Now that the fall season is approaching, we are closely monitoring how the cannabis sector closes out the year. During the last few months, leading cannabis companies have been reporting increasing revenues.
Jushi Holdings Inc. (NEO: JUSH.B) (OTCQX: JUSHF) is a leading US cannabis retailer that has been nothing short of an execution story and this an opportunity we are excited about following. During the last few months, the US cannabis company has expanded into burgeoning cannabis markets and the company is focused on executing the build out of its operations in these markets. We look forward to monitoring the growth prospects associated with the continued execution.
Jushi is Successfully Increasing Market Share in Pennsylvania
In August, Jushi received approval from the Pennsylvania Department of Health to open its second BEYOND / HELLO™ medical marijuana dispensary in the Philadelphia area. This approval represents an important development as it will allow Jushi the opportunity to add market share in Pennsylvania. This is a market that has been recording impressive growth since opening and we expect to see Jushi report increasing revenues from Pennsylvania on a going-forward basis due to additional store openings.
The second Philadelphia area BEYOND / HELLO™ location carries a wide variety of medical cannabis products including dry flower, cannabis concentrates, vape cartridges, oils, pills, capsules, tinctures, topicals and ancillary products at the dispensary. One of the reasons we are favorable regarding the BEYOND / HELLO™ locations is due to the focus on providing the best education and information to medical patients. Each location has a licensed pharmacist on site to enhance the patient’s experience and product knowledge.
When looking at the markets that Jushi is focused on, we are very excited about the opportunity in Pennsylvania. Pennsylvania represents an attractive cannabis destination for licensed operators due to the limited license nature of the market as well as the size of the population. The second location in the Philadelphia area is the fifth open BEYOND / HELLO™ location in the Commonwealth and the company plans to open four additional retail stores by the end of 2019.
Recently, Jushi signed a definitive agreement to acquire a Pennsylvania Dispensary Permittee approved for three retail locations in the Philadelphia region, Reading and Pottsville. Through the acquisition, Jushi will own and operate five dispensary permittees (allowing for up to 15 dispensaries in the Commonwealth), which is the current maximum allowable number of permits that can be operated by one company or its affiliates in Pennsylvania, outside of the Clinical Registrant program.
Currently, there are fewer than 50 operational dispensaries in Pennsylvania and we find this to be an attractive aspect of the market. In 2018, the first year that Pennsylvania’s medical cannabis market was operational, the state generated more than $130 million in total sales, and is expected to generate more than $360 million by 2022 (according to Arcview Market Research).
Going forward, the Commonwealth plans to cap the number of cannabis dispensaries at 150. By allowing a limited number of dispensaries, Pennsylvania cannabis retailers benefit from being in a limited license state and we expect this market to be a major aspect of Jushi’s long-term story.
An Execution and Expansion Story in the Making
A few months ago, Jushi became publicly listed and has been executing on all cylinders since then. In July, the US multi-state cannabis and hemp operator signed definitive agreements to acquire 62% of the membership interests in Dalitso LLC.
Dalitso is one of only five applicants to receive conditional approval for a permit issued by the Virginia Board of Pharmacy to cultivate and process medical cannabis, and to dispense and deliver CBD oil and THC-A oil extracts in Virginia. This transaction represents a significant early mover advantage for Jushi. Dalitso’s conditional approval is for the northeast region of Virginia and Jushi is developing a facility in Prince William County, near the city of Manassas.
Dalitso has received conditional approval to operate within the Virginia Board of Pharmacy-designated Health Service Area II, which includes two of Virginia’s most densely populated counties, Fairfax and Prince William. According to World Population Review, Health Service Area II has a population of 2.4 million people and represent 28.2% of the state’s total population. Fairfax and Prince William comprise approximately 50% of the population in Health Service Area II.
Virginia represents an emerging limited medical cannabis market and has the 12th largest population in the US according to the World Population Review. We believe that Jushi has selected and invested in one of the best operators in the Commonwealth and we will monitor how this relationship continues to evolve over time. By having a majority ownership interest in Dalitso, Jushi will be able to control the operations and we find this to be significant based on Jushi’s track record of accomplishing its objectives.
Around the same time as the Dalitso announcement, Jushi recorded a major milestone and formally entered the California market through a definitive agreement to acquire 75% of an operational recreational and medical dispensary with the ability to offer delivery services in San Diego. California is the largest state in the US and represents a multi-billion-dollar cannabis market.
Additionally, San Diego is the second largest city in California with a population of approximately 1.4 million and over 35 million visitors each year.
One of the most attractive aspects of the San Diego market is related to the limited license nature of it. The city has capped the number of retail cannabis licenses at 36 and these licenses will be divided among 9 council districts. To date, 17 retail cannabis licenses have been issued and are operational in the city. We hope to see Jushi record strong growth from this market.
When looking at the San Diego opportunity, we believe Jushi has its finger on the pulse of this market. The company selected a strategic partner that is a proven operator and has a loyal customer base, which offers customers a wide and premium product offering. Another attractive aspect of this market is related to the work the company has done on the merit-based application process for a storefront retail (and ancillary delivery) permit in Culver City. Of the 23 applications submitted, Jushi was one of only three to move forward in the storefront retail permit process for a license in Culver City. Additionally, the company will proceed by preparing a conditional use permit application for submission to the city. This represents a massive opportunity for Jushi and we expect the California cannabis market to be a major value driver on a going forward basis.
An Attractive Valuation
2019 has been a banner year for the cannabis industry and we believe that the industry is reaching an inflection point. Companies like Jushi are well positioned to capitalize on the changing landscape of the US cannabis industry. Also, we are impressed with the management team’s ability to execute and create value for its shareholders.
Going forward, we hope Jushi will record growth on a quarter-over-quarter basis and we will monitor how the operation continues to evolve over time. Furthermore, the company is focusing on key strategic US cannabis markets and we expect the strategic diversity of the business to play a major role in the long-term success of the company.
To learn more about Jushi, please contact email@example.com and we will add you to our distribution list.
Pursuant to an agreement between StoneBridge Partners LLC and Jushi Inc. we have been hired for a period of 180 days beginning May 20, 2019 and ending November 20, 2019 to publicly disseminate information about (JUSH) including on the Website and other media including Facebook and Twitter. We are being paid $7,000 per month (JUSH) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero (0) shares of (JUSH), which we purchased in the open market. We plan to sell the “ZERO” shares of (JUSH) 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 (JUSH) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.
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This article contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Jushi Holdings Inc.’s (the “Company’s”) beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but are not limited to, the ability of the combined company to successfully achieve business objectives, and expectations for other economic, business, and/or competitive factors.
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