The company is aiming to make further investments at currently depressed valuations in Canadian cannabis stocks which could materially add value to the portfolio during the next twelve months.
() made significant new investments in 2019 including in existing investees WeedMe and Embark Health, whilst also adding new investments in Sequoya and Bespoke.
The company owns a portfolio of investments in the cannabis sector and aims to invest across the full range of emerging cannabis-related sectors.
MMJ’s asset manager, Embark Ventures, sources new investments to diversify the company’s cannabis portfolio whilst providing resources to actively manage its existing investments.
The company believes that the current market and industry sentiment surrounding cannabis companies has created opportunities to invest in listed and unlisted Canadian cannabis businesses at attractive valuations and prices.
In addition to opportunities to invest into new businesses in the global cannabis market in line with MMJ’s investment mandate, MMJ also holds warrants (similar to ‘options’ in Australia) and contractual rights in a number of its existing listed and unlisted investments which provide opportunities for MMJ to make follow-on investments in businesses at a discount to current valuations.
Canadian cannabis industry: challenges
Whilst MMJ continues to hold high-quality Cannabis investments, the Canadian cannabis investment market suffered a material downturn in valuation in 2019.
The industry remains in a period of transition from business establishment to producing operational cashflow. This period of transition is expected to last for the majority of 2020.
Investors are critically examining the capacity of Canadian companies to generate sales and earnings growth during the following 12 to 18 months with expectations that some companies will need to raise cash to continue the rollout of their business plans.
Share purchase plan
MMJ recently launched a share purchase plan (SPP) to raise up to $5 million through the issue of shares priced at 11 cents.
The funds raised will be primarily applied towards investment in existing and new cannabis and hemp businesses, operating expenses and general working capital.
Eligible shareholders will be able to subscribe for up to $30,000 worth of new shares until March 10.