North American Cannabis Holdings, Inc. (USMJ) and Puration, Inc. (PURA) entered into a long-term business relationship last year surrounding the development of certain cannabis consumer products.
USMJ, through it’s subsidiary the American Seed and Oil Company, conducts ongoing pilot projects trialing various cannabis sector enterprises for commercialization viability.
USMJ is currently working to commercialize one of its pilot projects into a nationwide chain of retail cannabis cafes under the brand name AmeriCanna Cafe. A little less than a year ago, USMJ acquired an existing sports and fitness smoothie cafe as the foundation upon which to build the AmeriCanna Cafe. USMJ anticipates realizing over $500,000 in revenue operating the acquired cafe over the course of the first year following the acquisition.
Cannabis Health & Wellness Reorganized Under PURA
A separate pilot project involved the development of cannabis infused consumer health and wellness products. Central to this project is a process for extracting cannabinoids from cannabis. The extraction process was developed by a not-for-profit organization called Nature Comfort Meds. USMJ entered into a joint venture (JV) with Nature Comfort Meds to commercialize the extraction process.
USMJ reorganized the JV under PURA in order to have a dedicated capital structure for supporting the ongoing development of the Nature Comfort Meds extraction process as well as other cannabis health and wellness consumer products included in the pilot project reorganized under PURA.
U.S. Patent Awarded For Cannabis Extraction Process
Since the reorganization, the extraction process has been awarded a U.S. Patent. Various extracts derived from the patented process have been trialed with positive results in the treatment of illnesses including veterans suffering from PTSD, children with autism, various types of cancer, patients with a variety of neurological disorders, pain management, auto-immune disorders and seizures due to Epilepsy.
Colorado Extraction Facility
PURA is currently working to launch an extraction facility in the State of Colorado where the extraction process can be utilized for both the ongoing development of cannabis treatments and at the same time benefit from extracting and selling oil from marijuana into the legal recreational market.
DTC Eligibility; Current Information Status; Coming Dividend
In the reorganization of the cannabis health and wellness pilot project under PURA, USMJ’s intellectual property and operating assets were exchanged for a controlling stock interest in PURA. The transaction included PURA common stock slated for issue to North American Cannabis shareholders in a dividend distribution.
In order to effectively execute the dividend of PURA stock to USMJ shareholders the two companies have been working on both the operational foundation between the two companies and on the respective capital structures to facilitate the dividend of PURA stock to USMJ.
Since the reorganization transaction between USMJ and PURA, PURA has been working to reestablish good standing with the Depository Trust Company (the “DTC”), lost under previous management, and reestablish its ‘current information’ status with OTC Markets. PURA announced just last week becoming eligible for the book-entry delivery and the depository services of the DTC to facilitate electronic settlement and transfer of its common shares. PURA has also resolved its reporting delinquency with OTC Markets having filed all required financial reports and disclosure requirements. PURA’s compliance with the ‘current information’ standard is anticipated to be reflected on the OTC Markets’ website imminently and may in fact be reflected by the time this presentation is posted.
PURA and USMJ anticipate completing and announcing a detailed dividend plan in early July and rolling out a prompt execution thereof.
EVERx Sports and Fitness Nutritional Supplements and Jim McMahon
Coming from USMJ’s experience with the acquired sports and fitness smoothie cafe in conjunction with PURA’s health and wellness focus, the two companies have combined efforts to develop a line of sports and fitness nutritional supplements. The initial inventory of the first nutritional supplement product has been shipped and received. The EVERx line will include multiple supplement products. The production of the additional products is underway as is finalizing the packaging for the product already in inventory.
The EVERx line will be available on retail shelves of the Company owned store. EVERx will also be available from the retail shelves of other recognized brand name chains. The Company further plans to launch online sales.
Integral to the marketing plans for EVERx is the recent formation of the Cannabis Sports Policy Project (CSPP) and the signing of former Chicago Bears quarterback, Jim McMahon as spokesman. Jim McMahon is an advocate for medical marijuana. As a result of injuries incurred while playing in the NFL, he has endured 18 surgeries and now lives with chronic pain. Medical marijuana has enabled McMahon to end a pharmaceutical pain killer habit.
Applying Allan Greenspan To The USMJ and PURA Investment Opportunity
2015 was a big year for USMJ. The Company entered the emerging cannabis sector in 2013 and trialled a number of pilot projects in 2014, none of which gained traction. In 2015, USMJ launched the AmeriCanna Cafe strategy with the acquisition of the sports and fitness smoothie cafe establishing approximately a half a million dollars in annual base revenue. USMJ followed up on the AmeriCanna Cafe deal followed by the transaction with PURA to establish a cannabis health and wellness operation under a dedicated capital structure. The combined progress has regularly made USMJ the top most actively traded company in its category of publicly traded companies.
The thousands of startup and early stage companies found as nanocap and microcap listings on the OTC makeup a highly speculative market. Add to that the evolving and tumultuous legal environment of the cannabis sector and the word ‘SPECULATIVE’ ought to at least appear in bold capital letters. Share prices are bound to be volatile. Given that most startup and early stage companies have little in the way of operating history and frequently nothing when it comes to fixed assets, share prices and corresponding market capitalization values have little correlation with fundamental financial values.
In the startup and early stage public market, share prices are more a reflection of the market’s feeling or attitude about the future prospects of a company. The following is reprinted from a recent USMJ shareholder letter:
Former Federal Reserve Chief, Alan Greenspan noted that “stock prices can deviate from ‘fundamentals.’” He said, “human propensity to swing between euphoria and fear, which, while heavily influenced by economic events, has a life of its own. In my experience, such episodes are often not mere forecasts of future business activity, but major causes of it.” I contend that it is largely fear and euphoria that is driving share prices in the cannabis sector and not fundamentals. We all know the cannabis market is very big and legalizing means that businesses with profit and loss statements, balance sheets and cash flows can be built to capture profitable slices of that very big market opportunity. However, the legality is still evolving and the market is far too early on to produce reliable historical ‘fundamental’ measurements and benchmarks. That leaves cannabis share prices strongly linked to ‘fear’ and ‘euphoria’ with little in the way of ‘fundamentals’ to rely on for investment decision making.
The PPS of North American Cannabis Holdings reflects fear and euphoria within the cannabis sector. Fortunes can be, and have been made on investing in fear and euphoria. They can likewise be lost. I’m not hear to encourage euphoria or fear one over the other or in anyway recommend an investment strategy. On the contrary, regardless of PPS performance, we plan to continue executing on our business plan here at North American Cannabis Holdings – developing the AmeriCanna Cafe and EVERx and piloting new projects under the American Seed & Oil Company. We have no plans to execute a reverse split in an effort to see a higher PPS. We will simply continue to execute on our business plan and let the market decide on its level of confidence. We have every intention of sustaining through this exciting entrepreneurial time in the emerging cannabis sector until such time we can generate fundamental performance that might weigh more into future investing decisions than it does today. Once more, we’re in it for the long-haul.
In conclusion, while 2015 was a big year for USMJ, we here at both USMJ and PURA feel that 2016 will be an even bigger year.