VANCOUVER, British Columbia, May 21, 2014 (GLOBE NEWSWIRE) -- On May 16, 2014 Kash Heed, a former B.C. Solicitor General and West Vancouver Police Chief, appeared on CBC radio predicting that Canada will legalize marijuana within the next five years.
"That is a positive thing," stated Heed, who now works as a consultant to the medical marijuana industry.
The RCMP estimates the illegal marijuana market at more than $1 billion. The federal government is intent on destroying the sprawling cottage industry and replacing it with regulated, taxed commercial grow operations – creating huge business opportunities for early movers.
Umbral Energy (TSX-V: UMB ) is one of the companies moving into this space. Its mandate is to identify under-capitalized assets with a moderate risk profile. Based on how quickly it is achieving its milestones, and the strength of the advisory team, UMB could be an agricultural company in the next 6-12 months, radically increasing shareholder value.
Recent successes in this space include medical marijuana producers Tweed which has a market cap of $100 million, Windfire Capital whose stock has increased 300% in the last 12 months and Affinor which has experienced 1000% share price increase in the last two months after declaring its intention to diversify into medical marijuana and industrial hemp.
On May 21, 2014 Umbral announced that it had signed a non-disclosure agreement (NDA) with an unnamed private company and in return has received a business plan containing the details to produce and market several strains of medical marijuana.
"Currently there are only 12 or 14 companies in Canada that have a license to grow marijuana commercially," states Jagdip Bal, President and CEO of Umbral in an exclusive interview with Financial Press. "The private company we signed the NDA with is going to engage in the licensing process."
A successful application must satisfy specific criteria, including a facility that meets security standards, a location where the local residents favour the project, municipal approval, mayoral approval, police approval and letters of recommendation from members of parliament.
This private company has medical marijuana industry experience. UMB's expertise is in taking a public company and aligning it with a private company, amalgamating the two and financing the new entity. Basically UMB is looking to partner with industrial botanists.
Medical Marijuana has undergone extensive clinical trials. It is currently being prescribed to treat pain, neurological disorders, mental health, back spasms, and gastrointestinal disorders.
"This private company has the expertise, the land, the facility, the security measures, and is working on the permissions," states Bal.
The landscape is morphing rapidly as the federal government mobilizes to regulate and tax the medical marijuana industry. The current status quo creates safety and criminal concerns for Health Canada.
The new system will license commercial producers to grow and distribute medical marijuana to meet the expected demand growth. There are about 40,000 qualified patients today. In ten years the number of qualified patients is expected to be over 450,000 (source: Health Canada).
"I am excited by the potential of the Medical Marijuana industry and believe the Province of British Columbia will be a good place to grow marijuana," states Bal.
The private company has botanists, biologists and scientists who are all experts in the art of growing hybrid strains of marijuana, but there is another very important factor in licensing decisions: trust-worthiness. The federal government definitely wants to know: who is growing this marijuana?
Here, UMB will likely benefit from the counsel of Mr. Fraser Campbell who was recently appointed a Director of Umbral. He is a partner in First Growth Management, a private equity company which invests in small to mid-sized businesses. Mr. Campbell is expected to play a key advisory role in the vetting of potential partners and in the eventual amalgamation of UMB with a private medical marijuana producer.
Umbral also has a mineral exploration project in Quebec, Canada and an oil and gas project in Alberta, Canada. In 2013, Umbral participated in drilling an exploration oil well with Aroway Energy Inc. UMB is currently evaluating the commercial viability of the well.
Before Canada transitions to legalization, the medical marijuana industry is expected to increase ten-fold, creating a once-in-a-lifetime investment opportunity for early movers into government-sanctioned growing facilities.
Umbral is currently trading at .05 with a market cap of $1.49 million.
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