The California cannabis market has been one of the hottest topics of discussion when it comes to cannabis investment opportunities and we have had our finger on the pulse of this market. California is the world’s largest cannabis market and this has created significant opportunities for the companies that are levered to it.
One of the most exciting trends in the California cannabis market has been the rising demand for smokeless cannabis products and cannabis infused products. When compared to cannabis flower, these represent attractive markets due to the better margins, the longer shelf life, and the demand trends.
When it comes to California edibles companies, we believe that Plus Products (PLUS.CN) (PLPRF) is one of the best positioned and one of the most exciting growth opportunities. The company has been executing flawlessly on its business plan and has done a fantastic job at increasing market share in the California market.
Plus Products: A Leading California Cannabis Edible Brand
Although California is one of the most exciting cannabis markets, it is also one of the most competitive. This is an important aspect of the Plus Products story and we are bullish on its ability to take market share in new cannabis markets after it has been successful in what is probably the most competitive cannabis market.
Another reason why we are favorable on Plus Products is due to the strength of the balance sheet and the types of capital partners that are invested in this opportunity. From Tiger Global Management, a high powered hedge fund that was an early investor in the E-cigarette manufacturer JUUL, to Navy Capital, Gotham Green Partners and Stable Road Capital, Plus Products is backed some of the smartest money in the cannabis industry and this leaves us confident in the company’s ability to execute.
Last week, Plus Products completed a $25 million private placement and there were two aspects about this financing that made it special. First, the company priced the financing at the money (when it was announced, it was offered at Plus Products’ current share price). Second, demand for this financing was higher-than-expected and the company had to increase the size of this financing to $25 million from $20 million.
A Multi-Faceted Growth Opportunity
One of the most important aspects of the Plus Products story is the focus on expansion. The company is in the middle of two key expansions (focused on expanding production capacity and focused on expanding its product line) and we consider this to be one of the biggest possible growth drivers going forward.
Plus Products is in the middle of a major expansion (fully funded) and is constructing the largest dedicated cannabis food manufacturing facility in the United States. The facility will be able to generate $150 million worth of products per year, with the potential to expand to $450 million. Plus holds the eighth temporary manufacturing license granted in California and was one of the first to introduce fully compliant products to the state.
In late 2018, Plus Products completed the acquisition of California-based cannabis-infused baked goods brand GOOD CO-OP, in an all-stock deal. This is a significant acquisition and we expect it to prove to be accretive in the first half of 2019. For Plus, the acquisition represents a strategic entry into the third largest edibles category, baked goods, after having achieved the top spot in the edible’s category with only four full-time offerings.
The acquisition also adds an additional 4,800 sq. ft. of manufacturing space and associated equipment in southern California, augmenting its existing 12,000 sq. ft. manufacturing facility. The increased production capacity is a significant aspect of the acquisition and we are favorable on the growth prospects as a result of this.
Plus is Taking Significant Market Share in California
Plus Products has been seeing increasing demand for its product line and has been taking cannabis edibles market share at a staggering rate. These statements are not considered to be an opinion and have been confirmed and verified through data provided by BDS Analytics and Headset, two leading cannabis market research firms.
The cannabis edibles manufacturer has been laser focused on the California cannabis market and we are favorable on this. When it comes to distribution in California, this is an area where Plus Products excels and it has agreements with licensed distributors to sell its products to over 200 licensed dispensaries and delivery service customers. The edibles company has attractive growth prospects and plans to build upon its leading position in California in 2019.
Plus Products has significant catalysts for growth and has been executing flawlessly on the California market. With a nationwide expansion on the horizon, the growth prospects for Plus Products are becoming even more enticing and this is an opportunity to be watching. When compared to its peers, Plus Products has an attractive valuation and this is an important aspect of the story. We believe that the company has significant growth potential and to learn more, please contact email@example.com.
Pursuant to an agreement between StoneBridge Partners LLC and PLUS Products Inc. we have been hired for a period of 365 days beginning October 5, 2017 and ending October 5, 2018 to publicly disseminate information about (PLUS) including on the Website and other media including Facebook and Twitter. We are being paid $2,000 per month (CASH) for or were paid “96,000” shares of restricted common shares. We own 156,000 shares of (PLUS), which we purchased in via private placement. We may buy or sell additional shares of (PLUS) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information. On November 1st 2018 StoneBridge Partners LLC sold 50,000 restricted shares of (PLUS) to a private investor via a direct sale.