Although COVID-19 has negatively impacted the global economy, there seem to be several pockets of opportunity. One of the is the cannabis industry and we are impressed with how the industry has held up during the pandemic.
When to virus started to spread and states started to impose stay at home orders, the cannabis industry was declared as an essential and this represented a positive development for the sector. During the last two months, several US cannabis retailers have recorded impressive revenue growth and we believe that our readers need to be aware of this trend.
We believe that the cannabis industry is reaching an inflection point as new states come on-line and as medical market transition to recreational markets. States like Illinois and Michigan represent attractive growth opportunities after the legalization of recreational cannabis. We have been focused on identifying markets that will legalize recreational cannabis in the near future and continue to favor companies that have leverage to these types of markets. Today, we want to highlight 3 companies that are positioned to benefit from this trend and believe that these are opportunities to be aware of.
Jushi Holdings: Owns an Undervalued Portfolio of Assets
Jushi Holdings Inc. (JUSH.CN) (JUSHF) is a US cannabis company that we are excited about and are favorable on the markets that the business is levered to. Jushi is targeting markets that are issuing a limited number of licenses and this is significant when it comes to the long-term growth prospects of the business.
The US cannabis company is focused on markets like Pennsylvania, Virginia, and Illinois. These markets represent burgeoning growth opportunities and we are favorable on the direction that the management team is bringing the business. The team has utilized a cost-effective structure to increase market share and has identified a number of acquisition targets. Through a series of organic and inorganic growth initiatives, the company has been able to advance the story and we expect to see additional acquisitions reported in the back half of 2020.
One of the reasons we are excited about the US cannabis retailer is due to the amount of insider buying that has been taking place. When the management team and the largest investors are purchasing additional stock in the company, it leads us to believe that the opportunity is undervalued, and we find this to be an important aspect of the story.
Pure Harvest: Capitalizing on Two Recreational Markets
Pure Harvest Cannabis Group (PHCG) is levered to two of the most exciting cannabis markets in the US and is an opportunity to be aware of. The last few months have been transformative for the business, and we are favorable on how the story has evolved so far this year.
The cannabis markets that Pure Harvest is levered to are Colorado and Michigan (Note Pure Harvest is in the process of being pre-qualified and approved for the transactions by LARA in Michigan and MED in Colorado). Through acquisitions and strategic partnerships, the company has been building a portfolio of assets that are levered to the most exciting aspects of the cannabis value chain. Pure Harvest has an attractive growth profile and we believe that the market does not fully appreciate or understand the opportunity.
Last week, Pure Harvest announced a major milestone and reported to have completed the acquisition of EdenFlo, LLC, a large-scale producer of CBD extracts and concentrates. The acquisition adds a significant CBD production and distribution company to Pure Harvest’s growing cannabis portfolio and we are favorable on the structure of the transaction.
The acquisition of EdenFlo comes less than two months after Pure Harvest signed an agreement to acquire Sofa King Medical Wellness Products (SKM), a vertically integrated cannabis operator located in Dumont, Colorado. The dispensary is strategically located near Colorado’s most famous ski resorts and we are favorable on the amount of value that can be created between SKM and Eden Flo.
With regard to the recreational cannabis opportunity in Michigan, Pure Harvest is well positioned to be an early mover on the market. Last month, Pure Harvest announced an agreement to acquire 51% of How Smooth It Is, Inc. (HSII), a licensed medical cannabis processor. The agreement will allow Pure Harvest to expand out of Colorado and we find this to be an attractive aspect of the story.
If you were to combine the amount of value that Pure Harvest can capture between its Colorado assets and its Michigan assets, you will see that the opportunity has substantial upside potential. Over the next year, we expect Pure Harvest to report impressive growth and believe that the market discounts the value that is associated with its portfolio of assets.
Green Thumb: An Acquisition and Growth Story
Green Thumb Industries Inc. (GTII.CN) (GTBIF) has one of the most impressive portfolios of US cannabis assets and has been nothing short of an execution story. During the last year, the company has recorded a number of advancements as it has increased the number of states that it has leverage to.
From a management team standpoint, Green Thumb is one of the best in the business. CEO Ben Kovler is the heir to the Jim Beam fortune, and we are favorable on the experience and the relationships that he brings to the business. Through Kovler’s relationships, Green Thumb has been able to secure strategic investors, and this has put the business in a special league of companies.
During the last year, Green Thumb reported impressive growth and we believe that this is a trend that is just getting started. Going forward, we expect Green Thumb to report incredible growth and are favorable on the long-term opportunity. When compared to its peers, Green Thumb has held up better than most and we believe that the business is well positioned to be a long-term leader in the sector.
Pursuant to an agreement between StoneBridge Partners LLC and Pure Harvest Cannabis Group (PHCG) we have been hired for a period of 90 days beginning March 11, 2020 and ending June 11, 2020 to publicly disseminate information about (PHCG) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month (PHCG) for or were paid “0” shares of restricted common shares. We own zero shares of (PHCG), which we purchased in the open market. We plan to sell the “ZERO” shares of (PHCG) 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 (PHCG) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.