Why is iAnthus (IAN.C) stock going ballistic in a shitty weed market?

06/21/2018

According to a 118-year old “Glossary of Botanical Terms”, Anthus is a “cluster of flowers at the end of a long stalk”.

iAnthus (IAN.C) is a U.S-focussed weed company that has spent the last 12-months transitioning to owner/operator status in the American regulated cannabis sector.

IAN has sprouted six flowers.

In New York, Florida, Massachusetts, and Vermont, iAnthus “holds licenses to operate four cultivation and processing facilities and 34 dispensaries, it also has weed operations in Colorado and New Mexico.

The CEO of iAnthus, Hadley Ford is a banking/operations/healthcare-innovator.

Ford grew a network of cancer treatment centers to $100 million in annual revenue.  He also spent 14 years on Wall Street, where he completed “over 150 transactions worth billions of dollars.”

Here’s what else Ford can do:  perfectly articulate the vision of his company.

A small detail?

Maybe.

There are successful companies with CEOs that have Tourette Syndrome (Elon Musk – TSLA.NASDAQ).  But when the CEO listens to shareholders – and delivers intelligent, substantive answers (rebuttals or agreements) – it’s a big plus.

In our opinion, the CEO’s communication skills (or lack of) is one of the most over-looked risk factors in small-cap stocks.

If you want an example of Ford’s skill in this arena, listen to him square up to shareholders at the 1:56 minute mark of this podcast.

“You said our balance sheet was too hard to understand,” stated Ford on the podcast, “So we made our balance sheet more understandable. We got rid of convoluted ownership structures and pioneered new ways to show 100% ownership of our operations in key states.

You said you were worried about our ability to fund our licenses, so we raised more money both publicly and privately culminating in our recent $50 million raise, the largest ever investment by one investor into a public cannabis company…etc”.

Writers are prone to over-value lucid communication.  If Ford had consumed 11 glasses of Peppermint Schnapps, stumbled up to the microphone and recited The Quran in Czechoslovakian – it might’ve had the same effect.

But one thing is for sure:  iAnthus is performing like a champ in weak weed market.

It raises the question:  what is this stock going to do when President Trump decides to piss Jeff Sessions off by legalising weed at the federal level?

Ford recently provided a detailed summary of the company’s current activities and Q1, 2018 financial performance.

iAnthus Q1, 2018 Financial Highlights:

  • $3.2 million of revenues in Q1 2018, compared to $300,000 in Q1 2017.
  • Net loss $0.01 per share, compared to Q1, 2017 loss of .07.
  • Assets increased to $124.0 million at March 31, 2018 from $45.8 million at December 31, 2017 – due to the acquisitions of Citiva and GrowHealthy
  • Received $5.1 million from The Green Solution, LLC

iAnthus New Developments:

On May 14, 2018, received a $50 million investment from Gotham Green Partners. Net cash proceeds were approximately $46 million after deducting various fees and structuring costs.

IAnthus 6-State Business Update:

Massachusetts – Mayflower Medicinals Highlights:

  • Began operations at its 36,000 square-foot Holliston cultivation and processing facility, with annual production capacity of 2,625 kg.
  • Early 2018, planted clones, first harvest on April 20, 2018;
  • At the close of Q1 2018, Mayflower was cultivating 2,670 plants, representing 15 different strains.
  • Mayflower’s flagship Boston dispensary received the Approval to Sell, and is expected to open in the summer of 2018
  • Two more dispensaries in the pipe-line (subject to approvals)
    Massachusetts recreational cannabis program is targeted to begin in Q3 2018.

Florida – GrowHealthy Highlights:

  • More than 25,000 square-feet of the cultivation and processing facility in Lake Wales has been built-out
  • Cultivation facility houses over 2,400 plants representing 70 different strains. The gain on transformation of biological assets totaled $2.4 million, compared to $Nil for Q1 2017
  • Signed leases for dispensary locations in West Palm Beach, Orlando, Tampa Bay, and Deerfield Beach, representing total retail space of 13,500 square feet.
  • Judge Gievers of the Florida Circuit Court in Leon County ruled that Florida’s current ban on smokable medical marijuana is unconstitutional.

New York – Citiva Highlights:

    • Acquired 8.5 acres of land in Warwick, NY for the planned 39,500 square-foot modular cultivation and processing facility
    • Anticipated 2,200 kg of annual production
    • Signed a lease on a 2,000 square-foot dispensary in Brooklyn, located in the high-traffic area directly across from Barclays Center.
    • Only three competitors operating within Brooklyn (pop. 2.6 million)
    • Lease negotiations begun for dispensaries in Staten Island, Dutchess County, and Chemung County

(combined pop. 860,000)

Vermont – Grassroots Vermont Highlights:

  • Facility-wide upgrade took 50% of the cultivation capacity going offline.
  • Temporarily reduced cultivation capacity caused Q1 2018 revenue to decrease 4%.
  • Upgrades improved processing facilities, and additional grow space.
  • A gain on transformation of biological assets of $150,696 for the period, compared to $Nil for the comparable period in 2017
  • Executed lease for a second dispensary location in Williston, VT, pending state approval.

Colorado – Organix Highlights:

  • Revenue in Q1 2018 totaled $1.5 million, representing a 17% increase from 2017.
  • Achieved record sales of approximately $0.6 million in the month of March 2018; and

Note: state regulations prevent iAnthus from consolidating the financial results of Organix. This could change in the future.

New Mexico – Reynold Greenleaf & Associates (RGA) Highlights:

  • Q1 2018 revenue totaled $3.2 million, representing a 32% increase from the comparable period in 2017
  • Invested $2.3 million to-date – owning 24.6% of RGA.

There’s a lot to unpack there.  If you like, you can read the whole 52 page management discussion.

You want it simplified?

Let’s check Twitter!

Why – here’s our own Chris Parry’s May 31, 2018 tweet on IAN.C:

iAnthus, like its namesake – has grown a cluster of fast-growing businesses at the end of a robust capital investment stalk.

The company is trading at $7.30 with a market cap of $357 million.

Full Disclosure:  iAnthus is a new Equity Guru marketing client, and we own stock.

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