Cronos Group Inc. (Nasdaq: CRON) has been my No. 1 pot stock for months now…
And now that Canada’s Bill C-45, the Cannabis Act, has been ratified officially, the profit potential is about to go absolutely nuclear.
This act legalizes medicinal and recreational marijuana throughout Canada – the first G7 country to do so. It’s on track to be implemented fully by October.
And, practically overnight, a $400 million market will become a $22 BILLION dollar market, according to Deloitte.
Now, I don’t need to sell you on the marijuana investment opportunity. It’s massive and it’s well past the tipping point. This thing’s unstoppable.
But I do want to remind you why, out of several HUNDRED possible ways to invest, Cronos got my endorsement – and show you the three data points that just blew my mind when I saw them charted out (below).
1. Nasdaq Uplisting Got Serious Attention
First, it earned the distinction of becoming the first Nasdaq-listed pot company earlier this year – a big deal for institutional buyers. Mutual funds and index funds often won’t – or, due to bylaws, cannot – own stocks under $5. The Nasdaq listing was a big vote of confidence. According to the most recent 13-F filing, it worked.
Fifty-eight new institutions snapped up a total of 17 million shares (or about 10% of total) since its listing. Names like Morgan Stanley, Deutsche, Royal Bank of Canada, Credit Suisse. And get this – not one of these big buyers has found reason to sell a single share.
2. This Growing List of Lucrative Global Partnerships
Second, Cronos is lining up partnerships around the world like there’s no tomorrow.
- It “Owns” the German Pharmaceutical Circuit: Cronos already has an exclusive five-year supply agreement through G. Pohl-Boskamp to its 12,000 pharmacies across Germany – currently the largest legal cannabis market in the world. This company has been around since 1835 and is a major force in Europe.
- Just Announced: Taking Peace Naturals to Poland: On June 25, Cronos confirmed a five-year exclusive with Delfarma, which distributes directly to 5,000 pharmacies and 200 hospitals in Poland, reaching approximately 40% of the Polish domestic market.
- MedMen Canada: They’ve joined forces with the largest retail cannabis chain in California, called MedMen, to open stores and launch co-branded products across Canada. This looks like a very keen move. Speed is key, now that Canada has fired the starting pistol, and Cronos is all set up to leverage the experience and know-how of someone who’s just pulled it off.
- Cronos Israel: It’s solidified a joint venture with an established Israeli agri-collective to produce and distribute medical cannabis. The climate there is favorable, the workforce is skilled… and its partner already exports to 35 countries in Europe and Asia.
- Cronos Australia: They own a 50% interest in a Down Under JV, and all manufacturing licenses are now in place.
Besides making friends in all the right places, Cronos is gobbling up with strategic acquisitions. It owns 100% of Peace Naturals and Original BC, as well as 21.5% of Whistler Medical Marijuana Co. (WMMC), a British Columbia-based grower and vendor that prides itself on organic production. Whistler also sells live plants and “strain starter kits” for $750 each.
Additionally, Cronos owns 6% of ABcann Global Corp. (OTC: ABCCF), a medical-grade grower in Ontario, and 2% of Hydropothecary Corp. (OTC: HYYDF), which remains the ONLY firm authorized to produce cannabis in the province of Quebec. Monopoly is a beautiful thing.
3. This Chart – Production Capacity to Explode 609% in the Next Six Months
Finally… and why is no one talking about this??
Cronos has been steadily adding new production capacity over the years and has done well. Currently they have three major facilities online (in blue below) with an annual output of 6,650 kilos.
But as early as Q1/2019… they’re getting ready to flip the switch on THREE new producing projects.
Peace Naturals Building 4: A state-of-the-art 286,000 sq. ft. production facility in Stanyer, Ontario, capable of a ridiculous 33,500 kilos annually. It’s expected to be the largest purpose-built indoor cannabis production facility in the world. Here’s an aerial view of the facility taken in March and posted on Peace Naturals’ Twitter account:
Cronos Israel: It might seem strange, but Israel actually has the perfect climate, good infrastructure, and a skilled labor force of 1,000 community members. The partnership with Kibbutz Gan Shmuel includes a 45,000-sq.-ft. greenhouse that will produce up to 5,000 kilos each year. And that’s just Phase I… longer-term, Cronos Israel has the space (4,939 acres) to take production capacity to 24,000 kilos. We don’t have a firm timeline on that. We only know that they intend to break ground in September 2018.
Cronos Australia: Construction is underway for a 20,000-sq.-ft. indoor facility capable of producing 2,000 kg every year. The JV encompasses a 120-acre campus in Victoria.
Now here’s what nobody’s done just yet…
I took the most recent production data and charted out the projected production capacity that’s being added, as confirmed by Cronos. Now, I don’t have all the information, especially on exact dates. Cronos is playing this close to the vest. But clearly a picture emerges of a company that will stop at nothing to dominate this burgeoning industry and has the proven execution skills to pull it off.
Stay tuned for updates as I track this story for you.