SEATTLE, WA / ACCESSWIRE / March 1, 2016 / The cannabis industry is often heavy on promises and light on tangible results. While companies like OrganiGram Holdings Inc. (TSX VENTURE: OGI) (OTCQB: OGRMF) and GW Pharmaceuticals plc (NASDAQ: GWPH) have succeeded in building successful commercial businesses, there are countless examples of micro-cap companies pivoting from unrelated industries, raising millions of dollars, and folding up operations just months later, leaving investors out to dry.
PUF Ventures Inc. (CNSX: PUF) (OTC Pink: PUFXF) is a breath of fresh air that offers both tangible assets in the form of products and real estate, as well as the potential to capitalize on Canada's burgeoning cannabis industry via its MMPR license application. The company currently trades at a market cap of approximately $1.2 million that pales in comparison to other competitors in the cannabis and vape related space.
MMPR Ownership Interest
Canada has quickly transformed into a leader in the cannabis industry, with a nationwide medical marijuana program that is expected to reach 450,000 patients and C$1.3 billion in size by 2020, according to the country's health agency. With the election of Justin Trudeau, the legalization of recreational marijuana could dramatically expand the market by an additional $2 billion to $4 billion per year, according to industry analysts.
PUF Ventures is purchasing a 100% interest in AAA Heidelberg, a private Ontario company that has an application with Health Canada for an MMPR license. Since submitting its original application back in November 2013, the company has progressed through the time-consuming process and is now awaiting a ready to build letter. The last step after a ready to build letter is a pre-license inspection that the company is already prepared to complete.
Of course, Health Canada has been notoriously slow when it comes to issuing MMPR licenses, with only 27 licensed producers amid hundreds of applicants. Most applicants for the license remain in earlier stages of the process, which gives the company a distinct advantage in securing a license and gaining market share ahead of competitors. In many ways, the slow process may provide a competitive advantage to those that are closer to the finish line.
The company anticipates annual production capacity of around 960 kilograms at a cost of $0.85 per gram when fully operational. At these levels, the company requires just 867 patients to reach capacity and generate about $6-7 million in revenue each year. Over time, the company can also expand the project by about 2.5 times by building out its facility on the same land footprint, while these assets are wholly-owned and contribute to its tangible book value.
Vape Technology Portfolio
Many Canadian companies pursuing an MMPR license have been patiently waiting on the sidelines for Health Canada to work through its backlog. But, PUF Ventures CEO Yari Nieken is a realist that knows bureaucracy takes time and can be unpredictable. The acquisition of VapeTronix, a Canadian vaporizer and e-cigarette company, was designed to help build shareholder value in the interim and ultimately mesh with its overall vision.
The global vaping industry is expected to reach $3.5 billion, driven by a combination of novelty and the desire to quit smoking cigarettes. In the U.S., Research and Markets predicts that the e-cig market will grow at a 33% compound annual growth rate between 2015 and 2019. In Canada, the government indicated that e-cigs containing nicotine are unapproved, but nicotine-free e-cigs have still caught on in many demographics.
The acquisition provides the company with a number of different brands, including the Massari luxury disposable e-cigs, energy-infused 1313 Energy e-cigs, and a U.S.-targeted Ace of Spades line of e-cigs that contain nicotine. In addition, the company recently launched e-liquids that are designed to drive recurring revenue. These products position the company for the rapid growth in the e-cig market, particularly if nicotine is allowed Canada. The company is starting to gain revenue traction as they recently recognized record sales of $146,000 CDN over 30 days for their e-cigarette and branding solutions.
The company also has its eye on the cannabis side of the vaporizer market. Recently, the company launched Phase 1 of its online interactive social and search platform "WeedBeacon" which targets medicinal and recreational markets where allowable. Thus far, the WeedBeacon database houses info on 6,900 physical storefronts in North America. PUF has plans to initiate Phase 2 development of WeedBeacon in the near future which will be consist of a vaporizer technology that includes a customizable vaporizer and a mobile app that syncs and sends tracking data to physicians about cannabis usage. For physicians, the portal could provide a way to improve treatment by quantifying cannabis' effects.
Looking Ahead
PUF Ventures is well positioned with both its newly acquired vaporizer line of products and its high-potential MMPR opportunity. While these represent its most advanced businesses, the company also acquired a 9.7-acre property in Whatcom County in Washington State. Over the coming months, the company plans to lease the property to certified I-502 growers in the state, which could create a new revenue stream and add to its asset base.
Investors in vaporizer companies, like Vape Holdings Inc. (OTCQB: VAPE) or mCig Inc. (OTCQB: MCIG), may want to take a closer look at the stock, alongside MMPR producers like OrganiGram Holdings and Aphria Inc. (TSX VENTURE: APH) (OTC Grey: APHQF). With a lot of irons in the fire and tangible assets on its books, the company is uniquely positioned to capitalize on both areas of the market over the coming quarters.
For more information, visit the company's website at www.pufventures.com.
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Legal Disclaimer
Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Important factors that could cause these differences include, but are not limited to, the demand for the company's services, governmental regulation of the cannabis industry, and the company's ability to execute its business plan. Emerging Growth LLC dba TDM Financial, which owns CFN Media, is not registered with any financial or securities regulatory authority, and does not provide nor claim to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CFN Media, may from time to time have a position in the securities mentioned herein and may increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice. For full disclosure please visit:http://www.cannabisfn.com/legal-disclaimer/.
SOURCE: CFN Media
