Female-focused marijuana products, including cannabis-infused wines, cosmetics, beauty lotions and menstrual health products, could give this startup an edge over larger competitors.
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EVE & CO., $0.42, symbol EVE on the Toronto Venture Exchange (Shares outstanding: 248.1 million; Market cap: $104.2 million; TSI Cannabis Quality Rating (CQR): ; www.evecannabis.ca), through its wholly owned subsidiary Natural MedCo Ltd., holds cultivation and processing licenses under the Cannabis Act (Canada) for the production and sale of various cannabis products, including dried cannabis, cannabis plants and cannabis oil.
The stock began trading in July 2018.
Natural MedCo Ltd. was Canada’s first female-founded licensed producer of medicinal marijuana and received its cultivation license from Health Canada in 2016. Currently, two-thirds of the company’s 63 employees are women, including three-quarters of its management team.
The company has supply agreements with B.C., Newfoundland, and Ontario as well as an agreement to export its products to Germany.
In July 2018, Eve & Co completed construction of a 220,000-square-foot greenhouse production facility located in Strathroy, Ontario, with production capacity of around 10,000 kilograms per year.
Soon after, the company commenced construction of a 780,000 square foot expansion. It should be completed later this year. The addition would bring Eve & Co’s total anticipated greenhouse capacity to 1,000,000 square feet, with annual production of 50,000 kilograms. Upon completion, it would make the company one of the largest marijuana producers in Canada.
To help fund the expansion, the company secured an $18.7 million loan from the Royal Bank of Canada. As well, the company just raised $10 million in an issue of 20 million shares and warrants at $0.50 each. Each warrant lets the holder buy an Eve & Co. common share at $0.60 over the next two years.
In the two months ended December 31, 2018 (the company has changed its year end from October 31 to December 31), the company reported its first revenues. Sales were $484,777. It made $1.4 million, or $0.01 a share, in the quarter. However, the profit was due to estimated gains on the value of Eve’s inventory of cannabis. On an operating basis, it lost money. The company held cash of $1.0 million.
In February 2019, Eve & Co. announced that a product line of pre-rolled marijuana cigarettes is now available for purchase in select Newfoundland licensed cannabis retailers and will be available on the Cannabis NL website. That online portal is operated by the division of the Newfoundland Labrador Liquor Corporation responsible for cannabis distribution across the province.
Eve & Co. aims to position itself as a niche supplier of women’s cannabis products. This already includes flower brands such as “The Romantic” and “the Hostess.” But the company plans to eventually offer derivative products targeted at female consumers. These could include cannabis-infused products such as wines, cosmetics, beauty lotions, sensual and sexual enhancement products, and menstrual health products.
However, startups are inherently risky, especially so in a new market with an evolving regulatory environment and low barriers to entry.
Still, the gap between Eve’s market cap and its potential sales isn’t as big as it is for many of its competitors. That could also make the company a possible takeover candidate. While that alone is not reason enough to buy the stock, it adds to Eve’s appeal.
Eve & Co. has a 2.5-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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