This cannabis retailer continues to add assets by acquisition as it secures additional licenses. It now operates in 18 states and territories. It’s likely that the movement towards legalizing cannabis will continue in the U.S.—and that’s a major plus for this stock.
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HARVEST HEALTH & RECREATION INC., $7.28, symbol HARV on the Canadian Securities Exchange (Shares outstanding: 94.4 million; Market cap: $687.2 million; TSI Cannabis Quality Rating (CQR): ; www.harvestinc.com), is a U.S.-based owner of medical cannabis licenses and assets in 18 states and territories, including California, Colorado, Florida, Maryland, Arizona and Massachusetts. The company grows, processes and sells cannabis for both medical and recreational use.
The Canadian Securities Exchange (CSE), formerly the Canadian National Stock Exchange (CNSX), is one of our country’s alternative stock exchanges.
The CSE lets U.S. cannabis companies with U.S. operations list and trade on its exchange. However, the TSX (Canada’s largest stock exchange) doesn’t accept U.S. cannabis firms for trading, because of U.S. federal law against cannabis production and use.
You can trade Canadian Securities Exchange stocks through your broker. You can also get stock quotes at www.thecse.com.
Arizona-based Harvest began trading on the CSE as a public company on November 15, 2018. That’s after it closed a reverse takeover of CSE-listed RockBridge Resources Inc. As part of the transaction, the company raised $218.1 million U.S. through the sale of 33.3 million shares at $6.55 U.S. each.
In the three months ended March 31, 2019, Harvest’s revenue jumped 130.8%, to $19.2 million from $8.3 million. (All figures except share price and market cap in U.S. dollars.) The company lost $20.0 million in the latest quarter, compared to a profit of $1.2 million a year earlier. Most of the year-earlier profit was due to inventory adjustments.
In June 2019, Harvest opened its third, fourth and fifth Florida medical marijuana dispensaries. Harvest holds licenses in Florida for up to 35 medical dispensaries, one cultivation facility, one manufacturing facility, and has operational dispensaries in the Orlando and Tallahassee markets.
In July 2019, Harvest acquired Phoenix-based Urban Greenhouse. That company operates a medical cannabis dispensary and cultivation facility. The dispensary will be transitioned to operate under Harvest’s House of Cannabis stores. It adds to Harvest’s presence in the Arizona market, which not comprises a total of 13 dispensaries and cultivation and manufacturing facilities in the state. Pending acquisitions will add an additional six. Most recently in Arizona, Harvest acquired the right to operate a dispensary in Casa Grande, opened Glendale’s first medical dispensary, and announced the pending acquisition of control of six licenses from Devine Hunter, Inc.
Also in July 2019, Utah’s Department of Agriculture and Food issued Harvest of Utah a notice of intent to award a medical cultivation license. The selection process rewarded only eight of 81 applicants supporting Utah’s newly approved medical cannabis program
Harvest is now close to completing the purchase of Verano Holdings LLC for $850 million U.S. in Harvest shares. The acquisition includes operations in 11 states and territories, including seven cultivation licenses, and 37 retail licenses; ethanol extraction technology at pharmaceutical grade levels; providing new market opportunities for cannabis biotech, food and beverage verticals; a premium portfolio of proprietary strains and precisely dosed products; plus a newly developed headquarters in Chicago that will serve as a new hub of operations for Harvest’s operations east of the Mississippi River.
The November 2018 U.S. Midterm Elections saw the Democrats take control of the U.S. House of Representatives. As well, Michigan voted to legalize recreational use of cannabis, while Utah and Missouri legalized it for medical use. (A recreational measure in North Dakota failed, though medical cannabis remains legal there.)
Those states join 31 others plus Washington D.C. that have already legalized medical use, including the 11 states plus Washington D.C. that have also embraced recreational consumption.
The Midterms produced another potential catalyst for marijuana legalization. After the election, U.S. President Donald Trump effectively fired Attorney General Jeff Sessions—a fierce long-time opponent of marijuana legalization.
During his contentious time in office, Sessions rescinded the Obama-era decision to forego enforcement of the federal cannabis ban in states that have legalized marijuana use and have implemented regulations to control it.
Whatever stance Trump’s new attorney general takes, it’s likely that the movement towards legalizing cannabis nationally in the U.S. will continue—driven by public opinion, demand from patients, and the industry’s experts and advocates.
The continued expansion of the U.S. market will be a big plus for producers and sellers like Harvest.
Harvest Health & Recreation has a 3-Leaf Cannabis Quality Rating (CQR). The stock is a speculative buy for aggressive investors who want exposure to the marijuana industry.
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