NEW AGE FARM INC COM NPV (OTCMKTS:NWGFF) is an interesting player in the Canadian cannabis space. We recently put together a piece on a major cultivator in Canada that we felt might suffer because of declining cannabis prices as it becomes a broader, more established commodity market. New Age is interesting because it has a model that immunizes it against the pitfalls of the decline in pot prices to the extent that the trend is fueled by excitement and enthusiasm among new cannabis cultivators.
This is because the company profits not from selling cannabis but from owning and operating state-of-the-art cannabis growing facilities for rent by those who want to cultivate and sell cannabis. Hence, for this company, the key is about the demand to get into the cannabis game. And since we are talking about Canada, it’s likely safe to assume that’s a growth market. Why? Because, as we have discussed frequently in recent months, Canada is likely to fully legalize marijuana for recreational use nationwide sometime in 2017.
NEW AGE FARM INC COM NPV (OTCMKTS:NWGFF) promulgates itself as an innovative land bank and land development company that provides completely turnkey bespoke farming services to growers of high intensity, high yield crops.
All tenant-growers enjoy a fully custom built operation, at no cost to them. All they have to do is show up, flip the switch, plant their seeds and they are in business.
So, the big key here is this: If you want to be a pot grower, but you don’t want to spend huge time and money getting together a true professional grade set of resources (greenhouse, growing equipment, master grower and staff, lights, heaters, soil testing, etc, etc, etc), then you can just rent out some space at a New Age Farm campus and get started right now.
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As we see it, the company is positioned to take advantage of distribution trends in Canada and the US, with strong geographic placement to host clients looking to deliver to Washington, Oregon, and California, the largest growth markets in the world for cannabis consumption at present.
It owns and rents a 5.5 acre agricultural property with a 48,000 square feet of greenhouse capacity and 80,000 cubic yards of saleable peat soil located in the Langley, British Columbia; and intends to build and rent turnkey facilities for growing and processing of recreational marijuana products at the Sumas Green campus located in Whatcom County, Washington, as well as the Oroville property located in Oroville, Washington.
NWGFF also just announced the addition of a 21,000 square foot greenhouse to its Washington state cannabis facilities.
By adding these two structures, totaling 45,000 square feet, to the existing 5,600 square foot state of the art facility completed in 2016Q4, New Age Farm’s Tier 2 and Tier 3 tenant-growers will be able to grow at full, 100% allowable I-502 capacity, year-round.
The entire 45,000 square feet of greenhouse structure combines Cravo, Nexus and Hired Hand Green components for state of the art capabilities and 14 foot high trusses provide an ideal environment for growing large plants.
The company’s other big announcement is that it has entered into a letter of agreement with a local contractor to begin site preparation work on its Langley facility for the future build out of the planned processing, cold storage, and dry storage warehouse. Under the terms of the LOA, the Contractor will bulk excavate up to 65,000 cubic yards of peat from designated areas, screen it on site and backfill all excavated peat areas with structural fill to support the footprint of the Warehouse. The Contractor estimates approximately 7,900 truckloads of material will be handled at an average cost of $250 per truckload.
Traders will note about 11% tacked on to share prices for the name since its early March pivot low. Furthermore, the listing has seen interest climb, with an increase in recent trading volume of nearly 150% above the average volume levels in play in this stock over the longer term.
Currently trading at a market capitalization of $6.3M, NWGFF has virtually no cash on the books, which must be weighed relative to over $2M in total current liabilities. The company has put together nominal revenues at this point, but may be poised for bigger things as the Canadian cannabis market heads toward full legalization. We will look forward to updating this story again soon. For continuing coverage on shares of $NWGFF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!