadian bank accounts. Someone in the thread suggested credit unions, who Dawkins reports have similar attitudes.

If cannabis businesses can’t be treated the same way as the other parts of our social and economic fabric, legalization might as well just be paperwork. This country has sure picked a funny way of fighting the war against the black market.

Former CEO Sean Dollinger, with no media profile or executive role at N since February, still looms large over the E-Retailer.

Namaste never ceases to amaze

The Management Cease Trade Order that kept Namaste (TSX.V:N) from being de-listed for having filed late financials was rescinded Thursday, putting the company back on even regulatory footing with its peers.

Traffic spikes whenever we write about N, and that’s understandable, because it’s entertaining. A reader sent us this Namaste “due diligence report” that was posted on r/weedstocks about a month ago and is still getting traction on Facebook. The report throws former CEO Sean Dollinger under the bus for the company’s prolonged stay on the skids (N closed the day at $0.69, -82% off its 52 week high in September), and virtually nobody rushes in to stop it.

It isn’t that the report is wrong, just that it starts with its mind made up and doesn’t do much in the way of counting or comparing. The interested parties continue to be driven by emotions and vulnerable to conjecture. That’s bad market discipline, but it’s what makes N so very entertaining.

We dropped Namaste by the numbers part 1 on Thursday. Part 2 is on the way.

Trouble in Paradise at TGOD

The shareholder base that puts the “green” in The Green Organic Dutchman (TSX:TGOD) is confronting the process of TGOD’s convoluted spinout and learning that a) the SpinCo units don’t just show up automatically and b) they cost $0.50 each. Shareholders are entitled to buy one for each 6.67 shares they were holding on the record date, January 31st, 2019.

TGOD’s spinco was cooked up last summer in an environment where the acquisitions of international assets (like the ones that ended up blowing up the APHA trade) was all the rage among Canadian PotCo’s. Thanks to New Cannabis Ventures for the link.

Typically, plan of arrangement spinouts just show up in the accounts of shareholders of record at the prescribed ratio, representing a company that owns the assets being spun out. But this is a bit different.

This spinout consists not of international cannabis assets, but rather the opportunities afforded to TGOD to participate in them. No word about whether or not Chris Parry’s Red Hot Jamaican Weed Deal Green Stripe Naturals is one of those opportunities. They might be holding out for an offer from Canopy.

TGOD shareholders who got their exercise notice and fifty cents for every six point six shares in to the transfer agent by 5pm yesterday get the right to a share and one half a warrant priced at $1.25, expiring 2 years after SpinCo is listed to trade. The whole thing is contingent on TGOD having a prospectus for SpinCo approved and delivered before August 3rd of this year. They’ll have to wind it all down if they don’t, but we have faith, because The Dutchman is a lot better at equities alchemy than they are at growing weed.

An agreement to supply the province of Alberta through Alberta Gaming Liqour and Cannabis (AGLC) that they announced May 24th doesn’t tip any start date or quantity and, as of March 31st, despite a fully licensed facility, TGOD (est. 2012), still had no commercial production underway.

On top of all that: their over-priced gear sucks!

If you haven’t already, don’t forget to read our deep dive on Trulieve (CSE:TRUL).

If I’m back with more tomorrow, it means Tommy G’s posse hasn’t caught up with me yet.







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About Braden Maccke 74 Articles
Founder and Editor in Chief at Fundamental Hype, a blog about venture stage finance and the media that supports it.