Earlier this week, Tweed Marijuana Inc. (TWD) completed the acquisition of Bedrocan Cannabis Corp. (BED). The acquisition successfully combined the two largest Canadian medical marijuana producers and created a conglomerate in the Canadian medical marijuana industry.
The first priority for the newly combined company is to integrate its clients (more than 5,600 active and registered) and build on the unique strengths of each brand. Starting tomorrow, patients will have access to both product lines.
TWD records a $1 million profit in its most recent quarter
On Monday, TWD announced quarterly operating results and reported $1,011,783 in net income. The profit was primarily the result of a gain on the change in fair value of biological assets since the end of Fiscal 2015.
We expect to see incremental revenue growth due to TWD only using 12 of 30 indoor growing rooms.
Bedrocan and Tweed continue to receive license approvals
On August 27th, Bedrocan received a license amendment from Health Canada that allows them to sell up to 2,000 kilograms of medical marijuana until February 17, 2016. The company also retained its license to sell up to 240 kilograms from its second facility.
The increased capacity came a few days after Bedrocan’s production facility was fully licensed by Health Canada. These license amendments significantly expanded the company’s production capacity and reach.
In mid-August, Tweed received approval from Health Canada to begin the production of cannabis extracts in its facility in Smiths Falls, Ontario. Health Canada also approved seven climate-controlled drying rooms, a trimming room, an extraction room and a processing room.
Outlook
This has been a big week for the Canadian medical marijuana industry and we are favorable on TWD at current levels. Tweed and Bedrocan will be able to continue to grab market share in a rapidly growing industry that is in its infancy and we expect to see incremental revenue growth quarter-over-quarter.
Authored by: Michael Berger
Michael Berger is the president and founder of Technical420, an independent research firm focused specifically on the cannabis sector. He was working for the equity research department at Raymond James Financial Inc., when he recognized a need for a service that provides up-to-date research and analysis on companies that operate in the cannabis industry. Mr. Berger studied finance and economics at Florida State University and is working toward achieving his CFA charter.
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