The most asked question this month to consider were to provide an example of an industry promoter/influence or analyst who has been wrong and an example of one that may be seen in a conflict of interest. The second most asked question was to expand more on some of the past content in our magazine with respect to tax implications of investing. The third most asked question was what is the most difficult aspect of writing about this industry – and use a company as an example. Starting with the last question:
Our hypothesis that to be a successful investor in this industry is to accept as a basic truth that the industry is a vibrant ecosystem that is constantly being changed and that change is analogous to the science fiction concept of Terraforming - for this industry we call that Terraforming concept “Ecoforming”. That our hypothesis is now accepted as a given is instrumental to answering the question because that is the answer itself. That is also why I have separated my writing between the article and case studies. There is a very limited shelf life for investment information in this industry. Just last month one of my case studies was on CannImed Therapeutics Inc (TSX:CMED) and subsequently CMED announced their long rumoured merger plans with Newstrike Resources Ltd (TSXV:HIP) but that was only on the heels of a takeover bid announcement of CMED by Aurora Cannabis Inc (TSX:ACB).
The principles of the case study hold true because the case study was on due diligence and used CMED as an example however most of the investment decision information became irrelevant due to the M&A announcements. Another good example of a company that applies to I would suggest is the Tinley Beverage Company because of the proposed changes governing products derived from Industrial Hemp. With respect to Tinley specifically, I think we all accept as a basic fact of business that such companies need to spend money on getting product in stores as well as to the customer – marketing 101. We also all accept that such companies are not expected to have positive gross margins for some time. Obviously, an environment of expenses exceeding revenues in the beverage industry is not sustainable indefinitely. However, legalization in California is at the doorstep and Canada is legalizing derivatives and other substances made from Industrial Hemp as well as opening the door for consumable cannabis products as early as 2019. All of which is a game changer and now throw in the interest on cannabis infused
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other substances made from Industrial Hemp as well as opening the door for consumable cannabis products as early as 2019. All of which is a game changer and now throw in the interest on cannabis infused beverages because of the Constellation Brans investment in Canopy Growth. Tinley’s Q4 presentation clearly states under “development” is their intention to launch in Canada, Nevada, and other hospitable jurisdictions. Tinley Beverages recently made the IA top 40 beverage list joining such companies as Constellation Brands, Miller Coors, and The Boston Beer Company.