Small-cap weed stocks give individual cannabis stock investors a decided advantage over institutional behemoths looking to flood the market. As volatile as the pot stock market has been of late, small-cap options offer investors an opportunity to fund long-term growth while grabbing a significant share of their preferred company.
With the focus on cannabis’ significant players like Aurora Cannabis (TSX:ACB), Canopy Growth (TSX:WEED), and Aphria Inc. (TSX:APH, it can be easy for investors to feel lost in the shuffle; to feel as if the moment has passed. Here are three small-cap pot stock plays
MPX Bioceutical Corporation
With nine acquisitions in the U.S last year alone, including a recent expansion of their foothold in Arizona, MPX Bioceutical Corporation (CSE:MPX) (MPXEF) made clear in a recent investor phone call that the company can be selective with future deals. Furthermore, MPX brass has no interest in ramping up their grow-space square footage, a testosterone-fueled size competition that management rightfully argues has dwindling margins. This small-cap pot stock takes a cerebral view of the marijuana market, going after the much more lucrative capital investments in higher margin extracts.
Based in Ontario, MPX Bioceutical Corporation, with a market cap of $240 million, holds a number of U.S.-based assets. Through wholly owned subsidiaries the company provides operations and oversight assistance to two medical cannabis brands in Arizona, Health for Life dispensaries and Melting Point Extracts. They also hold assets in Ontario, Maryland, Massachusetts, and most notably Nevada, home to GreenMart of Nevada NLV, LLC a licensed cultivation, production, and wholesale business.
A smart weed stock play, MPX projects $40 million in revenue from their Arizona holdings over the next year. Current revenues are split, with around 45 percent coming from flower, 40 percent from concentrates, and 15 percent from other avenues, making this a diversified investment that should be at the top of every small-cap cannabis stock list.
In a recent statement, WeedMD Inc. (CVE:WMD) announced their investment in Snipp Interactive Inc. (CVE:SPN), which the company referred to as “global loyalty and promotions company focused on disruptive engagement platforms for consumers.” Snipp is set to become the vendor of record for WeedMD’s custom marketing solutions.
A favorite small-cap cannabis stock with a market cap of $170 million, late last year WeedMD closed a $15 million financing, followed by an additional $30 million. With that cash in hand, the company announced they would be leasing 217,000 square feet of existing greenhouse space in conjunction with a partnership with Perfect Pick Farms Ltd. to jump start capacity to 20,000 kgs per year. An option to retrofit additional space could bring that number up to 50,000 kg.
This small-cap pot stock shows vast growth potential for investors. A federally-licensed producer and distributor of medical cannabis and oils under the Access to Cannabis for Medical Purposes Regulations (ACMPR), WeedMD uniquely focuses on the senior market and assisted living homes, making them one of the smartest small-cap weed stocks on the market today.
Village Farms International, Inc.
Earlier this month Village Farms International, Inc. (TSX:VFF) (VFFIF) and their partner Emerald Health Therapeutics, Inc. (TSXV:EHT) (OTCQX:EMHTF) announced their co-owned Delta 3 greenhouse operation was issued a cultivation license by Health Canada under the Access to Cannabis for Medical Purposes Regulations ("ACMPR"). The 1.1 million square foot growing facility hopes to produce 75,000 kg of cannabis annually, an impressive number for a small cap weed stock.
A North American grower of fruits and vegetables with a market cap around $240 million, Village Farms is in the process of converting the greenhouse to cultivate cannabis. They have a unique 50/50 partnership with Emerald Health, where Village Farms brings the growing expertise to the partnership while Emerald brings the Cannabis industry compliance and licensing expertise. The profits are split down the middle, however, while Emerald may purchase product from the joint venture, Pure Sunfarms, it is not obligated to, nor is Pure Sunfarms obligated to sell to Emerald.
On the surface, this small-cap marijuana stock appears to be a long shot for investors. However, Village Farms has been in the growing sector for nearly 30 years. Their experience with fruits and vegetable makes them an ideal company to move into the cannabis cultivation market, a natural switch that could see their stock value skyrocket. According to projections, in year one the company expects around 8000 kg. Then they are looking at almost 40,000 kg in 2019 and 75,000 kg by 2020. This small-cap weed stock play is an under-the-radar, bold move for investors.
*Editors Note: An earlier version of this article implied that Emerald Health was obligated to purchase from Pure Sunfarms and vice-versa as part of the Village Farms/Emerald Health joint venture. While both companies split profits from the venture, Emerald is not obligated to purchase from Pure Sunfarms, nor is Pure Sunfarms obligated to sell to Emerald.