Firstly sorry for this post been so long, secondly thanks to those who attempt to read it.
Just some of my thoughts, generally from conception of my investment but also influenced by announcement of past & recent.
For any new business or investor attempting to enter the domestic hemp or medical marijuana industry there are many hurdles & risks.
The particularly unique risks to these industries on a national level are the many unknown factors that other established industries no longer face.
Yes hemp has been produced on Australian soil previous to November, 2017 but never for human consumption or on a scale or quality standard that is now required.
This means very limited farming experience across the country in hemp crops.
Farmer's are challenged with producing large scale crops of high quality & yesterday's announcement highlighted the many difficulties/trial & error in producing hemp seed on a mass scale.
I'm sure many lessons are being learnt very fast & I'm confident our farmers will reach targets & expectations over the next 1-2 years.
Another challenge the industry faces is revenue forecasting & I know this has been a talking point for Qbl investor's on hc over recent weeks.
Perhaps my thoughts bellow on revenue forecasting is not the case & the company will present holders with something different shortly but these are some of the challenges I imagine many hemp company's in Australia currently face.
You can analyze international costings however every country has its own unique variables that will effect the overall price of the product. Some possibly been...
1. Varying climate conditions (state to state)
2. Environmental regulations
3. Cost of power, water & fuel.
4. Industry wage regulations, not just one industry but every industry involved from farm to plate.
5. Cost of chemicals
The list goes on...
A further hurdle for current industry is unknown size of domestic market or appetite for hemp products at these early stages. This in conjunction with unknown crop yields would have to make any accurate revenue forecasts very difficult in the short term.
Frustrating for any investor however these are the increased risks that currently go with the territory.
As a long term investor I personally believe the hemp is the company's blood line & must be priority above all other business aspirations.
I'm not expecting a smooth ride to the top & huge revenue figures or dividends in the near future.
I'd be wraped to achieve a cash neutral company in the short term that has money in the bank & no plans for further capital raisings post MCL & Medcann resolution.
The 3 key components in my mind that are priority & will lead to increased sp are future possible dividends are..
1) Successfully producing quality hemp seed on a mass scale- Proving challenging but only early days
2) Successfully processing hemp seed on a mass scale- Upgrades to HHC complete & able meet any foreseeable demands placed upon it.
3) offtakes of hemp seed on a mass scale- Current partnerships with the likes of Red Tractor & Thompsons are promising & the opportunity to build upon them once we are able to harvest on a mass scale is promising.
We also have the 'Vitahemp' brand in its infancy & can also be built upon once producing hemp seed on mass scale.
Lastly but not least is the excitement & unknowns possibilities that surround the newly emerging mm industry on a domestic & international level.
I won't discuss this at length, this post is already too long. The risks & rewards speak for themselves & every company is faced with equal challenges both foreseen & unknown .
I can't speak for anyone else but from me to Pnina, Sholom, Andrew, Neil & all stakeholders & partners..Keep up the great job!
Regards, Dan
QBL Price at posting:
3.9¢ Sentiment: Buy Disclosure: Held
