WeedMD stock is soaring on Monday after the company announced it had completed its acquisition of Toronto-based medicinal cannabis firm Starseed Holdings, as well as reporting its third-quarter financial results.
WeedMD (TSXV:WMD) (OTCQX:WDDMF) will pay approximately $78 million CAD for the private pot producer, while Starseed’s major backer, the Labourers’ Pension Fund of Central and Eastern Canada, will make a concurrent $25 million CAD equity investment directly into WeedMD. While Starseed doesn’t actually cultivate any cannabis, it has reached an agreement to supply medicinal pot to the LiUNA, Canada’s largest construction union. With over 100,000 members, access to this partnership is pivotal to the gains in WeedMD stock today.
For the three months ended September 30, 2019, WeedMD Inc recorded net revenue of $6.7 million USD, up 232% from the same period in 2018. Between September 23 and November 4, WeedMD finished its inaugural harvest at its 27-acre outdoor cannabis facility. The harvest is expected to yield a dry weight of over eight tonnes at a cost of approximately $0.16 per gram. With one of the lowest costs per gram in the industry, WeedMD stock is currently gaining over 10%.
WeedMD Stock Looks to 2.0 Market
“With the outdoor harvest now complete, we’ve achieved a significant milestone. WeedMD now has a significant amount of cannabis that we intend to bring to market over the current and coming quarters as both dried flower and in various value-added formats,” said Keith Merker, CEO of WeedMD, adding that, “we are well-positioned to emerge as a leader in the production and sale of extracts.” Cannabis extracts will go to market later this month, and the launch of 2.0 products could be a major catalyst for growth for WeedMD stock.
WeedMD stock’s movement has been difficult to pin down in 2019. For the most part, the Ontario-based producer was able to avoid the worst of the industry headwinds that many other cannabis companies suffered from. Despite losing about 20% of its share value since the beginning of the year, WeedMD Inc remains one of the lowest-cost producers on the market and is well placed to take advantage of the medicinal market with its takeover of Starseed Holdings.
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