Emerald Health Therapeutics (TSXV:EMH) (OTCQX:EMHTF) stock is falling despite a company announcement earlier that should have pleased investors. EMHTF stock is down 3.39% and selling for $1.71 USD on the OTC at present.
EMHTF Stock Falls
The Canadian cannabis producer owns 50% of a joint venture called Pure Sunfarms. The other 50% is held by Village Farms (TSX:VFF) (NASDAQ:VFF). The venture aims to produce large-scale, low-cost, and high-quality cannabis.
Earlier today, Pure Sunfarms announced that it had achieved its "full production run-rate of 75,000 kilograms of dried cannabis at its 1.1 million square foot Delta 3 greenhouse."
Hitting the mark is important for two reasons. It shows that the company can deliver on its promises, and further, that it is producing capacity that keeps up with market demand.
Dr. Avtar Dhillon, Executive Chairman and President of Emerald Health Therapeutics, says further that the production quality, cost, and yield continues to "exceed our initial goals" and that Pure Sunfarms is becoming a "tremendously valuable asset."
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The success of this venture can only contribute greatly to Emerald's growth strategy. So it's surprising that EMHTF stock isn't reflecting the news in a positive manner.
Pure Sunfarms Growth
Pure Sunfarms is only growing bigger. The company has converted another 1.1 million sq ft greenhouse (also in Delta, BC) for cannabis production and this should double its annual output to 150,000 kilograms. With this amount of yield at full capacity, the company places in the top ten in Canada in terms of production capacity.
Emerald Health Therapeutics has a market cap of only $323 million CAD. Village Farms is nearly double that size but remains a low-mid tiered player in the cannabis market comparative to its peers. For their combined size, the expected output of Pure Sunfarms is impressive, and something investors should consider when considering EMHTF stock.
Dhillon alluded to what the combined entity shows of its parent companies:
“Pure Sunfarms’ growing operation is setting the standard for large-scale low cost high quality cannabis production, which we believe serves as a strong indication of what the combined expertise of Emerald and Village Farms can accomplish.”
Thus far, Pure Sunfarms has been profitable in its first two quarters. Gross margins were bolstered by sales to provincial and private retailers. To add to its future growth, the venture is progressing into in-house extraction, which is assumedly going to be used to make cannabis-derivatives for the upcoming market to be legalized later in 2019.
Why do you think EMHTF stock is down at present? Are there other reasons?
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