Audacious Brands Is Betting On The Empire State To Be A Major Growth Driver In 2022

During the last quarter, Audacious Brands (CSE: AUSA) (OTC: AUSAF) has reported a series of positive developments and has been flawlessly executing on a low-cost expansion strategy.

Most recently, the emerging global cannabis company entered into a letter of intent (LOI) with First Americans, LLC of the Saint Regis Mohawk Tribe. The Tribe is located in New York and the agreement is for the joint development and management of a cannabis operation on tribal land. The goal of the partnership is to operate cultivation, processing and manufacturing facilities, as well as two retail dispensaries, on tribal land.

We consider the relationship to be strategic and are favorable on the early-mover advantage that it provides Audacious. New York represents an attractive long-term opportunity and expects the rollout of a recreational cannabis market to be a catalyst for the companies that are levered to it. With a population of 20 million and a large tourism market, we classify New York as a top tier market opportunity in the US.

An Underappreciated Tourism Market

One of the reasons for our favorable view on the relationship is related to the strategic nature of the proposed location of the facilities. The first dispensary will be located walking distance from the Akwesasne Mohawk Casino and Resort which attracts approx. 2.4 million visitors per year. While the number of tourists per year is significantly lower than Las Vegas, the lack of saturation makes the region a very attractive opportunity for Audacious.

Las Vegas has quickly become a cannabis hub for the tourism market and this has benefited the companies that have significant market share of it. The main difference between these two locations is the number of dispensaries that will be opened. In Las Vegas, you can find several dispensaries on the same street which has saturated the market.

By operating on Tribal land, the partnership will benefit from the large amount of barriers to entry that will prevent the region from becoming a saturated cannabis market. The structure of the relationship falls in-line with Audacious’ low-cost expansion strategy and we are bullish on the impact it has on its long-term growth profile.

According to cannabis data firm Headset, the New York cannabis market is estimated to be a $3 billion industry a few years after the recreational cannabis market opens. From a population standpoint, New York is frequently compared to Florida and we are favorable on this. According to Forbes, medical cannabis sales in Florida have surpassed $1 billion and we are bullish on the potential revenue that can be generated in New York.

The Lack of a Leading Cannabis Operator in New York will Benefit Audacious

Although New York legalized medical cannabis in 2014, the restrictions that were associated with medical cannabis stifled growth. As a result of this, there is no clear cannabis leader in New York and we believe this creates a huge opportunity for Audacious.

The partnership will develop an Audacious Achieve12 cultivation facility (producing more than 10,000 pounds of dried flower per year) which includes the processing and manufacturing of derivatives. The facility is expected to produce more than 10,000 pounds of dried cannabis flower per year and we will monitor how the partnership advances in 2022.

Through ALPS, Audacious will provide a customized facility design as well as multiple services that allow operators to maximize yield and quality while minimizing inputs and resources. We believe the combination of Audacious’ diverse capabilities and the First Americans Tribe’s retail experience is a recipe for success and consider this to be an important aspect of the partnership.

A Company with Major Growth Catalysts

During the last quarter, the cannabis sector has been under considerable pressure and Audacious has been impacted by the trend. Although the story has recorded impressive advancements, momentum has been trending lower and we believe the opportunity is flying under the radar.

At current levels, we believe that Audacious has an attractive valuation and a favorable risk-reward profile. Going forward, we expect the company to report strong growth and benefit from the expansion into burgeoning markets in the US and abroad. We classify Audacious as a company that has significant growth catalysts and is an opportunity to be aware of.

If you are interested in learning more about Audacious’ expansion into New York, please send an email to support@technical420.com with the subject “Audacious Expands Into New York” to be added to our distribution list.

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