JuJu Royal's Future Is Looking Brighter

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Includes: MRRCF
by: Debra Borchardt
Summary

The company had a slow start to 2017 and is setting itself up for recovery.

A partnership with G FarmaBrands will boost distribution.

A partnership with Maricann will increase the customer base.

Canadian-based GEA Technologies nee Interbrands Cannabis (CSX: JUJU) is poised to deliver some positive results over the next six months as key partnerships take hold.

This is a microcap stock and brings inherent risks at that low of a price, especially liquidity issues. However, the company has been on a bit of a tear since this past summer and that has caught my attention. The key, of course, is whether they will be able to deliver all these plans.

In June, GEA Technologies merged with DropLeaf LLC, which is based in Nevada. DropLeaf has the exclusive rights to grant licenses to cannabis products under the Julian Marley JuJu Royal Ultra Premium Cannabis brand. Julian is the son of the late reggae and Rastafarian icon Bob Marley. DropLeaf was formed in 2014 for the specific purpose to license the Marley products and while it’s a private LLC in Nevada, the company’s main office is in Denver CO.

The JuJu Royal brand has 4 exclusive strains and as of June had raised $1.4 million. By doing the reverse merger with GEA, JuJu gets access to the public markets via the Canadian Stock Exchange. So, that’s one catalyst.

Another catalyst is the recent agreement with G FarmaBrands to distribute JuJu Royal to adult-use and recreational shops in Southern California through the company’s subsidiary Finka Distribution. Finka sends out product to over 1,100 stores that could carry JuJu’s flower and vape products. JuJu already has distribution in Washington, Colorado and Puerto Rico. It also has some distribution in California, but this will increase the ability to get the product in much bigger markets.

JuJu Royal followed up that deal with an announcement last week that it was partnering with Maricann Group (OTCQB:MRRCF) to cultivate and formulate the JuJu Royal group of products. According to the statement, “Maricann will offer the premium JuJu Royal line to its existing medical patients starting on January 1st, with four of Julian's designer strains of dry flower available for purchase.” The agreement is for three years following the approval from Health Canada to sell the products.

Under the terms of the agreement, subject to meeting certain revenue targets, Maricann will have the exclusive right to cultivate, extract and distribute in Canada the JuJu Royal line of products that are currently offered in the United States. The agreement is for a period of three years, following receipt of approval from Health Canada to sell the products. In addition, Maricann has a right of first refusal to distribute any JuJu Royal products in Europe.

Granted it will take some months for these partnerships to take hold and there could be some consumer confusion between Julian Marley’s company JuJu and the competing brand Marley Natural, which isn’t associated with Julian but instead is owned by Privateer and the Marley family estate in Jamaica. Marley Natural has spent millions on marketing and reviews seem to be mostly positive.

GEA Technologies' last financial reports occurred before many of these recent partnership deals were announced. At that time, I wouldn’t have given the stock a second thought. The losses rose for the six months ending in June 2017 to $787, 531 from the previous year's loss of $172,880 for the same period. Revenue also fell dramatically from $220,984 for the first six months of 2016 to $76,268 for the first six months of 2017. So, there is clearly a lot of work to be done here to bring back sales. Recent product reviews seem to be positive and now with these two partnership deals, it looks like JuJu may have a brighter future and that will be “irie.”

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.