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The previous news release was the most comprehensive news release a company could give shareholders. I don’t have anything to add except the above table which highlights the significant disparity between AgraFlora’s production capacity vs. Market Cap compared with the top industry players. That disparity is why I’ve invested in PUFXF and also why I believe this will be a 10- bagger from current levels when they are producing cannabis from their 2.2 million sq ft Delta Greenhouse. First things first though - the Delta facility has to be licensed by Health Canada - anticipated in Q4 2019.

Next week is the company annual shareholder meeting and they are opening up the doors to the Delta facility for shareholder and analyst tours. I imagine there might be a bit of a run-up for this event or afterwards, but that’s just a guess on my part.

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Comprehensive interview with strategic advisor to AgraFlora.

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Rick. I noticed last year that all of the main cannabis stocks increased in price between mid August and end of September.
ACB +111%
CGC +82%
APHA +74%
TLRY +564%
TGODF +58%
CRON +89%
OGRMF +50%

Was there some catalyst that caused this? Is it harvesting and cyclical? What are your thoughts for the boost?

That run up was due to the impending legalization of recreational marijuana in Canada which occurred last fall. I forget the exact date. It was definitely a “sell on the news” type of catalyst.

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Rick, what are your thoughts on a secondary cannabis stock to own for the next 4 months? I’m looking at Zenabis, Aleafia, 48 North or Village Farms. I am pretty much down to 48 North or Village Farms, but you might have other thoughts.

4 months is a short time frame…more of a swing trade, so in that case I’d be looking at either a catalyst or the chart more than the fundamentals.

My 2 favorite pot stocks other than PUFXF are OGI and HEXO…both mid-range players. OGI is a solid company and I’ve successfully traded that previously. They haven’t dipped as harshly as their industry peers so their relative performance makes them a safe and intriguing buy.

HEXO already has a beverage deal with Molson so there’s a degree of confidence in that one fundamentally. It’s on my radar to take a position because the chart is nearing a compelling buy point - bouncing off the lower support line of an ascending channel. I kinda like it in the low $4s.

ALEAF I got burned on 6 months or so ago, so I’m jaded with that one. It didn’t move well with the sector so it’s no longer on my watch list. Maybe things have changed though, who knows?

ZBISF - Don’t know much about them to comment on.

Thanks Rick. You still think PUFXF still has the biggest upside in the sector? Not sure what is going on with HEXO. Don’t no what your buy in position is, but you probably didn’t expect it to drop below $4.

I do like what is going on with VFF. Like you mentioned, they are not much different than PUFXF in that they converted a tomato greenhouse into cannabis. They have been climbing the last couple weeks. 48North intrigues me too. They have a good management team, just received there license from Health Canada. Have the first harvest going, 100 acres, and are sitting at $.60 with a float of 121M shares. Here is a video. 48North

Focusing on HEXO…it is confounding how hard hit HEXO has been recently and in particular last week where it lost nearly 20%. Regardless, it remains one of the better risk-to-upside ratios that I’m aware of in the sector.

Chartwise…it is breaking down from a technical standpoint. While it is hitting the bottom of the long term ascending channel at $4.00, it is doing so with a precipitous drop which makes me a bit more cautious about entry until I see a bottom confirmation.

From a fundamentals standpoint, this recent Yahoo article sums up HEXO’s situation pretty well - which is why it is on my radar. I just need the technicals to show less risk of continued downside.

HEXO Stock: When Will the Pain End?

After another new 52-week low, HEXO ( HEXO ) has become a perplexing stock that should benefit from some of the chaos in the Canadian cannabis sector that isn’t getting any benefit of the doubt. The market is selling most cannabis stocks regardless of valuations and forecasts providing the opportunity to build a solid position in the stock that uplisted to the NYSE in July.

Path Forward

HEXO hasn’t taken the path of massive cannabis cultivation growth like several other competitors in the Canadian market. Possibly the less promotional and aggressive nature of the management team is hurting the short-term stock price.

The company closed the Newstrike merger on May 28. The deal gives HEXO cultivation capacity of 150,000 kg for a company that generated only 9,800 kg of dried cannabis in FQ3. The plan increases quarterly cultivation to 37,500 kg.

In addition, HEXO has a massive supply of hemp lined up. The supply includes 200,000 kg of hemp for CBD in fiscal 2020 that starts next month. On top of this supply, the company has a second supplier providing 60,000 kg of hemp in the current quarters.

This huge supply will provide the company with the hemp needed for the legalization of edibles and concentrates in mid-December in Canada and a plan to enter eight U.S. states in 2020. Even smarter, HEXO is working with Valens for cannabis and hemp extraction of up to 50,000 kg next year.

The extraction agreement allows HEXO to smooth out the operating ramp-up to meet initial demand without having to have all of the facilities internally. Again, the company can focus on building the brand and sales and less on farming.

What To Watch

HEXO has now sold off to $4 following a weak market for cannabis stocks due in part to some management and legal issues in the sector. The market value is now below $1.1 billion for a company forecasting revenues of C$400 million in the upcoming fiscal year or the equivalent of $300 million.

Some question will exist on the revenue impact of the push back on the Cannabis 2.0. HEXO is focusing on gummies and premium vapes on top of the cannabis-infused beverages from the Truss Beverages joint venture with Molson Coors (TAP).

The Truss Beverages joint venture includes a 42.5% investment position from HEXO with Molson Coors owning the other 57.5%. These results won’t be consolidated in the quarterly and annual financials, but the business could become a large part of the investment thesis of the stock.

The near-term focus in the market will shift towards margins. HEXO hit 50% gross margins in the April quarter and Newstrike provides about C$10 million in annual synergies along with higher sales to cover corporate expenses.

Revenues are forecasted to double in the FQ4 quarter ending here at the end of July or somewhere around C$25 million.

Takeaway

The key investor takeaway is that HEXO is trading at the lows as the cannabis sector hits a lull. Investors need to remember that companies like HEXO are going to see revenues nearly double sequentially in each of the next couple of quarters. By next year, the company will look far different with sales forecasted to top C$100 million, up from only C$12 million in the last quarter.

One can’t predict when the pain ends for HEXO or any of the other cannabis stocks, but the stock appears set to outperform over the next year from the $4 levels.

Merrill Lynch analyst Christopher Carey has recently reiterated a Buy rating on HEXO stock with a $10 price target, which implies nearly 150% upside from current levels.

https://finance.yahoo.com/news/hexo-stock-pain-end-144617532.html

Based on the chart I posted back on June 18, absolutely. But that doesn’t mean it won’t experience growing pains like it is now.

Thanks Rick. Well HEXO did make a turn today. Will it hold? What is your entry point?

I bought into AGRA at near it’s height…$0.49 was my cost basis. I sold with 40% loss of my investment. Bought back in for half at 0.27, but I figure there is not much point in investing the other half until they get license from Health Canada and can start earning . That is why I asked for a good cannabis stock for the next 4 months. I invested 1/4 of it into AMD. I like it and might keep it there. I am hopeful that fall will be a turnaround for those cannabis stocks that have license and are harvesting. If I can earn back some of my losses in a revenue producing cannabis stock and invest it back into AGRA at, or near the point of my original sale, then I have successfully lowered my cost basis.
I am sure my plan will backfire and I probably should have just kept my money in AGRA. Actually, if I had put all my investment into AMD at the time I put it into AGRA I would be up 40% instead of down. Hah.

The S&P 500 Emini Futures contract (ES) is reaching the 62% retracement level of the climb back to the top from the recent drop. The number is 2932.50. We’ll see if we don’t get another down leg on bad market news in the next day or two, or if we continue the market climb.

Follow up on HEXO, as it turns out that dip from a couple weeks ago off the lower channel support line was the place to buy - it resulted in a 20-25% run. As I mentioned previously, the drop was too precipitous for me and I decided to watch from the sidelines. If there is a pullback back to the lower trend line I’ll probably take a position, though I’m not usually anxious to take positions in August unless it is a screaming buy.

Thanks, HR. You still bullish on AGFAF at these levels I assume?

I’m averaging down here, but I’m not pounding on the table because the overall market and the pot sector are struggling here. AgraFlora has been diluting more than I’d like. In some cases they are building up and expanding the company’s pipeline which I can accept, however they’ve also issued stock options to management and consultants which makes me pump the brakes. It would be different if there were achievements that deserve rewarding like receiving the license from Health Canada or planting their first crop, etc.

So I’m still bullish, but my position is large enough now that I’m not overly compelled to buy more. I did average down some regardless.

My time horizon for holding is over a year so I can wait out the growing pains.

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AgraFlora Organics Provides Final Licensing Guidance and Operational Update At 2.2M Sq./Ft. Delta Greenhouse Complex

VANCOUVER, British Columbia, Sept. 09, 2019 (GLOBE NEWSWIRE) – AgraFlora Organics International Inc. (“ AgraFlora ” or the “ Company ”) ( CSE: AGRA) (Frankfurt: PU31) (OTCPK: AGFAF ), a growth oriented and diversified international cannabis company, is pleased to provide the following licensing guidance and operational updates pertaining to the Company’s 2,200,000 square foot Delta Greenhouse Complex:

  • Completion of perimeter security fencing;
  • Installation of comprehensive surveillance and anti-intrusion systems, as well as access control infrastructure supported by servers and sustained by independent, backup generators;
  • Completion of Post Harvest zones including dry rooms, trim room, secure storage and packaging facilities;
  • Retrofitting of garment hygiene rooms, security/administration offices, as well as staff amenities;
  • Installation of state-of-the-art air exchange system equipped with climate and odour controls;
  • Full roof vent insect netting installation for crop protection;
  • Supplemental light output upgrades and the furnishing of light deprivation screens;
  • Installation of irrigation buffer tanks, mixing stations, and distribution system;
  • Retrofit and upgrade of Argus® Titan climate control system;
  • Completed grow room divisions for climate and hygiene isolation; and,
  • Successful submission of its affirmation of readiness and video evidence package (the “Evidence Package”) to Health Canada for its Phase 1 build-out.
    • Evidence Package submission is the final measure required in order to demonstrate and confirm to Health Canada that the Delta Greenhouse Complex is fully built, operationally ready and in compliance with the Cannabis Act and Cannabis Regulations, prior to being issued its standard cultivation licence.

The Company’s Phase 1 retrofit of its flagship Delta Greenhouse Complex is comprised of approximately 431,000 square feet of cultivation/processing expanse, including over 130,000 square feet of net flower canopy and is estimated to produce 15,000,000 million grams of premium cannabis annually. With the completion PSC’s Phase 1 retrofit, the Company’s current annual projected output of dried flower is approximately 160,000 kg including 2020 forecasted production at its purpose built AAA Heidelberg craft cannabis cultivation facility. In addition, AgraFlora anticipates the successful recapture of over 1,000,000 grams of premium cannabis trim to be manufactured into ancillary value-added cannabis products on an annualized basis.

AgraFlora worked with experienced security and licensing consultants at 3|Sixty Secure to obtain consulting services and produce the attestation package for the license application. 3|Sixty’s consultants are industry experts who have worked directly with more than 60 per cent of Canadian LPs and ensure their clients’ attestation packages meet the highest standards possible.

Brandon Boddy, Chairman and Chief Executive Officer of AgraFlora stated: “The successful submission of our Evidence Package to Health Canada is a momentous milestone in AgraFlora’s evolution towards the cultivation of premium, genetically characterized cannabis under 2.2 million square feet of glass at our world-class Delta Greenhouse Complex. Based on the most recent timelines from Health Canada, AgraFlora anticipates the award of a standard cultivation license within six to eight weeks.

Many thanks to the high functioning and multifaceted Houweling’s team for their commitment to this JV; consistently achieving mission critical, project level deliverables under budget and ahead of schedule.

The award of standard cultivation license from Health Canada at our Delta facility will signal to the marketplace that AgraFlora is primed to realize considerable cash flows from a top tier cannabis cultivation and processing hub. Through astute engineering and planning, our bellwether Delta facility will support the expansion of capacity while maintaining its full operational capabilities throughout Phase 2 and 3 of our planned retrofit.”

AgraFlora projects that Phase 1 of the Delta Greenhouse Complex retrofit will be completed on or before October 31st, 2019 and upon receipt of a standard cultivation license, in accordance with the Cannabis Act and Regulations, expects to immediately import a portfolio of high-end cultivars under a declaration from Health Canada. As a result of extensive deliberations with PSC and its industry consultants, the Company’s internal forecasts indicate that the inaugural harvest at its Delta Greenhouse Complex will occur within the first quarter of 2020.

Concurrent to AgraFlora’s inaugural harvest, the Company plans to initiate Phase 2 of the Delta Greenhouse Complex retrofit in December of 2019, which will include:

  • 10 flower rooms with over 1,000,000 square feet of canopy; and,
  • 40,000 square feet of post harvest/processing space.

Ruben Houweling, General Manager of PSC stated: “The Phase 1 retrofit of the Delta Greenhouse Complex and resulting submission of our Evidence Package to Health Canada was a exercise of expert execution in project management, cost analysis and agricultural innovation; culminating in over 160 skilled trade workers on site working in parallel paths to create one of the most advanced hybrid cannabis cultivation facilities in Canada, if not the world.

With the anticipated award of our standard cultivation license just weeks away and the commencement of Phase 2’s retrofit scheduled for December 2020- material levels of production are imminent”.

About AgraFlora Organics International Inc.

AgraFlora Organics International Inc. is a growth oriented and diversified company focused on the international cannabis industry. It owns an indoor cultivation operation in London, ON and is a joint venture partner in Propagation Service Canada and its large-scale 2,200,000 sq. ft. greenhouse complex in Delta, BC. The Company has a successful record of creating shareholder value and is actively pursuing other opportunities within the cannabis industry. For more information please visit: www.agraflora.com.
https://www.globenewswire.com/news-release/2019/09/09/1912503/0/en/AgraFlora-Organics-Provides-Final-Licensing-Guidance-and-Operational-Update-At-2-2M-Sq-Ft-Delta-Greenhouse-Complex.html

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The submission of their video package to Health Canada is significant news for AgraFlora. That’s the final step in the licensing process. Now they just wait for approval, assuming the facility has been built to Health Canada’s specifications. The time line for approval is 6-8 weeks, though it could be sooner.

The stock reacted well in a bad day for the cannabis sector.

.21 isn’t a bad entry point IMO if you wish to play the short term license approval. There could be a run-up into November and then a sell-on-news event. Ideally it would be helpful if the overall pot sector turned bullish, but regardless, I believe that barring any black swan events, the price of AGFAF should be higher then than it is today. All IMO of course.

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Great news! Hey Rick maybe we should have them build another greenhouse on the Alto lots of property there just sitting to no use.

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AgraFlora Organics Could Explode Over The Next Year

Sep. 24, 2019 11:47 AM ET

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18 comments

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About: AgraFlora Organics International Inc. (AGFAF)

Gary Bourgeault

Gary Bourgeault

Long only, research analyst, portfolio strategy, media

(11,051 followers)

Summary

Many of the pieces for long-term growth are close to being put in play.

Successful submission of its evidence package to Health Canada - last step before being issued its standard cultivation license.

Its 2.2 million square foot Delta Greenhouse Complex will be one of largest in the world.

A non-binding cannabidiol letter of intent has been entered into with one of the largest Canadian food retailers.

The company has also acquired stake in Hong Kong-based Eurasia Infused Cosmetics Inc.

agraflora source: USA Today

AgraFlora Organics (OTCPK:AGFAF) has been quietly building out a strong cultivation base that will result in it being one of the market leaders in production capacity in the cannabis industry when completed.

The market hasn’t caught wind of the narrative yet, as it has been recently trading on average at about only $.20 per share. While most companies at this price point are essentially worthless, AgraFlora is a real company that is aggressively expanding at a significant pace.

In this article we’ll look at the near-term potential of its giant new facility, its possible deal with an unnamed giant retailer in Canada, and how this may play out in the Canadian cannabis market over the next year or so.

Delta Greenhouse Complex

By far the most important part of AgraFlora’s business is its joint venture with Propagation Service Canada to build a 2.2 million square foot greenhouse in Delta, BC, Canada. At completion, it’ll be one of the largest in the world. AgraFlora’s stake in the joint venture is 70 percent.The companies have already submitted their evidence package to Health Canada concerning its Phase One build-out. The package confirms Delta Greenhouse is in compliance with the Cannabis Act and Cannabis Regulations. When approved, it’ll be issued a cultivation license.

The facility shouldn’t have any problem being approved because AgraFlora worked with 3|Sixty Secure as a consultant on the project. 3|Sixty Secure has worked with over 60 percent of the Canadian LPs to ensure they’re compliant and will be awarded their cultivation licenses.

AgraFlora expects to receive its a standard cultivation license in four to six weeks. Phase 1 of the retrofit should be completed “on or before October 31st, 2019.”

After receiving the license the company will quickly import “a portfolio of high-end cultivars.” The first harvest is expected to arrive in the first quarter of 2020.

After the Phase 1 retrofit, the facility will have about 431,000 square feet of cultivation/processing space to work with. That will produce an estimated 160,000 kilograms of drived flower, or approximately 15 million grams annually. AgraFlora also believe it will be able to recapture more than 1 million grams of premium cannabis trim on an annual basis that will be turned into high-value products.

At the launch of Phase 2 of the project, included with that retrofit will be ten flower rooms with more than 1 million square feet of canopy, and another 40,000 square feet designed for post harvest and processing.

In negotiations with large Canadian retailer for CBD distribution

In August 2019 AgraFlora announced it had entered into a non-binding agreement, dated July 31, 2019, with a large Canadian retailer for the distribution of CBD products across the nation.

Among the products being considered to be supplied to the retailer are edibles, cosmetics, beverages, CBD performance products, and pet products, among others.

Brandon Boddy Chairman and Chief Executive Officer of AgraFlora said this:

Following a protracted assessment of the Canadian cannabis marketplace as well as the associated Health Canada regulations we are elated to announce that this prominent Canadian Food Retailer has selected AgraFlora as a potential partner of choice for CBD commercialization and distribution due our assets human capital and manufacturing capabilities.

The importance of this and/or similar deals is the company must develop a distribution network in order to sell its products. That’s obvious, but the company must prove it has the capabilities to do so, or it’ll be sitting on a lot of pot. Keep in mind the negotiations with major food retailer isn’t a done deal yet.

Eurasia Infused Cosmetics Inc.

Another deal announced in August was the agreement by AgraFlora Organics to acquire 50 percent of the “issued and outstanding shares of Eurasia Infused Cosmetics Inc.”

Eurasia Infused, via a CBD Group Asia Limited, based in Hong Kong, has control of a distribution agreement with the Hong Kong Special Administrative Region and the People’s Republic of China.

Citing Regent Pacific Group from Hong Kong, CEO Brandon Boddy said the CBD market in China alone is forecasted to be worth $15 billion by 2024, citing beauty and wellness as the primary catalysts."

The Chinese cosmetics market will be primarily served through its wholly owned subsidiary Canutra, which manufactures and sells premium personal care and cosmetic products. It’s located in New Brunswick.

Needless to say, this is potentially a predictable and sustainable market AgraFlora can expand in for many years.

Uncertainty and risk

The major caveat for the potential of an extraordinary run for AgraFlora in the near future is the enormous amount of competition in Canada from entrenched and large players, and the slow licensing process that has severely limited the number of retail outlets that can be sold through.

Some of that would be mitigated if it does land the deal with the large retailer, but if not, the company will have to scramble to find ways to distribute it product at scale. I think this this is the biggest risk for AgraFlora at this time.

There is no doubt in my mind it’s going to be awarded a cultivation license, and that it’s going to generate some serious product in the not-too-distant future.

Having enough product doesn’t seem to be a problem to me, and even in Phase 1 of its project it’ll catapult ahead to be in the top ten in Canadian production capacity.

While AgraFlora has an outlet into the Chinese and Hong Kong markets, along with a presence in Colombia, it will need to find more distribution channels in Canada to do really well. I think it will find a way to do so as it proves it can deliver on its supply estimates.

One last thing is AgraFlora does need more markets to compete in in order to sell what is going to become a large amount of pot. Eventually the Canadian market will have more than enough supply to meet demand, and those without an international presence are going to struggle to grow at that time.

Conclusion

I think AgraFlora is an extraordinary bargain at $.20 per share, when taking into consideration the production capacity it’s going to have in the near future, the inevitable cultivation license it’ll receive, and the growing number of outlets it can distribute its product in.

If it lands the deal with the large retailer, or something similar, this stock will take off. Even without that it may take off once it gains approval for the cultivation license, and the market sees the potential of China and the Canadian market.

How fast and high it goes will continue to be determined in part by market sentiment, but this is going to be a stock that has a lot of emotion attached to it when it’s discovered, and that will drive the share price up in the short term far more than the fundamentals. After the initial run it’ll settle down and perform more in align with its underlying potential.

When considering you can buy 1,000 shares in the company for $200 at this time, it’s a no-brainer to me to take some cash allocated to risky investments and take a position in AgraFlora. I don’t think it’s going to take too long before it starts to reward shareholders.

For now, I wouldn’t think in terms of holding long term, but once the big run slows down and profits are taken, it would be worth considering it more for the long term once there is more clarity on the potential retail deal, and it secures more distribution deals based upon its production capacity.

https://seekingalpha.com/article/4293264-agraflora-organics-explode-next-year

Pot stocks (and AGFAF) getting crushed again today. Took a gamble on buying more AGFAF at .13 as a 90-day (or so) swing.

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Do any of you guys like Ely Gold Royalties?

What caught my eye is three very reputable people are involved

Rob McEwen
Rick Rule
Eric Sprott (just made a deal to loan them $6 Million)

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