Happy or not Happy ??, page-25

One of the main problems in evaluating ASX-listed cannabis companies at the moment is that they are all virtually start-up companies in a start-up industry, so we have no established metrics by which to judge them. Revenues are irrelevant, as they are virtually non-existent, and we're left to form a judgment based on a variety of factors which would normally just be side-issues in an established company in an established industry.

Overall, I have a very optimistic outlook for the hemp industry in Oz, and some degree of optimism for the medical cannabis industry, and as I currently hold or have held an interest in most of the ASX-listed cannabis/hemp companies, I've been trying to make some sense of where each company stands, and to work out some sort of value for each of them, mainly on a comparative basis.

Things like licences (currently held, already applied for, likely delays in being granted) are very important, as are growing and production facilities (are they already owned and in use, or ready to use when licensed), estimated cost of purchase of land and equipment and construction to be able to commence production and manufacture, competence and experience of management and staff in an industry where key personnel are thin on the ground but essential for a successful company build, cash/debt considerations, essential inputs such as seed for growing, market cap and number of shares already on issue in companies which are likely to have to issue more shares to raise more development capital, the worth and security of joint ventures, partnerships and supply agreements already in place or under negotiation. The list goes on.

Although I have significant reservations about the overall construct and the detail of the new QBL/MCL deals, I reluctantly find myself reaching the conclusion that of all the ASX-listed cannabis/hemp companies, QBL appears to me to be the best value and the one most likely to be generating significant revenues and profits in the near to medium term, and probably the company with the best prospects of becoming a major player, provided that management can successfully pull together all the strings and extract the full potential of the value which even at this early stage is building in this consortium of businesses.

I had been hoping to see MCL completely separated from QBL, partly because having a health food/medicinal company in bed with a bauxite mining company is like having a health food shop with one corner stocked with poisons. I believe that MCL would benefit considerably by being divorced from the mining company, but for the time being it appears that the two are joined at the hip.