Since 2015, MMJ (ASX:MMJ) has invested $74 million in cannabis businesses and has made a total return of 1.3 times capital invested.
Successful exits include Canadian developer Dosecann and extractor MediPharm Labs, which netted MMJ returns of 2.3 times and 4.3 times respectively.
With a 26 per cent holding, MMJ is the largest investor in Harvest One Cannabis, a producer of cannabis-derived lifestyle and wellness products.
In November last year Harvest One implemented a strategic turnaround plan, designed to move the company to profitability.
Since then, Harvest One has reduced expenses in targeted programs which will cut annual costs by 30 per cent.
The company has also divested some of its non-core assets, such as the 19.99 per cent interest in private cannabis retailer Burb Cannabis Corp for C$1.5 million ($1.69 million).
It is also in discussions to sell a 50.1 per cent stake in the Greenbelt Greenhouse facility in Hamilton, Ontario as well as its 398-acre site in Lillooet, British Columbia.
Importantly, Harvest One retains ownership in its core assets – United Greeneries, Santipharm, Dream Water and Delivra – which distribute cannabis-derived health, wellness and self-care products. The outlook is good, it says.
“Sales volumes to date in Q3 2020 have improved significantly from Q2 2020, most notably at United Greeneries,’ Harvest One told investors this week.
“Both dried and bulk flower sales have increased significantly, and Cannabis 2.0 sales are expected to be reflected in our Q3 2020 results as a result of strong demand from both our retail and provincial cannabis store partners.
“Revenues from our consumer and medical divisions are also expected to show steady quarter-over-quarter growth.”
MMJ non-executive director Mike Curtis told Stockhead the company always selects its investments carefully.
“We’re holding companies with good extraction operations and good brands,” he says.
“And if you look at our portfolio there’s a lot of business models that make for compelling takeover opportunities or consolidation opportunities.”
Curtis believes the market is going through a period of consolidation this year and in 2021 the winners will be decided.
“It’s all about getting ready for that next stage,” he said.