A brave new era is underway at MJardin Group (OTC:
Founding investor Rishi Gautam had spearheaded the company as chairman and chief executive since 2014, but he is stepping aside to make way for Montgomery. Gautam will remain on the board, while Wellpoint Health executive chairman Lorne Sugarman has also been appointed as a director to further bolster the board.
Montgomery was formerly president of Tuckamore Capital Management, a firm that has interests in the energy, oil, gas, mining, construction, forestry, transportation, and logistics industries. He is a member of the New York State Bar Association and previously worked at Rogers Media Inc., where he worked in partnership with the International Olympic Committee, the NFL and FIFA, while serving as a senior advisor to the government.
MJardin: A Potted History
Montgomery joins MJardin at an interesting time for the business. It began life in Denver, the heartland of the nascent U.S. cannabis trade, back in 2014 and built up its reputation as a turnkey service provider, offering management, cultivation, processing, and retail services to smaller marijuana producers.
Since 2017 it has pivoted towards affiliated operations and invested in its most exciting customers with the intention of eventually taking them over. In November 2018, it raised C$26 million in capital and listed on the CSE after a reverse takeover of Sumtra Holdings.
At the time Gautum unveiled plans to expand into Europe, Africa, and South America via international asset partnerships, and joint venture arrangements. It is in discussions with operators on all three continents as it bids to become a global player.
It also tied up a deal worth C$38 million to purchase Toronto-based cannabis firm GrowForce Holdings Inc. to create a group with “unparalleled experience in the cultivation, processing, distribution, and retail of marijuana”.
It now has more than 450 employees and has additional offices in Toronto and Barcelona. MJardin manages 36 facilities and produces 65,000 kilos of cannabis flower per year, with ambitious plans to expand. It has just announced that by 2020 it expects to produce 31,000 kilos per year of its own cannabis.
MJardin’s North American Operations
Its strategy is to find small private companies that display potential and provide them with turnkey services, while often investing in them before ultimately becoming a partner or owner of the companies. It purchased Buddy Boy Brands in Denver for $40 million in January 2018, and then acquired Las Vegas-based GreenMart of Nevada for $22 million in August, while it has an interesting strategic partnership in Massachusetts. In Canada, it has retail, cultivation, and production operations in Alberta, Manitoba, Ontario, and Nova Scotia.
It began trading at $6.30 on the CSE on Nov. 16, 2018, just after the RTO, but then plunged 66% to $2.14 by Dec. 21. It reported its first quarterly results as a publicly traded company in November 2018, revealing that Q3 revenue increased 65.1% to $7 million, while gross margin rose from 38.7% to 56.3%, and it posted a net loss of $400,000.
A lack of strategic focus cost RTO investors, but it has started to display recovery this year. The share price increased to an annual high of $3.37 by noon Wednesday, Feb. 20, and the new appointment appears to have increased confidence in the company’s future. Its diversity and regional spread could become a strength in the future, particularly if some of its bigger projects prove to be fruitful.
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