D. H. Taylor

About the Author D. H. Taylor

I am an economist and mathematician having studied at the University of Denver. I trade my own account. I eat what I kill. I focus on the consumer and the economics of that consumer. I start my focus on the consumer and look at economic data to determine how strong the consumer is at any moment. From that, I extrapolate the state of the consumer and shopping trends at retailers as well as purchasing of housing and autos. I follow the major trends of these to determine the health of the economy here in America and abroad. Being from California and Colorado, I am all-too familiar with cannabis. I am actively building a portfolio of cannabis biopharmaceuticals for my private investment. Also, I evaluate the cannabis stocks on a whole.

Acreage Holdings’ (ACRGF) Strong Board Presence Can Push the Stock Higher


When you start to research Acreage Holdings (ACRGF), one of the biggest cannabis companies in the US, there is one thing about the $2.3 billion company that stands out: The list of Board of Directors has some of the deepest connections in the America.  There are several pieces of the cannabis puzzle that could play out very well for Acreage, and having the proper connections will help.

The company has just recently completed its IPO; here is a look at their recent chart:

Acreage Holdings and Friends in High Places

As I mentioned, the company is very well connected.  Here is the listing of individuals that are on the Board of Directors for Acreage:

  • Former Republican Congressman and Speaker of the United States House of Representatives John Boehner.
  • Former libertarian Republican Governor of Massachusetts Bill Weld.
  • Former Chairman and CEO of TW Telecom (formerly Time Warner Telecom) Larissa Herda.
  • Former IBM Chief Financial Officer Douglas Maine.
  • Former Conservative Prime Minister of Canada Brian Mulroney.

This listing will help in many ways (more on that in a moment)

I truly believe in the healing powers of CBD.  I am also a veteran.  I know some veterans have used CBD products to help manage their PTSD symptoms.

Consider the number of veterans who suffer from PTSD:

  • 31% of Vietnam Veterans
  • 11% of Dessert Storm
  • 10% of Afghanistan veterans
  • 20% of Iraqi veterans

When you consider these numbers of potential veterans who could benefit from CBD products, and simultaneously you consider the members of the Board of Directors for the company, if Acreage were to get approval by the Department of Veterans to use their products for veterans, this could be a windfall move for the company.

Boehner would be able to connect with the Department of Veterans very easily.  Herda would be able to get necessary news coverage with a simple phone call.  Maine would be able to integrate database and statistical information readily and easily from his former connections.  And, finally, Mulroney has access to all of Canada and help the company navigate the country’s legal hierarchy.

Also, keep in mind the timing of two separate other pieces of the puzzle.  First, the FDA has recently approved a CBD-derived product for the use of epilepsy.  So, there is a foundation for CBD products to be used for medical products for veterans.  And, then there is the recent passage of the 2019 Farm Bill which has allowed for broader legalization around the country of cannabis in either hemp or CBD form.    All of these steps allow this company access to potentially large numbers of patients; this could be a windfall.

I believe in CBD products.  I also believe this company is putting together a powerhouse line-up of talent to get this business moving forward.  And, in a recent analyst report by Seaport Global analyst Brett Hundley had this to say: “We estimate that it will generate $29.3MM in annual pro forma revenue during 2018, along with an adjusted EBITDA loss of $17.6MM. We anticipate sizable growth in the years ahead, with pro forma revenues expected to reach $222.8MM in 2019 and $479.3MM in 2020. We expect positive EBITDA of $25.2MM in 2019 and $167.6MM in 2020.”

Given $167 million in revenue for 2020, that puts a market capitalization of $3.3 billion with 20-times earnings.  The current market capitalization is $2.3 billion.  There is room for a margin of safety given these numbers.  However, I wonder if these numbers are low considering the speed at which there has been progress in legalization efforts around the country and the fact that this company could see a potential large increase in the number of patients it will service via the Department of Veterans.

 

Author’s Disclosure:  I have no positions on this company nor intend on initiating any positions in the near-term.