When we look at the global cannabis opportunity, two markets that have been generating significant traction are the ones in North and South America. California has been the most talked about market in the United States while Colombia has recently been making headlines in the South American cannabis market.
California represents one of the most attractive and the most competitive cannabis opportunities for companies and this makes this market so exciting to watch. This multi-billion-dollar market tests the strength of cannabis business and it separates the mature and efficient companies from the not-legitimate operators.
When it comes to the California cannabis market, we look for fully licensed businesses that have visible and significant growth prospects. We look for companies that are led by a management team with a proven track record and one that knows how to allocate capital to the most important places. In regards to Colombian cannabis businesses, we are targeting fully licensed operations that have significant room to expand and are focused on high-margin aspects of the value chain (i.e. cannabis oil).
Next Green Wave Holdings (NGW.CN) (NXGWF) is one of the few cannabis companies to have leverage to these burgeoning markets and this is a company that we have been following. Next Green Wave is in the early innings of a major growth cycle and we have issued an update on this emerging opportunity.
Why Next Green Wave is an Opportunity to Watch
One of the reasons why we are monitoring Next Green Wave is due to the expansion that it is focused on. Once the facility is operational, it will be generating significant revenues and will be very efficient. The company’s operations are completely integrated, which allows it to control the complete seed-to-sale process, and the team is focused constructing state-of-the-art facilities for cultivation, nursery/breeding, extraction and distribution.
The focus on the California market is significant because there will always be strong demand for cannabis. Once the company’s facility is operational, it will be producing a significant amount of cannabis in a market where the demand is strong. This creates a significant growth opportunity for Next Green Wave and we will monitor how the team executes on this.
One of the most attractive aspects of the Next Green Wave story is the amount of distribution that it has. This is an area where the management team has been laser focused and the company is well position and plans to sell its products throughout the state and contract high quality licensed producers and processors that do not have a distribution license to package, market, transport and sell their respective products through its wholesale and retail network.
Expands its Focus to the Latin American Market
One of the ways that Next Green Wave has been able to differentiate itself from the competition is through its focus on strategic markets. The company is one of the few cannabis businesses to be levered to the opportunity in North and South American and we are favorable on this leverage. The economics associated with cultivating cannabis in South America are very attractive and we think this could benefit the company’s growth prospects.
Last month, Next Green Wave made a significant announcement and announced a memorandum of understanding to take a strategic investment in Organic Medical Growth OMG3 Inc. (OMG), a Canadian based company with a wholly owned subsidiary, Proymed S.A.S., that is focused on the Colombian cannabis market. This is a significant relationship that provides attractive leverage to a cannabis market that has come under heavy focus.
OMG is positioning itself to become a lowest cost, high margin businesses operating in Colombia while delivering premium quality cannabis products to their consumers. Proymed is a medical cannabis company that is focused on producing and commercializing non-psychoactive CBD products derived from cannabis. Proymed is finalizing its transformation and psychoactive licenses for THC products in Colombia as well as finalizing international distribution agreements.
Once this agreement is finalized, Next Green Wave will have access to the Colombia cannabis market which represents a burgeoning opportunity. Besides for the investment, the company will collaborate and provide commercial strategic support to OMG, through Proymed, including the following:
- Adoption of nursery, cultivation and manufacturing techniques that will enable OMG to produce high quality cannabinoid oil through large scale production and in compliance with GMP standards
- Planning and design of necessary infrastructure for its outdoor and indoor facilities
- Licensing of Next Green Waves medicinal consumer product goods and brands across OMG’s entire distribution network subject to countrywide regulation approval.
This investment and relationship could prove to be of significant value to Next Green Wave as OMG is actively pursuing an initial public offering (IPO) and is focusing on becoming a significant producer and supplier of medical cannabis products and services in Colombia. OMG has a defined strategic roadmap with a highly experienced management team. Key highlights from OMG’s unique offering include the following:
- OMG, through Proymed, has an exclusive offtake agreement to purchase the entire cannabis production of the Asomiravalle Norte Association. This association of 28 producers is located in the state of Valle Del Cauca. The association’s activities span across 100 hectares of land with the option to expand the production to 1000 hectares over the next 10 years.
- OMG has an exclusive distribution agreement with SALUTTI S.A.S. who owns 100% of ORTIX S.A.S.
- ORTIX S.A.S. gives OMG exclusive distribution of cannabis products to its network of over 7000 pharmacies in Colombia
- OMG is developing its distribution channels to export cannabis products in other established markets including Germany.
A Company with Catalysts for Growth
During the last year, we have a seen a significant increase in the number of companies focused on the cannabis opportunity in California and more recently in Colombia. Next Green Wave has clearly been focused on the right opportunities and this makes it a company with catalysts for growth. We believe that the company is just getting started and is well positioned to execute on the foundation it has built.
The fact that Next Green Wave is a fully licensed cannabis company provides it with a competitive advantage and we are favorable on this aspect of the story. The company has fully funded its current expansion and is led by a management team with a proven track record of success.
Next Green Wave is well capitalized and well positioned to execute and this is an opportunity to be watching. To learn more about this emerging cannabis company, please contact email@example.com.
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