One of the most exciting trends in the cannabis industry has been the emergence of leading cannabis brands and this is an area that we are closely following. Earlier this year, Select, a leading cannabis concentrate brand in California, was acquired for approx. $1 billion and we are favorable on the implications that this has on leading US cannabis brands.
1933 Industries (TGIF.CN) (TGIFF) has been laser focused on the US cannabis market and is comprised of several leading cannabidiol (CBD) and tetrahydrocannabinol (THC) brands. When it comes to the THC opportunity, the company has significant leverage to the Las Vegas market and also has leverage to the Colorado market. When it comes to the CBD opportunity, 1933 Industries has been nothing short of an executing story and continues to expand its reach.
Although 1933 Industries has significant catalysts for growth, we believe that the market under-appreciates this opportunity. In late April, the company reported a major development and announced that Chris Rebentisch was appointed to the role of Chief Executive Officer and will be overseeing the company’s operations going forward. We are excited about this transition and believe that Chris is the right person to take over as CEO.
In 2017, Chris founded Infused MFG. after personally developing the intellectual property for the company’s line of hemp-based, CBD infused products which experienced over 8,000% growth during its first year. In regard to 1933 Industries, he has been responsible for managing Alternative Medicine Association (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.
After 1933 Industries acquired the remaining ownership interests of Infused, the writing was on the wall and we are favorable on this appointment. Brayden Sutton will remain as the Chairman of the Board of Directors and will play a key role as the company advances to its next growth phase and we find this to be significant.
A Brand Story to be Watching
One of the reasons we are excited about 1933 Industries is due to the success that its brands has had across the US cannabis industry. When looking at the brands that are owned by the company, you will notice a diverse product mix with several brands focused on the CBD opportunity and several brands focused on the THC opportunity. This is an important aspect of the story and we are favorable on the leverage to both verticals of the cannabis industry.
Last year, Canna Hemp™ CBD Relief Cream was named as the “Best Topical” by Leafy’s Best in State: The Top State Specific Products and Experiences. Infused’s award-winning transdermal Pain Relief Cream delivers fast-acting targeted relief to areas of discomfort, combating inflammation, arthritis joint pain, backaches, muscles spasms, strains, bruises, cramps, and headaches. Canna Hemp X™ was named “Best Topicals for Pain” by Herb’s Guide to the Best Cannabis Products on the Planet. Canna Hemp X™ is a CBD sports recovery cream for athletes to help focus on recovery and wellness.
When looking at the portfolio of brands owned by 1933, we are the most excited about the Relief cream, Canna Hemp X™ cream for sports, elixirs, and the Canna Fused™ line. These products have been the best selling products for the overall company and we are bullish on the growth prospects associated with this opportunity. Over the next year, we expect to see significantly stronger revenue growth and expect these products to be a primary driver of this growth.
Capitalizing on the Burgeoning CBD Opportunity
So far this year, CBD has been one of the most significant trends of the cannabis industry and this is an area that 1933 Industries has been laser focused on. Through Infused, the company is well positioned to capitalize on the CBD market and currently has distribution in 46 states across the US. This provides 1933 Industries with significant leverage to the burgeoning CBD opportunity and we expect this become a much more significant revenue stream over the next years.
One of the ways that 1933 Industries has been able to differentiate itself is through the formation of strategic relationships. One relationship we are excited about is related to the execution of a licensing agreement with House of Hawk, LLC for the launch of several co-branded CBD wellness products. Working in collaboration with Tony Hawk, Infused will launch several co-branded products to be sold under Canna Hemp™, Canna Hemp X™ and Birdhouse Skateboards™ and we expect to see strong demand from consumers and expect this to be a catalyst for the business.
1933 Industries has been heavily focused on the action sports market and signed MMA fighter Sarah Moras as a Canna Hemp™ sponsored athlete to promote the company’s Action Sports Division and represent the Canna HempX™ brand. We are favorable on this market opportunity for 1933 Industries as professional athletes turn to CBD products instead of opiates. This trend has been gaining significant traction and is a trend that we expect to continue as athletes learn about the health benefits associated with CBD.
A Growth Story to be Watching
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 due to its branded products already having product distribution in more than 700 stores. 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 will play a key role in the company’s success and find this to be an underappreciated value driver.
Pursuant to an agreement between StoneBridge Partners LLC and 1933 Industries we have been hired for a period of 180 days beginning January 9 , 2019 and ending July 9, 2019 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.