C21 Investments (CXXI.C) to raise the equivalent of their market cap in US and global expansion fuel

One thing I love about US-focused cannabis roll-up C21 Investments (CXXI.C) is their ‘coming through’ attitude.

They’re buying up US weed assets quickly, and don’t mess around with small deals. Their Silver State deal brought in US$39m in annual revs. Not bad for a company with a $50m market cap.

Well they’re not going to be restricted by their lack of size in going for the brass ring.

C21 Investments Inc. has entered into a brokered syndicated private placement led by Industrial Alliance Securities Inc., with Canaccord Genuity Corp. and Sprott Capital Partners joining as syndicate members, for the sale of up to 45,000 units of C21 Investments at a price of $1,000 per unit for gross proceeds of a minimum of $20-million and up to a maximum of $45-million.

Holy cow, that’s a lot of coin for a company that, and I’m going to repeat myself here, has a $50m market cap.

What are they going to do with that cash?

Gold rush.

“This additional capital will accelerate our growth and expansion plans in the United States and globally,” said Robert Cheney, Chief Executive Officer of C21. “It is exciting to participate in an industry growing as rapidly as ours and with a regulatory landscape that continues to improve.”

Net proceeds from the Offering are intended to be used primarily to complete previously announced acquisitions in the United States, and to upgrade and expand the acquired businesses.

Why so much money? Why right now?

Because it’s now or never.

  • MedMen (MMEN.C) is blowing through every cent they haven’t set aside for executive bonuses, including cashing in their real estate and choosing to pay rent for the rest of their existence, just to grab another dispensary or two on their way to being the biggest dispensary chain in the US, with a $3.3b market cap.
  • Then along came Curaleaf (CURA.C), which raised $500m coming to market and has 28 dispensaries, 12 grows, and 9 processing sites across the US, good for a $3.5b market cap.
  • They’re being chased by iAnthus (IAN.C), who have grabbed MPX Bioceutical (MPX.C), and will be competing in that same race with permits for 56 locations across ten states. Said MPX CEO Scott Boyes, “The nascent U.S. cannabis market is still in a land-grab phase, and we feel that our footprint, when combined with iAnthus, provides our investors with the strongest possible exposure to this explosive marketplace.” That’s been good for a $443m market cap, which seems like good value in comparison to their comps.

C21 isn’t nearly the size of these guys, having done most of their business in Oregon and Nevada to this point, but they just announced their achievement of being the first licensed CBD producer in the Ukraine, which is a far bigger deal than you’d think.

CBD extracts and products with minimal THC (tetrahydrocannabinol) content are legal in multiple countries within the European Union. C21 will now have the ability to distribute and market its branded products across much of the EU targeting a large portion of a market with 742 million consumers.

They have the products already.

C21 Investments Inc. has entered into definitive agreements for the July 9, 2018, announced acquisition of Swell Companies Ltd. Swell is an extraction, manufacturer and distributor of THC (tetrahydrocannabinol) and CBD (cannabidiol) products. Swell has more than 50 of its branded products available in over 275 licensed retail locations across Oregon. Raw oil, encapsulates and vaporizers are distributed under its in-house brands: Dab Society Extracts and Hood Oil. The capacity of Swell’s Portland processing facility will reach up to 5,000 pounds of raw material throughput a month. This throughput will translate into 220,000 to 270,000 grams of processed high-quality oil-based extracts per month, making Swell one of the largest processing groups in Oregon.

They’ve been really quite busy.

C21 Investments (CXXI.C) buys a branded Oregon cultivator

All told, that’s not a bad set-up for future growth in a hot sector.

But it seems a little crazy when, once again…

CXXI has a $50m market cap.

Value investors should be digging deeper.

— Chris Parry

FULL DISCLOSURE: C21 is an Equity.Guru marketing client.

Too professional: Pure Global (PURE.V) and the companies discounted because they’re actually building businesses

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

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Mason
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I need to know when the OTC US version will be available to trade!!