During the last year, we have been highly focused on the California cannabis industry and believe that this is an area that investors need to be focused on. California is the world’s largest cannabis market and we expect to see several leading cannabis brands emerge out of this market.
Over the next year, we expect to see more companies become highly focused on the cannabis brand opportunity and are favorable on this market. Earlier this year, leading California cannabis concentrate brand Select was acquired for almost $1 billion and this is just the start of a major consolidation cycle of cannabis brands.
We prefer companies that have an early mover advantage on the cannabis brands opportunity in California and have been working to identify leaders in this space. Mojave Jane Brands Inc., formerly known as High Hampton Holdings Corp. Corp. (JANE: CSE) (HHPHF: OTC) is a California cannabis company that has been laser focused on the brand opportunity and this is a business to be watching.
During the last year, Mojave Jane’s’s stock has been under some pressure and we believe that the market underappreciates the growth prospects associated with its strategy to capitalize on the California cannabis market. Today, we have issued an update on the emerging California cannabis company and will continue to keep this opportunity on our radar.
An Emerging Growth Story to be Watching
In early May, Mojave Jane reported second quarter financial results and announced several significant developments as part of this release. The company is in the middle of a major transition and we are favorable on the way that it is approaching the California cannabis industry.
When it comes to the California cannabis market, Mojave Jane was recently granted six additional state licenses that include a cannabis nursery, manufacturing, processing, packaging and distribution operations, as well as, a non-storefront retail that will be used for a delivery service. After a partial demolition in April, the company is upgrading the facility to prepare for operations in early 2020.
Earlier this year, Mojave Jane entered into a binding letter of intent to acquire 40% of the 2083 Group, a leader in California’s cannabis delivery and brand space. Conditional upon the execution of a definitive agreement with 2083 Group, the delivery service will be provided by 2083 Group’s SpeedWeed platform and will serve the Greater Los Angeles area and beyond.
Once this acquisition is closed, Mojave Jane will provide 2083 with the necessary growth capital to expand its delivery presence. This acquisition will provide Mojave Jane with access to 2083’s delivery customers and consumer data, which will be a significant value driver. We expect this acquisition to quickly prove to be accretive and believe that there are significant synergies between the businesses that extend well beyond the delivery and data relationship.
Another opportunity that we are excited about is related to Mojave Jane’s CALIGOLD subsidiary which released three new products earlier this year that build on its award-winning brand. We are favorable on the growth prospects associated with the edible market and especially with the CALIGOLD brand, and believe that the market underappreciates this aspect of the business.
In April, Mojave Jane reported a major development and received a conditional use permit (CUP) and development agreement to construct a 13,000 sq. ft. facility as well as distribution operations in West Sacramento. The facility is expected to be operational in early 2020 and will serve the valuable cannabis markets in central and northern California. Mojave Jane plans for distribution to compliment its delivery operations to provide access to the full retail markets in California, and we are favorable on the growth prospects associated with this position.
In the Middle of a Major Transition
Earlier this year, Mojave Jane reported a significant development and announced an evolution of its strategy to align with the dynamic legal cannabis market in California. Based on the initial response from the market in regards to this new strategy, we believe this is an important initiative for the company and will monitor how the team executes on this opportunity.
The new vision takes a brand forward approach, whereby Mojave Jane will focus on four key strategy elements:
- Own and operate the processes that allow the company to manufacture, infuse, and package high quality, white label and branded products for the recreational and medical markets, with a focus on the expansion of its capacity to produce high quality distillates and concentrates.
- Own and operate the paths to market for branded products through its distribution capabilities in the state’s most lucrative markets in Northern and Southern California.
- Take advantage of the valuable data and insights collected through delivery and distribution to understand market needs and produce products and brands to meet those needs.
- Control its supply chain, starting with product-focused strains grown to meet specific consumer demands for flower and extracted products.
One of the reasons we are favorable on Mojave Jane is due to its developing portfolio of cannabis brands as well as its focus on delivery and distribution. Mojave Jane made several significant acquisitions during the last year and we have highlighted these transactions below:
- In late 2018, the company acquired a licensed manufacturer of premium cannabis extracts and concentrates for the California market Mojave Jane, LLC providingthe company with leverage to the smokeless cannabis product market, which we consider to be one of the most attractive verticals in the cannabis industry. We believe that this acquisition will result in the addition of revenue in 2019 and will create countless synergies within Mojave Jane’s growing portfolio of California-based cannabis manufacturers and distributors.
- In July 2018, Mojave Jane entered the smokeless product market through the acquisition of HS Airway Holding, which owns the CALIGOLD Edibles brand. The edibles brand represents a significant asset and has several award-winning chocolate bars in dispensaries across California with other products ready to launch. This acquisition improves the company’s leverage to the California edibles market and we believe that this is an attractive asset.
- Last year, Mojave Jane enhanced its California distribution network with the acquisition of 420 Realty. Earlier this year, 420 Realty received six California State cannabis licenses to operate at its facility and we are favorable on the growth prospects associated with this.
Levered to the California Cannabis Concentrate Market
Mojave Jane is in the middle of a major transition and we believe that the market underappreciates this. The new strategy leaves the company well positioned to fully execute on the manufacturing capacity, brands, delivery and distribution assets that make up its investment portfolio. We find this to be significant and are favorable on the amount of value that can be created through this family of integrated assets.
Mojave Jane’s acquisition of the extracts and concentrates manufacturer Mojave Jane, LLC provides the company with leverage to the smokeless cannabis product market, which we consider to be one of the most attractive verticals in the cannabis industry. Over the next year, we expect the trend toward cannabis concentrates to become even more significant and believe that cannabis infused products or edibles will be the primary driver of this growth. By 2022, the cannabis concentrate market is expected to be generating approx. $8 billion in retail sales and this represents a massive opportunity for companies like High Hampton.
Mojave Jane, LLC is licensed for both volatile and non-volatile manufacturing and currently utilizes state-of-the-art CO2 extraction technologies and proven distillation techniques to create products for both the recreational and medical cannabis market. We believe that this acquisition will result in the addition of near-term revenue and will create countless synergies within Mojave Jane’s growing portfolio of California -based cannabis manufacturers and distributors.
An Under-appreciated Opportunity to be Watching
Mojave Jane represents a multi-faceted growth opportunity and we are bullish on the growth prospects associated with this new strategy. We expect this refined focus to enhance the company’s operations, increase margins, and take the company down the path of profitability. The California cannabis concentrate market represents a massive opportunity for Mojave Jane and we are favorable on the leverage to this market
Through a series of strategic acquisitions, Mojave Janehas enhanced its leverage to the smokeless product market in California and we are bullish on this opportunity. The company’s revised strategy will allow Mojave Jane to become one of the few truly vertically integrated companies in California and we are excited about this opportunity.
During the last year, Mojave Jane has reported several major developments and this is an opportunity that we are excited about. The California cannabis company is well positioned to capitalize on the California cannabis market and this is something that we are monitoring. We believe that the market underappreciates the growth prospects associated with this emerging opportunity and find the valuation to be attractive when compared to its peers.
2019 has already proven to be a significant year for Mojave Jane and this is an opportunity that we are watching closely. To learn more about this emerging play on the United States market, please reach out to email@example.com
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