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MMJ Group Holdings makes progress in cannabis investment strategy

The company has accumulated a pool of around 16,000 investors and shareholders funds of about A$90 million.
Cannabis and products
Investments are sourced across the cannabis value chain from growing to extraction of oils

MMJ Group Holdings Ltd (ASX:MMJ) (OTCMKTS:MMJJF) is making inroads as it seeks to capitalise on considerable interest in the emerging global cannabis industry through strategic investments.

As such, it is the only ASX-listed investment company offering Australian investors the opportunity to invest in unlisted and listed cannabis-related businesses locally and offshore.

In the last 12 months MMJ has converted from a cannabis operational company into a listed investment company.

READ: MMJ Group focuses on shareholder returns with venture capital approach to global cannabis sector

In this short timeframe it has accumulated a pool of around 16,000 investors and shareholders funds of about A$90 million with most investments being offshore and predominantly in Canada.

Chief financial officer Jim Hallam said the company was looking for well-managed companies that needed capital and which had a business plan to be rolled out in the next 12-24 months.

The model seeks early stage companies looking to IPO and MMJ like to co-invest with other investors.

READ: MMJ Group invests in Canadian manufacturer of vape pens and cartridges

The company is also well positioned to benefit when the Canadian market opens up in October 2019 to CBD-infused beverage and food as well as vape pens.

MMJ has sourced 11 investments and is confident of gaining further exposure by way of a proposed arrangement with Embark Ventures, a team of investors and operators of cannabis businesses in Canada.

This partnership is expected to provide MMJ with greater understanding of the industry in North America and enable the company to extract greater value from its investments.

READ: MMJ Group reveals NTA nearly double that of market cap

The progress being made is not yet reflected by MMJ’s share price.

Unaudited net tangible assets (NTA) have been calculated at 40.01 cents post-tax as at April 30, 2019, and with shares trading on the ASX at 23.5 cents, the share price represents a 70% discount.

Working hard to bridge gap

Hallam said the board was working hard to bridge this gap.

He said the proposed tie-up with Embark Ventures would increase the footprint in Canada and help position the company for the longer term in North America, particularly if the US was to legalise cannabis at a federal level.

MediPharm Labs investment success

Hallam pointed out that cannabis oil extraction business MediPharm Labs was an example of the company’s investment success.

MMJ invested $5 million in the private business in 2018 as it saw that value would come after listing -Medipharm Labs Corp (CVE:LABS).

During early 2019 the investment went from $1.20 to $6 and in that period, MMJ decided to divest most of its holding.

The CFO said the better prospects were proven cannabis growers, extraction businesses and businesses that were intending to sell branded cannabis products recognised by consumers.

Many opportunities

He added that the company was already demonstrating that there were opportunities to offer investors private equity style returns in a market still at the early stages of delivering investment returns.

Upcoming developments and further industry growth, he said, would ensure MMJ was well-positioned to deliver better returns to investors in the next 12 months and beyond.

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