The next Medicinal Marjuana ASX play?

With the medical marjuana hype ready to descend on the NZ and Australian markets, especially in New Zealand as there will be a referendum in 2020 to legalise it due the political deals needed to be done the 1 seat NZ Labour Government needed to do sweetheart deal with Greens. If the referendum is a success and NZ legalises it, then Australia will follow suit very quickly as not be left behind as by now Canada, parts of Europe and 11 US States would have legalised it. With the potential of legalisation of medical marjuana in NZ and maybe Australia, cashed up Big Corporations like Altura ( think Malboro Cigarettes), Constellation Beverages ( Heineken and Corona ) and the big three Canadian marjuana companies ( canopy growth ect ) are desperately looking for early footholds in countries where medicinal CBD oil and recreational marjuana products are potentially going to be marketed. Hence we are seeing activity like the investment by CanopyGrowth in the $300m Cann Group ASX who are developing a 37,000 sqm growing facility at Tulleramarine Airport Industrial hub. They are intending to be a world class grower harvesting 40,000 kg of CBD Oil rich plants to be sold on the world market.

Due to the complexities and difficulties of getting medicinal marjuana products, research and growing permits approved by the Australian Federal Government and the TGA, its very difficult for competitors to just open up shop in Australia. You can’t just apply for a permit to grow a few specialised CBD rich plants in grandmas shed and claim its for “medical marjuana purposes” business that you and your uni mate dreamt up while being stoned and want to start up to pay for your uni fees. Its very strictly controlled and a regulation nightmare for those established companies who have applied to the TGA ( Theraputic Goods Association, the Government body that permits licences and approval for all Pharma stuff to be used and sold in Aus ) , so much so that there has been on five growers licenses handed out and only one them was to an ASX listed company being Cann. Its much easier for a large overseas company wanting a foothold in the future $55B international marjuana market of 2022, to look for a ASX listed bio-tech of low value and basically back-door list. As they have to be classified as a bio-tech or Pharma company. You can’t just slip your MM product in a mining, financial or property company ASX company. ASX will not have patience with speculators jumping on the next greatest thing and seeing loser companies from Perth, sky rocketing up and enriching the promoters only to see them crash taking millions of starry eyed investors when the music stops in the sector. These days the ASX has learnt from its experiences in the Dot Com boom and to effect recent “ Lithium and Cobalt” new players. See Capital Mining Ltd recent problems of being rejected as a MM company.

In this case the criteria for a ASX listed Bio-tech for a potential MM entry must have four fundamental criteria for a company to look at for a possibly slotting in a medicinal marjuana product for the

1. Must be a Bio-tech related company; yes BPH is a unique one which has morphed from a gas and energy to a hybrid bio-tech.

2. Must have a wide and diverse shareholding and not controlled by one or two major shareholders who have over 30-40% ownership. Its mainly owned by the CEO at 15%, Mr Freeze. There are other large holders enough to be a fair spread for the attention of a takeover.

3. Must have a very low market cap value that is near shell value of $1m-$3m. Think the worst of the worst on the ASX where they are unloved and sunk to all-time lows. BPH MC is only $2.3m with $1m cash at bank. So which one are there on the ASX? … I have researched nearly the whole ASX bio-tech board and found just another two companies other than my focused target. ( well I will keep them quiet as they are not as good this sleeper as they do not really satisfy the 30% criteria of ownership as they are stitched up with connected family controlled interests and have a slightly higher shell value of $5-6m. Also I can’t divulge all my research for free as my time is valuable like all of us on earth and I dont get paid much doing what I do for a daily living ).

That leaves us this unloved potential sleeping giant.I think that BPH Energy is a potential medical marjuana ASX shell waiting to be married to a large and wealthy and handsome marjuana suitor as its classified as bio-tech company. There are only three possible bio-techs on the ASX that are priced at near shell value and have the essential above criteria, which BPH is one of them.

With the ASX now being cautious on permitting existing low market cap ASX companies morphing into Pharma or Bio-tech companies, it will limit the ASX real estate available for any medical marjuana plays that want to list on the ASX to be approved. The ASX is be careful not to allow mining companies to suddenly convert to a medical marjuana company as in the dot com and crypto hype days to avoid rampant speculation in latest hot sharemarket products. Evidence of this is recently being shown by the rejection of Capital Mining request to become a bio-tech and a MM player. Yes there others you can buy into but they are already $30m-$300m companies like Cann, Auscann, BODS ( BDA.Ax), ATP, BOT, CP1, CPH, but the boat has left the port and sailed away on these. We have to look for the next ship that leaving the promised lands of Gold and Spices. 
Those companies currently on the ASX known as medical marjuana plays have either slipped in earlier before the ASX got tough recently after sniffing a potential hyped sector in 2017-2018 on recompliance requests to change to MM companies or they are existing Pharma companies. Lets face it…. There is no fun in the short term left in these well known MM companies as the 10-50 bags have already been made by the lucky few and their promoters. We all want to brag to our mates that we picked a dog stock at 0.001 and now its up 30 times to $0.03 in a year as you picked when no one wanted it. ( well fluked it is more the case with sheer luck ).

An investment into BPH is only for the patient and the cashed up who can afford to leave a lazy few thousand around for a while in hope that it succeeds in becoming a MM players. Its ultra high risk and you could call it a huge gamble. The only difference is that gambling at the casino you know your outcome within usually a minute of putting your money on the table and you can lose it all within that minute. This roulette table that BPH could be playing is spinning for a 6-12 months and no one knows when and where the ball will land.  As investing into BPH will take time for a large international marjuana focused corp to negotiate with it and acquire a large controlling stake.

Think of BPH in terms of medical ASX marjuana real estate. I will use the analogy of piece of vacant land say 5 acres on a highway road corner on the suburban outskirts of Sydney or Melbourne. The currently unloved vacant land that is unkept and full of weeds is land is zoned commercial or mixed use for say service station, fast foods and even a pub. Investors are keeping away from it as its not really wanted. Not many people around living there yet, still a semi-rural area. Its for sale on the quiet and its very cheap say $1m. But it has something special….its zoning for commercial business which is rare and expensive if the area booms and people and business move in around it. Not much around in the suburb with zoning except for a RSL and a few local shops and a pub of course. At the same time, in secrecy the Mcdonalds corporation are looking for a new site with their partner Shell service stations as they have secret knowledge from their connections inside State Government planning that the whole suburb and farmland land will be rezoned to residential and that its projected in 5 years there will be 40,000-50,000 people living in the area as a new satellite suburb grows up including a future rail link to the CBD centre and large shopping centre. Mcdonalds buys it on the quiet in 2018 with plans to develop it in future and then after a few years pass it say year 2022,  and you drive past in the area in amazement to gasp..."wow how things have changed, population booming, houses going up on every street, people and cars moving everywhere.I remember there was nothing here a few years ago". By then you had of wished you had bought that unloved parcel of land for $1m that no one wanted, because its rare zoning there is now a sprawling large busy complex of Mcdonalds, KFC, Shell service station and a new pub with a hotel. By now the land value has grown from $1m to $10m and you tell stories to your mates that you could have bought it for $1m and if only if you had a crystal ball and big balls also to buy it, you would be now retired as a multi millionaire by buying that land.

Yes Smart Money works behind the scenes like an Owl at Night. You never or rarely see an Owl in the Tree at night went it hunts. Before you know it and while you were unaware or asleep , the owl a powerful & highly skilled bird of prey hunter, swoops down in stealth and grabs its prey only to fly into the night back into the trees and you never saw a thing only to discover that you had lost a chicken last night. Thats how smart money works. It discreet, its powerful and spots opportunity way before the retail punter even dreams about it. And when it succeeds in finding a sleeper shell, the retail punter looks at it in amazement and dreams of having a time machine to go back a year and bought it also at 0.001. So BPH Energy I see is that piece of unloved ASX real estate that is primed to be transformed as an Medical Marjuana ASX.

But if and when the news does come out, investors will be potentially rewarded up to  50-100 times at the extreme and maybe 5-10 times at the lower not more realistic end of some good news. But then again, they could just dust there money as nothing ever happens with BPH and remains unloved and dreaming to become a gas player in NSW. Yes its a bit of weird ASX play as its also a energy gas player as well, but it does have medical interests in terms of monitoring equipment for aenathestic doctors patients. However recently I have noticed thats it rights issue was underwritten fully and they are cashed up and ready to keep the lights on till a medical marjuana suitor comes knocking at the door within the next 12-18 months. And yes it has a CEO at its helm being a Mr David Breeze, unloved by some, but respected by others, who is a experienced survivor on the ASX small caps pages, with a lot of connections to raise money if there is something good on the horizon. I would not read to much into the negative news of recent posts about him as he is a crafty old sailor who can sniff a deal a mile away. There has also been a lot of focus on BPH’s gas plays with its private company called Advance. This is just wishful thinking that they will get the money based on their past failures in drilling for gas off-shore near Newcastle in NSW. This is just a distraction to the real potential play that could be unfolding in the medical marjuana play. If and when a decent MM player arrives on the front door of BPH offices in Perth, looking for that scarce piece of ASX Bio-tech real estate to slot their Medicinal Marjuana product or research venture in and raise money and at the same time profiteer with the slow upswings as the deal progresses…

Then its game on and potentially huge rewards for the patient and courageous who took a punt at 0.001 per share. Its can’t get any cheaper and the only way is up for the next 12 months ( well thats when this cash could run out and another capital raising occurs)  and if there is even a hint of a medical marjuana play arising with BPH, then its hello 5-10 bags from here. And thats probably based on rumours, initial discussions and no concrete deals. If a big cannabis player cements something with BPH then we are looking 50-100X plus. 

 We all wish we had the skill or the connections to find that sleeper dog stock on the mining boards thats on its knees at 0.001 and then suddenly it turns around in a few months by Smart Money and the price fires 2000% and bragging rights apply to you at the Pub of how you picked one of ASX’s best winners in 2019-2020. Well I have saved the work and potentially granted your wish. But of course it comes with huge risks of being a flop as nothing could happen with it. Good luck but its hit risk high reward, so you have been warned at the same time your eyes have been opened to this medical marjuana sleeper. I have kissed a lot of ugly frogs in my investment life to find the Prince, lets hope this could be right frog this time, Please take a screen shot as the powers that be don’t seem to like me much and this could disappear quickly of the board and remember that this just my humble opinion & insight and is not financial advice.