During the last year, the US cannabis market became one of the hottest new investing themes and this is an opportunity that we have been closely following.
Over the next year, we expect to see the US cannabis market report massive growth as new recreational markets open and as existing cannabis markets mature. We expect the US cannabis market to record massive growth on a going-forward basis and this will benefit the companies that are levered to this burgeoning opportunity.
In honor of Independence Day, we have highlighted 7 leading US cannabis companies, and these are opportunities that we are excited about.
7 Leading US Cannabis Companies
Plus Products (PLUS.CN) (PLPRF) has been highly focused on the California cannabis infused product market and has been nothing short of an execution story. Over the next year, we expect Plus Products to record strong growth and expect the expansion into Nevada to be a major catalyst for growth. Two more factors that will contribute to growth will be the increasing of overall production capacity and the launch of new products. We believe that the next phase of growth in the cannabis industry is related to the emergence of leading brands and we expect Plus Products to be a beneficiary of this. One of the most important aspects of the story is related to the strength of the management team as well as the type of capital that the company has attracted. We believe that Plus Products has attracted some of the smartest money in the cannabis sector and find this to be significant. Going forward, we expect to see Plus Products significantly advance its fundamental story and this is an opportunity to be watching.
Hemptown USA plans to complete a go-public transaction later this year and represents a differentiated opportunity with massive growth prospects. In 2019, Hemptown plans to cultivate more than 500 acres of rare high-cannabigerol (CBG) genetics and expects to increase this number to 1,500 acres in 2020. At 1,500 acres, Hemptown could generate upwards of $200 million in revenue which would make it the largest hemp company in the world. Although we have heard a lot about cannabidiol (CBD) over the last few years, only a few companies understand the opportunity associated with CBG, which is the pre-cursor cannabinoid to CBD and THC. By being one of the only companies to focus on the production of CBG, Hemptown will be able to protect itself from potential price compression and we find this to be a very attractive differentiator. The company’s foresight to focus on CBG is a testament to the strength of the management team and this is one of the most attractive aspects of the story. Hemptown is led by a management with a proven track record of success and this is an opportunity to have on your radar.
Green Thumb Industries (GTII.CN) (GTBIF) is highly levered to the cannabis retail opportunity in the US and has been nothing short of an execution story. In late June, the US cannabis retailer announced plans to open its 25th dispensary in the nation and we are favorable on the markets that the company has been focused on. Green Thumb is highly levered to the medical cannabis opportunity in Florida and has significantly advanced its operations over the last year. Florida is expected to be one of the largest medical cannabis markets in US and we expect to see this market transition into a recreational state in the coming years. We are favorable on the states that the company is targeting, the strength of the management team, and the growth prospects on a going-forward basis.
Harvest Health & Recreation (HARV.CN) (HRVSF) represents a leading play on the US cannabis retail market and we are impressed with the way the story has advanced over the last year. Currently, Harvest Health has more than 230 facility licenses (if it was able to close all of its pending acquisitions) and this is significant. Of these facilities, 142 are for retail licenses spanning 17 states and we are bullish on this opportunity. Last month, Harvest signed an agreement with the Asian American Trade Associations Council (AATAC) to provide its Colors, CBx Essentials, and Harvest-branded CBD products in over 10,000 gas stations and convenience stores around the country. This is a massive deal and an opportunity to be watching.
Cresco Labs (CL.CN) (CRLBF) made a major splash in the US cannabis market when it announced the acquisition of Origin House (OH.CN) (ORHOF). We are favorable on the growth prospects associated with the combined company and will monitor how the team is able to advance this opportunity from here. The combined company has significant leverage to the California cannabis market and we are favorable on the exposure to this opportunity. California is the world’s largest cannabis market and we will monitor how the company is able to execute on this opportunity. Cresco is highly focused on the entire US opportunity and this is a business that we continue to follow.
Jushi Holdings Inc. (“NEO: JUSH.B”) recently completed a go-public transaction. This is a leading US opportunity that we have been excited about and are following. One of the most exciting aspects of the Jushi story is related to its expanding US footprint. The company is in the process of securing cannabis operations in California, Virginia, Pennsylvania, Ohio, and Nevada as well as additional states. Additionally, its subsidiary, Sound Wellness Holdings, Inc., has an industrial hemp processing license in New York and is preparing to build out a significantly large processing facility. Currently, the company is targeting several potential acquisitions across the US. In California, the company has binding agreements in place for 3 retail locations. Furthermore, Jushi is targeting several acquisitions in this market, several of which are handpicked cannabis retail operations with the potential for delivery capabilities as well as licenses for distribution, cultivation and processing. When it comes to the hemp opportunity, we are favorable on the growth prospects associated with the acquisition of Mend and we expect this acquisition to quickly prove to be accretive. Mend recently launched a full spectrum CBD – hemp-derived product line and we believe this product will gain traction with consumers. Jushi represents a multi-faceted opportunity with significant catalysts for growth. Jushi is a company we will be following closely since it is well positioned to take advantage of inorganic and organic growth opportunities.
KushCo Holdings (KSHB) has been highly focused on the US cannabis market for several years and recently pivoted its strategy to also be focused on the production and sale of cannabis products. KushCo has done a fantastic job at creating a leading cannabis brand in the US and will monitor how the business continues to evolve. While visiting Las Vegas last month, we saw the company’s products at several dispensaries and heard mixed reviews about the company’s product line. Over the next year, we expect to see advancements to the product line and will monitor how the team continues to execute on its expansion strategy. Earlier this year, KushCo raised more than $30 million and the shares are trading below the pricing of the financing. This is an opportunity that we are excited about and will monitor how the team continues to execute.
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