EDITORIAL Sep 8, 2023 • 10:56 AM EDT
A few months ago, we highlighted Body and Mind Inc. (CSE: BAMM) (OTCQB: BMMJ) as an undervalued United States (US) multi-state operator (MSO) and we hope you listened to us.
In late July, Body and Mind reported a major milestone and announced an equity purchase agreement with FarmaceuticalRX to sell its Ohio cannabis operation for $8.225 million in cash proceeds at closing with an additional US$2.5 million in potential contingent proceeds.
Following the announcement, Body and Mind’s stock jumped higher and we are not surprised by the rally. Based on the market capitalization at the time of the announcement, the entire business was valued at approx. $10 million. Based on the proceeds at closing (as well as the contingent proceeds), the transaction shows how undervalued the business was and we find this to be significant.
Going forward, Body and Mind plans to use the proceeds from the sale of the Ohio assets to improve its balance sheet, focus on developing New Jersey and Illinois, and have greater flexibility to be opportunistic with its operating capabilities as the cannabis market continues to evolve. We are favorable on the company’s strategy to further grow the business and are bullish on the long-term opportunity for Body and Mind.
Issues a Corporate Update and Highlights Growth Prospects
Last week, Body and Mind issued a corporate update which covered the planned divestment of its Ohio processing operation and license, the commencement of construction at its branded dispensary in Lynnwood, Illinois, as well as the finalization of its building plans for its New Jersey dispensary.
The company has already started construction at the Lynnwood dispensary and we are bullish on the growth prospects that are associated with it. We are favorable on the location and believe that the dispensary is strategically located near Chicago as well as the Indiana border. Once the dispensary is operational, we expect a good portion of the foot traffic to come from these regions and consider the location to be an attractive part of the story.
When it comes to the opportunity for Body and Mind in New Jersey, we believe the market is discounting the growth prospects that are associated with this part of the business. The company has completed final building plans to renovate an existing 4,100 square foot building and we are favorable on how this project has advanced.
We expect the capital from the Ohio divesture to support the growth of Body and Mind’s footprint in New Jersey. According to the New Jersey Cannabis Regulatory Commission, recreational cannabis has generated about $306 million in sales in the first two quarters of 2023 combined. We expect Body and Mind to capture a significant amount of market share in the state and consider this to be an underappreciated aspect of the story.
An Undervalued Growth Story
From Nevada to New Jersey, Body and Mind is levered to some of the most attractive cannabis markets in the US. We are especially excited about the company’s opportunity in Illinois and believe this market will serve as a huge growth driver for it. Body and Mind is led by a management team that has a proven track record when it comes to execution and we expect this aspect of the story to play a key role in the success of the business.
Over the next year, we expect Illinois and New Jersey to play a more important role in the growth of the entire business. Based on the current valuation, we believe the market is not assigning enough value to these opportunities and consider this to be an underappreciated aspect of the business.
During the last few years, Body and Mind’s management team has proven its ability to capitalize on emerging cannabis markets in the US. We consider the company to be one of the most attractive efficient growth stories and expect the capital from the Ohio divesture to play a crucial role in the advancement of the business.
By the end of the year, we expect Body and Mind’s market share in both Illinois and New Jersey to increase. We are also bullish on the opportunity for the company in Arkansas and believe this is an undervalued part of the business. Next year, we believe these markets will be generating a significant amount of revenue for the business and will be monitoring how the story evolves from here.
If you are interested in learning more about Body and Mind’s growth prospects, please send an email to support@technical420.com with the subject “Body and Mind” to be added to our distribution list.
Company Relationship Disclosure
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Pursuant to an agreement between StoneBridge Partners LLC and Body and Mind Inc. we have been hired for a period of 360 days beginning September 15, 2021 and ending September 15, 2023 to publicly disseminate information about (BAMM) including on the Website and other media including Facebook and Twitter. We are being paid $1,000 per month (BAMM) and were paid “ZERO” shares common shares. We hold “ZERO” shares common shares. We will not sell or purchase shares during the Term. We reserve the right to buy or sell shares after the Term in accordance with State and Federal securities laws. See “Disclosures” below which is to be read in conjunction with this release.
This article contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs regarding future performance are “forward-looking statements”. Forward-looking statements can be identified by the use of words such as “expects”, “does not expect”, “is expected”, “believes”, “intends”, “anticipates”, “does not anticipate”, “believes” or variations of these words, expressions or statements, that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, will occur or will be realized. Such forward-looking statements involve risks, uncertainties and other known and unknown factors that could cause actual results, events or developments to differ materially from the results, events or developments expected and expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, dependence on obtaining and maintaining regulatory approvals, including the acquisition and renewal of federal, provincial, state, municipal, local or other licenses, and any inability to obtain all necessary government authorizations, licenses and permits to operate and expand the Company’s facilities; regulatory or policy changes such as changes in applicable laws and regulations, including federal, state and provincial legalization, due to fluctuations in public opinion, industry perception of integrative mental health, including the use of psychedelic-assisted therapy, delays or inefficiencies or any other reason; any other factor or development likely to hamper the growth of the market; the Company’s limited operating and profitability track record; dependence on management; the Company’s need for additional financing and the effects of financial market conditions and other factors on the availability of capital; competition, including that of more established and better funded competitors; the impact of the Russia-Ukraine conflict on the global economy; the continued impact of the COVID-19 pandemic; and the need to build and maintain alliances and partnerships, including with research and development companies, customers and suppliers. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. Despite the Company’s efforts to identify the main risk factors that could cause actual measures, events or results to differ materially from those described in forward-looking statements, other risk factors may cause measures, events or developments to materially differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. The Company does not undertake to revise forward-looking statements, even if new information becomes available as a result of future events, new facts or any other reason, except as required by applicable laws
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