An interesting trend that we have been following is related to the outdoor cultivation opportunity in Canada and this is something that we are excited about. During the last year, we have seen a significant increase the amount of demand for cannabis derivative products and this is a trend that we expect to continue. The production of outdoor cannabis in Canada will play a major role in the development of cannabis derivative products due to the low-cost nature of the outdoor operation and we find are bullish on the growth prospects associated with this.

Last month, we highlighted WeedMD Inc. (WMD.V) (WDDMF) as a company that has been laser focused on the outdoor cultivation and the cannabis concentrate opportunity. Although the Canadian cannabis producer has been nothing short of an execution story when it comes to these two verticals, the market has not associated any value with these opportunities, and this is something to be aware of.

WeedMD represents a multi-faceted growth opportunity that when compared to its peers, is trading at a massive discount on almost every metric. We find this to be significant since we are talking about a business with several major potential catalysts for growth that is due for a re-rating. Today, we have issued an update on WeedMD and believe that this is an opportunity to be watching.

Outdoor Operation Advances On-Schedule and On-Budget

Last week, WeedMD planted more than 20,000 fully-rooted cannabis plants as part of its outdoor cultivation operation at its Strathroy property. This represented a major milestone for WeedMD which became one of the first Canadian Licensed Producers (LPs) to embark on its outdoor grow operation and we find this to be significant. The company expects to have its first harvest in October and the cannabis from this harvest will play a key role in the development and sale of high-margin derivative cannabis products.

One of the reasons we have been excited about WeedMD is due to its ability to execute on-time and on budget. The company is capital efficient cannabis producer, and this is a testament to the strength of the management team. The construction of fencing, security, irrigation and other required infrastructure for the outdoor operation fell within a fully-funded $2 million budget and we expect WeedMD to quickly realize a return on this investment.

Phase I of this project includes the cultivation of cannabis on 27 acres and this will end up increasing the company’s total potential production output by an additional 27,000 kgs. When we look at the growth profile of WeedMD, the success of the outdoor cultivation operation will have a significant impact on the amount of revenue that can be generated. In 2020, the company plans to cultivate on an additional 73 acre as part of its Phase II expansion and the success of this operation could prove to be a significant catalyst for growth.

Going forward, WeedMD is well positioned to further capitalize on the Canadian cannabis market and we are favorable on its focus on the cannabis oil opportunity. The company recently announced that plans to transition its Aylmer facility into a cannabis extraction and processing hub. WeedMD plans to utilize the low-cost cannabis from the outdoor operation for the development and sale of high-margin derivative products. We are bullish on the growth prospects associated with this opportunity and believe that the market underappreciates this aspect of the business.

A De-Risked Operation with Massive Growth Potential

We expect WeedMD to recognize significant operational synergies between the indoor and outdoor cultivation facility and we are favorable on this. When you combine the opportunity associated with the increasing demand for derivative cannabis products with the large amount of low-cost premium cannabis that WeedMD’s outdoor harvest will generate, you will see that the Canadian cannabis producer is well positioned to process and market significant quantities of cannabis extracts and concentrates.

When it comes to being able to execute on this operation, WeedMD has the right team in place and we find this to be significant. Earlier this year, we visited the facility and met with WeedMD’s Chief Cannabis Officer Derek Pedro who explained how the work that the team has accomplished from a genetics standpoint has de-risked the outdoor operation. By genetically modifying cannabis strains, the company can cultivate crops that can withstand intense weather conditions. By selecting a strategic location for this operation (surrounded by a forest), WeedMD is well positioned for success and this is something to be aware of.

The work that WeedMD has completed ahead of the planting of more than 20,000 fully-rooted cannabis plants has been significant. Although the company has significantly advanced this operation, we do not believe that the market associates any value with this initiative and believe that the market is missing out on something that could be a massive value driver for the entire business.

The Outdoor Operation Could Fuel WeedMD’s Cannabis Oil Business

Another reason we are excited about WeedMD is due to the increased focus on the cannabis concentrates opportunity. Earlier, we mentioned that WeedMD announced the transition of its Aylmer facility into a cannabis extraction and processing hub. This is a development that caught our attention due to the large volume of high cannabinoid, low-cost input material that the outdoor harvest is expected to generate. The planned transition and the outdoor operation leave the company well positioned to process and market large quantities of cannabis extracts and concentrates beginning in the fourth quarter of 2019 and we will monitor how the team is able to execute on this.

The success of the outdoor operation will have a measurable impact on WeedMD’s cannabis concentrate business and is one of the most significant potential catalysts for the company. We have been bullish on the decision to convert the Aylmer facility into a cannabis concentrate producer as WeedMD plans to target domestic and international opportunities when it comes to this side of the business.

Over the next year, we expect to see WeedMD report significant revenue growth and expect the outdoor cultivation operation to be a primary driver of this growth. WeedMD recently launched its adult-use brand Color Cannabis and will introduce branded cannabis extract products later this year. Based on the demand that we have seen for the company’s cannabis flower, we expect to see significant demand for this new line of products and will monitor the launch of the Color Cannabis brand.

An Under-appreciated Growth Opportunity

With a combined indoor and outdoor production footprint of over 5.2 million sq. ft. and a projected total potential annual output of 150,000 kgs of cannabis by 2020, WeedMD is well positioned to become one of Canada’s largest cannabis producers and we believe that the market significantly underappreciates this.

Over the next year, we expect the trend toward cannabis concentrates to become even more significant especially after Health Canada legalizes the sale of cannabis derivative products for the medical and recreational market. According to BDS Analytics, the cannabis concentrate market is expected to be generating approx. $8 billion in retail sales by 2022 and this represents a massive opportunity for companies like WeedMD.

There are a number of reasons to be excited about WeedMD and we believe that this is an opportunity that is flying under the radar. When compared to its peers, the Canadian LP is trading at a massive discount and this is something that we find to be significant. WeedMD is a company with significant potential catalysts for growth and we believe that the market underappreciates this aspect of the story.

During the last year, WeedMD has significantly advanced its fundamental story and has massive growth prospects. We believe that this opportunity is long overdue for a re-rating and this is something to be monitoring. To learn more about the Canadian cannabis producer, please email support@technical420.com.

Pursuant to an agreement between StoneBridge Partners LLC and WeedMD Inc. we have been hired for a period of 180 days beginning April 22, 2019 and ending October 22, 2019 to publicly disseminate information about (WMD) including on the Website and other media including Facebook and Twitter. We are being paid $6,000 per month (WMD) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero (0) shares of (WMD), which we purchased in the open market. We plan to sell the “ZERO” shares of (WMD) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (WMD) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.