During the last year, we have seen a significant increase in the amount of interest in the US cannabis industry and this a trend that we expect to continue.
2019 has been a banner year for the cannabis industry and we are not even halfway through the year. When it comes to the state of the cannabis industry in the US, it is no longer a question of if but when in regard to federal legalization. This would be a massive catalyst for the companies that are levered to the US cannabis industry and we are excited about this.
One company that we are excited about is GreenStar Biosciences (CSE:GSTR) which has attractive leverage to the US market. Today, we have issued an update on the burgeoning US cannabis business and believe that this is an opportunity to be watching. One of the reasons we are excited about Greenstar is due to the relationship that it has with Cowlitz County Cannabis Cultivation Inc. Greenstar is the owner of the property leases, brands and intellectual property of Cowlitz County Cannabis Cultivation Inc., a licensed cannabis producer and processor located in Washington State.
Cowlitz is a leading producer, marketer and vendor in the Washington State recreational cannabis market. Known for sourcing high-quality cannabis sold at affordable prices to a broad and established consumer base, Cowlitz’s portfolio of branded products is available at approximately 20% of cannabis retailers throughout Washington State. Cowlitz brands include; Columbia Valley Private Reserve, Cowlitz Creeper, Cowlitz Gold, High Guys and Dab Dudes and they have seen steady growth in the past five years. Cowlitz exceeded $14M in revenue for the 2018 calendar year and is on pace to exceed that number again in 2019.
Plans to Expand Across the US with an Award-Winning Brand
Cowlitz has built an award-winning formula in Washington State and Greenstar plans to use the brand to expand into additional US markets. We are favorable on this strategy as Greenstar will be able to leverage Cowlitz’s track record as a leading cannabis operator when it enters new markets.
Through the acquisition of the Cowlitz brands, Greenstar has gained access to a suite of cannabis products that are in high demand as well as industry trade names that can be deployed in new cannabis markets across the US as Greenstar expands. The Cowlitz brands cover a wide range of cannabis related products that target all price points and customer demographics. We are favorable on this aspect of the story and find this to be significant when it comes to expanding into new market.
Going forward, Greenstar plans to significantly expand its reach and the management team has commenced the process to enter new markets. The company is targeting several major cannabis markets that include: California, Oregon, Michigan, West Virginia, and Nevada. These represent highly lucrative cannabis markets and we are favorable on the growth prospects associated with these markets. In 2019, Greenstar plans on entering 2 of these markets and we will monitor how the team is able to execute on this.
A Cost-Effective Cannabis Producer
One of the ways that the company is been able to differentiate itself from the competition is though the implementation of state-of-the-art vertically integrated cultivation technologies and we are bullish on the way this will improve profit margins.
Through the vertical integration of its product lines, Greenstar and its partners are able to produce and secure cannabis products at a cost that is lower than the industry standard. The company has developed a proprietary grow process that can significantly increase the total yield per watt, while reducing cycle time and overall capital requirements. This provides the company with a significant competitive advantage and this is something to be aware of.
An attractive aspect of the Greenstar story pertains to the maintenance of a fully integrated sourcing and distribution network, which allows the procurement of low-cost ancillary consumable materials while providing alternative revenue streams for increased stability. We are favorable on the network that the company has in place and finds this to be significant for the long-term story.
Another way that Greenstar has been able to differentiate itself is through its focus on the packaging side of the business. By utilizing prior relationships across Asia and India, Greenstar is able to source and secure premium low-cost products that are utilized and in demand across the entire cannabis supply. This is significant as it uniquely positions Greenstar to understand the non-cannabis product needs of all in-house and outside parties.
Greenstar packaging maintains a three-tier product catalog and provides selective cultivation equipment to growers, a wide variety of packaging and delivery products to processors, and a line of consumption devices for dispensaries. The company is able to take advantage of this interface to source-and-supply their wide range of support equipment, packaging and sundry products. We find this to be an attractive aspect of the story and believe that the packaging market represents a significant opportunity.
Since inception, Greenstar has been focused on securing state-of-the-art cultivation technology and we have been monitoring this initiative. Through a joint venture agreement Greenstar has secured sole access to a patented Micro-Pod Grow Technology. The patented micro-pod technology drastically reduces the amount of resources that are needed to deliver quality cannabis.
Currently, these systems are being utilized in a prototype operation within Cowlitz in Washington State. The project is running in conjunction with a new multi-level cultivation facility that can deliver 2,520 sq. ft. of grow space in a 1600 sq. ft. room and a cost that is significantly lower than the industry standard. We are favorable on this aspect of the business and believe that this will help support growth over the long-term.
Highly Levered to the Cannabis Infused Product Market
During the last year, we have seen a significant increase in the amount of demand for cannabis infused products. Many consumers are looking for standardized products that are accurately dosed and this is an area that GreenStar Biosciences has been focused on. Through a partnership with Pharmastrip, the company is addressing this need and we are favorable on the growth prospects associated with this relationship.
Going forward, we expect to see a significant increase in the demand for cannabis infused products and Greenstar has attractive leverage to this trend through this relationship. Pharmastrip’s Cannabis Oral Thin Film Strips are reliable and properly dosed cannabis infused strips that dissolve on your tongue. This partnership provides Greenstar with a significant differentiator and we will monitor how the team is able to execute on this market. One of the reasons we are favorable on Pharmastrip is due to its proven track record of success and we will monitor how this relationship supports the entire business. Pharmastrip’s products have strong sell-through numbers and we believe that there is a significant opportunity for Greenstar.
Over the next year, we expect to see GreenStar Biosciences increase the number of states that it is selling products in and believe that this relationship will be a major value driver for the overall business. By being able to offer a diverse product line that includes cannabis flower, oil and infused products, Greenstar has a significant opportunity license or to sell its products to dispensaries.
A Differentiated Growth Opportunity
GreenStar Biosciences represents a differentiated opportunity that has attractive growth prospects. The company is led by a management team with a proven track record of success and we believe that this is one of the most important aspects of the entire story.
When it comes to investing in a cannabis company, you are really investing in the management team. We believe that GreenStar Biosciences is comprised of a management team that have diverse backgrounds and skill sets and we find this to be significantly. Most importantly, we believe that the management team is focused on creating value for shareholders and are favorable on the way that the team has advanced the story.
When looking at Greenstar, we believe that this a company that has significant catalysts for growth. Over the next year, we expect to see the company significantly expand its reach and this is an opportunity to be monitoring. The management team has already proven itself to be a very capable operator and we are bullish on this aspect of the story.
Greenstar represents an emerging cannabis opportunity and we will continue to monitor how the team continues to execute. To learn more about this burgeoning opportunity, please email email@example.com
Pursuant to an agreement between StoneBridge Partners LLC and GreenStar Biosciences we have been hired for a period of 90 days beginning May 28, 2019 and ending August 28, 2019 to publicly disseminate information about (GSTR) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month (GSTR) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own two hundred thousand (200,000) shares of (GSTR), which we purchased via private placement. We plan to sell the “ZERO” shares of (GSTR) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (GSTR) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.