Citron presents the Red Flags Why the SEC should investigate Village Farms
In 2017, Village Farms was a failed tomato farmer on the brink of bankruptcy that found a way to revitalize its stock price with a “joint venture” with Emerald Health Therapeutics, Pure Sunfarms, to enter the cannabis growing market. This along with a paid stock promotion has resulted in a vertical move in the stock.
The reality of this “joint venture” is Village Farms has moved to the dark side by partnering with shady stock promoters that have a track record of failed businesses and JV’s while insiders at both Village Farms and Emerald Health have dumped stock.
This JV should be in the crosshairs of the SEC due to its numerous red flags highlighted by the SEC regarding investment schemes involving marijuana-related companies.
While we believe the whole cannabis space has become overextended, we acknowledge that there are real players in the business who might have expensive stocks versus pretenders whose primary objective is to separate investors from their money as warned by the SEC. We put Village Farms in the category of pretenders.
With a rapidly growing universe of cannabis stocks to invest in this global trend, why would investors choose to give their capital to a company that only owns 50% of a farming entity alongside an operator with a long history of stock promotion and failures. At the same $700 million enterprise value, you can invest in a much higher quality operator like CannTrust. Unlike the Canadian listed US multi state operators or vertically integrated players, Village Farms is at best a farmer with a track record of failure.