One of the most significant themes of 2019 is related to the vaping health epidemic and this is a trend that we have been closely following.
Although the trend has served as a headwind for the cannabis sector, we expect the impact to be transitory and believe that investors need to be aware of the companies that have been negatively affected by it.
Vapen MJ Ventures (VAPN.CN) (VAPNF) has been hit especially hard by the vaping crisis and this is an opportunity that we have been excited about. Earlier this month, the company announced that it would be changing its name to Vext Science Inc. (CSE:VEXT) (OTC:VEXTF), and we are favorable on the decision to do so. Going forward, the company plans to keep the Vapen MJ brand and have it fall under the Vext umbrella.
We are favorable on the decision to change the company’s name and believe that the new name better represents the business. The company is highly focused on expanding its reach through joint venture partnerships and we believe that the new name better reflects this. The new name encompasses all the diverse cannabis and hemp cannabinoid products that are currently being produced and sold by the company in the rapidly growing cannabinoid industry.
Going forward, the Vapen™ brand will continue to be consumer facing through the sale of THC distillate and concentrate products in the US. When it comes to the international opportunity, Vapen will be focused on the sale of certain hemp-based products and we are favorable on the structure of the business.
Although the company has been nothing short of an execution story so far this year, the shares have been under considerable pressure and this is a trend that we are watching. During the last year, the company has recorded substantial revenue growth and is highly focused on improving profitability. We find this to be significant and believe that the management team is bringing the business down the right path.
A Domestic Growth Story
Initially, the company was only focused on the Arizona medical cannabis market and we are impressed by how the story has evolved in such a short period of time. By also focusing on the cannabidiol (CBD) opportunity, the company has been able to expand into strategic US markets through joint venture partnerships. We are favorable on the growth prospects associated with the expanded market position and expect the business to report ramping revenues on a quarter-over-quarter basis.
In late October, Vapen announced a cannabis production, extraction and cultivation partnership with the principals and founders of Texoma House of Cannabis to form Vapen Oklahoma, LLC in Oklahoma. The partnership is focused on the production of THC products and we are bullish on the growth prospects associated with this relationship. Oklahoma is expected to be a major medical cannabis market and we find this leverage to be significant.
The new, state-of-the-art extraction and production facility is expected to be fully operational and selling product wholesale to licensed Oklahoma dispensaries by the end of 2019. The partnership with Texoma will facilitate the launch of Vapen branded product including a line of THC concentrates, edibles and extraction products to dispensaries in Oklahoma. We will monitor how the management team is able to drive this aspect of the story forward and are excited about the impact the partnership will have on the company in 2020 and beyond.
When it comes to the international cannabis opportunity, Vapen has been nothing short of an execution story and has its finger on the pulse of the market. We believe that the company is led by a management team that has a firm understanding of where the cannabis industry is going and believe that the business is well positioned to take advantage of this.
Over the next year, we expect the company to report incremental revenue growth and this is an opportunity to be aware of. During the first half of the year, the company generated more than $13 million of revenue in Arizona. Once these new markets come online and start generating revenues, we expect the company to report substantial growth and believe that this opportunity is flying under the radar.
To learn more about how the Vext Sciences is positioned to capitalize on the domestic and international cannabis opportunity, please email firstname.lastname@example.org to be added to our distribution list.
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