3 U.S. Cannabis Stocks Trading Under Pressure Despite Consistent Execution

Earlier this week, we published the first part of a two-article series that covers the recent performance of the cannabis industry.

The initial article focused on companies that are in the Canadian cannabis sector. Today’s article will cover 3 companies that are focused on the US cannabis market. The US companies represent emerging growth opportunities that have been laser focused on execution and are businesses that we are closely watching.

1933 Industries: A Burgeoning THC and CBD Execution Story

Las Vegas has transformed into one of the most attractive US markets for cannabis businesses. This is an opportunity that we have been closely watching following the opening of the recreational market in July 2016. A few months ago, we traveled to Sin City to visit 1933 Industries (TGIF.CN) (TGIFF), a company that has been laser focused on the Las Vegas cannabis market.

Last month, 1933 Industries reported to have received final approvals from both Clark County and Nevada’s Department of Taxation for the transfer of its existing cultivation licenses to the new cultivation facility. The new facility is almost 5 times larger than the initial facility and is expected to be able to produce approx. 700 to 800 pounds of dried cannabis per month.

Although we are bullish on the growth prospects associated with the new facility, 1933 Industries has been under pressure. During the back half of the year, we expect production capacity to ramp higher and for 1933 Industries to recognize the benefits associated with the facility. We have highlighted several of the recent developments that we have found to be significant:

  • August 15th – 1933 Industries officially entered the California cannabis market via an agreement with Green Spectrum Trading, Inc.. Under the terms of the Agreement, the Company will provide the services necessary for the operation of Green Spectrum’s business, including oversight over the general management of the business and operations, product manufacturing, distribution efforts, staffing, sales, marketing, accounting, and compliance.
  • July 19th – 1933 Industries reported to have received final approvals from both Clark County and Nevada Department of Taxation for the transfer of its existing cultivation licenses to its new cultivation facility, which completes all the necessary steps to begin the transfer of its cannabis plants.
  • July 12th – 1933 Industries expanded its concentrate production area from 483 sq. ft. to 2,215 sq. ft. in the current facility. The expected distillate production capacity will increase from 40 liters per month to 80 liters per month in order to secure the supply for its branded products as well as for its white label partners.
  • July 2nd – 1933 Industries reported to have generated $4.6 million of revenue in the third quarter of 2019.
  • June 17th – 1933 Industries reported to be distributing Canna Hemp products to more than 800 retail outlets, with coast-to-coast distribution in the US.
  • June 6th –1933 Industries appointed Ester Vigil as President of the company and Caleb Zobrist as Executive Vice President
  • May 31st – 1933 Industries appointed Chris Rebentisch as Chief Executive Officer, overseeing the company’s operations going forward. Brayden Sutton will remain Chairman of the Board of Directors.
  • May 15th – 1933 Industries completed a sale and lease back for its newly constructed cannabis cultivation facility in Las Vegas. The purchase price for the transaction was $10,450,000 which included the cultivation facility as well as the 1.39 acres of land it sits on.
  • April 29th – 1933 Industries reported to be progressing with its plans to launch one of Nevada’s largest hemp extraction facilities and to add a new significant revenue stream to its business model.
  • April 9th – 1933 Industries announced a licensing agreement with OG DNA Genetics, a globally recognized leading cannabis brand, for the exclusive license to cultivate, manufacture, sell and distribute co-branded cannabis products for a two-year term in Nevada.
  • April 8th – 1933 Industries executed a licensing agreement with House of Hawk for the launch of several co-branded CBD wellness products for a two-year term in North America.
  • March 28th – 1933 Industries signed a membership interest purchase definitive agreement to acquire the remaining 9% of Infused MFG.
  • March 15th – 1933 Industries closed its previously announced non-brokered private placement which raised total proceeds of $4.5 million.

Liberty Health Sciences: A Florida Cannabis Firm to be Watching

Another US focused cannabis company that is worth highlighting is Liberty Health Sciences (LHS.CN) (LHSIF), which has been highly focused on the medical cannabis sector in Florida. So far this year, the company has been executing flawlessly and has opened several new dispensaries in the state of Florida.

In late July, Liberty Health Sciences reported first quarter financial results and these numbers showed strong growth when compared to the prior quarter. Going forward, this is a trend that we expect to continue and this is due to the steady increase in the number of operational medical cannabis dispensaries.

Although Liberty Health Sciences has done a great job at increasing market share in Florida, the shares have been trading lower with the market. We have highlighted some of the most significant developments that have been reported since mid-March:

  • July 31st – Liberty Health Sciences reported $5.5+ million of revenue for the quarter that ended on May 31st, much higher than the $1,141,118 reported during the same period last year. Gross profit for the quarter was $5,018,399 and this was much higher than the $606,178 reported during the same period last year.
  • July 24th – Liberty Health Sciences announced that it had the second highest sales of smokable cannabis in Florida with 16 dispensaries open.
  • June 17th – Liberty Health Sciences announced that it will open its 16th dispensary in Tallahassee, Florida
  • June 11th – Liberty Health Sciences announced that it will open its 15th dispensary in Boca Raton
  • June 10th – Liberty Health Sciences announced that it is continuing to expand its product offerings by introducing two additional brands: Papa’s Herb and Lemon and Grass, subject to Florida Department of Health approval.
  • June 6th – Liberty Health Sciences announced that it will be introducing Zentient to all of its dispensaries as its new house brand of products along with Pretty Pistil, subject to the Florida Department of Health approval. Pretty Pistil will be replacing all of Liberty’s Solei branded products.
  • May 22nd – Liberty Health Sciences appointed Sheri Cholodofsky as Chief Financial Officer who replaces Jeff Chan who had served as interim CFO following the resignation of Rene Gulliver as CFO. Chan will resume his duties at Liberty as Vice President, Finance and will work closely with Cholodofsky during this transition period.
  • May 6th – Liberty Health Sciences announced that it will open its 14th Florida dispensary in Cape Coral’s South Cape business district
  • April 23rd – Liberty Health Sciences successfully launched sales of its whole flower smokable products as well as its pre-rolled cannabis cigarette products this past weekend.
  • April 3rd – Liberty Health Sciences announced that it will open its 13th Florida dispensary in Bonita Springs. The company also received approval for an additional use of 80,000 sq. ft. of enclosed greenhouse space at the Liberty 360 Innovation campus in Gainesville. This brings the company to a total of 228,880 sq. ft. of cultivation space in the Gainesville area.
  • April 1st – Liberty Health Sciences received Florida Department of Health (DOH) approval on March 26th to sell pre-rolls along with whole flower smokable products to patients.
  • March 25th – Liberty Health Sciences received Florida Department of Health (DOH) approval to sell whole flower smokable products to patients in Florida, making it one of the first companies in the state to provide smokable medical marijuana in all of its dispensaries.
  • March 15th – Liberty Health Sciences announced that it is continuing its expansion in Florida and is on schedule to open its 12th dispensary in Gainesville

Green Thumb Industries: A US Leader in the Making

Green Thumb Industries (GTII.CN) (GTBIF) is a US cannabis retailer that we have been excited about and have been closely following. Green Thumb CEO Ben Kovler is the heir to the Jim Beam empire and we are favorable on how he has been able to drive the story forward.

Although the US cannabis retailer has been nothing short of an execution story and is well capitalized to continue to expand its reach across the country, the shares have been under pressure with the rest of the cannabis sector. Today, we have issued an update on the US cannabis retailer and this is an opportunity that we continue to watch.

  • July 30th – Green Thumb announced that it will open its 27th location, Rise Cleveland. This is the third Rise store in Ohio and the city’s first cannabis retail store.
  • July 25th – Green Thumb announced that it is one of only three companies to be awarded a new retail license by Culver City, located in Los Angeles County, California.
  • July 9th – Green Thumb announced that it will open its fourth retail location in Florida, its 26th open location in the country.
  • June 25th –Green Thumb announced that it will open Rise Mechanicsburg, its sixth retail location in Pennsylvania and 25th in the nation
  • June 18th – Green Thumb announced that it will open its fifth retail location in Pennsylvania, which is located in the Pittsburgh metropolitan area
  • June 6th – Green Thumb was awarded a retail dispensary and delivery license by the City of Pasadena, making it one of only six new licenses in Pasadena.
  • June 5th – Green Thumb Industries closed on the acquisition of Integral Associates. The acquisition includes: three high-traffic retail stores located across the Las Vegas area; and eight additional retail licenses in Nevada (five in the Las Vegas area and three in Northern Nevada); West Hollywood retail license, one of only five with a consumption lounge and delivery service; Desert Grown Farms, a 54,000 square foot state-of-the-art cultivation and processing facility with an award-winning genetics library of 100+ strains; and Cannabiotix NV, a 41,000 square foot cultivation and processing facility
  • May 31st – Green Thumb announced that it will open its third retail location in Florida and 20th in the country
  • May 30th – Green Thumb reported that it generated $28 million in revenue during the first quarter that ended on March 31st
  • May 8th – Green Thumb announced that Rise Amherst will begin selling cannabis to adults aged 21 and over in Massachusetts.
  • April 26th – Green Thumb announced that it will open its second retail location in Florida

Pursuant to an agreement between StoneBridge Partners LLC and 1933 Industries we have been hired for a period of 180 days beginning July 15, 2019 and ending January 15, 2020 to publicly disseminate information about (TGIF) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month for a period of 6 months. We own zero shares of (TGIF), which we purchased in the open market. We plan to sell the “ZERO” shares of (TGIF) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (TGIF) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.


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Authored By

Anthony Varrell

Anthony Varrell is Managing Director of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

Published at Fri, 16 Aug 2019 11:48:34 +0000

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