Connect with us

PROFILES

For the Next Wave of Marijuana Profits, Look to Real Estate

Published

on

The cannabis land rush is coming.

Thanks to one powerful advantage,
Crop Infrastructure Corp. (OTC:CRXPF / CSE:CROP)
looks poised to grab a massive share of the market.

You’ve probably heard about the outrageous profits investors are making in cannabis stocks. In the last three years the North American Marijuana Index (NAMI) has soared 408%.

Some individual stocks have done much better, returning as much as 3,146% (Aurora Cannabis), 3,502% (Canopy Growth), and even 7,429% (Cronos Group).

But investors who bought those and other cannabis stocks have had to endure a hair-raising ride. In January, Cronos stock lost 50% of its value. Aurora lost 43%. And Canopy lost 42%. The NAMI lost 39%, and continued to slide until mid-August of this year, ultimately losing three-quarters of a year worth of gains. Now it’s starting to rise again, up 27% in the last 13 days, as of this writing.

Even with those losses the gains are spectacular, however, many investors don’t have the stomach for that kind of volatility. This is why you’ll be glad to know there’s a better way to reap big cannabis profits.First, take a look at why investors are so eager to jump on the cannabis bandwagon.

Learn More About CRXPF at your brokerage today!

 

A full-scale cannabis revolution

The cannabis revolution is just getting started. And it’s growing fast.

In the U.S., 31 states already have laws allowing the use of cannabis, either medicinally or recreationally. Seven more states are in the process of legalizing its use,[1] and as of October 17th of this year, both medical and recreational cannabis will be legal all across Canada.

The legalization trend is creating a tremendous market. Research firm ArcView estimates that the cannabis market will grow to $47 billion in the next 10 years. That’s a compound annual growth rate of 47%.[2]

Farm Journal saysMarijuana is not only the fastest-growing industry in the U.S., but its statistical rate of growth is unparalleled in U.S. history.”[3] And World Finance reports that growth “continues to smash records, with the market expanding at an astonishing rate.” [4]

Choosing the right cannabis investment

Cannabis companies are jockeying for position and as with any industry, there will be winners and losers. Watch for a major shake-up within the next 24 months, with some companies rising to the top, and others going out of business for good.

The chance for life-changing profits is too good to pass up, but cautious investors who are eager to share in the explosive profits need a risk-reduction strategy to protect them from the volatility and regulatory risk inherent in cannabis investing.

That’s why you’ll be glad to know that…

There’s another, less risky way to get your share of profits from this exploding new industry

One of the best risk-reduction strategies in any industry is to invest in companies with tangible assets. In the cannabis industry, that means finding companies that supply or service cannabis growers and share in their growth.

The Motley Fool says “The ancillary [cannabis] market could deliver even more impressive growth” than cannabis producers.[5] They’re referring to real estate holding companies specializing in cannabis properties.

Investing in cannabis-growing properties allows investors to profit from the cannabis revolution without the regulatory risks that come with the cultivation and retail sides of the business.

Big profits from the cannabis land rush

Right now, there’s a real estate rush for cannabis properties. The Los Angeles Times says that cannabis growers are “willing to pay top-dollar rent,” noting that in some areas, prospective tenants are offering double or even triple the asking prices.[6]

News website Curbed reports that “prices for scarce square footage have already skyrocketed.”[7] The Real Deal, a real estate news website, says that cannabis growers typically pay anywhere from a 25% premium to two or three times higher on real estate.[8]

One such cannabis real estate holding company is Innovative Industrial Properties, Inc (IIPR). The company focuses on licensed medical cannabis growers, acting as a source of capital by acquiring the grower’s real estate and leasing it back to them. By selling the real estate to IIPR and then leasing it back, growers then have the opportunity to redeploy capital into the core operations of their companies.

Since going public in late 2016, IIPR stock has gained a tidy 136%, to $43.23. With a market cap of $282.86 million, that hardly makes the stock a bargain. Which is why you’ll be excited to know there’s a less inflated way to capitalize on this savvy business model.

Crop Infrastructure Corp (OTC:CRXPF / CSE:CROP) fills essential cannabis market need

Crop Infrastructure Corp (OTC:CRXPF / CSE:CROP) is a business that invests in the real estate, branding, and greenhouse infrastructure that cannabis producers need. The company owns the land, infrastructure, and equipment which it leases back to producers, creating win-win scenario for both parties. Producers get the land they need without the massive capital outlay required to buy land. And Crop Infrastructure Corp gets the land appreciation and property upgrades, plus a steady cash flow from its leases, management fees, and brand licensing fees.

It’s a solution for a problem that has plagued the industry and prevented its natural growth.


Solving cannabis growers’ biggest problem

Although there is huge demand for cannabis in states where it is legal, producers can’t get traditional bank financing to build their businesses. That’s because with cannabis still illegal at the Federal level, bank loans to cannabis producers cannot be FDIC-insured. That leaves cannabis businesses at the mercy of non-traditional financing agents who charge considerably higher interest rates, hobbling cannabis growers from the get-go.

There is no practical reason for producers to need to own the land they’re on. Instead, by leasing land, they can start their businesses with minimal resources and pay their leases through cash flow.

One of the largest producing footprints of anyone in the cannabis industry

Crop Infrastructure Corp also provides infrastructure development like greenhouse canopies, roads, water, and electricity, giving cannabis producers turnkey opportunities. What’s more, it provides cultivation, business management, and marketing expertise via already established brands, thus freeing up producers to do what they do best – grow cannabis. These services are provided for a series of brand licensing, leases, and management fees.

Crop Infrastructure’s portfolio consists so far of interests in over 1,095 acres of outdoor production and 89,000 square feet covered or under construction. An additional 218,400 square feet of light supplemented greenhouse facilities are scheduled. This gives the company one of the largest producing footprints of anyone publicly traded in the cannabis business.

But it isn’t just the value of the real estate that makes CRXPF valuable to investors.

Helping lease-holders achieve low-cost production

Crop Infrastructure Corp is strategically acquiring its real estate holdings in areas with low water and power costs. Their 35,000 square foot facility in Washington, for example, enjoys the lowest power costs in the U.S., allowing producers to achieve a target cost per gram of $0.30 USD. Most growers aim to achieve costs of $1.00 USD, which means CRXPF’s tenant growers have a significant cost advantage.

That cost advantage translates to higher volume sales, which in turn translates to higher brand license fees paid to Crop Infrastructure Corp, as well as great incentive for other licensed producers to turn to CRXPF for a competitive advantage.

 

Learn More About CRXPF at your brokerage today!

 

Advantageous terms for Crop Infrastructure Corp financing

In May 2018 Crop Infrastructure Corp completed a private placement worth $4.35 million CAD with each 40-cent unit consisting of one common share of CROP and one-half of one common share purchase warrant at an exercise price of $0.55 good for 18 months. This financing gives CRXPF the capitalization to continue its expansion, purchasing further real estate assets and building out properties.

Another private placement was completed in July 2018 for $1.6 million CAD at $0.30 per unit. Each unit consists of one common share and one common share purchase warrant at an exercise price of $0.50 per Warrant Share for a period of two years following the date of issuance. In total, the company has raised $12 million to date.

Here’s a look at Crop Infrastructure’s properties:

California

In California, where both medicinal and recreational cannabis are legal, CRXPF bought an 8.46 acre producing property in Humboldt County with a 10,000 square foot greenhouse for medicinal cannabis and 20,000 square feet of recreational licensed canopy. The tenant’s first crop was harvested at the end of August, and is expected to yield approximately 3,000 pounds of cannabis for the 2018 season.

Crop Infrastructure paid $2 million for the land and equipment at Humboldt in return for a 30% residual interest in the project with preferential payback on the funds it has advanced to the project consisting of 60% of the net after-tax profits.

Washington

CRXPF owns two properties in Washington state. The first Washington property is a 9-acre parcel in Grant County with 35,000 square feet of state-of-the-art canopy. The tenant at this property initially harvested 350 pounds of high quality cannabis, and was able to successfully ramp up to full production in September 2018. The perpetually harvesting facility should consistently yield approximately 1,000 lbs of cannabis per month.

The second, located in Grant County, consists of 44,000 square feet of canopy under construction in 12 greenhouse structures. Another 114,000 square feet of canopy is planned, bringing total canopy on the property to approximately three acres. The first six greenhouses should be complete within 45 days, and are designed to yield 12,000 pounds per year.

The cost of electricity at the both the Grant County sites is only $0.02 per kilowatt-hour, among the lowest rates in America. This should result in production costs of less than $150 per pound, or $0.33 per gram, an exceptionally competitive price.

Nevada

The company purchased a 49% interest in 315 acres in Nye County, Nevada for $1.3 million in cash. The acreage will be planted with high-CBD hemp at a cost of $90,000 USD. Nye County was selected for its temperate climate, which is ideal for greenhouse growing. The property includes 300 acres of private water rights, with 240 acres under automatic irrigation and fertilizer injection systems. A total of 50 acres is set aside for cannabis greenhouses and the company announced on August 22nd that it has leased an additional 750 acres in Nye County, bringing the total Nevada acreage to 1065.

CBD oil is currently valued between $5,000-$6,500 USD per kilogram in the US depending on quality. With the current

With the current land CROP owns its tenant growers have the opportunity to cultivate massive amounts of high CBD flower each year. One can assume the plan is to concentrate as much flower as possible into CBD oil. If that happens the potential sales numbers become truly impressive.

It is expected that Crop’s tenant grower will be able to harvest approximately 217,724 Kg of flower , or 29,674kg of CBD isolate, per 240 acre parcel harvested twice annually. CROP’s tenant grower intends to plant the full 1065 acres in 2019 and as Nevada has allowed hemp cultivation/production since 2016, the tenant grower does not require hemp processing licenses. CBD products in Nevada are available for purchase over-the-counter and without a prescription.

International

Crop Infrastructure Corp also owns interests in properties in Jamaica and Italy. The Jamaica project consists of a 49% interest in a 217,000 square foot canopy on five acres of prime agricultural land in Westmoreland Parish, some of the most fertile land in Jamaica. There is a robust cannabis tourism trade in Jamaica, as well as interest in developing pharmaceutical potentialities.

In Italy, the company is set to open two CBD retail outlets before the end of 2018. This comes after a June 2018 announcement that CRXPF acquired the rights in Italy and the US for 50 cannabis wellness products from The Yield Growth Corp. The $1 million deal grants Crop Infrastructure the license to infuse those products with high grade CBD.

The company is also 30% owner of a 25 acre property in Italy that is planted with high grade hemp. The property includes three drying facilities for the preparation of dried hemp biomass and has identified a location to build a state-of-the-art extraction facility to process the CBD Isolate.

Crop Infrastructure Corp (OTC:CRXPF / CSE:CROP): The best way to cash in on the cannabis boom

By focusing on land, infrastructure and branding, Crop Infrastructure Corp has taken out as much investment risk as possible. With their hard assets there is no regulatory risk. And with their management and production fee arrangements, there is plenty of upside for profits.

The company has aggressively built out its greenhouse portfolio. What’s more, the company is positioned to become one of America’s largest cannabis real estate holding companies.

Investors looking to profit from the cannabis revolution but who want to minimize risk should be advised to take a close look at Crop Infrastructure Corp (OTC:CRXPF / CSE:CROP).

 

Learn More About CRXPF at your brokerage today!

 

[1] https://www.forbes.com/sites/tomangell/2017/12/26/these-states-are-likely-to-legalize-marijuana-in-2018/#6e1e94f61032

[2] https://globenewswire.com/news-release/2018/02/26/1387588/0/en/NEW-REPORT-Worldwide-spending-on-legal-cannabis-will-reach-57-billion-by-2027.html

[3] https://www.agweb.com/article/marijuana-farming-is-now-for-us-agriculture-naa-chris-bennett/

[4] https://www.worldfinance.com/markets/arcview-enabling-investment-to-prosper-in-the-cannabis-industry?platform=hootsuite

[5] https://www.fool.com/investing/2018/04/27/a-marijuana-reit-yeah-thats-a-real-thing.aspx

[6] http://www.latimes.com/business/la-fi-cannabis-real-estate-20180331-story.html#

[7] https://www.curbed.com/2018/7/24/17604852/real-estate-marijuana-retail-cannabis-coworking

[8] https://therealdeal.com/la/issues_articles/joint-ventures/

PROFILES

The Next Big Thing In Cannabis With High Upside Potential

Published

on

Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF): Better Bioavailability PLUS True Vertical Integration Puts this Company into a Class of its Own

In the rapidly-growing legal cannabis market, many investment opportunities can look very similar.

So when you discover a company that truly stands apart from the rest – it’s worthy of immediate attention.

That’s the case with Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) – a company with an “unfair advantage” that right now appears to be the best way for investors to play California’s sustained legal cannabis growth.

 

Learn More About CLABF at your brokerage today!

 

What is the “unfair advantage” Core One Labs, Inc. has that no one else does?

Core One Labs, Inc. has removed every middle man from the equation in its business – achieving true vertical integration.

This from cultivation all the way through product delivery…the Company controls it all. This provides significant cost savings not only by reducing the middlemen… but also minimizing taxes that can drive product costs sky high in many cases.

So – much like a company selling technology, such as Apple – Core One Labs, Inc. manages the entire production and sales process from start to finish, selling directly to the consumer as opposed to selling to a retailer for a fraction of the price.

But that “unfair” vertical integration advantage is just part of what makesCore One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) such a unique investment opportunity.

The Company’s flagship product – CannaStrips™, which are similar to breath strips – offer consumers cannabis-infused strips that are a safer, healthier option than any other form of delivery.

This is because – when compared to other forms of cannabis products, CannaStrips™ have a significant advantage in bioavailability.

It’s all thanks to a patented science that allows for a more consistent – and longer-lasting – customer experience compared to other forms such as edibles or vaping.

Core One Labs, Inc. offers a compelling combination of…

A safe, effective, patented cannabis product – CannaStrips™ — which is unlike any other on the market today…

Lower price points – just $1 per package – and higher margins than others in the cannabis space thanks to  efficient production…

A true vertically integrated business model that allows the Company to control every aspect of the supply chain from seeds to delivery…

And the growth opportunities available in California – the world’s largest cannabis market.

 

Core One Labs, Inc. through its California wholly-owned subsidiaries has permits to cultivate, extract, produce, manufacture, transport, distribute and conduct retail dispensary sales, accompanied by home delivery of marijuana products for sale in California.

True Vertical Integration is the Key for Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF)

“Vertical integration” has become a buzzword in the cannabis industry – and something that is often an exaggeration when claimed by many companies in the cannabis sector.

Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF)is a vertically integrated technology company in the truest sense of the phrase.

The Company’s vertically integrated scientific approach includes total control of every aspect of its supply chain – from genetics, seeds, seedlings, cultivation, extraction, distillation and manufacturing.

This true vertical integration for Core One Labs, Inc. stands alone in the cannabis industry and offers the Company a powerful advantage in the market.

Core One Labs, Inc. controls its transportation, distribution and direct delivery, making it the most complete vertical integration in the cannabis sector.

Effective, Healthy and Convenient:
Core One Labs, Inc.’s CannaStrips™

Core One Labs, Inc.’s flagship product is CannaStrips™ — cannabis-infused strips that are a safer, healthier option than any other form of delivery.

Each fast-acting, sublingual dissolving strip has a consistent dosage and allows for a discreet and comfortable delivery system.

 

This convenient, effective and safe cannabis product is truly one-of-a-kind – and the company’s state-of-the-art growing technology and laboratory give Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) the ability to provide an unmatched customer experience on a consistent basis.

Because Core One Labs, Inc. controls every aspect of the manufacturing and delivery process, CannaStrips™ is able to offer the consumer a precisely measured, consistent dosage.

CannaStrips™ — which are similar to breath strips – offer a delivery method that is not only convenient for consumption but is also more direct when compared to cannabis edibles, which are ingested.

Edibles are ingested…and in that process the blood containing the medication – including THC or CBD – is absorbed through the intestines and must first filter through the liver, where as much as 60% of the medication is removed from the bloodstream.

This process, known as FPM (First Pass Metabolism) can take up to 45 minutes and can be stressful to the liver.

CannaStrips™, on the other hand, offer a safe consumption method for the enjoyment of cannabis and its benefits. Each strip has a consistent dosage and allows for a discreet and comfortable delivery system.

The patented science behind CannaStrips™ is called Transmucosal Delivery of Biologically Active Agents.

To put it simply, this is a method for delivering biological molecules systemically – directly across mucous membranes – to make it easier for delivery and repeatability of dosage.

The CannaStrips™ extract is reduced to a micro particulate size and homogenized into a lipid encapsulation. This allows the active cannabinoids and terpenes to enter the bloodstream quickly through the buccal membrane of the mouth and remain in the bloodstream until receptors in the body are available.

CannaStrips™ offer an effective dosage with no liver involvement. The result is a consistent, precise and effective experience for each of the company’s five unique products:

 

 

 

Rêveur: A Luxury Brand of Superior Quality Live Resin

Smoking cannabis will always appeal to a certain number of consumers. To address this demographic, Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) has developed Rêveur, a luxury brand line of superior quality live resin.

Through the superior quality of the extraction process, Rêveur live resin is created to contribute to a community of the urban professional living a refined lifestyle.

Rêveur is extensively lab-tested to be contaminate-free and contains a high percentage of cannabis-derived terpenes and THCA. Rêveur products are available in indica, sativa and hybrid strains.

Rêveur is the purest reflection of the plant’s essence, bringing beauty, sophistication and elegance to the world of cannabis concentrates.

Core One Labs, Inc. Offers Access to Unrivaled Expertise in 6 Critical Areas of Vertical Integration

By developing a solution to resolve the issues associated with pesticide-riddled cannabis products – and developing a truly vertically integrated operation – Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) has become a game-changing company.

Core One Labs, Inc. has eliminated virtually every middleman mistake and cost margin in its operations.

This will translate into a superior product and customer experience as well as increased margins at every level of production and distribution with potentially significant increases in net profit margin.

Here’s a quick look at how Core One Labs, Inc. has eliminated third party excuses and developed a fully integrated market solution to produce superior products.

Step 1: Isogenic Nursery

Core One Labs, Inc.’s state-of-the-art genetics nursery has the capability to supply up to 60 contracted cultivators to grow its seedlings into mature, ready-to-harvest cannabis plants.

These plants have precise genetics for extraction and distillation to help produce CannaStrips™ formulations. The Company also generates additional revenue from the sale of seedlings to cultivators.

By controlling its supply chain from start to finish – beginning with the isogenic nursery – Core One Labs, Inc. ensures the highest quality ingredients are used for every product the company delivers.

Step 2: Multi-Level Cultivation

The Company’s cultivation system is unlike any other cannabis cultivation currently in operation today. The multi-level environment is controlled within one single degree of temperature variation and less than 2 percent of humidity variation continuously.

This is all accomplished with 170 tons of a proprietary air/humidity conditioning system and the entire environment is circulated through almost 300 feet of ultraviolet light every 3 minutes, significantly reducing the chance of contamination in the grow.

Core One Labs, Inc. controls the environment from purification of the water to each individual plant being monitored for all of its nutritional, water, temperature and pH needs.

Step 3: Extraction
Core One Labs, Inc.’s extraction permits allow for CannaStrips™ production and the production on behalf of third parties for white label products such as extracts for edibles, drops, vaping cartridges, sprays and topical ointments. Most cannabis products require cannabis extracts (oils) or distillate, which Core One Labs, Inc. can supply.

This capability will serve growing industry demand across the state of California as the need for high quality extracted cannabis oil increases with a price as high as $10,000 per liter.

Step 4: Distillation

Core One Labs, Inc. projects that its distillation activities will generate high margin revenues throughout 2019 and beyond.

The Company’s Cash Flow per Square Foot ratio value is 1 million dollars per 100 square feet ($1 million per 30.5 sq. meters) annually, a figure that is higher than any other industry in the world.

Step 5: Manufacturing
Core One Labs, Inc.’s production equipment is constructed from pharmaceutical grade stainless steel and built to FDA specifications. At a 40% run rate, the equipment has the capacity to produce 500,000 CannaStrips™ per day.

The packaging equipment is also constructed from pharmaceutical grade stainless steel and produces individually sealed, water resistant, shelf-stable, pharmaceutical grade and FDA-childproof compliant packaging. The packaging equipment is capable of meeting production capacity and producing 500,000 CannaStrips™ per day.

Step 6: Dispensary/Delivery

Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) has a brick-and-mortar dispensary – the Highway 395 Dispensary – located within 100 meters of, and clearly visible from, California’s famous Highway 395.

 

This dispensary will be the flagship for CannaStrips™ and Rêveur’s promotional point-of-sale and direct delivery.

Over 120,000 vehicles will pass this dispensary every day on a stretch of Highway 395 that connects the eastern halves of Northern and Southern California.

In addition, Core One Labs, Inc. is launching its 420 Prime Delivery Service as part of the Highway 395 Dispensary.

This revolutionary new service will be able to receive online orders for cannabis products and deliver them directly to the customer’s home or place of business, thus removing all potential middle men and potentially increasing margins for the Company.

The 420 Prime Delivery Service allows for delivery of all types of products – not just Core One Labs, Inc. brands – directly to the consumer.

This revolutionary new delivery service will provide same-day delivery access to 39 million California residents – and 260 million annual visitors – making Core One Labs, Inc. an early favorite to claim the title of “The Amazon of Cannabis.”

The rapidly-growing legal cannabis market has created many opportunities for investors to consider. And the unique combination of factors working in favor of Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) could make this company the single best way for investors to play California’s ongoing cannabis boom.

Here are 5 reasons investors should consider looking more closely at adding shares of Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) in the early stages of this bull market:

1) Enormous California Market – California’s population of 39.3 million makes it the world’s sixth-largest market by itself and projections for rapid growth ahead in this market create significant upside opportunity for well-positioned companies.

2) True Vertical Integration – While many cannabis companies falsely claim to be “vertically integrated,” Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) offers true vertical integration. The Company controls every aspect of its supply chain – from genetics, seeds, seedlings, cultivation, extraction, distillation and manufacturing.

3) Successful Flagship Product – Core One Labs, Inc. ’ flagship product – CannaStrips™ — are cannabis-infused strips that are a safer, healthier option than any other form of delivery available. And at just $1 per package, CannaStrips™ offer an affordable cannabis experience no other company can match.

4) Dispensary and Delivery– The Company’s new Highway 395 Dispensary – and its 420 Prime Delivery Service – provide an opportunity to serve even more customers while eliminating the middlemen associated with the retail process. This allows the Company to better manage its customer experience while also achieving higher margins.

5) Future Growth Potential – In addition to its activities in the California market, Core One Labs, Inc. (CSE: COOL); (OTCQX: CLABF) has also signed a letter of understanding with National Green Biomed Ltd. This agreement calls for the construction of a manufacturing facility in British Columbia, Canada which will incorporate all the technologies the Company has developed over the past five years into producing CannaStrips™ for global distribution.

Learn More About CLABF at your brokerage today!

 

i https://www.forbes.com/sites/nickkovacevich/2019/01/02/budding-cannabis-trends-in-2019/#37851c6c586f

Continue Reading

PROFILES

California cannabis stocks take off after new July 1 regulations

Published

on

Stocks jump as much as 105% in 30 days…and still rising!

Undervalued Chemesis International Inc. (OTC: CADMF / CSE: CSI) is the single best way for investors to play this fast-moving scenario.

While most cannabis investors are still looking to Canadian producers for big stock profits, the California pot market is starting to rise like a tsunami.

The savviest investors are jumping from Canadian cannabis stocks to catch the California wave. If you’re out for big profits, it’s time for you to jump in too.

Consider this. In the 30 days ending September 11, these California-focused cannabis stocks have given their investors returns that beat the market by an average of 29-to-1.

Returns since early August:
Chemesis Intl (CADMF) 150%
Solis Tek (SLTK) 105%
CannaRoyalty (CNNRF) 58%
MedMen (MMNFF) 55%
Sunniva (SNNVF) 34%
S&P 500 2%

It’s the beginning of the biggest new bull market today

No other industry today is recording these kinds of returns. Not technology, not Internet retail, not industrials or oil and gas. California-focused cannabis stocks are out-performing nearly everything else in the market, and this is just the beginning.

Legal sales of recreational cannabis began in California on January 1, 2018. The state gave sellers six months to become compliant with new regulations. By July 1 they had to be in strict compliance on purity testing, safety packaging, and content labeling of products.

Plenty failed to meet the stringent standards, and the state started shutting them down. But those that are compliant have seen their stocks soar as laggards are weeded out.

These companies are benefitting from what will soon be the world’s biggest legal cannabis market.

California will soon eclipse entire Canadian cannabis market

California is already the largest cannabis market in the world – by a long shot. ArcView Market Research estimates that the legal and illegal cannabis market in the state surpassed $8 billion in 2016. Newsweek puts the figure even higher at $13.5 billion. The California legal medicinal market alone is responsible for an estimated 62% of US sales.

Now, with legalization, much of the illegal sales will transfer to legal dispensaries, contributing to a growth rate for legal cannabis that is expected to compound at an annual rate of 23%. By comparison, the entire Canadian cannabis market is $4.2 billion.

It’s easy to see why California legal sales will surpass all of Canada’s. More people live in California than in all of Canada. And California’s GDP is nearly three times larger than Canada’s. That means there are more people to use cannabis and more money to buy larger quantities of it.

To put California’s massive cannabis market size in perspective, experts believe legal cannabis sales could surpass beer sales in the state by the end of 2019, topping $5 billion, and $6.5 billion by 2020.

All of which is why California-focused cannabis companies will grow the largest and will dominate the market for years to come.

For comparison, take a look at how cannabis legalization in Canada fueled investor profits.

Profits as high as 9,755%

Though medicinal cannabis has been legal in Canada since 2001, until 2014 it could only be purchased through the government. Laws were relaxed in 2014 to allow sales through private companies. That triggered a gold rush, and produced the first wave of cannabis stock millionaires. Investors saw returns as high as 9,755% in Abattis Bioceuticals and 9,150% in United Cannabis.

There’s no question that Canada’s cannabis stocks have made investors rich. In the last 12 months the Canadian Marijuana Index has shot up 291%, despite a dramatic pullback in January. The last three years has seen a 1,437% rise.

But for Canada-focused cannabis companies, the biggest gains are behind them. The market leaders have already been established. Now you will see a wave of consolidation as second-tier companies are bought up or go out of business, unable to compete with the geographic range and low production costs of the leaders.

That’s why savvy investors are turning to California.

A remarkably uncrowded marketplace

Savvy investors are buying up stocks like Solis Tek (SLTK), CannaRoyalty (CNNRF), MedMen (MMNFF), Chemesis International (CADMF), and Sunniva (SNNVF).

These are not only the dominant players in California, they are among the few players there. One of the reasons is because the new rules are making it harder for new companies to find their financial footing, with licenses and compliance for everything from product potency and zoning requiring the expenditure of tens of thousands of dollars. “Since all of the regulations went into place, now it takes a few hundred thousand to a few million to start,” said Kimberly Cargile, CEO of Sacramento retailer A Therapeutic Alternative.

Morgan Paxhia, founder of Poseidon Asset Management, notes that there are thousands of sellers in the state that have been put out of business because they don’t have the capital or expertise to meet regulatory requirements.

That leaves the enormous California market to a handful of companies that can afford the kind of investment required. Venture capital companies “want you to be holding several half-acre or 1-acre permits and licenses to even think about investing,” says one grower. “Most of the bigger guys, a half-acre grow isn’t going to make them the kind of money they want to make. They want something extremely large.”

One cannabis company that has what it takes to attract the kind of venture capital necessary to be a major player is Chemesis International (OTC: CADMF / CSE: CSI).

Deep-pockets challenger aims to be California’s biggest cannabis company

On August 7, 2018 Chemesis announced the finalization of a draw-down $25 million equity financing deal with Alumina Partners, a New York-based private equity firm. The financing is at the sole discretion of Chemesis, allowing the company to access funds as needed.

The financing is designed to protect shareholder value while the company aggressively grows its market share. Such major investments are rare for early stage companies, and serves as a validation of Chemesis’ business plan and growth strategy.

Terms of the deal allow Alumina Partners the purchase of up to $25 million in Chemesis units, consisting of one common share at a 15-25% discount to market price, and one purchase warrant at a 50% premium over market price, all at the exclusive discretion of Chemesis. There are no upfront fees or interest associated with the use of the financing.

Such robust financing is rare for cannabis companies doing business in California. For one thing, cannabis is still illegal on the Federal level. This has stopped many venture capitalists from wanting to participate in the market.

However, the tide is rapidly turning. Casa Verde Capital says that “the cannabis industry will be among the most compelling investment themes of our generation.”

Americans overwhelmingly support legalization

President Trump has promised to protect states that have legalized cannabis. His position was made clear in April of 2018 when he told Colorado Senator Cory Gardner that the state’s cannabis industry would not be targeted, despite the objections of Attorney General Jeff Sessions.

What’s more, in April, the US House of Representatives proposed legislation to loosen federal cannabis regulations. Even formerly staunch opponents are coming around, including former House Speaker John Boehner and conservative Republican congressmen Dana Rohrabacher and Tom Garrett.

More than half of US states allow some form of cannabis use, either medical or medical and recreational. By the end of 2018 that number could be more than three quarters.

They are responding to the will of the people: Americans, including Republicans, overwhelmingly support legalization.

For these reasons and more, venture capital company Alumina Partners bet big on Chemesis International. What they saw was a company that could dominate its market.

Says CEO Edgar Montero, “We are very well capitalized at this point. We have control of our destiny, which is very, very refreshing for our shareholders because now the leverage is on our side.”

Chemesis International (OTC: CADMF / CSE: CSI): First-mover advantage in the enormous California market

In marketing strategy, there’s a term called “first-mover advantage” that offers rare benefit to those companies that can claim it. It’s when a company is among the first key players in a new market or a new industry, and therefore are able to establish themselves before being overrun by competitors.

These companies are able to establish strong brand recognition, shore up the best sources of funding, and build a loyal customer base simply because there aren’t any competitors in the way during their first few years of operation.

Chemesis is one of the few fully compliant first movers in the California market. The company is vertically integrated, which means they are involved in every stage of the cannabis market from seed to sale. That includes cultivation, product manufacturing, branding, distribution, and retail.

The company also owns a state-of-the-art, fully state-compliant facility in Cathedral City, California that provides legal cannabis to a network of dispensaries throughout California.

Chemesis also owns 80% of SAP Global, a California producer with a 2,000 pound processing capacity that can yield as much as 200 pounds of compliant cannabis oil per day, which is substantial. SAP is known for its high quality, and has been the recipient of 26 awards in the past five years.

The producer is intended to provide Chemesis with a consistent revenue stream as the company invests its resources in aggressive growth strategies.

Chemesis also owns Desert Zen, a state-compliant cannabis manufacturing, packaging, distribution, and transport company with a large existing network of dispensaries and distributors throughout California.

Importantly, Desert Zen is able to track all products, monitor safety, and ensure that all seed-to-sale laws are followed throughout the entire supply chain.

Chemesis projects annual revenue from California operations of $61.5 by 2022, with a net income of $27.2.

But California isn’t the company’s only market where they have first-mover advantage.

Chemesis expands into second new market

Part of the company’s unique strategy is to be first-to-market as cannabis legalization expands globally. That was how they were able to establish an early presence in California. And it is why they have now expanded into Puerto Rico.

With medicinal cannabis now legal in Puerto Rico as of 2017, Chemesis has become a first-mover in that market. More than 20,000 patients have registered for medical cannabis in the first year in the territory.

Secretary of Health Rafael Rodriguez Mercado says that the market is “growing exponentially,” with approximately 500 new patients per week. The US territory’s treasury secretary says medical cannabis could generate up to $100 million a year in sales taxes.

In August 2018 Chemesis purchased an 80% interest in Natural Ventures PR LLC, a seed-to-sale medicinal cannabis company based in Caguas, Puerto Rico. Natural Ventures has operated since 2017, and is licensed to cultivate 100,000 square feet of cannabis.

Currently the company owns a 35,000 square foot manufacturing facility, and is producing oil-based products as well as edibles and other cannabis products. (Puerto Rico law restricts medicinal cannabis products to capsules, extractions, lotions, patches, edibles, flower, and oils.)

Chemesis expects their Puerto Rico operations to provide a significant revenue stream totaling $6.7 million in revenue by 2022, with a net income of $2.8 million.

Don’t miss your chance for oversize profits from California’s new recreational cannabis market

On July 1, compliant California cannabis companies put the pedal to the medal. With thousands of non-compliant sellers being wiped from the market, those that remain – the ones with deep-pockets financing and fully compliant facilities and products – will quickly rise to the top.

There are only a small number of them, like Solis Tek (SLTK), CannaRoyalty (CNNRF), MedMen (MMNFF), Chemesis International (OTC: CADMF / CSE: CSI), and Sunniva (SNNVF).

Chemesis International has distinct advantages. If you’re eager to get your share of big cannabis profits, take a close look at Chemesis (OTC: CADMF / CSE: CSI) today. And remember to always do your own due diligence.

 

 

 

[1] https://www.ino.com/blog/2017/12/6-cannabis-stocks-set-surge-californias-rec-market/#.W5lQPM5Khpg

[1] https://newfrontierdata.com/marijuana-insights/california-legal-cannabis-market-projection/

[1] https://newfrontierdata.com/marijuana-insights/california-legal-cannabis-market-projection/

[1] https://www.fool.com/investing/2017/11/05/surprise-the-market-for-canadian-marijuana-stocks.aspx

[1] https://www.businessinsider.com/california-legalizing-weed-on-january-1-market-size-revenue-2017-12

[1] https://www.forbes.com/sites/julieweed/2017/11/26/california-weed-entrepreneurs-will-make-5-2b-in-2018-with-almost-no-banks-to-put-it-in/#1162d9ff4e52

[1] https://mjbizdaily.com/why-financing-is-a-key-hurdle-for-california-cannabis-companies-and-forcing-some-to-the-black-market/

[1] https://www.pehub.com/canada/2018/05/america-can-learn-canadas-first-mover-advantage-cannabis/#

[1] https://www.washingtonpost.com/politics/trump-gardner-strike-deal-on-legalized-marijuana-ending-standoff-over-justice-nominees/2018/04/13/2ac3b35a-3f3a-11e8-912d-16c9e9b37800_story.html?utm_term=.e5ccd78b840b

[1] https://www.washingtonpost.com/news/the-fix/wp/2018/04/20/whats-up-with-politicians-suddenly-embracing-pot/?utm_term=.4079d8ff7f56

[1] http://www.latimes.com/nation/la-na-pol-republicans-legal-marijuana-20180417-story.html

[1] https://www.washingtonpost.com/news/wonk/wp/2017/10/25/for-the-first-time-a-majority-of-republicans-support-marijuana-legalization/?utm_term=.a725a33a6018

[1] https://mjbizdaily.com/puerto-rico-medical-marijuana-market-growing-exponentially/

[1] https://www.apnews.com/ef52a9e5ed484df4baf70047f432f3d9

Continue Reading

Business

High Times Holding Co. is on a Mission and Wants You to Be a Part of It

Published

on

With such intense attention on the cannabis sector over the last few months, it should come as no surprise that the industry’s mascot, and perhaps its heart and soul, is looking to cash in as well. High Times, the iconic magazine and media property is looking to go public.

The actual entity in question here is High Times Holding Co., which was formerly known as Trans-High Corporation and changed its name to High Times Holding Co. in June, 2017. You probably know it as ‘that marijuana magazine’. The company has actually been around for nearly 45 years. And it’s apparently high time for a move onto the public markets.

 

Going to the Show

After filing for an IPO in January of this year, those plans were put on hold when it looked like prospects for raising enough in the deal soured. However, in June, the company announced it would be “launching an equity crowdfunding campaign ahead of its application for an initial public offering on Nasdaq later this year.”

Adam Levin, Chief Executive Officer of High Times said, “The campaign is intended to bolster the valuation of High Times Holding Corp while offering non-institutional investors greater access to shares than they would have in an IPO.”

For the offering, High Times set a price of $11 per share, 10% below the price the company expects the shares to trade on Nasdaq.

The company recently acknowledged that it would have to raise at least $14.7 million from the offering to live up to the Nasdaq’s stringent listing standards. They already have about $12.5 million committed from more than 9,000 investors.

Initially, in order to help open the spigots, the company suggested it would accept investments in Bitcoin. However, that plan was changed – without clear explanation. At this point, High Times will take fiat only, but through any means possible (checks, credit cards, ACH or wire transfers), as it strives to raise funds for subscription to is Reg-A+ share offering.

So, what do they need to get to the magic number? Remember, the parent company has a troubled balance sheet, with lots of debt on hand. So far, over half of its raised funds have gone to pay off creditors.

The answer is: more media exposure – it boils down to “Buzz”.

 

How to Get High

To get that done, the company recently entered into a “no cash” deal with iHeartMedia Inc (OTCMKTS:IHRTQ), a diversified media and entertainment company with a broad mainstream reach. According to the Wall Street Journal, iHeartMedia Inc “will trade up to $10 million worth of advertising inventory for a roughly 5% stake in the publisher of High Times, the 44-year-old marijuana magazine, offering the biggest U.S. radio broadcaster access to the nation’s growing number of cannabis consumers.”

“Cannabis at the end of the day is mainstream,” said High Times Chief Executive Adam Levin. “And iHeart has a huge mainstream appeal.”

In other words, Levin sees this as the deal that can take the High Times investment opportunity to the masses in a big enough way to generate what amounts to a rescue bid for ownership that is big enough to get the company public through the Reg A+ route and in position to meet Nasdaq listing criteria.

Given the buzz right now in front of the full legalization of the Adult-Use market in Canada expected to take effect later this month, and the $5 million to $10 million of ad inventory committed from iHeart, this is the right time to try this unique strategy.

What investors will be left with over the longer term is another question altogether.

Continue Reading
Advertisement


Advertisement
Advertisement

Whats Hot