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Cannabis Summary for Feb. 12, 2020

2020-02-12 19:27 ET - Market Summary

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by Stockwatch Business Reporter

The S&P/TSX Cannabis Index fell 5.94 points to 175.22 Wednesday, while the Canadian Securities Exchange Composite Index lost 4 points to 382.82. Harvest One Cannabis Inc. (HVT) dropped a cent to 11 cents on 478,900 shares after announcing that it will review "strategic alternatives," which typically include a potential sale of the company.

Harvest One has said previously that it intends to reduce its exposure to "pure cultivation" and instead focus on brand development, production and distribution. Presumably, this means the company will focus on the processing of marijuana into cannabis 2.0 products, such as edibles and beverages. The company's biggest shareholder, MMJ Group Holdings Ltd. (an Australian investment company), insisted in today's news release that it believes Harvest One is "significantly undervalued given its substantial cultivation and cannabis 2.0 assets."

MMJ owns about 26 per cent of Harvest One's outstanding shares. Last month, on Jan. 13, it granted a $2-million loan to Harvest One. The loan bears interest at an annual rate of 15 per cent and will mature on March 13, 2020. As part of the loan, Harvest One granted a security interest in its property to MMJ. That MMJ demanded 15-per-cent interest, as well as the securing of the loan by Harvest One's property, shows the risk inherent to Harvest One.

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