Medical Marijuana M&A Activity Begins With First Major Deal

VANCOUVER, British Columbia, April 2, 2014 (GLOBE NEWSWIRE) -- Shutting down small personal medical marijuana growers as of April 1st, 2014 didn't really have any legs as a viable or even a remotely intelligent strategy. As the rules change to 'favour' commercial growers as of that same date, it is apparent that it will take time to move from a home-based, small producer regime to large, regulated commercial operations.

The injunction to exempt existing patients currently licensed to grow medical marijuana. does not directly affect the new licensing system; the status quo will be maintained. There will likely be final resolution through the court system within a year. Until then, commercial participants will move ahead.

"While a number of peers are planning to 'bolt on' Medical Marijuana assets by way of acquisition: Umbral plans a more direct approach and involvement," stated Jagdip Bal, President and CEO of Umbral Energy (TSX-V:UMB) in an exclusive interview with Financial Press. "We are planning to apply for a license and are currently having discussions with growers and others to secure land and expertise to become a major commercial supplier in this burgeoning industry."

The growth of the Medical Marijuana market over the next decade is explosive. With a current user base of around 40,000, that number is expected to swell to nearly 500,000 in ten years. And that may be conservative.

As of April 1st, physicians will be the prescribers of the substance as opposed to Health Canada. In a perfect world, patients will be able to purchase a maximum of 150 grams a month produced by a licensed commercial grow operation.

The March 21st injunction that reversed the dictum that all marijuana would be supplied commercially after April 1st, will, until a constitutional challenge is heard, allow patients licensed to grow for personal use to continue.

Maintaining the status quo for the time being will certainly ease the transition, application and prescription of cannabis as the new rules settle. In this new world, there are concerns as well as opportunities that will be addressed. Early commercial adopters that are willing to get directly involved in production as the market unfolds will likely see the largest benefits.

Numerous stocks have seen positive reaction to plans to enter the Medical Marijuana market:

Windfire Capital was languishing at $0.02 at the beginning of the year and is trading at $0.14 currently, following recent double announcements of closing a private placement and a foray into the Medical Marijuana space. As well, Affinor has seen its shares rise from under $0.05 March 13th, to trade at just under $0.35 on very heavy volume: Following the announcement that Vertical Designs Ltd is taking a controlling interest. Vertical Designs is a leading vertical growing technology firm, which lends itself directly to high volume agricultural production; in this case marijuana.

Activity, other than just announcements, is obviously coming quickly, which more than likely warrants some initial exposure by investors.

Umbral looks a somewhat similar situation to Affinor, except that UMB intends to apply for a license and build a proprietary business as well as enter into relationships with private companies that are set up to produce and sell Medical Marijuana. The next wave for the space will likely be more acquisitions, joint ventures, sourcing expertise and of course, financings to bring it all together.

"Umbral is in active negotiations/discussions with multiple private companies," stated Bal. "Once a formal agreement is reached, we expect to also apply for a license, which we hope will be in the next 30-60 days."

The Company also has two resource properties, a mine in the Abitibi region of SW Quebec and an oil and gas concern in Little Bow Prospect in Alberta. The former is 65 mineral claims over 2633 ha. Past exploration of the Letourneur property was carried out sporadically from 1997 to 2002. The work consisted of geological mapping, trenching, geophysical surveys including magnetic and IP/PP and rock sampling. Previous grab and channel rock sampling from the quartz veins revealed high gold values ranging from 1g/t to 19 g/t. A verification visit to the property in May 2010 produced assay results ranging from 0.93 to 6.64 g/t Au.

Gold is contained in pyrite and easily extracted by standard beneficiation methods.

Umbral Energy Corp. has entered a participation agreement with Aroway Energy Corp. Aroway has a significant track record of success and meets the criteria, which Umbral requires as a strong partner.

Pursuant to this farm out agreement, Umbral has paid 37.5% to earn a 25% interest in the initial Glauconitic Test Well (1500m); these costs are estimated to be $300,000 net to Umbral.

Upon completion of a successful test well, Umbral will pay 37.5% to earn a 37.5% interest in further participation in the area – currently 1,600 acres (2.5 sections) of land.

While Umbral intends to further develop these assets, the current focus is to diversify into the Medical Marijuana space, both as a developer and producer. The Company intends to move on this initiative quickly for the benefit of the Company as well as shareholders.

Umbral shares currently trade at $0.095 with a market cap of $2.8 million.

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CONTACT: Umbral Energy Corp 929 Mainland Street Vancouver, British Columbia V6B 1S3 Telephone: (604) 628-1767 Fax: (604) 628-0129 email: info@umbralenergy.comSource:Umbral Energy Corp