Affinor Growers Inc. (OTC: RSSFF) (CNSX: AFI), a diversified company focused on growing high quality crops such as romaine lettuce, spinach, strawberries, and high quality medical marijuana, has taken a number of steps over the past few months to improve both its operational and financial condition. Combined with its vertical growing technology, management hopes to unlock significant shareholder value.
In this article, we will take a look at the company’s operational expansion into both the strawberry and medical marijuana industries, as well as how its DTC eligibility could help improve volumes and lower transaction costs for investors.
Growing Operational Footprint
Affinor Growers purchased a 45-acre agricultural property in St. Chrysostome, Quebec, Canada for $340,000 in July where it plans to build a state-of-the-art strawberry growing facility. Management plans on leveraging the robust and expanding demand for strawberries, along with incentives for agricultural job creation in Quebec, to generate long-term shareholder value with the project.
In addition to its strawberry operations, the company announced the acquisition of a 49% interest in Good to Grow LLC in August. Affinor will invest US$600,000 to improve the U.S.-based medical marijuana dispensary and grower’s existing facility and bring it up to the strict standards required by Health Canada for growing and dispensing marijuana to eventually sell north of the border.
These two lines of business provide investors with diversified exposure to two rapidly growing markets, along with immediate revenue from the U.S.-based operations of Good to Grow LLC. In addition to these businesses, the company announced that it purchased a 10% interest in Margaux Red Capital (TSX-V: MXC) in August as a strategic investment in the way the firm is organized.
Stronger Financial Footing
Affinor Growers became DTC eligible in August, which represents an important step in making its stock more accessible to investors. The Depository Trust Company (“DTC”) facilitates the electronic settlement of common stock transfers in the United States. With over $35 trillion worth of securities on deposit, stocks that aren’t DTC eligible tend to have less liquidity, particularly for larger investors.
“The ability to have AFI shares traded electronically in the U.S. is more convenient and lowers the costs incurred in trading shares,” said Affinor Growers Executive Chairman Nick Brusatore. “With our shares now trading electronically, investors can instantly benefit from greater liquidity and faster execution speeds. We are excited that new investors that may have been restricted … can now participate.”
Companies that have received DTC eligibility often experience higher trading volumes in their stock given the additional accessibility and availability of shares for trading. Most large U.S. broker-dealers and banks are DTC participants, which means that they are also accustomed to trading in DTC eligible stocks. In the end, the move is very significant for the firm moving forward on a financial level.
Affinor Growers stands at a unique point in its corporate history. After acquiring its growing properties, management is ready to begin generating near-term revenue while maintaining long-term growth potential. The company’s DTC eligibility means that these efforts could be appreciated on a greater level due to the market’s enhanced ability to buy and sell the stock with low transaction costs.
Investors in Canada’s medical marijuana space, including companies like Tweed Inc. (OTC: TWMJF) (TSX-V: TWD), may want to take a closer look at the company given its acquisition of Good to Grow LLC. Meanwhile, investors in traditional agricultural stocks, like Farmland Partners Inc. (NYSE: FPI), may want to take a closer look at the stock given its play in strawberries and other cash crops.
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