MCTC Holdings Inc (OTCMKTS:MCTC), now doing business now as Cannabis Global, Inc. (MCTC), is starting to look like an increasingly interesting stock in the small-cap cannabis space for a number of reasons, prompting our analysis here as part of our mission to provide insights into under-the-radar speculative opportunities in the cannabis, CBD, and hemp sector.
From a macro perspective, one can easily make a case that the overall sector has transitioned from persistent, glut-induced headwinds to post-purge structural tailwinds. In a robust long-term growth thesis, that’s the crucial moment of opportunity. It is imperative for aggressive investors to find new ways to position at this stage given this transition.
The Big Point
MCTC Holdings Inc (OTCMKTS:MCTC) demands special attention for two key reasons. First, the company is right now making the jump from development-stage operations to full commercialization of its base of proprietary IP. Second, this is one of the very few IP-heavy plays in the cannabis space, with robust R&D and a strong portfolio of patents now in process with the USPTO.
That latter point is especially important because the company’s IP continues to expand as a market-leading foundation, with a growing list of partners pining for access to infusion methods in the edibles space, and because the edibles niche is increasingly looking like the big opportunity as cannabis edges toward universal mainstream popularity.
Laying a Foundation
For example, the company just announced the signing of a definitive, five-year agreement for the production of cannabis edibles and beverages in conjunction with licensed California cannabis operator, Magnolia Extracts, LLC. Under the terms of the agreement, Cannabis Global will provide access to its trade secrets and patent pending technologies for chemical-free cannabis and hemp infusions in the production of tetrahydrocannabinol (THC) containing edibles and beverages.
“This deal represents an enormous escalation in terms of our positioning in the California cannabis edibles and beverages marketplace,” stated Arman Tabatabaei, CEO of Cannabis Global. “We will be working closely with Magnolia and look forward to a rapid path to market for these innovative products. We have strong reason to believe we will see a relatively quick expansion in distribution footprint given the prepotency of demand we are seeing among potential distribution partners already. The Magnolia site has recently been modified to our specifications and is now complete. We are looking forward to moving out of our initial stage of development and into full-scale production. This Agreement is a game-changing development with strong tangible implications for our performance this year.”
The Crux of the Matter
Remember: the big driver of this whole theme is the inexorable trend toward universal legalization of cannabis-based products. If you have any doubts, it’s time to do a personal reality check. The art of successful speculative investing is driven by forming derivative conclusions around a core idea that commands conviction. In this case, the inevitability of the long-term trend toward increasing mainstream integration of cannabis products as legal doors open step by step is that core idea.
From there, the most interesting opportunities are unappreciated and underpriced companies that have built a foundation of valuable proprietary assets that have the potential to increase in applied market value by huge leaps as they become essential in the ecosystem of the market phenomenon in question.
We see Cannabis Global, Inc. (MCTC) as precisely that kind of opportunity right now. The stock has yet to garner attention from the crowd. But it has a rapidly growing role as a core technology provider for many other companies building strong market positions in the industry.
The Only “Varin”
Aside from its formidable edibles infusion IP, the company has also recently made big strides toward establishing a new cannabinoid market with its “Project Varin”. This is potentially a huge future driver of growth for the company because it represents a segment with enormous demand possibilities and virtually no competition. That’s precisely where an IP-driven model has the most potent impact.
Project Varin refers to the company’s initiative to develop new delivery systems for varin cannabinoids. THC-V, which is one of the best known Varins, is becoming known within the cannabinoid sciences arena as the ‘Skinny Cannabinoid’ due to its purported appetite suppression qualities, and its possible use as a treatment against obesity-associated glucose intolerance
The project has already yielded strong results, including a research breakthrough in the form of a new tetrahydrocannabivarin (THC-V) delivery system providing for sustained release of the cannabinoid over a predetermined period of time and two other delivery systems for immediate release.
“While these developments add to our growing list of intellectual property, these are much more than technologies that will sit on a shelf,” commented Arman Tabatabaei, CEO of Cannabis Global. “We have already integrated both the sustained and immediate release versions into beverage products that we expect to be available to consumers next month. We believe the field of minor and exotic cannabinoids will grow substantially this year with several product introductions. We are extremely excited at the prospect of being a first mover in this emerging market segment.”
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