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Cannbis Stocks Big Market, Big Risks

Continuing the discussion from Tuesday July 25th at 11am MDT - Ask Me Anything with Rick from AllGreen:

Nicholas brought up a question and an article I would like to discuss.

One thing with Cannabis stock that is crazy to me is the market value of these companies when they are currently in debt. The author of this article put it well…

Marijuana legalization might have you thinking it makes sense to buy marijuana stocks as an investment. However, the marijuana market is only beginning to develop, and most marijuana stocks that can be bought on stock exchanges aren’t earning a dime in profit yet.

First off, we will be earning profits before we hit the NYSE. We are earning profits on sales right now. Second, most of these cannabis stocks are dilutive to their share holders. Meaning “reduction in the ownership percentage of a share of stock caused by the issuance of new shares. Dilution can also occur when holders of stock options, such as company employees, or holders of other optionable securities exercise their options.” An example of this would be Cannabis wheaton, we got some literature on some of the deals they made and they are in excess of over 15 million a piece. Meaning they will have to continuously dilute the value of their shares to pre-purchase Cannabis that will have constant pricing issues as a commodity.

I completely agree with the author of the article…

“While many marijuana stocks have rallied sharply on the potential to profit from marijuana, the reality is that there are thousands of businesses elbowing each other for market share, and only a few of those companies trade on market exchanges.Instead, most are bootstrapped by family or venture capital, or they trade on risky, unregulated over-the-counter stock markets. Stocks available on over-the-counter markets don’t have to meet the strict regulatory requirements associated with major stock exchanges, including the New York Stock Exchange, and therefore, they’re ripe for fraud.”

I also believe that there is a lot of market distortion caused by government mandates.

I believe we are different… and apparently… so do main stream legitimate, knowledgeable investors. We raised a significant amount of money and had great success this past weekend within a main stream event called Freedomfest. These guys are privy to the risks involved with Cannabis stocks, and to be frank are not involved with any of them except now, us. I think it is a great indicator to the solidity of our plans.

I promise you we meet the requirements and will be on both the NYSE as well as the TSE in Canada. We don’t touch the product, when it comes down to it we aren’t a Cannabis business on paper. Even though we will have bags of cannabis with our logo on it, issue equity for advertising, sell product directed at Cannabis cultivation, and have tight relationships/shareholders within the community, all attorneys agree our plans are out of reach for any legal repercussion.

Our model is anti-dilutive Meaning of Anti-dilutive – “is a term describing the effects of securities retirement, securities conversion or corporate actions (such as acquisitions made through the issuance of common stock or other securities) on earnings per common share (EPS), where EPS is increased for shareholders. A transaction is considered to be antidilutive if its effect is to increase the amount of EPS, either by lowering the share count or increasing earnings”

We are considered a Product Royalty Plus Company

The main difference between a streaming company and royalty company is that a royalty is paid in cash as a percentage of revenue, while a stream involves the actual delivery of a physical commodity to the holder of the streaming agreement. It allows us to be involved without ever touching the product. This finance model has also been called a volumetric production payment transaction and originated in the oil industry.

Many of the oil and gas, or mining companies, have a fixed set of assets. Since they don’t grow the asset base, they tend to pay higher dividends, but decline in value over time, as it is a wasting asset. Arguably the most popular have been those in the precious metals sector, providing financing for mining companies in the form of an upfront cash payment in exchange for a percentage of production or revenues from the mine and reinvesting a portion of profits so they continue to grow. We are open to doing this right now, for maybe one or two business up to 150k each.

The first (and only to our knowledge) public company to apply this successful business model to agriculture is Input Capital Corp (INPLF) in Canada. Input Capital enters into canola streaming contracts with canola farmers in Western Canada. Pursuant to the streaming contract, Input purchases a fixed portion of the canola produced, at a fixed price, for the duration of the term of the contract. Input is a non-operating farming company with a portfolio of over 100 canola streams. They have an average P/E ratio of 40 (business is seasonal so it is difficult to calculate) I expect our P/E ratio to be much higher. Which is why it makes sense for established growers to try our product and sign with us. The Company will be going public as soon as possible. Let’s assume it will have a price-earnings (P/E) or Free Cash Flow (FCF) ratio of 30 to 1. If so, for every $1 paid by the growers, the value of Company stock should theoretically increase by $15 (P/E of 30 x $0.50 in earnings).

The Company believes the royalty model is superior, whereby they capture the upside and avoid the downside (most of the time) of operating companies and commodity handling. These companies are good comparisons for URB Sciences.

This article also mentioned a well known cannabis spokesperson. While its not official yet, through mutual contacts…the same ones the got us the committed Aurora trial…we could be having that individual and the network he is associated with highly involved with our campaign coming soon.

With our current website, labeling, and complete lack of market presence I understand all of this is sketchy at best. All of these “issues” are going to rapidly change very soon. As I said many times over, I am not here to fuck people over. I like this forum and what it stands for and genuinely believe I am offering an opportunity to everyone involved. There will be a day when everyone says… I remember that guy on growersnetwork. Our product provides a sustainable solution to 90% of the growers out there. It works, the results speak for themselves and as we collect further testimony the customers will too. Our business model provides extremely low risk opportunity for our customers to be owners and to “grow higher” with us.

Whether you want to use our product, advertise our product, or both…get in touch. Trying our product is free right now, so that is as “low risk” as it gets. Reach out if you want to know more about our stocks.

Thanks again for your time,

Cody

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That is a great way to look at the investment model. Depending on the age of the investor I could see buying into the market.

Remember, Microsoft was not a sure thing at its IPO. Also, a company like Borland was a dog in the long term. So a diversified portfolio based on your risk position is a good bet

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I wonder if cannabis production will ever mature enough in my lifetime to see the need for a cooperative production model. Like we see in small farm production?

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If you are referencing Driscoll’s or Chiquita then yes I think you will absolutely see that model :wink:

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I now have to clean my screen. I just laughed all over it!

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