During the last year, the Las Vegas cannabis market has become a necessary destination for cannabis businesses and we are not surprised by this trend. If you look at the Las Vegas cannabis market from an awareness and economics standpoint, there are several reasons that explain why a business would to want to be levered to this burgeoning cannabis market.
First, from an awareness standpoint, Las Vegas attracts more than 42 million tourists per year and the market provides cannabis companies with an opportunity to bring their brand to the people. There are only a handful of markets across the globe that attract as many tourists as Las Vegas and the cannabis industry has been a major beneficiary of this.
From an economics standpoint, the Las Vegas cannabis market is much more attractive for businesses than markets like Colorado and Oregon. When compared to Las Vegas, the cost of cannabis in these mature markets is much less expensive and this has made it more challenging for businesses to operate in a profitable manner. We are bullish on the Las Vegas cannabis market and want to highlight 1933 Industries Inc. (TGIF.CN) (TGIFF), which has been flying under the radar and has been capitalizing on this burgeoning market.
When looking at the 1933 Industries opportunity, the most exciting aspect of the story is related to the transition into a facility that is more than 5 times bigger than the facility it has been operating out of. The growth prospects associated with this facility are incredible as it will significantly increase overall production capacity for their branded products.
Granted Final Approval to Move into the New Facility
A few weeks ago, the company reported to have received final approvals from both Clark County and Nevada’s Department of Taxation for the transfer of its existing cultivation licenses to the new cultivation facility.
Once the new facility is fully operational, 1933 Industries expects to produce approx. 700 to 800 pounds of dried cannabis per month. The cannabis produced by this facility will be used to create company branded flower and concentrate products that are currently being distributed to licensed dispensaries throughout Nevada.
In June, we visited 1933 Industries’ state-of-the-art cultivation facility and were beyond impressed with the operation. The company’s subsidiary, Alternative Medicine Association (AMA) offers a premium product line and we expect the facility to prove to be a major catalyst for growth.
Not only does the new facility provide a much larger production footprint, but it will also provide better control over the input material for its premium cannabis concentrate products. By using a flash freezing fresh flower process, AMA can better preserve the monoterpenes that are not found in cured biomass. This process allows the company to produce a product that has the full terpene profile of the flower for increased potency and better taste.
Demand for premium cannabis concentrate products continues to increase and the price of these products tend to be higher than other cannabis products. The margins associated with these products also tend to be much higher and we are favorable on the way this benefits the company. AMA is highly levered to the cannabis concentrate market and produces a premium product line that is in high demand.
1933 Industries has always been focused on offering a premium product for a reasonable price. This is a strategy that we have always been favorable on and expect the new facility to lead to significant revenue growth. During the back half of the year, we expect production capacity to ramp higher and expect 1933 Industries to start to quickly start to recognize the benefits associated with the facility.
A Growth Story that is Trading for a Discount
When analyzing the 1933 Industries opportunity, one of the most significant potential catalysts for growth will be the entrance into new markets. On the cannabidiol (CBD) side of the business, the company has proven to be nothing short of an execution story and is selling its Canna Hemp products in 46 states. We believe that this track record of success bodes well for any expansion on the THC side of the business and will keep an eye on this opportunity.
Over the next year, we expect to see 1933 Industries continue its growth and increase market share in the Las Vegas cannabis market and would not be surprised if we saw the company expand its THC business into new states. Going forward, the name of the game for 1933 Industries is execution and we believe that the market does not appreciate the growth prospects associated with this opportunity.
If you look at the revenue numbers that 1933 Industries has been reporting and then look at the potential impact of the expansion, we multiplied these revenue numbers by 5 and these numbers look much more attractive. This is one of the primary reasons for our positive view of the operation and we find the risk-reward profile to be attractive. When compared to its peers, the company is trading at a discount and we expect this to change as production capacity continues to increase.
If you want to learn more about 1933 Industries, please reach out to firstname.lastname@example.org.
Pursuant to an agreement between StoneBridge Partners LLC and 1933 Industries we have been hired for a period of 180 days beginning July 15, 2019 and ending January 15, 2020 to publicly disseminate information about (TGIF) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month for a period of 6 months. We own zero shares of (TGIF), which we purchased in the open market. We plan to sell the “ZERO” shares of (TGIF) 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 (TGIF) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.