Shifting public opinion on cannabis may have incentivized the House Financial Services Committee to pass the US Secure and Fair Enforcement (SAFE) Banking Act. Now with two-thirds of Americans supporting federal marijuana legalization, prominent Multi-State Operators (MSOs) stand to gain from a freer banking system such as Cannabis One Holdings Inc. (CNSX:CBIS.CN) (OTC:CAAOF), 1933 Industries Inc. (OTC:TGIFF) (CNSX:TGIF.CN), Curaleaf Holdings, Inc. (OTC:CURLF) (CNSX:CURA.CN), Green Thumb Industries Inc. (OTC:GTBIF) (CNSX:GTII.CN) and Trulieve Cannabis Corp. (CNSX:TRUL.CN) (OTC:TCNNF).
The SAFE Act’s progress points to a shift that shows the US creeping closer to full legalization, much like its neighbors to the north. For an MSO like Cannabis One Holdings Inc. (CNSX:CBIS.CN) (OTC:CAAOF), which currently has a presence across 5 states (soon to be 10), any movement towards a single federal regulatory standard could be quite beneficial.
Presently, Cannabis One Holdings Inc. (CBIS) (CAAOF) manufactures cannabis-infused products in two facilities: Evergreen Organix (Nevada), and the newly acquired Honu (Washington).
Taking the company as an example, having the ability to manufacture goods in one state, and to ship them to and sell them in another state significantly opens up their market size. Being able to sell any of their products in all of Cannabis One’s dispensary chain The Joint stores would be quite beneficial.
Though the SAFE Act has yet to be scheduled for consideration by the entire House, having 150 sponsors already thanks to the House Financial Committee is a great start. It is expected that the Act will come to a vote soon, after a review by the House Judiciary Committee.
Capitalizing on the Current Multi-State Landscape
By acquiring the Washington-based Honu, Cannabis One Holdings Inc. (CBIS) (CAAOF) added to its growing portfolio of established and successful brands in multiple states.
How successful is Honu? Since its inception, the brand has accumulated a series of accolades, including Best Edible Company, Best Cannabis Brand Design, and Best Sweet Edible in Washington. Cannabis One Holdings Inc. projects Honu’s 2019 system-wide brand revenue to reach US$20.3 million.
“Following on our recent announcement to acquire the ‘Fat Face Farms’ brand, CBIS believes the addition of the ‘Honu’ brand family to our growing catalogue of IP further validates Cannabis One’s stated strategy of securing ‘Best-of-Breed’ brands.” Mr. Mascio continued, “We anticipate that the market popularity and positive reception of the Honu brand will provide yet another catalyst for Cannabis One, opening the door for us to explore new manufacturing partnerships – with opportunities for the expansion of our own manufacturing infrastructure – into new, state-legal markets.”
Under the terms of the Definitive Agreement, the Company’s wholly-owned subsidiary shall acquire certain assets of Honu, inclusive of all intellectual property and equipment. In accordance with Washington State regulations and legislation, neither the Company, nor its subsidiary, shall acquire any interest in regulated inventory or licenses related to the cultivation, manufacture, distribution, or sale of cannabis or cannabis-related products in connection with the transaction.
Now with Honu in the fold, Cannabis One Holdings Inc. (CNSX:CBIS.CN) (OTC:CAAOF) has amassed nearly 100,000 sq ft of manufacturing facility space across Honu, and Evergreen Organix. Once manufacturing at full capacity, the company’s manufacturing potential would be worth just under $1 billion, at today’s prices.
Also very notable is the latest acquisition of the Colorado concentrate brand, called West Edison, which was acquired for its technology that specializes in deconstructing the cannabis plant, separating out all the cannabinoids and terpenes, only to restructure them back into products in a clean and effective manner.
West Edison has already been quite successful, despite virtually no branding or marketing gaining hype for their products. Companies like this are what groups like Cannabis One Holdings Inc. seek out as arbitrage investments–Undervalued only because of their current market value versus what they could be under a much larger family of brands.
Already West Edison has accumulated industry accolades of its own, ranking 1st for All Concentrates Categories, and Best THCa in 2018. The company has been projected to reach system-wide brand revenue of US$8.1 million in 2019.
With an impressive brand portfolio that includes popular dispensary chain The Joint, innovative vape pen line INDVR, as well as celebrity endorsed Cheech’s Private Stash line, Cannabis One Holdings Inc. is primed to roll out several premium products nationwide. In the meantime, the company will remain in compliance in its current 5 states of operation, as it builds out its capabilities and footprint to an eventual 10 states: Colorado, Nevada, California, Oregon, Washington, Alaska, Vermont, Michigan, Massachusetts, and Maine.
Based on established revenue streams and trajectories, Cannabis One Holdings Inc. is set to accumulate US$116 million in 2019. By 2020, that projection more than doubles to US$289 million, and more than quadruples to US$561 million.
Much of this growth comes from a strategy that relies on new dispensaries. Instead of starting from scratch, Cannabis One Holdings Inc. (CBIS) (CAAOF) acquires successful dispensaries, and then retrofits them with The Joint branding. In 2019, The Joint’s footprint will finish with 25 stores across 5 states. By 2021, the expectation is to have 100 stores across ten states.
By this point, there’s a good possibility that the SAFE Act will already have passed. Perhaps even federal prohibition of cannabis will be lifted. But for now, the optimism for the legal potential of the cannabis sector is on the rise.
Further Multi-State Branding
Through a recently signed licensing agreement with American skateboarder Tony Hawk’s Birdhouse Skateboards, 1933 Industries Inc. (OTC:TGIFF) (CNSX:TGIF.CN) will collaboratively launch hemp and CBD recovery creams and lotions. The two-year deal will entail the launch of several co-branded CBD wellness products in North America. The products will be sold under the Canna Hemp, Canna Hemp X and Birdhouse Skateboards names.
Products from Curaleaf Holdings, Inc. (OTC:CURLF) (CNSX:CURA.CN) just began selling their CBD-infused products in more than 800 CVS Health stores. The distribution deal for the products infused with the trendy, non-intoxicating hemp component caused Curaleaf’s shares to jump upon the announcement. CVS has started selling CBD creams, sprays and lotions in either states, that include Alabama, California, Colorado, and Illinois.
Green Thumb Industries Inc. (OTC:GTBIF) (CNSX:GTII.CN) recently closed the acquisition of For Success Holding Company, which is the lifestyle suite of Beboe branded cannabis products. Beboe is currently available in more than 125 retail locations in California and Colorado, and was also announced to be on the shelves of the newly launched The High-End luxury cannabis stores, from Barneys New York. Green Thumb is also in the process of acquiring Essence, which has a strong presence in Nevada and in California, for a mainly stock amount worth $290 million.
With a footprint that spans three states, Florida-based Trulieve Cannabis Corp. (CNSX:TRUL.CN) (OTC:TCNNF), recently announced an agreement with California-based Blue River Extracts & Terpenes to bring their award-winning terpene extracts and other branded products to Trulieve’s main market of Florida. Blue River is an industry leader, focused on developing full spectrum, solvent-less cannabis-derived terpenes. The company uses advanced mechanical extraction techniques to create an array of award-winning branded products including Rosin, Dry Sift Sap, Vape Cartridges and much, much more.
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