Chemistree is Now a Coast to Coast Cannabis Player In The United States
Chemistree Technology Inc. (CA: CHM – $0.26 & US: CHMJF – $0.19 & GER: CM1 – €0.17) is an investment company that to this date has focused on opportunities in the cannabis sector on the Pacific Coast of North America. It has multiple investments in the states of Washington and California as well as a stake in British Columbian craft cannabis company Pasha Brands. Chemistree has now officially expanded its reach to the east coast of the United States as it completed the acquisition of New Jersey-based medical vertically integrated cannabis applicant Applied Cannabis Sciences (ACS).
Chemistree Is Positioned To Be a First Mover Ahead Of New Jersey’s 2020 Adult Use Referendum
ACS is an applicant for a medical marijuana license in New Jersey once again after having just missed out during the last permitting round. ACS finished within the top 20 of all applicants the last time, so it is looking favorable for it this time around as 24 new permits, comprising of 15 dispensary permits, 5 cultivation permits, and 4 vertically integrated permits will be issued.
New Jersey is a great place to look for growth in the medical marijuana market as the state plans to increase the number of patients enrolled in its program from 49,000 to 200,000. Right now there are only 12 facilities to serve those 49,000 people of which 6 are currently up and operational. The number of licenses issued will triple but the customer base served will increase by more than four times, making the opportunity even more lucrative for early licensed entrants.
“Completing this investment with ACS and being on the ground floor towards expanding New Jersey’s medical marijuana program marks a significant step forward in our Company’s East Coast expansion plans,” stated Karl Kottmeier, President of Chemistree. “We expect, along with ACS’ leading cannabis experts and track record, that we will be able to secure this highly coveted and valuable State license.”
As part of the acquisition, ACS’ co-founder and CEO Nico Escondido joined Chemistree’s Board of Directors. He is also an author, director and part owner of well-known industry magazine High Times. He stated, “The entire team at ACS is very excited to have solidified our partnership with Chemistree. The goals of both entities are keenly aligned, with the objectives of serving both the patients and communities in which we operate being our top priority. This partnership enables us to disseminate our mission across North America, while also creating a hub for cannabis research and development here on the Eastern seaboard. We look forward to a successful application in our great State of New Jersey and working with the members of Chemistree to build something of incredible value for both our patients and the cannabis industry.”
While both Mr. Kottmeier and Mr. Escondido were careful to focus on the medical aspect of the New Jersey cannabis opportunity, the State has a referendum during the 2020 election season to legalize adult recreational use of cannabis. Should this referendum pass, ACS becomes very well positioned to serve a market of 9 million residents when there will be only three dozen licensed producers and dispensaries.
Summer Pullback Presents Buying Opportunity
Immediately following the announcement of the initial Letter of Intent with ACS in April and appointment of Nico Escondido to the Board, Chemistree’s stock had a lot of momentum. It moved from $0.60 to its 52-week high of $0.75 in Canada in the days following the news. However, the major pullback we have seen in the cannabis sector – particularly with microcaps – eventually caught up with Chemistree. The stock is now priced at slightly less than half of where it was on the day of the ACS announcement.
While it is easy for us to say that this pullback over the summer represents a buying opportunity, it is demonstrated by the President of the Company’s own buying on the open market. Karl Kottmeier purchased shares through the CSE twice over the last two months. He purchased 50,000 shares at $0.45 CAD in June and another 20,000 shares at $0.30 CAD in July for a total investment of $28,500. Insider transactions for Chemistree can be seen here.
The recent investment by the President demonstrate his confidence that Chemistree is on the right track in the long run. Now is a perfect time for risk tolerant investors to look at an investment in Chemistree as we believe that the industry is set to pick up after the summer slumber. The Company is aggressively developing multiple cannabis-related businesses across the United States. With a $10 million CAD valuation, Chemistree is among the most attractive small cap stocks in the cannabis sector. Smallcaps Recommendation: BUY.
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