How CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) Benefits From Geographic Diversification

CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) continues to act quite well during this period of correction and consolidation among the big players in the cannabis production patch. We have seen several of these plays pull back of late, and Canopy is faring about as well as any of them. This is often an important signal: relative strength is generally best spotted during corrective moves for a group. So, one should take note if you follow these players.

The latest from the company is its announcement this week that it has launched a strategic partnership in the Jamaican cannabis market as part of its ongoing international expansion. “Grow House JA Limited – to operate as Tweed Limited JA, will serve the needs of the Jamaican medical cannabis market with Tweed’s well-established cultivation processing and international standards, matched with the local know-how of its Jamaican partners and the renowned sun, soil, and water of Jamaica. Canopy Growth holds 49 per cent of the share capital of Tweed JA, which, with conditional license approvals already in place, has already begun construction of its facility.”

CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF) is one of the bigger growers. The company produces and sells medical marijuana in Canada. It offers dry cannabis and oil products primarily under the Tweed and Bedrocan brands. It also sells its products through online.

According to company materials, “Tweed is the most recognized marijuana production brand in the world. It has built a large and loyal following by focusing on quality products and meaningful customer relationships. Tweed doesn’t just sell marijuana, it facilitates a conversation about a product we’ve all heard about but haven’t met intimately yet. It is approachable and friendly, yet reliable and trusted. As marijuana laws liberalize around the world, Tweed will expand its leading Canadian position around the globe.”

Also from their materials, “Bedrocan is the epitome of medical-grade cannabis. Bedrocan BV pioneered medical cannabis in Holland through decades of selection and refinement, leading to standardized, whole bud cannabis strains that patients can rely on. Bedrocan Canada supplies the same standardized strains to the Canadian market through exclusive licensing rights to the American continents, an arrangement it will also enjoy for all future genetic advancements. Due to its consistency over time, Bedrocan’s strains have been used in clinical research in seven European countries. That commitment to research didn’t stay on the east side of the Atlantic – Bedrocan Canada recently launched one of the largest clinical cannabis studies in the world, the EQUAL Study, to evaluate quality of life before and after medical cannabis use.”

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As noted above, shares of TWMJF have been demonstrating relative strength on the OTC over the past couple weeks as stocks in the cannabis production space all pull back in what is likely a healthy consolidation of recent gains.

To potentially augment its market position, the company just announced the launch of its new strategic partnership in the Jamaican cannabis market. The move represents the company’s continuing attempt to geographically diversify its revenue streams. This is especially important in this market space given the special role that local legislative factors play. Diversification among different legal zones is, in effect, not keeping all your eggs in a single basket.

“Jamaica represents a world-class cannabis market, and we are fortunate to be working with a highly experienced and knowledgeable local team so we can put the right pieces in place to turn these opportunities into local prosperity and success,” said Bruce Linton, Chairman & CEO, Canopy Growth. “Ensuring we have the brands, infrastructure, and the right people in place is our priority. We look forward to contributing to a successful Jamaican cannabis market with the addition of Tweed JA.”

The chart shows 17% during the past month in terms of shareholder gains in the name. The situation may be worth watching. TWMJF has a history of dramatic rallies. In addition, the listing has benefitted from a jump in recent trading volume to the tune of just shy of 110% over the long run average.

Currently trading at a market capitalization of $1060M, TWMJF has a significant war chest ($116M) of cash on the books, which compares with about $1.7M in total current liabilities. One should also note that debt has been growing over recent quarters. TWMJF is pulling in trailing 12-month revenues of $48.8M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 127.3%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $TWMJF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $TWMJF, either long or short, and we have not been compensated for this article.