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A Completely Transformed mCig May Be The Sleeping Giant Of The Marijuana Sector

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A Completely Transformed mCig May Be The Sleeping Giant Of The Marijuana Sector

Shared by: marijaunaindex.com

Source: SeekingAlpha

 

Summary

  • New revenue sources and partnerships could make MCIG the sector’s best value play for 2015.
  • MCIG is no longer the vape pen company it was in December.
  • Investors looking at individual announcements would have missed the big picture. Taken together, they reflect a cohesive and aggressive strategy to become the sector’s largest holding company.
  • Cafe Serendipity partnership provides professional marketing team, sales force, retail channel and potential entry into casino market.
  • New Chill CBD oils create buzz. Market is underestimating potential for it and follow on EM-J products to generate revenue.

I first started investing in mCig (OTC: OTCQB:MCIG) over a year ago when it was just a $10 pen vaporizer company. I was attracted by the fact that it had no toxic debt, or much debt of any kind, and a seemingly shareholder friendly CEO, Paul Rozenberg, who had made a public commitment not to dilute. I was soon rewarded with the promise that I would get an equal number of shares in a spinoff company called VitaCig (OTC:VTCQ) in a deal in which Paul contributed his own personal shares to pay for the dividend. At the time, many people questioned the wisdom of spinning off a subsidiary that promised to be the biggest money generator in their product line. It didn’t help that it took 8 months to complete the spinoff during which time the bloggersphere erupted with daily critiques of the deal. What we didn’t know at the time, however, was that Paul had bigger things in mind for his company. In the past 3 months, with a flurry of press releases, the company has launched a strategy to transform itself into what could become the marijuana sector’s largest and most successful holding company.

It started on December 29, when the company announced plans to form a new subsidiary called CannaProTech, LLC in the state of Oregon, which had just voted to legalize marijuana for recreational use. They stated it was,

For the purpose of processing and distributing cannabis and derivatives, along with future expansion into recreational retail locations. CannaProTech will also assist in the development of the mCig+ line of products, which will provide mobile vaporization in applications for the delivery of cannabis plant derivatives [CBD].

A hint of things to come was also evident in the PR.

mCig, Inc. and CannaProTech, LLC are nearing conclusive agreements with two reputable and long established Medical Marijuana growers in Oregon with large, productive organic cannabis farms. These agreements will allow for CannaProTech to directly obtain medical-grade cannabis for use in extractions, distribution, and retail sales.

This was followed by an announcement on January 5 that caught everyone by surprise. MCIG would enter the market for extraction equipment with the announcement of a new line of home extraction machines and development of a new e-liquid technology using a non-toxic thinning fluid that replaces Propylene Glycol [PG] and Vegetable Glycerin [VG] via a patent pending technique within the extraction process. Both PG and VG have come under increasing criticism as new research is suggesting that they could potentially be harmful to users of e-cigarettes. The new liquids will require pens with a newly developed processing chamber and closed looped extraction system which MCIG has dubbed the “Ultrasonic Vaporizer” and which it plans to offer on an OEM basis.

Almost unnoticed in the announcement was a statement by the CEO that he plans to enter the extraction facilities market in 2015 with “multiple targets in Colorado and elsewhere.” This sent me off to Google to look up extraction machines. They can be used to extract oils from plant materials – anything from olives to coconuts as well as marijuana or tobacco. Some of these machines sell for hundreds of thousands of dollars and MCIG claims that their machines run 4 times faster than existing technologies and can process plant materials in as little as 15 minutes. While a home extractor to create your own olive or hash oil looks like it has potential, could MCIG also be looking at selling or licensing the technology for industrial grade applications?

The next announcement on January 8 seemed to come out of left field. They announced a new Technology Division headed by Richard Kreuger, a software exec with an established track record in social media and business intelligence software.

The company’s technology will help growers and dispensaries become more informed about their growing operations, inventory management, and legal compliances. It will also provide insight into sales, customer buying habits, and other dispensary operations.

The significance of this announcement didn’t become apparent until we absorbed some of the subsequent PRs.

On January 14, the company announced it was rolling out the Electronic Medicated Joint, EM-J, a

New pre-loaded vaporizing pen thru its Colorado-based subsidiary mCig, CBD Technologies. The unique bundled product combines the highest quality THC and CBD concentrated oils pre-loaded into a convenient, discrete vaporizing pen device, which requires no flame, and produces no smoke or odor.

Our new line of EM-J™ vaporizer pens, along with our advanced non-toxic extraction process, extraction machines, and facilitiesaddress the most pressing needs of today’s medical and recreational marijuana providers. Along with our recent investment in our CannaProTech, LLC subsidiary, operating out of Oregon, we’re quickly putting the pieces together to be an industry powerhouse,explained Rosenberg.

Rosenberg also points to the Company’s recently launched Colorado-based subsidiary, mCig CBD Technologies, LLC as another key initiative underscoring the company’s long-term commitment to extracts. The subsidiary is responsible for designing and manufacturing a new line of products that will leverage its EM-J™ technology for delivery of Cannabis plant derivatives, largely around CBD. CBD, or Cannabidiol, is an active compound in marijuana with a wide range of potential medical benefits and none of the psychoactive effects of THC.

So we now had two subsidiaries, CBD Technologies responsible for designing and manufacturing a new line of EM-J products focused on CBD and CannaPro Tech, focused on processing and distributing cannabis and derivatives. We also had new extraction equipment and facilities and new pens based on a vaporization technology that replaces PG and VG with a new non-toxic thinning fluid. It all sounded really good but none of it had so far addressed the biggest problem the company had faced over the previous 12 months, namely the lack of a distribution channel to produce significant revenue. While the company’s products had all met with excellent reviews, there seemed to be little marketing expertise within the company’s management. Product sales had come almost exclusively from online sales.

Then on January 20 came an announcement that would make sense of it all. MCIG announced a strategic partnership with Cafe Serendipity (OTC:CAFS), previously (OTC: FOFU), a company that was planning on franchising dispensaries and growing operations into what they expect to be the “Starbucks” of the MJ sector. The announcement resulted in a huge spike for CAFS shares but barely moved the needle on MCIG’s pps. After all, CAFS had yet to open its first franchise. What the market didn’t see initially was thatMCIG had just bought itself a professional sales force with virtually no dilution of its shares. The terms call for an exchange of shares between the companies with MCIG receiving 10 million CAFS shares and CAFS receiving 3 million MCIG shares. The agreement allows CAFS to sell all MCIG and VitaCig products and requires that 60% of the products in their stores be supplied by MCIG with MCIG having a right of first refusal on any other products a franchisee orders. It also requires CAFS to become fully reporting and have 25 franchisees within 18 months.

Since the announcement, Cafe Serendipity has signed up 3 dispensaries which should come online this quarter and the CEO recently announced that they’ve now hired 20 sales reps and will have 50 by July. He’s also forecasting that they should have 60 to 75 franchisees in various stages by the end of the year. Even without new stores, that many reps pushing MCIG products is bound to have an impact.

But MCIG wasn’t finished yet.

Read more »

Source: SeekingAlpha

 

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