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American Green Inc (OTCMKTS: ERBB) Running Northbound as Federal Bill Passes Unanimously & MJs Heat Up (Sweet Virginia & Cypress Chill Grow Facilities)

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American Green Inc (OTCMKTS: ERBB) is making a powerful run northbound taking off out of the double zeroes on Friday, a day after the Senate unanimously approved “the Cannabidiol and Marihuana Research Expansion Act” which cleared the full chamber without debate. The bill streamlines the application process for researchers who want to study the plant and encourages the FDA to develop cannabis-derived medicines. Advocates and stakeholders are eagerly awaiting the formal introduction of the Cannabis Administration & Opportunity Act (CAOA) which will decriminalize marijuana at the federal level.   

ERBB is one of the original pot stocks on the OTC, back when there were none and it has made a number of big moves whenever the sector heats up. In early 2021 when cannabis stocks got hot, ERBB skyrocketed from triple zeroes to $0.023 highs, a run we alerted early just as ERBB was taking off in December, 2020 and the stock has had similar runs in the past. Over the years ERBB has seen a tremendous transformation from a pipe dream with a nonfunctional vending machine into Company that has done many millions in revenues thanks to its successful “Sweet Virginia,” grow operation in West Phonex that continues to pump out booming harvests as seen on their YouTube channel. According to the quarterly report filed on February 12 ERBB did $565,000 in revenues for the 3 months ended, December 31, 2021 and $1.019 million for the 6 months ended December 31, 2021. ERBB has 3,847,765,733 shares outstanding out of 4.8 billion authorized. While ERBB has invested close to $5 million into their two grow facilities; Sweet Virginia and Cypress Chill, and has $440,000 in cash in the treasury they will need to seek additional funding in the future and judging by the past this will result in significant dilution to current shareholders

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American Green Inc (OTCMKTS: ERBB) operating out of Phoenix, Arizona is among the original pot stocks starting back in 2009 when ERBB became America’s second publicly-traded company in the cannabis sector. American Green now, with its more than 50,000 certified beneficial shareholders, is one of the largest (in shareholder count) in the cannabis sector.  American Green’s mission is to lead the cannabis and premium CBD industry. ERBB has seen significant growth as a Company in the cannabis space and has several new initiatives on the way. Besides the grow operations and the vending machines they are working on several cannabis apps, have a shop open on Amazon Marketplace for apparel as well as an online store front for Organic Hemp derived CBD. 

ERBB operates a 12,000 sq ft modern and very efficient grow facility in West Phoenix, Arizona called “Sweet Virginia,” that really transformed this Company from a pipe dream with a nonfunctional vending machine into Company that has done millions in revenues. Management has invested around $3 million in the space; at one point the Company won a lawsuit against the building owners who were trying to increase the rent.   

American Green recently started another grow operation in Phoenix in a 37,000 square foot facility called the Cypress Chill that has room for significant expansion. In August 2021 the Phoenix city council approved the Company’s request to utilize the space as a cannabis grow facility. Currently completing construction ERBB says the facility will be ready to start growing in early 2022. The Company also subleases a warehouse space from Vendweb, Inc where they produce the smart vending machines called the American Green Xpress as well as their other models. 

I would like to point out that a past shareholder of ERBB responded to this article and he had nothing but terrible things to say about ERBB past and management.

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ERBB

ERBB just put out news on March 21 reporting the final phase of demolition is completed at its new cannabis grow building and that its architectural team will self-certify their building plans at the “Cypress Chill,” grow operation to ensure a faster approval from the City of Phoenix.  

American Green president, David G. Gwyther said, “The strategic decisions which we have recently made by choosing to self-certify the architectural plans to speed up the completion of Cypress Chill and to install a top-of-the-line, custom-engineered, reverse osmosis water purification system manufactured by the Suez Group show that we are consistently making progress with the development of our existing warehouse into a state-of-the-art grow facility. We are extremely happy with where we are today including the completion of the inside demolition at ‘Cypress Chill.’ ” 

While the custom design of the Suez system required American Green to change its architectural plans now, it allowed them to avoid any “change fees” and the time delays it would have incurred if it waited to submit the plan changes after they were submitted to the City of Phoenix. Plan submission will occur in May and this will have little or no effect on the goal of completing final construction by the end of the year since self-certifying the plans speed up the construction process.  

We have been reporting on ERBB for many years, the stock is one of the original pot stocks from back in the day and at that time did not have much of a business as they do now. On December 6, 2020 we reported on ERBB just as the stock was moving out of the triple zeroes on its way to #$0.023 highs. Here is the intro to that article: “American Green Inc (OTCMKTS: ERBB) is making a powerful run-in recent weeks off its triple zero lows to highs near a penny. The stock has emerged as a volume leader as Arizona legalized cannabis for recreational use. American Green’s “Sweet Virginia” Cannabis Grow Operation recently surpassed $3,000,000 in total sales revenues since opening and is operating profitably. ERBB management division was given the green light to expand its current cannabis production by 300% in 2021.  The current grow management in Phoenix, at the company’s flagship operation “Sweet Virginia,” have proven successful in both profitability and in developing a well-earned reputation producing consistently high-quality cannabis in high demand. 

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Currently trading at a $16.9 million market valuation ERBB has seen a lot of growth through expansion, currently building out its 2nd grow facility and the convertible debt-based financing to pay for this growth has resulted in significant dilution. ERBB has 3,847,765,733 shares outstanding out of 4.8 billion authorized. While ERBB has invested close to $5 million into their two grow facilities; Sweet Virginia and Cypress Chill, and has $440,000 in cash in the treasury they will need to seek additional funding in the future and judging by the past this will result in significant dilution to current shareholders. ERBB is a cannabis stock to watch here, as the sector heats up and it looks like it will, ERBB has a good chance of repeating previous moves anytime cannabis stocks saw a boost of attention. Management has proven they can grow good cannabis flower at the 12,000 sq ft Sweet Virginia grow facility and they should be able to vamp up production when the new 37,000 sq ft Cypress Chill facility is operational in the coming months. Also  they should be able to dwarf the $170,00 a month they are currently bringing in from just the Sweet Virginia facility. We will be updating on ERBB on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with ERBB.

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Disclosure: we hold no position in ERBB either long or short and we have not been compensated for this article.

Emerging Markets

Lucy Scientific Discovery’s (NASDAQ: LSDI) Game-Changing Move: A Closer Look at the High Times Acquisition

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On August 8th, 2023, Lucy Scientific Discovery Inc. (NASDAQ: LSDI), a leading developer in the psychedelic drug industry, witnessed an impressive surge in its stock value, gaining approximately 25% in combined trading, including after-hours (AH) trading. The British Columbia-based company made headlines by announcing its strategic move to acquire intellectual property (IP) from the renowned cannabis publication, High Times Holding Corp. (HHC).

Additional Background:

Under this agreement, Lucy will exchange 20% of its shares and a series of payments for access to HHC’s valuable IP portfolio, which includes the rights to generate licensing and royalty income from renowned brands like High Times, 420.com, and Cannabis Cup, along with their associated domain names.

Lucy’s commitment involves making semi-annual payments to HHC over a five-year period, structured around earnings before income, taxes, depreciation, and amortization (EBITDA) generated through the acquired IP. The flexibility exists for Lucy to fulfill these payments either in cash or through stock issuance and the announcement is generating considerable interest.

Furthermore, post-acquisition, Lucy will grant High Times the opportunity to operate retail outlets and distribute THC products bearing these prestigious brands within the United States. This privilege comes in exchange for an annual license fee of $1 million, set to double to $2 million annually once federal legalization of cannabis occurs in the country.

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Leveraging the brand rights secured from HHC, Lucy aims to bolster its revenue streams by expanding and enhancing its existing 18 licensing agreements, both domestically and internationally. These arrangements encompass a wide array of consumer products and merchandise, promising to further establish Lucy’s presence in the global market. The acquisition is expected to be finalized within the coming two weeks, marking a significant strategic move for Lucy Scientific Discovery Inc.

As a result of the acquisition, High Times is now a publicly-traded entity. Lucy anticipates that this agreement will contribute over $10 million in revenue to its financial results in the upcoming year, along with $5 million in EBITDA.

Adam Levin, the Executive Chairman of HHC, expressed optimism about the deal, noting, “This transaction will create exciting new growth opportunities for the High Times brand, under the leadership of Richard Nanula, a seasoned executive with extensive experience in major consumer brands and global corporations.”

Levin also emphasized High Times’ enthusiasm in becoming a significant shareholder of Lucy Scientific Discovery. Notably, Lucy completed its initial public offering and Nasdaq listing in February, offering 1,875,000 shares at $4.00 each.

Richard Nanula, CEO of the British Columbia-based company, shared his outlook on the acquisition, stating, “Lucy expects this acquisition to rapidly generate high-margin revenue within the global cannabis sector.”

In recent developments, Lucy introduced the sleep aid product “Twilight,” which includes amanita muscaria and reishi mushrooms. Additionally, the company joined forces with Wesana Health Holdings Inc. (OTCQB: WSNAF) in March to collaborate on the development of the CBD and psilocybin-based drug SANA-013, targeting conditions such as migraines, cluster headaches, and major depressive disorder.

High Times, founded in 1974, has a rich history, featuring works by renowned writers like Truman Capote and Hunter S. Thompson. Since 1988, its Cannabis Cup has stood as the most prestigious cannabis competition globally, with notable judges including Snoop Dogg, Joe Rogan, Tommy Chong, and other prominent figures in the cannabis industry.

While Lucy’s shares showed a nearly 16% increase to reach $0.68 on the Nasdaq exchange on Friday, it is worth noting that they have experienced a decline of over 77% over the past year.

Macro Trend:

In recent times, our articles have prominently featured cannabis-related topics, reflecting the growing popularity of stocks in this sector. LSDI’s acquisition aligns perfectly with the current climate, as the cannabis industry experiences a significant surge, coinciding with the Health and Human Services (HHS) exploring the possibility of reclassifying cannabis from Schedule I to Schedule III of the Controlled Substances Act.

While many countries around the world have already moved towards decriminalization and legalization, the United States has been relatively cautious in its approach. However, the consideration of such a reclassification represents a potential historic turning point. If such a change were to materialize, it would mark a substantial shift in the regulatory landscape, potentially revitalizing cannabis as an attractive investment opportunity. The industry is already showing signs of reestablishing its market presence and could once again become a noteworthy investment option.

We will update you on LSDI when more details emerge, subscribe to Microcapdaily to follow along!

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Disclosure: We have not been compensated for this article/video. MicroCap Daily is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.

Picture by herbalhemp from Pixabay

 

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WM Technology’s (NASDAQ: MAPS) Stock Surges 91% in Mysterious Rally: What’s Behind the Boom?

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WM Technology’s (NASDAQ: MAPS) stock has exhibited remarkable growth, surging by an impressive 91% since August 16th, 2023. Intriguingly, this surge occurred in the absence of any substantial news or filings from the company, with their most recent release dating back to August 23rd, 2023. This limited information raises the question: What is driving this impressive rally? We will delve into the details below to shed light on the matter.

Cannabis Industry:

If you’ve been following our newsletter, you may have noticed our recent article spotlighting Flora Growth Corp. (NASDAQ: FLGC), along with larger players like Cronos Group Inc. (NASDAQ: CRON), and Canopy Growth Corporation (NASDAQ: CGC).

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In case you haven’t had a chance to read it, you can find the article here, featuring a dedicated section on the broader trends shaping the cannabis industry.

For those seeking a quick summary, a significant development has emerged in the cannabis landscape. A high-ranking official at the Department of Health and Human Services (HHS) has proposed moving cannabis from Schedule I to Schedule III of the Controlled Substances Act. This shift marks a historic moment and comes after a comprehensive yearlong investigation requested by President Biden.

It’s worth noting the potential implications of this change for U.S.-based, plant-touching marijuana companies. Currently, these companies are restricted from trading on major exchanges like the NYSE or NASDAQ and are relegated to smaller markets such as the OTC, or smaller Canadian markets like the TSX, CSE, or NEO.

The CEO of Trulieve Cannabis Corp. (OTC: TCNNF), Kim Rivers delves into these implications in a podcast conversation with a Twitter user known as @stock_mj. She also recommends keeping a close eye on the AdvisorShares Pure US Cannabis ETF (MSOS) as the cannabis sector garners increasing attention from investors.

Weedmap’s Earnings:

To evaluate the potential of MAPS, it’s essential to examine their recent earnings and assess the fundamentals. Here’s a brief overview of the news release.

Revenue: Amounted to $50.9 million, representing a decline compared to the same period in the prior year when it reached $58.3 million.

Net Income: Recorded at $2.0 million for the second quarter of 2023, marking a significant decrease from the previous year’s figure of $19.8 million.

Adjusted EBITDA: Showed substantial improvement, totaling $10.2 million in the second quarter of 2023, as opposed to a negative figure of $(0.6) million in the same period of the prior year.

Cash: As of June 30, 2023, the company held $24.6 million in cash, noteworthy for being entirely debt-free.

WM Technology’s Executive Chair, Doug Francis, underscored the company’s dedication to reinforcing its financial position and delivering sustained growth.

Guidance for the third quarter of 2023:

Revenue: An estimated $47 million.

Non-GAAP Adjusted EBITDA: Approximately $4 million.

It’s important to note that these projections are subject to potential variations based on various factors and developments.

Furthermore, WM Technology announced the transition to Moss Adams LLP as its new independent registered public accounting firm, effective upon the filing of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, following the resignation of Baker Tilly US, LLP due to staffing constraints.

Although the company maintains a debt-free status, it’s crucial to recognize that there has been a substantial decline in both revenue and net income. Consequently, it is advisable to exercise caution when considering investment, as the current trajectory of their top-line figures does not exhibit a positive trend.

https://twitter.com/5teelersfan/status/1699102436672299134?s=20

Weedmap’s Strategic Partnership:

Furthermore, the company made another recent announcement regarding its strategic partnership with the producer of “The Freak Brothers,” a celebrated stoner comic series that has captivated audiences for over five decades.

The series follows the adventures of three stoner characters and their cat, who awaken from a 50-year slumber induced by a magical strain of weed in 1969, now navigating life in contemporary San Francisco.

Key highlights of this partnership include in-episode Weedmaps integrations in the upcoming second half of “Freak Brothers” season two, commencing on September 24th. Additionally, exclusive “Smoke & Screen” events will be held across the U.S., bringing together influential figures from both the cannabis and entertainment industries.

“The Freak Brothers” series, based on Gilbert Shelton’s cult classic comic, celebrates its 55th anniversary with a star-studded voice cast for Season 2, featuring Woody Harrelson, John Goodman, Pete Davidson, Tiffany Haddish, Adam Devine, Blake Anderson, Andrea Savage, La La Anthony, ScHoolboy Q, and a special guest appearance by Joe Sikora.

To watch Season 2 of “The Freak Brothers,” visit Tubitv.com, and for cannabis-related information, explore Weedmaps.com. For more on “The Freak Brothers,” visit the official website at www.thefreakbrothers.com.

We will update you on MAPS when more details emerge, subscribe to Microcapdaily to follow along!

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Disclosure: We have not been compensated for this article/video. MicroCap Daily is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.

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Cannabis Industry Surges: Flora Growth Corp. (NASDAQ: FLGC) Leads the Way with 77% Intraday Jump

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Flora Growth Corp. (NASDAQ: FLGC) experienced a remarkable intraday surge of over 77%. While the company has made significant announcements recently, today’s surge occurred without any specific filings or press releases to explain it. There seems to be something substantial driving this trading frenzy, a broader force impacting the entire asset class.

It’s worth noting that established industry leaders like Canopy Growth Corporation (NASDAQ: CGC) and Cronos Group Inc. (NASDAQ: CRON) have faced significant downtrends in past years. However, today’s market activity also lifted their stocks along with others. To understand this trend, let’s take a closer look at the larger market dynamics at play.

 

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What Happened:

A top official at the Department of Health and Human Services (HHS) has recommended moving cannabis from Schedule I to Schedule III of the Controlled Substances Act, marking a historic shift. This move follows a comprehensive yearlong investigation requested by President Biden.

https://twitter.com/NotFinancialRep/status/1697189406665245149?s=20

In the short term, this won’t significantly impact the cannabis industry, as the Drug Enforcement Agency (DEA) needs to conduct its own review and the federal prohibition on marijuana remains. However, the HHS recommendation, if followed by the DEA, could happen within a year, possibly before the 2024 presidential election.

Long-term implications for the cannabis industry are uncertain, but a key immediate effect would be the elimination of Section 280e of the IRS tax code for cannabis businesses. This provision currently prevents them from claiming standard business deductions, a major financial burden.

While rescheduling won’t directly open up access to institutional banking, it may attract new capital sources due to reduced risk perception among investors. Smaller banks and lenders might become more willing to engage.

Eliminating 280e could also stimulate lending in an industry with high borrowing costs, as companies would have improved cash flow. This might lead to lower interest rates and greater access to operating and expansion capital.

Rescheduling could benefit publicly traded cannabis companies, potentially enticing more exchanges, like the Toronto Stock Exchange, to accept U.S.-based cannabis businesses. It could also encourage Congress to take further action, such as passing the SAFE Banking Act and broader reforms.

Overall, while the exact implications of rescheduling are uncertain, the HHS announcement signals progress toward a post-prohibition reality for the cannabis industry, which is a significant development.

https://twitter.com/S_Andreoni/status/1697289527180562880?s=20

Having set the stage with the broader cannabis industry context, let’s delve into Flora Growth’s recent developments and their implications for the company’s future. Is Flora Growth strategically positioned to leverage the potential easing of restrictions in the cannabis sector?

European Expansion:

Flora Growth just formed a partnership with TruHC Pharma GmbH, a leading medical cannabis expert based in Hamburg, Germany. TruHC holds key certifications for importing, distributing, and manufacturing medical cannabis and is awaiting an EU-GMP license for its cutting-edge cannabis laboratory.

Hendrik Knopp, a respected legal professional and entrepreneur, and his team from TruHC are joining Flora, bringing their extensive expertise in pioneering medical cannabis in Germany. This partnership is seen as very valuable, especially as Germany and the European Union move towards making medical cannabis more accessible to patients.

Clifford Starke, CEO of Flora, expressed excitement about the collaboration, recognizing the potential to contribute to the growth of the medical cannabis industry as regulations evolve. The partnership aims to capture a significant market share in Germany.

Hulk Hogan Partnership:

Flora Growth also just recently entered an exclusive worldwide partnership with WWE legend Hulk Hogan to launch a range of consumer products through Just Brands. These products will include CBD-infused items like pre-rolls, topicals, edibles, and more, which Flora will produce and sell globally. The partnership aims to capitalize on Hulk Hogan’s iconic status and Flora’s global distribution network. The initial agreement is for three years, with potential renewals, targeting $20 million in sales over the first 24 months. Flora will pay royalties and license fees for Hulk Hogan-branded products.

Conclusion:

In summary, the cannabis industry appears ready for a resurgence, buoyed by renewed investor optimism and shifting market dynamics. Our focus today was Flora Growth Corp. (NASDAQ: FLGC) but larger names like Canopy Growth Corporation (NASDAQ: CGC) and Cronos Group Inc. (NASDAQ: CRON) are among the many companies benefitting from this positive trend.

We will update you on FLGC when more details emerge, subscribe to Microcapdaily to follow along!

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Disclosure: We have not been compensated for this article/video. MicroCap Daily is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.

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