Extraction specialist Cannabella produces lozenges, gummies, dried fruits, honey, ghee, and olive oil, all with THC added to them. It also supplies CBD-infused gummies, breath spray, honey, and ghee, plus neuropathy salves and tinctures containing CBD.
It is based in Carson City and it was set up by Lucinda Mahoney to focus on vegan, low-sugar and gluten-free offerings within the cannabis sector. Its products are sold in approximately 50 of the 60 marijuana dispensaries operating in Nevada.
“This transaction is a positive step for us in the U.S. market,” said Mjardin chairman Adrian Montgomery, who joined the firm in February. “The addition of extraction capabilities improves MJardin’s market position and allows us to take advantage of diversifying our product portfolio by adding products such as oils and vapes to capture more of the value chain.”
The transaction is expected to close in Q3 2019 and Mjardin has ambitious plans to expand the footprint of Cannabella’s distribution.
Concentrate Sales Set to Soar
Concentrates are becoming an increasingly important category within the flourishing cannabis market as many consumers prefer to avoid the health implications of smoking. Arcview Group estimates that concentrate retail sales will hit the $8 billion mark by 2022.
The Canadian market is also set to open up for edibles in October 2019, and it is a part of the sector that producers cannot afford to ignore. Many are outsourcing extraction companies like MediPharm Labs Corp. and Westleaf, but we can also expect to see more acquisitions going forward as companies look to bring it in-house.
Denver-based Mjardin mainly offers turnkey services for smaller producers within the cannabis industry, including cultivation, processing, and retail services to smaller marijuana producers. Adding the ability to produce edibles and other concentrates is a natural extension to the services it provides.
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.
An Underperforming Stock
The plan is for Mjardin to produce 31,000kg of its own cannabis in 2020 as it becomes a producer itself and not just a turnkey provider. Its first Canadian production facility is based in Brampton, Ontario, and it claims it can yield industry leading volumes there. The target is for 340g per sq. ft. (and 190g trim) and it believes that is more than any of its peers can manage.
It also has a joint venture called AtlantiCann Medical Inc. in Nova Scotia and it reported that this facility has reached full production capacity within four months of receiving. This facility has a production capacity of 3,000kg per year.
Despite all of this activity, MJAR has significantly underperformed the sector this year. Its share price stood at C$5.25 on Dec. 31, 2018, and it opened at C$2.60 on Apr. 22, 2019, a decrease of more than 50%. That flies in the face of the overall cannabis market, as the North American marijuana index has seen large increases in 2019 and many stocks have soared.
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