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Aleafia Health (ALEAF) is a little cannabis company that has legitimate growth potential; something many of its smaller peers, in reality, actually don't.
The major catalysts that could propel the company to the next level is its facilities that are close to being licensed by Health Canada, and its recent acquisition of Emblem Cannabis Corporation, which is giving it more options and results than it was capable of before the deal.
While the company has a lot to do and prove before I would be a believer, it has positioned itself to give it a chance to become a potential growth company with a future.
Latest earnings
In the first quarter the company generated $1.5 million in revenue, up over 1,700 percent from the $0.1 million generated in the same reporting period a year ago.
The company had a net loss of $20.2 million in the quarter, with an adjusted net loss of $7 million after excluding one-time, non-cash payments of $13.2 million associated with the closing of the acquisition of Emblem.
It had $36.8 million in cash on its balance sheet at the end of March 2019, and total assets were at $61 million, including cash.
Licensing getting closer to full approval
Licensing approval for Port Perry Outdoor Grow and Niagara Greenhouse moving along nicely.
The Port Perry Outdoor Grow includes 1.1 million square feet of space, or approximately 26 acres. That's the same area its Port Perry Indoor facility is located. Aleafia said it finished the build-out of the site and on May 3 submitted its evidence package to Health Canada showing it meets all requirements to receive its License Amendment. It is currently under review.
At the Port Perry Outdoor Grow facility it has already been approved for Zone 2, and has 13,000 plants currently growing at that location.
The company also stated it has received a status update back from Health Canada concerning its 160,000 square foot Niagara Greenhouse facility, saying it had passed a high-level review, and so far there were no concerns communicated by Health Canada concerning the facility.
It appears it won't be long before Aleafia receives both licenses, barring some unforeseen issue that needs to be fixed. Either way, I would be surprised if Aleafia doesn't get approved for both licenses soon.
What Else Emblem Cannabis brings to the table
The acquisition of Emblem Cannabis Corporation is a real potential game changer for Aleafia in a number of ways. First, it brings immediate revenue growth to the table, and has already entered into the biggest deal Aleafia has ever made.
It reported that Emblem completed an adult-use cannabis order which is expected to generate sales exceeding $1 million, which has already been sent to a Canadian provincial government for online and physical retail distribution.