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Expect Body and Mind To Keep It’s Foot On The Gas For All Of 2022

Jan 3, 2022 • 8:04 AM EST
5 MIN READ  •  By Michael Berger
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Although the US cannabis industry has recorded impressive growth in 2021 with several states generating more than $1 billion from the sale of cannabis, the sector has been under pressure and this is trend that we are closely following,

With only a few days left in 2021, we are working to identify cannabis operators that have been executing on significant growth initiatives and are flying under the radar. We are especially favorable on operators that have leverage to a basket of high-growth markets in the US and want to highlight a business that meets our criteria.

We believe that Body and Mind Inc. (CSE: BAMM) (OTC: BMMJ) has been flawlessly executing on a low-cost expansion strategy in the US and is an opportunity that we are closely following. The continued execution has made the US multi-state operator’s (MSO) growth profile more attractive and we believe the market is discounting the growth prospects that are associated with it.

Expect 2022 to be a Banner Year for Body and Mind

We expect the management team to build off the success it had in 2021 and consider the following markets to attractive aspects of the Body and Mind story:

  1. California – Last month, Body and Mind signed definitive agreements to acquire a dispensary in California and we expect the development to serve as a catalyst for revenue growth. The transaction should allow the company to capture additional market share and benefit from economies of scale in the state. A key piece of the transaction is related to the dispensary’s retail delivery platform which is expected to support the growth of the business.
  2. Nevada – In October, we visited Body and Mind’s facility in Las Vegas and were impressed with how the management team has been able to maximize the amount of revenue that can be generated by it. Las Vegas has been a major growth driver for the business and we expect Body and Mind to continue to report revenue growth in future quarters.
  3. Ohio – The state is an emerging limited license cannabis market and we are bullish on the US MSO’s leverage to it. A few months ago, Body and Mind reported to have purchased the remaining ownership interest in NMG Ohio and indirectly owns 100% of it. The transaction included the transfer of a dispensary license as well as the final award of a production license, and we expect Ohio to have an impact on Body and Mind’s revenue growth in 2022 and consider this to be an underappreciated aspect of the story.
  4. Michigan – When compared to 2020, the state has been one of the fastest growing medical and recreational cannabis markets in the US. In September, Body and Mind announced that it would execute on a vertical integration strategy in Michigan. The company plans to capitalize on the market with retail, cultivation and production facilities (all fully funded) and we are bullish on this approach. Body and Mind team has secured locations for each facility and has finalized local and state pre-approval licenses for the dispensary, cultivation, and production facilities. The dispensary is expected to open in January 2022. Going forward, we expect the state to serve as a core growth driver in future quarters and will monitor how this aspect of the story advances in 2022.
  5. Akansas – Body and Mind’s management team plans to execute on a strategy that is similar to it plans for Ohio and we believe the market is discounting the potential value that is associated with this aspect of the story. Through a partnership with Comprehensive Care Group, the company gained leverage to Arkansas’ cannabis market and are favorable on the approach to capitalize on it. Body and Mind’s dispensary and cultivation operations in Arkansas received 1 of 40 dispensary licenses and recently sold their first flower from cultivation operations.. We expect the business to benefit from the early mover advantage it has in Arkansas and will monitor how this aspect of the story advances in 2022.

A Low Cost US Expansion Story

2021 was a banner year for Body and Mind and we expect the business capture additional market share in burgeoning state markets in 2022. Through a series of accretive acquisitions and strategic partnerships, the company has accelerated its expansion in the US and we consider states like Michigan and Ohio to be attractive long-term growth markets.

During the last week, the cannabis sector has come under heavy pressure and we attribute the volatility to the SAFE Banking Act not being included in the National Defense Authorization Act (NDAA). We believe the recent weakness is transitory and expect Body and Mind to come well off its recent lows.

At current levels, we believe the market underappreciates the growth prospects that are associated with the states the business is levered to. We are of the opinion that Body and Mind has a compelling valuation and a favorable risk-reward profile. Based on the recent performance of the stock, the market seems to not fully appreciate the potential avenues the business has for growth and consider this to be an important aspect of the story.

From having expertise that ranges from brand development to capital markets, Body and Mind is led by a well-rounded management team which has a diverse set of skills and we are bullish on this aspect of the story. By having a balanced management team, the US cannabis company has its finger on the pulse of the market and consider this to be a core pillar of the long-term opportunity with Body and Mind.

When analyzing Body and Mind, we determined that there are a number of business traits that we consider to be beneficial for the long-term opportunity and find this to be an attractive aspect of the story.

If you are interested in learning more about Body and Mind, please send an email to support@technical420.com with the subject “Body and Mind” to be added to our distribution list.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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