In late June, we had the opportunity to visit 1933 Industries (TGIF: CSE) (TGIFF: OTCQX) while in Las Vegas and were beyond impressed with what the company has been able to accomplish.
1933 Industries is finalizing a massive cultivation expansion and we visited the facility that the company will be moving into. Once 1933 Industries receives the final permits from the city of Las Vegas, this facility will become operational and we expect this to be a major catalyst for the entire business.
With approx. 70,000 sq. ft., the facility is almost 10x larger that 1933 Industries’ existing facility and this will significantly increase the amount of product that is being produced by the company. After visiting the existing facility and then visiting the new facility, we were able to visualize the way that the new facility will enhance the entire operation and we believe that the street does not fully appreciate this. One of the reasons we are so excited about the opening of this facility is due to the amount of revenue that can be generated from it and we find this to be significant.
While visiting Las Vegas, we visited 7 dispensaries and spoke with a number of representatives at these locations. When we asked the budtenders about the cannabis brands that are owned by 1933 Industries, Alternative Medicine Association (AMA), Canna Hemp™, and Denver Dab Company (DDC), we received outstanding reviews about the company’s product line and found this to be of importance.
A CBD and THC Growth Story in the Making
When we were visiting 1933 Industries’ existing facility, we were able to see the process of creating AMA and DDC products. These are two very impressive brands that are levered to the tetrahydrocannabinol (THC) opportunity and we expect to see much stronger demand for these products once the new facility becomes operational.
While AMA and DDC have attractive leverage to the THC opportunity, Canna Hemp™ is highly levered to the cannabidiol (CBD) opportunity and we believe that this is one of the most attractive aspects of the business. During the last year, Canna Hemp™ has gained significant traction and the products are now being carried by more than 800 retail outlets across the US.
The Canna Hemp™ operation was nothing short of exceptional and has been a massive revenue driver for the entire business. Earlier this year, the company announced that Chris Rebentisch was appointed as CEO and will be overseeing operations going forward. While we were in Las Vegas, we had the opportunity to meet with Chris and are favorable on the way that he has been advancing the business.
Chris has a proven track record of success in the cannabis industry and founded Infused MFG., (which owns Canna Hemp™) in 2017. While working for 1933 Industries, he has been responsible for managing AMA and has overseen the company’s expansion initiatives and product growth across the US. Chris has positioned 1933 Industries as a strong operator in one of the fastest growing cannabis markets in the US that is also well positioned to capitalize on a number of attractive verticals. We were impressed with our meeting with Chris and believe that he is the right person to take over as CEO.
An Opportunity that is Flying Under the Radar
During the last year, 1933 Industries has been working tirelessly on its Las Vegas expansion and this is something that we are excited about. Once the new facility becomes operational, we expect to see the company report massive revenue growth and believe that the market does not recognize this opportunity.
When compared to its peers, 1933 Industries is trading at a significant discount and we believe that this is something to be aware of. With a market capitalization that is below the $125 million (CAD) level, this is an opportunity with significant upside and that is due for a re-rating. Once the new facility becomes operational, we expect to see the market take another look at 1933 Industries and this represents a significant potential catalyst for growth.
Over the next year, we expect to see 1933 Industries further expand its reach and enter new markets. We expect Infused MFG. to be a primary driver of this growth. One of the reasons we are confident in 1933 Industries’ ability to execute is related to the fact that it owns its distribution. We believe that this plays a key role in the company’s success and find this to be an underappreciated value driver.
We believe that 1933 Industries has an attractive risk-reward profile, and this is an opportunity that we continue to monitor. To learn more about this burgeoning opportunity, please contact email@example.com.
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