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Chemesis International Is A Company That Needs To Be On Investors Radars

Mar 1, 2019 • 12:36 PM GMT+0000
4 MIN READ  •  By Michael Berger
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Earlier this month, we highlighted Chemesis International (CSI.CN) (CADMF) and we hope that you put this opportunity on your radar. Since the last update, the company has been nothing short of an execution story and the shares have trending higher.

The market responded favorably to Chemesis’ plan to add an additional 25,000 sq. ft. of manufacturing capacity to its facility in Cathedral City, California. The expansion comes after the commercialization of its fully compliant state-of-the-art extraction facility and is expected to be completed by the second quarter of 2019.

This is a significant development and we are favorable on the planned expansion especially due to the company’s plans for growth. The facility will comply with state regulations for manufacturing, packaging, distribution and transportation, allowing for products to be distributed directly to state licensed dispensaries. With this expansion, Chemesis will have the ability to further increase its finished goods portfolio, which will include beverages, edibles, and other consumer goods.

One of the major positives of this expansion is going to be the company’s ability to cut costs and improve margins. The manufacturing expansion will maximize efficiencies, and will also increase production capacity for Chemesis’ brands, including California Sap and Jay & Silent Bob’s Private Stash, as well as third party brands.

The ability to produce a significant amount of cannabis products is especially important for brands that are operating in a market as large as California. We are bullish on the growth prospects associated with expansion and believe that it will lead to Chemesis having a larger market share in California.

This expansion was announced less than a week after Chemesis acquired intellectual property and the physical equipment for an extraction methodology to preserve all of the phytocannabinoids and terpenes from cannabis while utilizing a low-temperature process to create “live resin”. We have been bullish on the cannabis oil market in California and believe that this technology will provide the company with a major avenue for growth.

The extraction method will allow the company to produce a unique variety of finished goods such as tinctures, shatters, vapes, oils and other consumer products that can be varied to achieve desired potencies of different cannabinoids and terpenes. This is an important aspect of the acquisition since the company will be able to create a wide variety of cannabis products that appeal to consumers.

In the Middle of a Major Expansion in Colombia

Demand for cannabis products in South and Central America has been increasing as new markets come on-line and existing markets gain traction. Chemesis has been highly focused on this and has signed a definitive agreement to acquire La Finca Interacviva-Arachna Med SAS, an integrated cannabis company that has been operational since late 2017 and has access to over 1,000 acres of outdoor cultivation land and is aggressively exploring opportunities to expand.

In late January, Chemesis announced that La Finca plans to commence construction of its GMP certified extraction facility before the end of the first quarter of 2019. The state-of-the-art facility will also house a certified production lab, which will have a large production capacity for both domestic and international markets.

The company also announced that La Finca has been granted a Seed Producer License and recently had a verification visit from ICA (Colombian Ministry of Agriculture), where La Finca demonstrated full compliance with all regulations and infrastructure requirements to be granted this license. As per ICA regulations, La Finca will work towards the completion of additional agronomic evaluations. Once completed, the company will be permitted to commence large scale commercial cultivation in regions across the nation.

This represents a significant opportunity for Chemesis and we are very favorable on the Latin American cannabis market. The economics associated with cultivating cannabis is Colombia are very attractive and we are favorable on the plans to start constructing a GMP certified extraction facility. This represents a significant growth opportunity and we will monitor how the team executes on this.

Signs USD $4 Million Annual Purchase Order

Chemesis announced yesterday that its subsidiary Natural Ventures has signed a definitive agreement for an annual purchase order of a minimum total of USD $4,000,000.

The Company will cultivate, manufacture, package and distribute for the Puerto Rico based dispensary network from its fully licensed, state compliant facility. The products are white labelled under the dispensaries brand and delivered on a weekly basis. Initial purchase orders over $400,000 USD have been fulfilled in February and with weekly increases in the Puerto Rican medical patient base, both companies anticipate demand to increase heading into the Q2 2019.

Natural Ventures began fulfilling purchase orders in February 2019 and is providing the vendor with edibles, vaporizers, lotions, beverages, and flower.

A Company to be Watching

During the last month, Chemesis has come well off its lows and this is an opportunity that we have been excited about. The company has been executing on an expansion in Puerto Rico and California and we are favorable on the focus on Latin America through La Finca. Chemesis has several significant potential catalysts for growth and is led by a management team with a proven track record of success.

Although the recent rally has been significant, we believe that Chemesis still has room to run. The company is focused on some of the most exciting cannabis markets and is in the early innings of a major expansion. To learn more about Chemesis, please contact support@technical420.com.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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