Recently this U.S.-based cannabis company expanded its operations by acquiring a medical marijuana specialist in Florida.
At the same time, the company’s shares began trading on the Canadian Securities Exchange. This firm has medical cannabis licenses and assets in 11 states and nine retail stores in two states. Its revenue and earnings rose in the latest quarter. Like other U.S.-based cannabis companies, it stands to benefit from the spread of marijuana legalization in the United States. That process could be helped by the election of a Democratic Congress and the departure of former Attorney General Jeff Sessions, a fierce opponent of legalization.
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HARVEST HEALTH & RECREATION INC., $5.67, symbol HARV on the Canadian Securities Exchange (Shares outstanding: 62.3 million; Market cap: $353.2 million; TSI Cannabis Quality Rating (CQR): ; www.harvestinc.com), is a U.S.-based owner of medical cannabis licenses and assets in 11 states, including California, Colorado, Florida, Maryland, and Massachusetts. The company grows, processes and sells cannabis for both medical and recreational use. This included, as of September 30, 2018, nine retail locations in two states.
The Canadian Securities Exchange (CSE), formerly the Canadian National Stock Exchange (CNSX), is one of our country’s alternative stock exchanges.
The CSE lets U.S. cannabis companies with U.S. operations list and trade on its exchange. However, the TSX (Canada’s largest stock exchange) doesn’t accept U.S. cannabis firms for trading, because of U.S. federal law against cannabis production and use.
You can trade Canadian Securities Exchange stocks through your broker. You can also get stock quotes at www.thecse.com.
Arizona-based Harvest began trading on the CSE as a public company on November 15, 2018. That’s after it closed a reverse takeover of CSE-listed RockBridge Resources Inc. As part of the transaction, the company raised $218.1 million U.S. through the sale of 33.3 million shares at $6.55 U.S. each.
In the nine months ended September 30, 2018, Harvest’s revenue jumped 92.3%, to $30.0 million from $15.6 million. (All figures except share price and market cap in U.S. dollars.) The company made $3.6 million in the latest quarter, up 56.0% from $2.3 million a year earlier. Some of the gains were from financing transactions or inventory adjustments.
Cash flow fell 32.8%, to $833,767 from $1.2 million. However, the latest nine-months cash flow include $4.8 million of costs related to the listing on the CSE.
In November 2018, Harvest acquired San Felasco Nurseries, a holder of a medical marijuana license and authorized to operate as a Medical Marijuana Treatment Center in the state of Florida. Each Medical Marijuana Treatment Center is allowed to operate up to 25 dispensaries, as well as a cultivation and production facility in the State of Florida.
The November 2018 U.S. Midterm Elections saw the Democrats take control of the U.S. House of Representatives. As well, Michigan voted to legalize recreational use of cannabis, while Utah and Missouri legalized it for medical use. (A recreational measure in North Dakota failed, though medical cannabis remains legal there.)
Those states join 31 others that have already legalized medical use, including the nine states that have also embraced recreational consumption.
The Midterms produced another potential catalyst for marijuana legalization. After the election, U.S. President Donald Trump effectively fired Attorney General Jeff Sessions—a fierce long-time opponent of marijuana legalization.
During his contentious time in office, Sessions rescinded the Obama-era decision to forego enforcement of the federal cannabis ban in states that have legalized marijuana use and have implemented regulations to control it.
Whatever stance Trump’s new attorney general takes, it’s likely that the movement towards legalizing cannabis nationally in the U.S. will continue—driven by public opinion, demand from patients, and the industry’s experts and advocates.
Those states join 31 others that already allow for medical marijuana use, and nine others that also allow for recreational consumption.
The continued expansion of the U.S. market will be a big plus for producers and sellers like Harvest.
Harvest Health & Recreation has a 3-Leaf Cannabis Quality Rating (CQR). The stock is a speculative buy for aggressive investors who want exposure to the marijuana industry.
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