In a matter of weeks, recreational cannabis will be legal in Canada, and pot stocks are on a rampage that’s won over even the grizzliest of bears and the most skeptical short-sellers.
Three deals are creating a beautiful set-up for investors. Two of them will bring cannabis into the mainstream. The third involves one of the largest cannabis companies and a little-known incubator that’s seeing a big payday.
The first two deals started the rampage: First, Constellation, the maker of Corona Beer, is prepared to throw $4 billion more into Canopy Growth, bumping its stake up from 9.9 percent to 38 percent. Then, Diageo PLC, the maker of Johnnie Walker and Smirnoff, started talks with three Canadian pot companies for a stake. They want in, badly.
But the most exciting deal is still flying under the radar.
Aphria gave Scythian Biosciences 15,678,310 shares of its stock to buy Scythian’s incubated cannabis assets. For Scythian, the timing could not have been better—right before the rampage exploded. When the deal was agreed upon, those Aphria shares were at CAD $12, worth $193 million.
But something brilliant happened …
By the time the deal was closed last week—right as recreational cannabis was about to be legalized—Aphria shares had spiked to CAD $20, making Scythian’s position worth approx CAD $313 million.
That’s a massive payoff.
And it’s Scythian Biosciences’ third win-win deal in a row.
Forbes is all over it, and everyone else will be soon. From a ground-floor investment perspective, this isn’t just a big deal—it’s possibly the most mouth-watering arbitrage event in this rapidly transforming sector.
#1 One of the Biggest Cannabis Transactions This Year
Aphria gave Scythian Biosciences 15.7 million shares of stock to incubate cannabis assets. That’s a 6.3 percent stake in Aphria, arguably the strongest cannabis producer in the world—and it also makes Scythian the largest single Aphria shareholder.
For Scythian, the timing was brilliant—right before the rampage exploded.
When the deal was agreed upon, those shares were at CAD $12, worth $193 million.
It was a great deal for Scythian…
But then it got much better …
When it closed last week, shares had spiked to CAD $20, making Scythian’s position worth nearly CAD $313 million.
Right now, the market is paying attention to Aphria because it was a good deal for the third-largest cannabis producer, too. They got cannabis assets in three countries in Latin America for CAD $193 million. When Canopy Growth did a similar deal, it got only one country for $290 million.
The deal gave Aphria “access to world-class assets in the “most advanced regulatory jurisdictions across LATAM and Caribbean markets”, according to Forbes. It gave them first-mover advantage in Argentina. It gave them market leadership in Jamaica and gave them Colombia—a prime setting with export channels to the rest of Latin America.
But while the market was busy looking at Aphria, Scythian—a very smart and sophisticated incubator of cannabis assets—is stuffing its war chest.
The market is starting to find out that the incubator is where it’s at. And when they do, good things could happen.
This deal should put little-known Scythian Biosciences on the cannabis map—in a very dramatic way. It’s the best cannabis story, that few know about. Yet.
#2 The Next Big Event Goes Down in Florida
The next big thing will come later this month, when it acquires an exclusive medical cannabis license in Florida. That’s imminent—and the pipeline has lots more potential.
Ahead of that licensing, Scythian took a controlling interest in 3 Boys Farms LLC—an established Florida medical cannabis company and primary care medical organization.
Now that they’ve conquered and then sold their assets in Latin America, they’re building out Florida. But that’s only the first stop. They’re eyeing multiple U.S. states ripe for legal cannabis sales.
The potential for dividend, share buybacks, and the prospects for funding the American business with all this Aphria stock as it turns into cash should excite investors.
Medical cannabis is currently legal in 29 U.S. States, and several key reform bills are moving through the United States Congress. All of them are strengthening Scythian Biosciences, whose team has so far made all the right moves at exactly the right time.
And when it comes to medical cannabis, the U.S. is definitively the best opportunity in the marketplace.
The U.S. legal marijuana market size was estimated at over $7 billion in 2016. And it’s expected to grow at a CAGR of 24.9 percent from 2017 to 2025.
North Americans spent an estimated $53 billion on marijuana (most of it illegal) in 2016, according to ArcView Market Research. When the U.S. side of that market opens up, Scythian (CSE:SCYB, OTCMKTS:SCCYF) plans to be there too.
#3 The Second Cannabis Ship Is Sailing, And It’s Bigger Than the First
If you missed the first pot boat, this time around it’s even bigger—and the timing is now.
In just a few days, Canada will have legal recreational cannabis —and it will be all over the news.
Already, global legal cannabis sales were expected to reach nearly $146 billion by 2025. And that projection was before Canada voted in June to legalize recreational pot.
So, in just a few days Canada will open the doors to licensed dispensaries to sell legal recreational pot... and press coverage will be dizzying.
The world’s investors will focus their attention on this long-maligned sector. And they’ve already given us a mega-deal glimpse with major alcohol producers scrambling to get on board.
This is what they know:
In less than 10 years, the legal cannabis worldwide market could go from essentially zero to $146 billion in sales.
These are floodgates, and they could unleash serious market attention for Scythian Biosciences.
Cannabis is one of those “special situation” markets that could have an unusually high upside for those who get in the right deal. That’s why the makers of Johnny Walker, Smirnoff and Corona want in so badly. This blows beer away.
#4 Spot On Incubator In The Hottest New Sector
What most people don't understand about this market is that incubator funding isn't coming from Silicon Valley …
or Wall Street...
This might be the greatest unknown story in the sector.
Scythian looks for the huge upside potential of these early stage investments...
But, because this space is so new, many investors don’t yet understand the profit potential of this new breed of company...
And that's opened up a huge opportunity for investors that do.
Scythian Biosciences is a credible international incubator. It’s also the world's first global cannabis incubator, and they've already made some game-changing deals.
They incubate and sell off assets, and so far, Scythian has done this with a new level of sophistication. We’ve already seen that with the Aphria deal that just closed.
How do incubators make money? They take equity stakes in startups and build them up until they get big enough and successful enough to sell. It’s all about building it up fast, for high-profit sale. It’s not about going public. Get in, build up, get out, get paid. It’s the fast-track cash cow—and in the cannabis sector, it’s going at breakneck speed.
The playbook is simple: Scythian Biosciences identifies, acquires and flips key businesses – looking to net a huge profit along the way.
For Scythian, most recently, it was the Aphria deal, which saw the value of its Aphria stocks jump close to 70 percent from deal to close. That’s a huge payoff for a short incubation and closing time.
What you need to know is this: early stage Cannabis investments aren’t yet being made by Silicon Valley or Wall Street incubators... some public company stocks now act like them. It should pay off to dig deep for the little-known incubators who are disrupting this sector and rewarding investors.
#5 Global Opportunity in A $53B/Year Market
Incubators are all the rage—and they should be.
We’re looking at a confluence of break-out factors here:
• A stunningly executed incubator business model that’s widely diversified
• A team that has experience closing deals
• A value that has been recognized by Aphria
• A super-high-growth market that’s days away from getting a massive boost by Canada legalization
When you’ve got someone like Scythian Biosciences’ CEO Rob Reid making ultra-rewarding deals, it’s enough to get the market excited. Reid is already a leading business figure in Europe’s legal cannabis industry.
Chief Medical Officer Michael Barnes is a leading world authority on neurological rehabilitation and founder and president of the World Federation of Neurological Rehabilitation. He was the first doctor in the UK to be granted the ability to issue a medical prescription for cannabis to a child with an ailment.
And most recently, Andrew De Francesco has been added to the Scythian Biosciences board. He’s a 26-year veteran of capital markets and has led a string of companies to multi-million-dollar sales. As founder and chairman, he took Dalradian Resources through its IPO in 2010 and it was recently sold for $500 million. What investors definitely won’t miss here: He also injected $6.2 million into Aphria Inc. (TSE:APH), a company which is now reaching toward worth of a cool $5 billion.
So, you’ve got big Cannabis player Aphria storming the global cannabis scene to investor delight. And then, if you follow this trail all the way to the incubator, you’ve got Scythian Biosciences (CSE:SCYB, OTCMKTS:SCCYF) —the world’s first global cannabis incubator that has a stellar deal track record right out of the gate.
The huge Aphria deal just closed …
The Florida component is imminent …
The team is hotter-than-hot when it comes to deal-making …
Canada is days away from exploding this market with legalized recreational marijuana …
This is a combination of factors that is rather mind-blowing—and as soon as the market catches up to it, the ship will set sail with its cannabis cash.
Other cannabis companies looking to make an impact on the market:
Intec Pharma Ltd (NASDAQ:NTEC): Intec is an Israeli based pharmaceutical company that earlier this year announced an early-stage study testing its painkiller made of natural CBD and THC extracts. This kind of marijuana-based painkiller will become increasingly popular as full-scale legalization takes place.
In August, Intec reported its overwhelmingly positive second-quarter earnings report, with Jeffery A. Meckler, Vice Chairman and Chief Executive Officer stating, "We continue to be pleased with the progress Intec has made during the first half of 2018, as we made significant advances that position us to achieve a number of important clinical, commercial and corporate milestones throughout the balance of the year and beyond.”
CannTrust Holdings Inc. (OTCMKTS:CNTTF) is a cannabis company focusing on the numerous medical benefits of the plant. They offer a number of cannabis-derived products, from CBD and THC pills to actual plant matter.
In September, the company made history with the first approved shipment of a cannabis product to Denmark. The company shipped cannabis oils overseas in a breakthrough deal with its Danish joint venture partner, STENOCARE.
"Thanks to CannTrust's consistent quality and standardized products, we are the first in Denmark to have cannabis oil products approved for the market, and we are thrilled to be able to provide Danish patients with another therapeutic option," noted Thomas S. Schnegelsberg, CEO of STENOCARE.
Emblem Corp. (OTCMKTS:EMMBF) is a leading licensed marijuana producer in Canada. With a number of cannabis-based products, Emblem works closely with the medical community to ensure both patients and physicians have the information necessary to make decisions regarding treatments involving marijuana.
Recently, Emblem completed testing on a new oral extended release product with partner Canntab Therapeutics. With the successful tests, the companies announced that they will be moving forward into clinical trials.
"Achieving this milestone marks a key step in the development of the oral extended release formulation," said President of Emblem Medical, John H. Stewart.
THC Biomed International (OTCMKTS:THCBF) operates as a licensed producer under Canada's Marihuana for Medical Purposes Regulations. It is also engaged in the research & development of the products and services to medical marijuana.
THC’s share price bounced back in November after the company announced the creation of THC2Go dispensaries – a fully owned subsidiary, focused on retail cannabis products – in the province of Manitoba.
THC Biomed’s recently announced a new THC-based beverage, aiming to appeal to a broader range of consumers. John Miller CEO explained, "THC has conducted extensive research on cannabis edibles and beverages and I have found our product to be exclusive in its category.”
OrganiGram Holdings. (OTCMKTS:OGRMF): Organigram Inc. is a licensed medical marijuana producer in Canada, while it managed to maintain its production license this year, the company saw its stock price fall somewhat Year-To-Date, but we see strong upside for this stock as the changing Canadian cannabis legislation could give a massive boost to the market.
OrganiGram Holdings is a customer-first organization with a wide variety of products from which patients can choose. The company specializes in both organic and minerally grown cannabis, and is sure to satisfy the customers’ needs.
Recently, OrganiGram entered into an agreement with Canopy Growth which includes distribution and retail services in Newfoundland and Labrador.
Emerald Health Therapeutics Inc (TSXV:EMH) is another producer and distributer of medical marijuana. Based in British Columbia, Emerald Health is fully licensed by Access to Cannabis for Medical Purposes Regulations (ACMPR) and provides high quality medicine of different varieties. The company’s approach to research is what really sets the company apart from the competition. With the incredible emphasis placed on isolating the most important qualities in each strain and creating new products for patients, it is no wonder their medicine is so popular.
Recently, Emerald Health announced a partnership with Newfoundland Labrador Liquor Corporation to supply the company with cannabis products beginning on the date of recreational marijuana legalization, October 17th.
By. Charles Kennedy
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Notice for Forward-Looking Information
Certain statements in this press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such forward-looking information includes that investor interest in the cannabis sector will continue to grow to October 17, 2018 and beyond; that cannabis use and sales will grow as currently predicted; Scythian Biosciences’ intended acquisition of various foreign companies and expansion into the US market; that the Aphria stock owned by Scythian Biosciences will retain its current value and that Scythian Biosciences can realize a profit on its sale; Scythian Biosciences’ plans to incubate projects in various locations throughout the world; that it could be granted licensable patents; that Scythian Biosciences will get an exclusive cannabis distribution license in Florida; and that it will be able to carry out its business plans.
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