Softly, slowly approach shows Nutritional High (EAT.C) was right all along

edibleslab

They emerged from nothing and blasted off, telling the world of their desire to sell edibles in a responsible, corporate, consistent, quality assured way. No more ‘band of buddies shoving weed into cookie dough in the garage every Friday’, rather they wanted to build a factory-like facility where the end product could be assured to be what it says on the label.

But that takes time. So the daytraders fled and the stock crashed and then… nothing.

Not promo to keep a finger in the dam. Not promises that couldn’t be fulfilled or endless LOIs that never get closed. Just business. Building. Planning. Permits. Hiring. Training. Designing.

The stuff that doesn’t move shares, even though it’s the only stuff that actually builds a company that will endure.

Today, Nutritional High put out news that, in my opinion, is indicative of what the company is and who the people are that have been guiding it.

It was about California. Not claims that it would own California and make billions of dollars, nor endless rah rah about how much all the shareholders will make bank.

It was a calm, business-like, assured explanation of why the company has avoided California to date, why likely rule changes make it a place now on their radar, and how the company has planned for growth into that market.

“As an initial step in its California expansion strategy, the Company has purchased and taken delivery of equipment to facilitate cold ethanol extraction. The equipment is being stored at a warehouse in California and is ready for installation once an appropriate facility is secured.”

“Nutritional High has previously been cautious about dedicating resources to pursuing expansion into California, primarily due to issues relating to compliance with the Cole Memo. Introduction of Medical Cannabis Regulation and Safety Act (“MCRSA“) has established the framework that minimizes Cole Memo compliance issues and in the Company’s view provides adequate regulatory infrastructure for operating professional, transparent and most importantly legally regulated business in the cannabis industry while mitigating the risk of law enforcement by the US Federal Government.”

It shouldn’t be, but a news release like that is rare. It shows the company has been paying attention but, rather than charge in had bode its time waiting for the right moves to happen in the regulatory space, and that even if it might have been able to make coin in California last year, as a responsible public company, it deems now to be the prudent time to move forward.

According to the current laws, only registered non-profit organizations can operate a medical marijuana business in the State of California. In this regard, Nutritional High will utilize a similar approach to operations as that which is being utilized in states with residency requirements. Nutritional High is in the process of identifying local municipalities with robust regulatory frameworks, which allow for organizations to operate in a financially accretive manner. Nutritional High is currently considering two potential expansion strategies:

  1. Establish a new non-profit entity and apply for a new license. Nutritional High will also purchase real estate, equipment and provide know-how to the non-profit to enable them to provide top notch products to patients;
  2. Partner with an existing licensed operator and focus on developing the cannabis extraction and manufacturing operations under an existing license.

Nutritional High is in discussion with several counterparties and expects to provide an update in this regard in short order.

Nutritional High has operations already in Colorado and Illinois, and has been in talks for some time with Canadian entities as laws change up here.

The big money in weed will be made by large companies that treat it as an ingredient in existing industries, more than activists who have a pot brownie recipe and a home-made logo. EAT.C is clearly still planning to be a part of the former group. Well played.

EAT stock has grown from $0.06 in September, when I started telling people it was gearing up, to $0.21 today. I remain long.

— Chris Parry

FULL DISCLOSURE: There is no commercial connection between Equity.Guru and Nutritional High, though the author does own stock in the company.

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