MCTC Holdings Inc (OTCMKTS:MCTC), now doing business as Cannabis Global, Inc. (OTCMKTS:MCTC), is interesting on a number of levels.
First off, the company is that rare version of a player in the cannabis, CBD, and hemp space that fuels its model on IP R&D. That’s unusual. The company has a number of provisional patents now at various stages of processing at the USPTO, and its technology appears to allow for the commercial-scale development of cannabinoids that have previously been inviting but inaccessible to scaling development and distribution.
It has revealed evidence in recent weeks that suggests the potential to commercialize THCV and CBN, with the possibility of applying the same new discoveries to other so-called “exotic” cannabinoids (CBG, CBC, THCA, etc).
However, this same IP may well apply to gaining an edge on the biggest playing field in the space: THC.
Not only is this an edge in terms of potential production methods, but the company has picked a particularly strong access point to the traditional cannabis market, especially given the current health crisis: mobile dispensary operations (ie, cannabis to your door).
The Deal
This springs from a recent deal announced by Cannabis Global, Inc. (OTCMKTS:MCTC) with Whisper Weed, a leading cannabis delivery service.
Last week, MCTC announced the closing of a definitive agreement to enter the fast-growing California cannabis delivery market. According to the release, Whisper Weed, Inc. and Cannabis Global, have created a new California Corporation to be named CGI Whisper W, Inc., which will provide management services for the delivery entity. CGI Whisper W, Inc, will receive 51% of the profits from the new entity, which will be recognized as income by Cannabis Global, Inc.
“The delivery sector is the hottest area of the California cannabis business and we are very pleased to have a seat at the table,” commented Arman Tabatabaei. “We not only will be able to grow our revenue base relative to direct delivery, but we also see Whisper Weed as a perfect platform to launch our infusion technologies in the regulated marketplace. With the deal closing, we are already in the process of adding other delivery platforms and other businesses to our overall portfolio.”
The release continued to note that Cannabis Global views this agreement as an important step toward the verticalization of its IP-driven focus. Many of the technologies developed for CBD and non-THC marketplaces can be directly applied to the regulated California cannabis marketplace, including the Company’s newly developed tetrahydrocannabivarin (THCV) and Cannabinol (CBN) delivery technologies.
We would also point out that Whisper Weed Inc operates a website (www.WhisperWeedDelivery.com) where consumers are able to browse products in the flower, pre-roll, cartridge, edibles, and concentrate categories. Consumers simply sign up on the website and order products with a delivery typically within a few hours.
The operation headquartered in Downtown Los Angeles delivers to the Los Angeles metro area. Cannabis Global believes the trend toward home delivery for cannabis is robust with further growth expected over the coming year.
In terms of structure, as compensation for the Agreement, the owners of Whisper Weed, Inc. will receive $150,000 restricted common shares in the Company and shares of a newly created non-voting, participating preferred stock in Cannabis Global. With the signing of the definitive agreement, Cannabis Global expects to begin recognizing revenues from Whisper Weed immediately.
Mr. Tabatabaei continued, “We have recently shifted priorities from full product development to marketing the many innovative products we have put forth into the marketplace. This new deal with Whisper Weed is simply only one component of our overall growth programs – We have so much more planned for the Company.”
The Opportunity
It should be noted that the cannabis delivery space is not like Uber Eats or Grubhub, but for cannabis. It is a full retail dispensary operation that delivers similarly strong margins to other dispensaries (often in the 40-55% range), rather than commissions on deliveries. In other words, it builds an inventory and dispenses it, with obvious advantages.
In the current environment, consumers aren’t exactly champing at the bit to go stand in lines or in crowded retail store spaces to buy products. If you can get it delivered, you bypass the trip out and exposure.
Such is the case for cannabis consumers as well.
MCTC is walking into the game affiliated with a known brand in the service space. And it brings obvious advantages from an IP standpoint as it creates the potential for significant verticalization through its cannabinoid production methods.
From any angle, the company’s recent deal offers a fresh angle through which the company may be able to offer increasing value for its shareholders as it builds a unique vision in the space.
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