Zoned Properties Inc (OTCMKTS:ZDPY): What The Latest Announcement Means

Zoned Properties Inc (OTCMKTS:ZDPY) has had a pretty rough year so far. The company hit highs of $2.5 a share back in January, having opened 2017 in and around the $2.10 region. At the most recent close, however, Zoned was changing hands for $1.25 a piece – a more than 40% discount on its 2017 open and a 50% discount to highs.The recreational cannabis buzz from the end of last year has all but died down now, and market operators are being careful about where they allocate their capital. There remains plenty of potentially rewarding exposures in the space, but it's far from the free for all we saw at the end of last year.With this in mind, and taking the performance year to date in to consideration, is Zoned a company with said potential, or is it set to continue to depreciate as 2017 matures?Let's take a look.The company is trying to position itself as a cannabis grower and distributor, with an initial core focus on the medical marijuana space (as opposed to the recreational side of the sector). We think this is a pretty smart move at the moment – with the political and regulatory uncertainty that's holding something of a dark cloud over sentiment in the recreational space.Basically, it identifies and acquires grow space, and then leases it to growers as real estate on which they can grow product for distribution as medical marijuana. Prior to what we might call the green rush, Zoned wasn’t just focused on grow space – and the company still states (by way of its description blurb) that cannabis is only one part of its strategy. We think it’s really the major part, however, and we think a focus on cannabis is probably a smart move going forward.So what have we learned recently that might hint at a reversal in fortunes?Well, recent developments have centered on the company's sale of one of its properties in Arizona. Specifically, the property is located in Tempe, Arizona, and it's one of a number of properties that Zoned owns and operates as part of its Medical Marijuana Business Park in the region. It's gone to a buyer that's going to use it for non marijuana purposes, and management has described it as non-core to the company's operational focus (which sort of validates our above suggestion that cannabis is the current only focus for Zoned right now).The property went for $2.125 million cash, and it's the use of proceeds from the sale that we're looking at as likely to have the biggest impact on sentiment, as opposed to the sale itself. Specifically, Zoned has used (and announced subsequent to the sale, just recently) a portion of the proceeds (as well as some of the proceeds from a $2.02 million private placement transaction) to retire $1 million of convertible notes due to mature in August 2017. It's a high cost/low cost debt transfer at core, and the major impact will be that it reduces the company's unsecured debt servicing cost to the tune of one hundred base points. It's also given the company a bit of wriggle room from a cash perspective, lifting any near term dilution risk, and should serve to cut operational costs (or at least, allow operational dollars to allocate more efficiently, and more in line with the cannabis strategy as opposed to alternative focus).From a shareholder perspective, then, this is a neat move.So what are we looking at going forward?Well we want something quantitative to point towards the positive impact of the buy and lease strategy in the medical marijuana space. Earnings at the end of last month (as well as an accompanying update) pointed towards things moving in the right direction, but we would like to see some smart land acquisitions, and the securing of some long term (we're talking ten years plus) leases on said acquisitions, as supportive of a bullish bias heading into the remainder of the second quarter and beyond.This one's far from out of the woods, and it's going to have to battle for speculative dollars in a very busy market, but as a strategic play in a growing market, it might well be worth a look.We will be updating our subscribers as soon as we know more. For the latest updates on ZDPY, sign up below!Disclosure: We have no position in ZDPY and have not been compensated for this article.