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AGRITEK HLDGS INC COM USD0.0001 (OTCMKTS:AGTK) Is Running On News; More To Come?

AGRITEK HLDGS INC COM USD0.0001 (OTCMKTS:AGTK) Is Running On News; More To Come?
Written by
Chris Sandburg
Published on
January 26, 2017
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AGRITEK HLDGS INC COM USD0.0001 (OTCMKTS:AGTK) is a big runner in the cannabis space this week, with the company announcing the completion of a new purchase agreement. The company is currently trading at 40% up on its Monday close, on the highest volume seen since the last week of December.Can the run continue? Let's take a look.For those not familiar with this one, Agritek is a medical marijuana company that – as per the company's marketing blurb – provides innovative technology and agricultural solutions and seeks to be the leader in Compassionate Care Technology for the cannabis industry. The company likes to tell us that it doesn't actually get involved with the growing, harvesting or distribution of cannabis product, which – to some – may seem a little confusing. It's not that complicated, however. Basically, the company buys land and builds out the land in preparation for cannabis production (in other words, creates a growth facility). It then leases this land to producers, which in turn, grow cannabis and distribute it themselves throughout various networks.It's a pretty smart model in a sense, in that the company doesn't have to circumnavigate the rules and regulations associated with growing and handling cannabis plants. As we've seen on a number of occasions already over the last few months, these regulations can be costly, and labor-intensive to overcome.So, what did the latest announcement tell us? As mentioned in the introduction, it relates to a purchase agreement for a property in Colorado. The property is an 80-acre cannabis farm that already has approval for the growth of both recreational and medicinal cannabis product, and had been previously deeded to Agritek by a third party. As per the new real estate contract purchase, the company will own the land outright, and by proxy, water and mineral rights to the property.So why is this such a big deal?Well, first of all, it's in Colorado, and – right now at least – the state is the epicenter of the cannabis industry in the US. Any approved growth facility, especially one with approval for recreational growth, is an asset worth having. Land is generally regarded as a great investment anywhere, but grow-licensed land in Colorado right now is hot property, and should only increase in value as the industry matures. The value of the land aside, however, Agritek's plans for the 80 acres are what really interest us.Basically, the company is going to split the land into 80 separate parcels of an acre each, and lease them to licensed cannabis growers on an acre by acre basis. Many of the cannabis businesses in Colorado are independent right now, and as such, are unable to afford the leasing of large licensed facilities from which they can grow their own product. With Agritek's bitesize offerings at its newly acquired property, the company is offering these smaller, independent growers an opportunity to do just that, and as such, we see the demand for these acre-wide leases being strong.In addition to the Colorado operations, there are also some near-term catalysts rooted in operational activity elsewhere. Near term, the company plans to announce additional operations for California in Humbolt County rooted in the roll out of a so-called California Premium Brand, as well as partnerships in Puerto Rico with Agritek's first approved cultivation operation on the island. Both of these announcements should inject some upside momentum to the company, if the latest property acquisition (and its impact on market capitalization) is anything to go by.Cash is a concern on this one, with practically nothing on the books, and so we expect some degree of dilution near-term as the company expands. While we don't see this is prohibitive to an exposure, it should probably be taking consideration ahead of any allocation decision.We will be updating our subscribers as soon as we know more. For the latest updates on AGTK, sign up below!Disclosure: We have no position in AGTK and have not been compensated for this article.

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