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The legalization of recreational marijuana in California has created a major opportunity for cannabis companies focused on this market and today we want to highlight a company benefiting from this trend.
The company, Plus Products, is an edibles manufacturer that has been capitalizing on California’s burgeoning marijuana market. The size of the edibles market in California is massive and Plus has seen incredible demand for its product line, especially when it comes to its gummy. Investors that are looking to capitalize on the edibles market in California need to take a look at Plus.
We are favorable on the smokeless product opportunity and view Plus as a leader in this space. Edibles and cannabis oils continue to take market share in every market where it is legal. More than half of the revenue generated in Colorado from cannabis is from smokeless products. We expect California’s cannabis-infused edibles market to look like what we saw in Colorado, but on a much larger scale.
Plus is Generating Real Revenues
Plus is producing real revenues and the company has been recording very strong growth. In April, the edibles manufacturer generated more than $1.4 million in retail sales (source: BDS Analytics) and continues to increase market share in California. We expect its fundamentals to continue to improve as Plus increases production capacity and expands its distribution.
Plus Products has been nothing short of an execution story and during the last year, the company improved its management team through strategic additions, strengthened its balance sheet through step-up financings, expanded its product portfolio, and significantly increased production capacity.
Plus has been seeing incredible demand for its products and has secured a new facility and equipment to increase production capacity. We are excited about this initiative as it will be funded with the proceeds from a recent financing and will significantly increase the amount of revenue Plus can generate.
Focused on the California Edibles Market
Plus is led by a management team that continues to execute and has the company positioned to capitalize on what will be a major opportunity. While many companies have expanded their focus to new markets, Plus remains laser focused on California and we think this is the right move.
While other markets are tempting, none are as big as California. Also, once Plus proves to be successful in California, the company can easily expand into new markets. When it comes to a strategic location, Plus is located in a market that is second-to-none and we think the company is positioned to capitalize on a cannabis boom in California.
Plus offers a product that is meant for users that are looking for a low dose and we find this aspect of the product line to be very appealing. Plus offers the gummy product in a variety of flavors that meet the needs of consumers (indica, sativa, and CBD). Plus’ gummy product has been rising in the ranks and according to BDS Analytics, is the fourth most popular edible in all of California.
An Attractively Valued Opportunity
The recent financing was completed at a valuation of approx. $25 million (pre-money) and we think the continued execution warrants a much higher valuation. When compared to a company like CannaRoyalty, which has a market cap that is above $300 million, Plus trades at 1.7x revenue. This is significant and leaves massive room for upside.
If you look at Nutritional High International Inc. (EAT.CN), which is much less developed when compared to Plus, the market cap is close to $200 million. Plus has a very attractive valuation and fundamentals continue to improve. This is an opportunity that cannot be ignored.
We think Plus represents one of the most exciting new opportunities and cannabis investors need to keep an eye on this one. The strong and improving fundamentals, leading management team and attractive valuation make this a company that cannot be missed.
Plus is a company that we are excited about due to the following reasons: 1) Sales numbers continue to improve, 2) The company is focused on significantly increasing production capacity, 3) Plus is led by a management team that has a proven track record of success, 4) The company continues to execute, and 5) The valuation is very attractive.