Recent Purchase- Cronos Group MJN
I originally bought into Cronos Group (MJN) back in Oct 2016, and have been accumulating shares ever since. I even bought at what I thought was a dip when the price went down to 2.30, it continued to drop down to 1.75. Really should have bought during this drop but I was buying other companies as they pretty much all had this pattern. Check out my portfolio page for a list of buys. I recently bought another 5000 shares @ 2.29 just before the recent run up.
One key reason to hold Cronos is Mike Gorensteins drive to increase share holder value. All the MJ companies want to increase share holder value, but a lot of them are using dilution as a means to raise money, effectively reducing our ownership in the company. Gorenstein is using debt instead of dilution to raise capital. The less dilution there is the quicker and easier it is for the stock to rise. I have read that dilution also ends up being more expensive to the company in the long run.
Why did I buy into Cronos Group (MJN)?
Cronos was the first MJ company I came across that was diversified across a few different licensed producers.
Companies Cronos owns or are invested in.
Peace Naturals- 100% ownership.
OGBC- Original BC- 100% ownership
Whistler Medical Marijuana Company- 21% ownership ($2.7 million investment in the company)
Abcann- $3 million in shares and 900k in warrants.
Hydropothecary- $1 million investment
Evergreen Medical Supply $300,000 investment and $300,000 loan. Looks like there are legal issues with this investment as the company is going to the supreme court to prove their equity stake.
Canopy Growth- Small $300,000 investment as they sold some of their position off.
Peace Naturals is under going a 315,000 sq ft expansion. Along with a 28,000 sq ft green house which will be used for low cost production used to make oils. A 1,200 sq ft oils extraction lab is also being built. Cronos is constantly reinvesting into their existing facilities to increase efficiency and yields.
Cronos Group was one of the first MJ companies to start exporting, sending product to Germany. They sell the product through Pedanios, which is a wholesale supply to German Pharmacies. Recently Pedanios was bought by Aurora but Cronos does have a contract with Pedanios for a few more years.
Due to Aurora buying Pedanios, Cronos group entered into a supply agreement with Cannamedical. Cannamedical supplies a network of 780 pharmacies in Germany with expansion plans to reach 2,500.
Cronos has sent their first shipment to the Cayman Islands, which was also their first time shipping extracts.
Cronos had made a deal with Kibbutz Gan Shmuel. Phase 1 will be a 45,000 sq ft facility producing 5,000KG annually.
This also includes a 11,000 sq ft oils lab, 10x bigger than the one they are making for peace.
Due to the climate and cheap labor costs, it is expected their cost to product will be around .40-.50 per gram.
Phase 2 will be producing 24,000 kg annually, they don’t specify the sq ft but it must be around 250,000 since they would be producing 5x phase 1.
If out door growing can eventually be used, they can expand growth to 100,000 kg per year.
Currently Cronos group is only generating about $650,000 per quarter. Although this is a 25% increase from the previous quarter.
The company is continuing to execute and with international expansion plans under way the the revenue will come in time.
MJN is one of my core holdings with over $22k invested, about 10,000 shares held. I will be holding these shares for the long term.
Reddit Ask Me Anything with Mike Gorenstein