Article

WHAT’S FJC ALL ABOUT?

November 26, 2018

 

 

First Jersey Cannabis Corporation plans to be the best there is. 

 

Not by attracting billions of dollars to buy vast quantities of land, building millions of square feet of greenhouses, cultivating thousands upon thousands of areas or committing enormous sums of capital to become a commodity grower; precisely what big money has done --- colossal cultivations and the oversize infrastructures to support the growing of marijuana and hemp. The results of these efforts have created companies that are over-leveraged, bloated market capitalizations with unrealistic expectations to ever return a profit to shareholders.  Public companies have scaled up their operations based exclusively on projected demands, which means building more extensive facilities, buying specialized equipment and hiring expensive employees. All these costs demand a constant flow of capital, and if a company doesn’t have the funds required to expand its operations, it may choose to raise money by issuing additional shares, which comes at the expense of existing shareholders, whose percentage ownership decreases proportionally to the number of new shares created.  Dilution is the “kiss-of-death” for investors --- continuously raises money by issuing more shares, your investment will decrease in value.

 

The primary explanation for the wild enthusiasm to heavily invest in the cannabis industry is the perceived potential. According to our proprietary SPM-Game Theory algorithm, the legal cannabis industry over the next ten years expects worldwide spending to exceed $59 billion. North American posted $9.2 billion in 2017 and projected to be at $51.5 billion ten years later. Our analytics are conservative based on the other prognosticators.  The bottom line: The legal cannabis industry has potential.  The chase for the next big thing has attracted billions of dollars to speculate on trends and business models with no proven record.

 

Viewed from a historical perspective of tobacco.

 

Applying the events of tobacco history and our proprietary algorithms, we have fashioned an early warning system as a roadmap to circumvent many of the obstacles others have faced.  Without the knowledge of the past, and current observations, financial planning is like planting a tree without roots. The chronicle of tobacco cultivation parallels what cannabis is currently facing.

 

Until 1850, tobacco cultivation was the main focus with most of the capital committed to land ownership, production and maintenance. Tobacco for the manufacturing of cigars and chew were mostly performed in Europe because of lesser margins in product marketing.  Based on today’s valuation, an acre of tobacco land in Virginia in 1850 was equivalent to an acre in New York City. After the Civil War, tobacco land values dropped 80 percent as tobacco leaf began to trade as a commodity. Meanwhile, the introduction of steam-powered shredding, cigarette machines, and lower tobacco leaf prices, cigar/cigarette manufacturing concentrated in the Philadelphia, New York, Boston, Cincinnati, Chicago, Baltimore, Richmond, Tampa, and Key West because of lower transportation costs and higher profit margins.

 

Product branding emerged as the primary profit sector for the tobacco industry, while cultivators were forced to sell-out, consolidate with distributors or filed for bankruptcy. Of the approximately 1600 farms in the United States growing tobacco, not one survived in its original form. In twenty years, product branding ruled the direction of tobacco and removed the growers as an independent economic force.   The early adopters emerged as major industrialist of the 20th century.

 

In 1865, using a converted corn crib as a factory, Washington Duke started his first branding company, "W. Duke and Sons," and began production of pipe tobacco under the brand name "Pro Bono Publico” By 1889 W. Duke and Sons had become the world's leading manufacturer of cigarettes with 40% of the U.S. market to formed American Tobacco Company.  His vision was embraced by others to become the primary business model. By 1913 R.J. Reynolds launched Camels, the "first modern cigarette." An innovative blend of burley and Turkish tobacco backed by a massive publicity campaign, Camels, were quickly imitated by American's Lucky Strike and Liggett and Myers' revamped Chesterfield cigarettes (in 1926 Lorillard jumped in with its Old Gold brand). All three brands stressed their mildness and catered their appeal to men and women alike.

 

Like what will happen to a “bag of pot,” tobacco went from free rolling to mass consumer acceptance. …  You get the picture?

 

Today’s headlines and history’s judgment are rarely the same.

 

The history of tobacco is the path that marijuana as a crop will follow. Today’s headlines have declared that cannabis is a win-win situation with no risk to the investor. At last count the headlines don’t fit the facts --- billions of dollars in market value has been lost. Despite the rapid growth of companies in the cannabis sector, there remains no guarantee that their businesses are profitable or will be in the future.

 

Many cannabis companies are hedging their cultivation expansion on the future, although many rules and regulations are still in the process of being established. Not one early medical cannabis company is successful, with some often failing to provide investors with adequate disclosure about the barriers to entering the industry (such as licenses required to grow cannabis) or adequately explained how to create a profitable business. The true risks of investing in this emerging industry have never been addressed. As with any investment, there is no guarantee that a stake in the cannabis industry will provide any return or income. Such “news” is not conveyed to the general public.

 

What makes First Jersey Cannabis Corporation (“FJC”) different?

 

Our business model involved opportunities in product development, distribution, technologies and services beyond just the cultivation itself.

 

Granted --- FJC has risks, but are tempered by prudent planning.  All investments come with some amount of risk. Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will get a higher return by accepting more risk. When you invest in the cannabis industry, you’re exposed to different types of risk that can affect your potential return. In the U.S., some states have authorized the sale and use of cannabis, but it remains illegal under federal law. Government-mandated pricing and taxation on cannabis products may also pose a risk to the success of a cannabis company. Cannabis products, especially those intended for recreational use, should be priced below their black-market value to attract consumers. If the government prices cannabis products too high, or if black market dealers undercut prices of products available in stores, the companies growing and selling the products may not be able to sell enough product to make a profit.

 

Interpretation of the underlying risks with the evolution of tobacco, our business model has built-in “safe harbors,” which allow us to embrace the potential of cannabis, not as a commodity, but as brand based consumer products.  On November 14, 2018, we announced the merging of our branding activities and R&D efforts to form FJC National Brands. While our marijuana cultivation facilities are in transition, we plan to fast-track our direct distribution and marketing channels with product introductions and brand name licensing to accelerate revenue. FJC National Brands will coordinate experimentation in cultivation and cloning techniques by manipulating the cannabis plant to enhance its positive features and reducing its negative characteristics. By establishing a complimentary business strategy, we can accelerate the marketing of our transnational brands of recreational cannabis cigarettes (non-tobacco), cigars (non-tobacco) and infused marijuana products with hemp-based merchandise. Under this formula, our vertical integration model includes specialty cultivation, products and services development, online and conventional marketing, distribution and licensing activities.

 

FJC BUSINESS MODEL    

     

We have the only business model based on sound fundamentals and management strategies to ensure higher rewards.  Our bold prediction relies on a proprietary algorithm – Subjective Probability Game Theory Model (SP-GTM), which is capable of assessing, analyzing and interpreting the events and circumstances within the cannabis industry, all the public companies filing reports, historical, current and projected trends, legal ramifications and other aspects to allow us to design an effective market strategy.

 

As an investor, you know that all business decisions are based upon use of the Consensus Model. Under a consensus model, the process of decision making involves all partners in the business. The consensus process is meant to be a comprehensive approach to decision making, focused on finding common ground among partners and eventually reaching a collective decision.  Corporate decision about a specific capital or human-resources are made in the course of normal business. Who was involved, what drove the decisions, how in-depth the analysis was, how unfettered the discussions, and how and where politics were involved.  The final considerations are the financial and operational outcomes of the decisions. The results highlight the hard business benefits—such as increased profits and rapid implementation—of several decision-making disciplines. These disciplines include ensuring that people with the right skills and experience are included in decision making, making decisions based on transparent criteria and a robust fact base; and ensuring that the person who will be responsible for implementing a decision is involved in making that decision. Finally, although corporate politics sometimes seems to undermine strong decision making, some types of consensus-building and alliances apparently can help create good outcomes.

 

For the continually evolving cannabis industry, the rapidly changing federal and states laws, federal and state tax consequences, and information that is less than current, the Consensus Model cannot work, because all underlying assumption and a robust fact base are not available. The only assumption that the Consensus Model got right was the legal emergence of marijuana and hemp as 21st-century consumer paragons.  

 

With a flawed Consensus Model, money from all sources poured-in, and found to their despair that the cannabis industry is high risk with limited foreseeable gains. Most of the billions of dollars committed went into growing cannabis, medicalizing marijuana, and selling it by the bag. Add in the complicated and inflated tax base, and compliance structure, marijuana as a crop is expensive to produce and impossible to make a reasonable profit.  No public company is currently profitable, and the best estimates project five years with a constant capital infuse to do so. Meanwhile, the black market still controls 80% of the market and operate a fraction of the cost.

 

We follow all the noise poured out by the media and the public companies themselves of how great the prospects are --- but in truth, they are scared --- and the information is knowingly false.

 

Our analytical business decisions are based on the Subjective Probability Game Theory Model algorithm 1/, because it works. SP-GTM understand the dynamics of the cannabis industry, able to evaluate various business models and to observe how and why the industry and the public companies have evolved to their current state. The data collected is a significant part of our business decision-making process. Many of SP-GTM’s conclusions are conveyed in a series of articles posted to our Cannabis News site, www.fjcannab.com.  An article of particular insight was posted on November 15, 2018, entitled “CANADA CANNABIS INVESTMENT SERIES – Conclusion.”

 

Our business model revolves around FJC National Brands to fast-tracked our direct distribution and marketing channels with product introductions and brand name licensing to accelerate revenue. Under this formula, our vertical integration model includes specialty cultivation, products and services development, online and conventional marketing, distribution and licensing activities.

 

In Conclusion: Our fundamentals are more effective and predictable after the cultivation stage — an area in which First Jersey Cannabis Corporation plans to utilize.

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1/ Notes:

Subjective Probability Game Theory Model (SP-GTM): The best way to judge an algorithm is by performance. The accuracy of its judgment, the more reliable the source. By evaluation mistakes, SP-GTM is capable of using negative judgment of others to gain insight to best navigate experience, learn by it and execute.  These are a few right call examples made by SP-GTM.

             1.        The passing of Proposition 215, California's Compassionate Use Act, legalizing  the cultivation, possession, and use of marijuana for medical purposes. SP-GTM  used the fact to analyze the future course of other states legalization.

             2.        SP-GTM forecasted that Washington and Colorado would legalize marijuana for  personal recreational use (11.6.2012), 18 months before it happened.

             3.         On 11.5.2013 voters passed marijuana use in Colorado, Maine, and Michigan, SP-GTM forecasted it six months before it happened.

              4.       On 11.5.2016 voters in Alaska and Oregon legalized recreational cannabis, SP- GTM predicted it eight months before.

              5.     In 2015 five states passed low-THC, high-CBD medical cannabis laws: Virginia, Georgia, Oklahoma, Texas, and Wyoming. SP-GTM predicted all states except Georgia, ten months before it happened.

              6.     On January 24, 2018, Vermont became the first state to legalize recreational   cannabis by way of state legislature, SP-GTM called it one year before the fact.

            7.         SP-GTM projected on numerous occasions that public companies in the U.S.A. that focused on cannabis crop cultivation would not make a profit for at least ten   years with all of them will be out of bonuses or evolved into another focus.  This   analysis was first apparent in 2010, reconfirmed five times from 2011 to the  present. As part of the data, their market capitalization as public companies would exceed actual value greater than 50 to 1. Current data suggests that all of   the U.S.A. public companies are overcapitalized within the ratio projected.

              8.       SP-GTM forecasted that Canada would nationalize recreational use in 2018, two   years before it happened. As part of this prediction, all public companies will not   make a profit   for five years or more, and a larger percentage of them will be                                 bankrupt by 2020.

            9.     SP-GTM’s analysis on marketing and merchandising have been accurate. At the discretion of the Company, such disclosures are not available because they  represent“trade secrets.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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