Canadian CANNAINVESTOR Magazine February 2018 | Page 294

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Leading Canadian producers have begun to lay the foundation to become dominant players in the European markets, and, on May 4, 2017, the company announced $42.5mm in non-dilutive financing (Financing) to establish a presence in the rapidly growing German market. The proceeds were used to acquire and retrofit a 1.1 million sq. ft. campus in Ebersbach, Germany. The campus consists of indoor cultivation space as well as an outdoor hemp farm, of which Maricann owns a 95% stake. The company was previously named as a finalist in the German cultivation bid, and is positioned very well to capitalize on that opportunity if they are awarded a license, which is anticipated to be announced in the first half of 2018.

The company continues to actively pursue the European market, and on January 24, 2018 their entry into the Swiss market through an acquisition (Haxxon) called Haxxon AG. The deal has yet to be finalized, but the company intends to leverage Haxxon’s 60,000 sq. ft. hemp cultivation facility to manufacture finished products such as vape cartridges and pre-roll CBD cigarettes for distribution across Europe.

Arguably the most interesting of all their initiatives to date was the acquisition announced on August 22, 2017(NanoLeaf). The company purchased all outstanding shares of NanoLeaf Technologies Inc., a biotech company who owns licensing rights globally to patented delivery technologies. As the industry matures, an increasingly growing segment of the market is going to be in oral dosed delivery systems. This Health Canada approved technology allows for increased bioavailability and absorption, as well as manipulation of the release of cannabinoids over time. This will prove to be extremely valuable in fast onset or delayed onset of cannabis capsules, and moreso as the market matures into edibles, functional beverages and topicals.

Many producers have began to reveal their recreational branding strategies in advance of upcoming adult use. Maricann has aligned themselves with two distinct global brands to date in this area. On October 6, 2017, the company announced that they had entered into an exclusive licensing agreement with International Cannabrands Ltd. (JuJu Royal™) to bring Julian Marley’s JuJu Royal™ brand to Canada and Western Europe. Additionally, the company announced on January 2, 2018 an exclusive agreement (Rare Dankness) to license High Times Cannabis Cup award winning strains from Rare Dankess LLC into the Canadian market. These distinct brands should cater to a diverse demographic and position Maricann very well to gain market share of the adult use market.

Maricann recently added $70mm in cash to its balance sheet with a bought deal financing which was announced on January 29, 2018 (January Financing). The company took advantage of a temporarily inflated stock price to sell units at $4.00 with 36 month warrants at $4.15 to increase its already strong cash position to a total in excess of $120mm. With such a significant sum of cash on hand, one could expect that the company will seek further to make additional acquisitions both in Canada and globally over the coming months.

In conclusion, it appears that Maricann Group has the pieces in place to become a global powerhouse in the cannabis sector. Despite making several savvy acquisitions and aligning themselves with large global corporations, the company has been overlooked by many investors, and it is evident when comparing their valuation to some peers. Priced very attractively with a market cap under $300mm, some of their direct competitors are being valued at two to three times higher, without consideration that over 30% of their current market cap is in cash. The company has many upcoming catalysts in the first half of 2018 including GMP certification, TSX uplisting, export licenses, and phase 1 completion to name a few. A combination of these catalysts could be the driving force to make Maricann a top performing stock in 2018.

Highlights:

Automation partnerships with global companies

Canadian expansion potential to 95,000kg

Global delivery system patents in Vesisorb

Finalist in German cultivation bid - 1,150,000 sq. ft. facility in Ebersbach

Licensing agreements with international recreational cannabis brands

Future uplisting to TSX

Canadian Pharmacy partnerships