The United States cannabis opportunity has been gaining considerable traction and this is a trend that investors need to be watching. Earlier this month, Michigan voted to legalize recreational cannabis and became the 10th state to do so.
We are favorable on this trend and have been laser focused on the California cannabis market. California is the world’s largest cannabis market and this has created significant opportunities for the companies that are levered to it. Recreational cannabis has been legal in California for almost a year and the market has been recording incredible growth.
The California cannabis market is in the early innings of a major growth cycle and we have been looking for companies that are levered to this opportunity. We are not looking at the major retailers due to the valuations and have been targeting companies that been flying under the radar.
High Hampton Holdings Corp. (HC.CN) (HHPHF) is a company that has been flying under the radar and is highly levered to the California cannabis opportunity. The company recently appointed an Interim CEO and this has proved to a smart decision as the management team has been executing on all cylinders.
Under the leadership of Interim CEO and Director Christian Scovenna, High Hampton has been nothing short of an execution story closing a significant acquisition. The market has responded favorably to these strategic developments and the shares have been trending higher. We are bullish on the direction of the company as well as the new leadership team and believe that this is a company worth watching.
Closes Acquisition of a Leading Cannabis Oil Company
Earlier this week, High Hampton made a major announcement and closed the previously announced acquisition of Mojave Jane, LLC. This is a significant development and adds to High Hampton’s growing portfolio of California-based cannabis manufacturers and distributors. This acquisition is expected to be immediately accretive and we are bullish on the growth prospects heading into 2019.
Mojave Jane is a licensed manufacturer of premium cannabis extracts and concentrates (volatile and non-volatile) for the California market. The company utilizes state-of-the-art CO2 extraction technologies and proven distillation techniques to create products for both recreational and medical market. Mojave Jane is a key part of the Coachella Valley’s cannabis economy and supports distribution throughout California.
The relationship will provide High Hampton with the means to produce white label and branded extracts for distribution across the California markets. We expect the acquisition to prove to be accretive as it will provide near term revenues that will fuel profitability and growth. The deal will also establish a foundation for the full integration of High Hampton’s portfolio companies and create the means to achieve substantial growth in California
We have been bullish on the cannabis oil opportunity and are favorable on the leverage to this market. Demand for cannabis oil continues to increase and we expect this trend to become even more significant over the coming years. The trend toward cannabis oil is a very lucrative opportunity and we will monitor how High Hampton executes on this.
During the last decade, the amount of people smoking cigarettes has significant decreased while the number of people using e-cigarettes has increased significantly. The trend in the cannabis industry is very similar, albeit on a much smaller scale. This transition will create significant opportunities for companies like Mojave Jane and we will monitor how this adds value to High Hampton.
Attractive Leverage to the Smokeless Product Market
The smokeless product market is one of the most attractive opportunities within the cannabis industry due to the increasing demand for these products as well as the more attractive economics (has a higher price point and higher profit margins). High Hampton has been laser focused on this opportunity and we are favorable on the acquisitions made to improve the company’s leverage to it.
In late July, High Hampton Holdings completed the acquisition of HS Airway Holding, a California company that owns the CALIGOLD Edibles brand. This was a significant acquisition that strengthened the company’s portfolio of assets through the addition of a well-established and recognized edibles brand.
The leverage to the edibles market is significant and we are favorable on the growth prospects heading into 2019. CALIGOLD is a well-known brand that enhances High Hampton’s product portfolio and we will monitor how this adds value to the business.
High Hampton Appoints New Chief Executive Officer and Chief Operations Officer
Last week High Hampton the appointment of Gary C. Latham, an influential figure in the California cannabis market, to the role of Chief Executive Officer (CEO) for the company. Mr. Latham is regarded as a leader with his hands-on experience in starting, building and growing middle market to Fortune 500 organizations and spent the last few years exclusively in the California cannabis space; among other things as a key contributor to such success stories as Mojave Jane, LLC.
Christion Scovenna, Director of High Hampton commented:
“We welcome Gary and Tom aboard and to the High Hampton executive management. Our board appointed seasoned leaders who can navigate the company through this phase
of development and as we move our subsidiaries toward active operations and more growth.”
Tom Baird, COO of High Hampton, added:
“I am looking forward to getting into the nitty-gritty of the High Hampton cannabis operations throughout California. Finding synergies, establishing and optimizing production processes and scaling according to market demands are going to be the key near-term objectives to solidify our subsidiaries as viable contributors and create sustainable value for our shareholders.”
We are favorable on these new key additions as the Mojave acquisition was accretive and allowed High Hampton to expand their footprint in the California market.
A Company Worth Watching
Through a combination of organic and inorganic growth initiatives, High Hampton has been able to significantly advance its fundamental story and we will monitor how the team executes from here.
High Hampton is in the middle of a major expansion and plans on building a 254,000 sq. ft. greenhouse facility in Coachella, California. The company has secured the necessary permits and is working with Aurora Larssen Projects Inc. (ALPS), a wholly owned subsidiary of Aurora Cannabis (ACB.TO) (ACBFF), for the design of its cannabis cultivation facility.
We are favorable on High Hampton due to the continued execution, the number of catalysts for growth, and the new leadership team. The shares have been trending higher and we are monitoring price movements from here. Despite the recent move higher, High Hampton Holdings is trading at a discount to its peers and this is a company worth watching.
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