A few weeks ago, 1933 Industries released an operational update that provided a great overview of the business. Prior to that update, the US focused cannabis company announced that it would be expanding into California and this is a development that we are excited about. 1933 Industries has been nothing short of an execution story in Nevada and Colorado and we are impressed with the way the management team has been able to drastically improve the company’s growth prospects by entering the California market.
1933 Industries has a strong balance sheet and this is an important aspect of the story. During the last year, the management team has been improving operational efficiencies to operate a lean and sustainable business with scalable profitability as its main objective. Over the last two years, the company has raised approx. $36 million and has added approx. $60 million of assets to the overall operation.
Over the last few months, the cannabis sector has been under heavy pressure and 1933 Industries has traded lower with the market. When you compare the company’s valuation to its assets and that of its subsidiaries, we believe that the market is missing out on something big and are bullish on the growth prospects associated with this US multi-state operator.
One of the reasons we are excited about 1933 Industries is due to the diverse assets owned by the business. These assets and that of its subsidiaries provide leverage to the most exciting verticals of the cannabis value chain and we want to highlight these below:
- Alternative Medicine Association (AMA) – The company owns 91% of AMA which is highly focused on the production of cannabis that is high in THC. AMA produces a wide variety of cannabis products that have significant distribution in Las Vegas. In the near future, AMA products will start to be sold in California and this represents a significant opportunity for the business.
- Infused MFG. – The wholly owned subsidiary provides attractive leverage to the burgeoning cannabidiol (CBD) market and we are bullish on this aspect of the story. Canna Hemp is a leading CBD brand that falls under the Infused umbrella that is sold in 46 states across the US
1933 Industries has attractive leverage to several of the most exciting verticals within the cannabis industry. We believe that the company has significant catalysts for growth and is trading at a discount when compared to its peers. Over the next year, we expect to see 1933 Industries report strong growth and are favorable on the focus on expansion. When looking at 1933 Industries, there is a lot to be excited about and we are bullish on the opportunity for the following reasons:
- 1933 Industries has an attractive operating structure and we are favorable on the leverage that it has to the CBD and THC market
- The company completed a major transition and moved into a much larger production facility in Las Vegas. We expect the facility to prove to be a major catalyst for growth and believe that the market under-appreciates this aspect of the story
- 1933 Industries is expanding into the California market and we expect this market to prove to be a major growth driver for the business
- The company is led by a management team that has a proven track record of success and we are favorable on the way the team is working to create value for shareholders
- 1933 Industries has an attractive risk-reward profile and is trading at a discount when compared to its peers
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