MARICANN GROUP INC COM NPV (OTCMKTS:MRRCF): Heavy Investment Does Pay Off

The Canadian cannabis industry has grown quite significantly in the recent past. Companies have been entering into the market with hopes of positioning themselves favorably and making money as a result. Investment within Canada, however, can only go so far and companies need to position themselves internationally.With this backdrop in mind, let’s go ahead and analyze MARICANN GROUP INC COM NPV (OTCMKTS:MRRCF), a $74.3 million company which has not only opted to venture into international waters and distribute in Germany but also acquired one of the largest cannabis growing facilities in the country at a lower than fair value price. The company which is based in Canada is on the verge of taking off in the near future.Despite this, its share price has been on a downward trend, as can be seen below, a trend which we expect to reverse in the near future upon the completion of their projects and implementation of their strategy. MRRCF Daily ChartLet’s start by generally understanding the company as we build on to analyze it in depth further in this piece.MRRCF: An OverviewFounded in 2013 in Langton, Ontario, Maricann Group Inc. is a publicly traded medical cannabis company that serves thousands of patients.Maricann Group Inc is currently expanding its cultivation, extraction, analytics and production facilities to elevate offerings and prepare for growth into the adult-use cannabis market in Canada, and ultimately into mature and developing cannabis markets worldwide.Their bid to venture into the world has led them to invest in Germany and other countries globally with the hope of being rewarded handsomely for such investments in the future as will be seen later in this piece.Good NewsIn the recent past, the company has been at its best with the surge in favorable news rising.This began with their $42.5 million acquisition of 150,000 square feet of cultivation operations in Ebersbach Facility in Germany as well as 250,000 square feet expansion of their two-tiered cultivation plan and outdoor hemp farm. The expansion, meant to boost output in the wake of increased demand within the German market, comes as a major boost to the firm’s valuation of assets given that they purchased the farm at a discount. The company’s CEO, Benjamin Ward was quoted saying:

“The Ebersbach facility offers Maricann a significant advantage in cost of overall construction and speed to market…. To construct a similar facility today, the estimated cost would be over 120 million EUR. Maricann entered into a reservation agreement to purchase the facility for a total price of 3,410,000 EUR at closing.”

Source:The company went further to issue a letter of intent with McKesson Canada Retail Banner Group for the education of their customer base on the use of cannabis products with the aim of distribution through these channels. The latter controls 20.01% of The National Association of Pharmacy Regulatory Authorities (NAPRA) and therefore holds one of the largest client bases in Canada.The move is seen by management as a step in the right direction. MRRCF, using this platform, will be enabled to market its products to a significant portion of users and in doing so will boost their customer base. Their revenues, moreover, will also rise through this agreement and eventually MRRCF can turn a profit.Finally, they have just obtained leeway to list on the Toronto Stock Exchange through their addition to the Horizon Marijuana Life Sciences Index (HMMJ) Exchange Traded Fund. This, according to players, was based on their ability to offer investors stock in a global company given their plans for aggressive international expansion.How deep are their pockets?The growth of the company is clearly visible from the growth in their book values= over the first two quarters of 2017. Their book value grew to $15.93 million in 2Q17 from their negative position of $(44.49 million) in 1Q17 courtesy of additional common stock obtained during this period.However, their revenues fell by 41% over the first two quarters in 2017 to $509,000 from $857,000 in a period when their cost of goods sold fell from $1.1 million to $195,000. The commensurate fall signified a reduction in the operations of the company during this period.Despite this, their net income stood at $11.322 million an increase of over $61.44 million from the previous value of $50.15 million in losses. This was due to the gains in convertible debt which due to its variability was quite high in this period. The converse may, however, occur in future therefore it would be prudent for the company to engage more in ensuring solid operating financials are generated over the next period.Finally, their acquisition of $42.5 million, which will be used in capital investments, seems like a step in the right direction for them as well as a nod from investors on their strategy to invest in their new farm. This is a signal that such an investment will have significant payoffs for investors into the future.Given this financial background, the growth in their position is quite visible with management merely being required to work at boosting the company’s revenues. Over the long term, given their current investments and partnerships, the latter seems like a target they can easily beat and overcome in the short term.ConclusionMRRCF has positioned itself as a global player, investing heavily in its bid to expand its reach. This is expected to reward them handsomely and grow the company in future. Investors would be prudent to ride this wave by accumulating a position.We will be updating our subscribers as soon as we know more. For the latest updates on MRRCF, sign up below!Disclosure: We have no position in MRRCF and have not been compensated for this article.