Next Green Wave is turning to Colombia to lead its international expansion efforts

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One of the ways that Next Green Wave has been able to differentiate itself from the competition is through strategic investment in assets outside of the California market. Earlier this year, the company signed definitive agreements to make a strategic investment in Organic Medical Growth OMG3 INC. (OMG), which is focused on producing and commercializing CBD products derived from medical and industrial cannabis in Colombia. We have been favorable on the economics associated with the cannabis opportunity in Latin America and find the leverage to Colombia to be worth highlighting.

OMG is positioning itself to become a low cost producer of premium cannabis in Colombia and its wholly owned subsidiary, Proymed S.A.S., is a medical cannabis company that is focused on producing and commercializing non-psychoactive cannabidiol (CBD) products derived from cannabis. 2019 has been a banner year for the CBD market as demand for these products has spiked higher. This increase comes as consumers have started to learn about the medical benefits associated with CBD and this is a trend that we expect to continue.

Currently, Proymed is also finalizing its transformation and psychoactive licenses for THC products in Colombia as well as finalizing international distribution agreements. Through this asset, Next Green Wave will have access to biomass that is being grown at a fraction of the cost when compared to North America. Cannabis is simply an input product to create additional cannabis products and through OMG, the company will be able to produce this input product in a very efficient manner.

We believe that OMG represents a strategic partner and will monitor how the company is able to execute on the Latin American opportunity. Through OMG’s current distribution channel of 7,300 pharmacies, Next Green Wave has the opportunity to license its collection of brands and products into the Colombian market. We are favorable on the growth prospects associated with the Colombian cannabis market and are of the opinion that it could prove to be a major value driver for Next Green Wave.

Enhances Leverage to the Colombian Market

Following the signing of the initial agreement, OMG formed a joint venture with Cannabolland Cluster S.A.S, a vertical biotech cluster based in Colombia that groups companies with cannabis licenses with the goal of structuring the companies, consolidating the licenses, providing technical knowledge and infrastructure. According to the agreement, OMG has access to the planned production of cannabis on 5,000 hectares with the possible extension of the cultivation licenses to the geographical area of the cluster (up to 12,000 acres). The six companies within Cannabolland, that include 2,500 associated growers, have 3 psychoactive (THC) and 3 non-psychoactive (CBD) licenses, as well as 2 transformational (extraction) licenses.

In collaboration with its strategic and distribution partner Ortix S.A.S, OMG is working on the launch of 9 cannabis-based topical products under the OMG brand. The first two products from the OMG portfolio in Colombia will be distributed across Ortix network of 7,300 stores within the next 60 days. We are bullish on the growth prospects associated with this and will monitor how it adds value to the overall business.

OMG is actively pursuing a go-public transaction and focusing on becoming a significant producer and supplier of medicinal cannabis products and services in Colombia. OMG is positioning itself to become one of the lowest costs, high-margin businesses operating in Colombia and this represents a major opportunity. If the company completes a go-public transaction, Next Green Wave should benefit from this in the form of price appreciation and we are favorable on OMG’s plan to create value.

We are favorable on the investment in OMG and will monitor how the companies work to create value for each other. Over the next year, we expect the Latin America cannabis market to report strong growth and we are favorable on the leverage that Next Green Wave has to this burgeoning international market. If the company is able to execute, this could play a key role in enhancing profitability and overall growth.

An Under-appreciated Execution Story

2019 has been a banner year for Next Green Wave and we are favorable on the expansion into Latin America via Colombia. The company has attractive growth prospects and has significantly advanced its California operations. Over the next year, we expect the California market to be a major value driver as the Colombia opportunity advances forward.

Although the management team has done a fantastic job when it comes to execution, the shares have been under considerable pressure and have been trading lower with the rest of the cannabis sector. We believe that there has never been a better time to put this opportunity on your radar and will be keeping an eye on how the team continues to execute.

Next Green Wave is an opportunity with significant catalysts for growth and we are most excited about the opportunity in California. Going forward, the name of the game for the company is execution and we believe that the management has positioned Next Green Wave for success.

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