PharmaCielo Ltd: 2020 Will Be Transformational for World’s Largest Licensed Cannabis Producer

PharmaCielo Ltd Largest Producer of Cannabis Has 160% Upside
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PharmaCielo Ltd Poised for Massive Gains In 2020

PharmaCielo Ltd (OTCMKTS:PHCEF, CVE:PCLO) is one of the few, but increasing number of, cannabis producers that focus on operations in Colombia. What sets PharmaCielo apart from the competition though, is its massive size and number of licenses.

Most investors have never heard of this Toronto-based company, probably because its stock only began trading in late January of this year. And like the broader cannabis industry, PharmaCielo stock has been under pressure, which doesn’t make for the most compelling story.

But investors need to ignore the white noise and look at PharmaCielo’s fundamentals. The company’s long-term growth potential is massive.

PharmaCielo’s cultivation operations in Colombia are the size of 260 football fields, with an annual capacity of 5.5 million kilograms (11.7 million pounds) of marijuana flower.

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It is also the first company to hold licenses in Colombia for cannabis with unrestricted percentages of tetrahydrocannabinol (THC) and cannabidiol (CBD).

Add it all up and PharmaCielo is the world’s largest licensed producer of marijuana. Best of all, the company expects to begin commercial sales in the fourth quarter of 2019.

PHCEF stock might be trading hands at $4.69 per share now, but that price is expected to soar over the coming quarters. A 12-month forecast of $9.25 for PharmaCielo stock represents a 160% gain from its current price.

PHCEF Stock Overview

PharmaCielo is a dominant player in Colombia’s burgeoning marijuana industry, having received its manufacturing license way back in 2016.

The company’s operations include 1.3 million square feet of open-air greenhouses that are ready for cultivation. PharmaCielo also supplies plant seedlings to more than 2,500 acres (108.9 million square feet) of contract growers’ open-air greenhouses. (Source: “Home,” PharmaCielo Ltd, last accessed September 10, 2019.)

As the first company in Colombia to receive a license to cultivate THC strains and produce THC cannabis oil extracts, PharmaCielo is completing its Good Manufacturing Practice (GMP)-certified oil processing facility.

Commercial-scale production and sales from both THC-and CBD-infused products are expected to bring in the second half of 2019.

Why Colombia?

Why grow marijuana in Colombia? The country is known for its outstanding climate for agriculture and a long history of being a leader in the cut flower industry. Colombia is known for its constant sunlight, with an even 12-hour day-and-night cycle. That, according to many, makes Colombia the best place in the world to grow cannabis.

Many companies produce weed in Colombia for less than $0.40 per gram, most of which is used for cannabis oil. PharmaCielo Ltd produces dried cannabis flower at levels below $0.05 per gram.

Being a leader in the cut flower industry also means that Colombia already has the infrastructure in place and a workforce that already knows what it’s doing.

PHCEF Stock Information
Market Cap $350.1 Million
52-Week High $9.98
52-Week Low $3.04
Float 78.3 Million
50-Day Moving Average $3.85
200-Day Moving Average $5.45

(Source: “PharmaCielo Ltd. (PHCEF),” Yahoo! Finance, last accessed September 10, 2019.)

Joint Venture Opens Up Mexican Market

In January, PharmaCielo announced a joint venture with MINO Labs, a specialty pharmaceutical company.

The deal will see PharmaCielo enter the Mexican market. The first delivery of cannabis oil under the joint venture is expected in the fourth quarter of 2019. (Source: “PharmaCielo Establishes Joint Venture with Mino Labs to Bring Medicinal Cannabis Oil to Mexico,” PharmaCielo Ltd, January 28, 2019.)

With a population of 130 million and more than 33,000 medicinal distribution points, this new joint venture gives PharmaCielo a foothold in the world’s largest legal medical marijuana marketplace.

Acquisition of Ubiquo Telemedicina

In late July, PharmaCielo announced that it had completed the previously announced acquisition of Ubiquo Telemedicina, Colombia’s leading telemedicine company, with over 80,000 patients. (Source: “PharmaCielo Completes Acquisition of Ubiquo Telemedicina,” PharmaCielo Ltd, July 26, 2019.)

With the acquisition, PharmaCielo will open seven clinics in seven new jurisdictions, which is expected to result in a much larger patient base. Outside of Colombia, the company is looking to enter Mexico and Italy.

Increased Dried Marijuana Processing Capacity

In early August, PharmaCielo announced that it expanded its oil processing capabilities at its facility in Rionegro, Colombia, following the acquisition of new high-volume extractors. (Source: “PharmaCielo Achieves Twelvefold Increase in Dried Cannabis Processing Capacity to Meet Global Demand for Medicinal Oil Extracts,” PharmaCielo Ltd, August 1, 2019)

In an effort to meet the expected global demand for its premium medicinal cannabis oil, the company increased its extraction processing capacity to 265 tonnes of dried marijuana flower.

At the time of the announcement, PharmaCielo already had more than 18 tonnes of dried flower in inventory, ready to be processed.

The company is continuing to expand the amount of land it cultivates to 12.1 hectares (51,667 square feet), with annual cultivation in excess of 480,000 kilograms (1.1 million pounds), up from 5.3 hectares (570,487 square feet) at the start of 2019. PharmaCielo expects to further expand its cultivation capacity throughout the year.

First Commercial CBD Shipment to Europe

In mid-August, PharmaCielo announced that its first commercial export of CBD isolate arrived in Europe.

It was delivered to the Swiss headquarters of Creso Pharma Ltd (OTCMKTS:COPHF, FRA:1X8), an international pharmaceutical company that specializes in cannabis- and hemp-derived products for human and veterinary use. (Source: “PharmaCielo’s Very First Commercial CBD Export from Colombia Lands in Europe,” PharmaCielo Ltd, August 19, 2019.)

This sale comes on the heels of a recently announced multi-country sales agreement with Laboratorios Adler, a Uruguay-based company that will supply PharmaCielo-produced CBD isolate, along with Creso Pharma’s veterinary CBD products, for distribution in Bolivia, Paraguay, Southern Brazil, and Uruguay. .

Analyst Take

So far, 2019 has been a very productive year for PharmaCielo. The company nears the completion of a number of key elements that will help it process cannabis oil and generate sales.

Since the beginning of the year, PharmaCielo has increased its cultivation footprint, increased its cannabis oil processing capacity, received a permit to export CBD isolate from Colombia, and completed its first commercial sale to Europe.

The next 12 months should be even more exciting for PharmaCielo Ltd (and for PharmaCielo stock owners) as the company transitions from a founding-stage operation to a more mature one with an inventory, finished products, distribution channels, sales agreements, and international sales relationships.