The United States cannabis industry represents a massive opportunity that we have been closely watching. During the last year, several new cannabis markets have opened while other existing markets have matured and have recorded significant growth. During this time, there also has been a significant increase in the number of publicly traded companies focused on this opportunity.
One of the companies that has been capitalizing on the United States cannabis opportunity is 1933 Industries (CSE:TGIF) (OTCQX:TGIFF). The company is nearing completion of a major expansion and has attractive leverage to burgeoning cannabis markets such as those in California and in Nevada. We have been monitoring 1933 Industries and believe that the market underappreciates the company’s growth potential.
On New Year’s Eve, 1933 Industries issued an update that highlighted the company’s progress during its first year of operations. During that year, the company generated $12.6 million in revenue and reported impressive growth on a quarter-over-quarter basis. We are favorable on the growth prospects and expect to see the company build upon its success.
The success that the company has had is a testament to the strength of its management team and this is an important aspect of the story. The management team has been executing on all cylinders and has significantly advanced its fundamental story. During the last year, 1933 Industries has executed on several key initiatives that include: infrastructure build-out and expansion of wholesale capacity to meet increasing demand, growing and strengthening its product pipeline, increasing sales revenue quarter to quarter, and building a world-class team.
1933 Industries: A US Leader in the Making
Last year, 1933 Industries experienced strong growth and this was fueled by increasing demand for its cannabis products in Nevada, California and Colorado. We are favorable on the leverage to these burgeoning cannabis markets and expect to see the company build on its success from last year.
1933 Industries is comprised of three subsidiaries which can create value for each other as well as improve the value proposition of the entire company. Its three subsidiaries are focused on the production of cannabis through Alternative Medicine Association (AMA), the production and sale of industrial hemp-based and CBD infused products through Infused MFG., and security and intelligence through Spire Global Strategy.
AMA, Las Vegas’ original licensed cultivator of medical cannabis, reported strong sales revenue in 2018. The company’s business model is based on servicing existing medical cannabis patients in Nevada as well recreational consumers. The year’s highlights include:
- Continued an exclusive licensing agreement with the iconic Hip-Hop Artist Kurupt to produce The Real Kurupts Moon Rocks.
- Signed a licensing deal to produce Denver Dab Company’s line of unique products.
- Expanded product line to over 100 SKUs such as flower, pre-rolls and concentrates for sale through licensed dispensaries in Nevada, with additional products in the pipeline for 2019.
The company owns 91% of Infused MFG., which continues to build out and increase the reach of its suite of branded products. The year’s highlights include:
- Established key distribution networks in California, where it now sells its products in over 100 retail shops.
- Sales to over 400 retail locations around the U.S.
- Signed a licensing agreement and partnership with professional skateboarder and Grizzly Griptape LLC. founder Tory Pudwill to promote Canna Hemp X, a CBD-infused recovery cream, targeting the rapidly growing recovery market.
- Signed a licensing agreement with Scotty Nguyen for the launch of Canna Hemp branded products co-marketed under his name.
- Signed a licensing agreement with Denver Dab Company to manufacture and distribute Canna Hemp CBD and hemp-based products on an exclusive basis to retail cannabis dispensaries in Colorado.
- Expanded its own line of CBD products specific to the pet industry and launched Canna Hemp Paws.
- Launched Canna Fused, a 1:1 CBD/THC-infused product line in partnership with Denver Dab Company.
Last year, 1933 Industries entered the emerging cannabis security and intelligence space with the strategic acquisition of Spire Global Strategy, which provides services, on a confidential basis to the cannabis sector including:
- International production, sales, and import/export licensing agreements
- Domestic licensing applications
- Public policy development
- Design and development of large-scale hemp, cannabis, and CBD projects for third parties
- Risk and resilience management and investigative due diligence
- Physical security and force protection
A Company that is Well Positioned for Growth
1933 Industries has a strong retail foothold in Nevada and is now building distribution networks in California. The company plans to expand its reach and has been taking a look at the Canadian cannabis opportunity. If 1933 Industries is able to establish a foothold in the Canadian market, it could open distribution channels into the European markets.
We are favorable on the company’s leverage to the United States cannabis market and its growth prospects going forward. 1933 Industries represents a leading opportunity and is one of the best positioned for growth. Last year, we visited the cannabis markets where 1933 Industries had a presence and were very impressed with what we saw.
1933 Industries has a significant presence in cannabis dispensaries in Las Vegas and we are favorable on this. In California and Colorado, the company has penetrated these markets with its hemp/CBD infused line of wellness products which continue to gain traction and we expect these assets to become more significant growth drivers this year.
Major Expansion in Las Vegas
1933 Industries is nearing completion of a major expansion and construction on its advanced 67,750 sq. ft. cannabis cultivation facility. The company has been preparing cannabis plant clones to be transferred into the new facility to ensure a seamless ramp up in cultivation.
1933 Industries recently purchased 2.78 acres located next to AMA’s new state-of-the-art 67,750 sq. ft. cultivation facility in Las Vegas, bringing the total land package to 4.17 acres. The company has received all of the necessary permitting such that the new cultivation facility should be operational during the first quarter of 2019. The facility is expected to cultivate approximately 800 – 900 pounds per month which will significantly increase the amount of flower cultivation to support AMA’s own line of cannabis-based products and white-label extraction.
AMA also purchased an existing 12,160 sq. ft. building adjacent to the cultivation facility to be utilized for cannabis production, processing and extraction. The production space will be 6 times the size of the current facility (2,000 sq. ft.), which should position the company to more efficiently produce larger quantities of product.
Infused MFG., is an attractive part of the business and we are favorable on its growth prospects going forward. In the recent company update, management announced that the subsidiary is adding an average of 50 new wholesale accounts every month and we are favorable on this growth.
Nothing Short of an Execution Story
During the last year, 1933 Industries has been nothing short of an execution story and this is a company that investors need to be watching. The company has several catalysts for growth and trades at a valuation that is very attractive, especially when compared to its peers.
1933 Industries is well capitalized and is led by a management team that is focused on creating value for shareholders. The company has made several strategic additions to the management team and this is an important aspect of the story. When it comes to investing in cannabis companies, it all starts with the management team and we believe that 1933 Industries is well positioned from this standpoint.
We believe that 1933 Industries is a leading United States cannabis company and is an opportunity to watch. If you want to receive updates on 1933 Industries, please email email@example.com.
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