Emerald Health ($EMH) has been similar to several companies in legal cannabis, seeming to aimlessly drift while the bank balance dwindles.

The whole story behind PureSun Farms will probably not be known outside of their boardroom, but we’ve chronicled how Village Farms ($VFF) made the inevitable move on one of the only performing assets (PureSun Farm) in the Canadian sector. It took them less than 6 months to cinch the thing up and ride off into 100% ownership Nirvana…and it doesn’t look like $VFF even had to roll up their sleeves.

So, what now for $EMH?

Growing craft cannabis, doubling product SKUs, add 2 brands and 5 more distinct product lines, hiring a new sales team, developing a focus on Ontario and Quebec, shuttering their BC grow-op, and <takes breath> building a new business division to explore ‘strategic partnerships’ and licence/acquire/invest in technologies or companies – and of course – explore international opportunities. Good Lord.

Their product team has been empowered to delve into their very own ‘trade secrets’ – and of course – leverage off of 3rd party expertise for any internal gaps they might have. Oh, and devise new applications for medical to service needs as yet unknown by consumers. Sigh.

It’s not like they didn’t own half of an actual performing asset (they did), but are now pivoting into doing everything with a bank account that will see them through about 3 quarters of it (maybe). $EMH is already sporting an anemic $10MM/YTD in sales (which lost $20MM on operations alone in 2020).

In a couple of ways….GoBlue and I lament the recent share price run – in that we’ll see non-viable companies able to continue to stumble along, adding little value to shareholders while driving slowly on an already congested highway. $EMH wasn’t able to raise the cash (I expect they will try shortly), but instead came into the money by being elbowed out of a JV. Same result though. A zombie of a poorly run 200MM share nothing is now trying to become an Auxly operationally – without any kind of demonstrated business acumen in the entire time they’ve been around.

Normally I’d have no interest in a mutt like this – but like other weak/failing companies in the sector – they provide great examples for investors, even if in the negative.

What $EMH tells us is that the ‘value’ segment is pretty much covered, that the ‘premium’ category is coveted (read profitable), that some regions aren’t worth being in without scale, and that cannabis ‘CPG’ still needs to find a way to tap into the broader consumer market.

Dope’s got a ways to go. I just wish middling outfits with middling management that restructure their business plan to chase revenue…..would simply go away. With recent share price moves and renewed interest in the Canadian legal cannabis sector, that’s been set back awhile. And the sector will remain plagued by middling penny zombies pleading for just a little while longer.

The preceding is the opinion of the author, and is in no way intended to be a recommendation to buy or sell any security or derivative. The author holds no position in $EMH.