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MCOA Report:
Marijuana Company of America Inc. (OTC: MCOA) is a cannabis marketing and distribution company that distributes medical cannabis products providing product sourcing, branding, payment, distribution and knowledge.
During February 2017, MCOA announced that it entered into a non-binding LOI while performing due diligence to finalize a joint venture agreement with Bougainville Ventures, Inc. for the purpose of housing tenant growers engaging in the cultivation, processing and commercial availability of legal marijuana in the State of Washington.
Subject to final agreement, MCOA will invest up to $1 million in JV for 50% equity ownership and share in profits. While, Bougainville Ventures, Inc. will contribute its expertise in establishing the facilities.
During 2016, MCOA launched its flagship wellness product called hempSMART Brain. It’s a CBD product combined with a bunch of branded ingredients, and it can purportedly improve brain function and brain health. Management plans to distribute its product through a Multi Level Marketing (MLM) program.
MCOA’s MLM model might have the company positioned better than other cannabis names in the industry. California, Massachusetts, Maine, and Nevada voted to legalize marijuana for recreational use, while North Dakota, Arkansas, Montana, and Florida voted for medical use. This creates plenty of opportunities for MCOA to recruit new members and sell its hempSMART brand of products.
MCOA operates in Marijuana industry that has rapidly & recently turned into a multi-billion dollar massive growth market across US and Canada with many new states legalizing it. According to a recent estimates, cannabis market crossed $6.7 billion from the U.S. alone in 2016, and that sale of cannabis are set to rise to $22.8 billion in the U.S. by 2020. Also, Combined recreational cannabis sales could total an estimated $40-$45 billion, if cannabis is legalized across the United States of America.
The company’s stock has unsurprisingly found some strength in the recent past. It has been powering due to the favorable impact of the company’s recent announcements and growing popularity & demand of the industry.
Description & about the Company:
Marijuana Company of America Inc. (OTC: MCOA) was founded in 2015 and is headquartered in Southern California. MCOA provides product sourcing, branding, payment, distribution, and knowledge base through architecture to maintain customer loyalty and capture market share. MCOA is developing a unique member-only state-by-state club operation for the purposes of better serving individuals desiring to get all the benefits of cannabis. Club members and affiliates in legal medicinal or adult use states will use its app or website to place their order for next-day delivery. MCOA’s CBD line will be available to club members in all 50 states and internationally. The company’s CEO is Donald Steinberg, who was the founder of Medical Marijuana Inc (OTCMKTS:MJNA).
Major product & divisions:
HempSMART: HempSMART brand, represents MCOA’s non-THC, hemp derived, product line. HempSMART products are formulated wit cannabinoid base that is derived from hemp. hempSMART Brain is formulated with CBD or Cannabidiol as the core ingredient combined with high quality branded ingredients to compliment the CBD to support brain health. This is a first-of-its-kind product with a synergistic blend of natural brain support ingredients, blended with water soluble CBD to provide optimal bioavailability for brain support and protection.
Club Harmoneous: It is a multi level marketing (MLM) model for Distribution of MCOA products, as a sort of run-your-own-business program. Through this, MCOA’s offers Marketing Services designed to increase membership. This is done through an affiliate referral program where members refer new member patients and earn discounts and income.
Cultivation and processing: Last month, MCOA entered into a Letter of Intent with Bougainville Ventures, Inc. for the purpose of housing tenant growers engaging in the cultivation, processing and commercial availability of legal marijuana in the State of Washington.
Recent announcements:
MCOA recently announced that it has entered into a non-binding Letter of Intent while performing due diligence to finalize a joint venture agreement with Bougainville Ventures, Inc. for the purpose of housing tenant growers engaging in the cultivation, processing and commercial availability of legal marijuana in the State of Washington
According to the release, MCOA will invest up to $1 million in cash in a newly formed entity and receive 50% equity ownership and 50% share in net profits produced by the joint venture. Bougainville Ventures, Inc. will contribute its expertise in establishing facilities related to the production, processing and management for tenant growers utilizing an I-502 Tier 3 license, with leased property, established partnerships, licensing agreements and marketing relationships.
Expected synergies:
Management confirmed that partnership would allow them to produce high quality products at the lowest possible prices, thereby benefiting their supply chain. Management is of the view that such partnerships would allow them to cultivate superior products in each state, whilst remaining within the state laws.
About Bougainville Venture Inc (JV Partner):
Bougainville Venture Inc., is in the core business of converting irrigated farmland that was traditionally used to grow marginally profitable feed crops, to greenhouse-equipped farmland used to grow luxury crops with a primary focus on marijuana. Bougainville offers fully built out turnkey solutions to licensed I-502 tenant-growers and luxury crop growers who will lease the facilities for production and processing.
Previous announcements:
Previously, MCOA also announced that it has successfully retained the services of 420 Pros, for the provision of marketing and branding services, for its hempSMART and Club Harmoneous products. Furthermore, it is expected that MCOA would attend a number of expos and trade shows across the country, in the near future, in a bid to reach a larger market.
The company also engaged a CPA firm to complete a two-year audit of its financial statements as part of the process of preparing to become a fully reporting public company with the intent of uplisting to a higher reporting exchange.
Key Stock Influences:
Some key influences that might govern future stock price performance include:
- MCOA’s distribution strategy is still at a very nascent stage. Though, the initial product is on shelves, and the program is underway. MCOA’s ability to revamp its sales strategy and to align with mainstream markets would hold the key over the near to medium term.
- MCOA’s ability to maintain its liquidity and financial flexibility to fund its incremental capital requirements. Since cannabis is still illegal at federal level, and only selective states have passed legislation to legalize cannabis for medical purposes, it is not easy for MCOA to access capital on agreeable terms. Also, any additional equity raise is exposed to significant dilution risk.
- Company’s ability to timely deliver under its signed contract for cultivation and processing.
Earnings Review:
The company is in the process of reporting its latest financials. As of September 30, 2016, the Company has generated no revenue per its financial statements.
Liquidity and Capital Resources:
At September 30, 2016, the Company’s had limited liquidity and cash reserves. From the date of inception until September 30, 2016, the Company has incurred losses of $4,782,071.
The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and ultimately to achieve profitable operations.
On Monday, March 13th, 2017, MCOA shares declined by -5.2% to $0.0540 on an average volume of 10.01 shares exchanging hands. Market capitalization is $95.70 million. The current RSI is 24.44.
In the past 52 weeks, shares of MCOA have traded as low as $0.00 and as high as $0.20.
At $0.0540, shares of MCOA are trading below their 50-day moving average (MA) at $0.07 and above their 200-day MA at $0.04.
The present support and resistance levels for the stock are at $0.0520 & $0.580 respectively.
Disclaimer
Broad Street Alerts is a wholly owned subsidiary of Small Cap Specialists LLC, herein referred to as SCS LLC.
SCS LLC has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.