Sector Snapshot – – How Cannabis Industry Growth is Accelerating the Ancillary Businesses (OTC: $GOHE) (OTCQB: $MCOA) (OTC: $KSHB) (OTCQB: $MRMD)
Investorideas.com, a leading investor news resource covering hemp and cannabis stocks releases a snapshot reporting on the continued development of the cannabis ancillary market as the sector matures; expanding into new states and countries.
The maturation of the Canadian and US markets, along with the rapid expansion of international cannabis markets is now beginning to drive the ancillary sector of the industry as more companies realize the need for better payment processing, more reliable delivery services and advanced infrastructure. These new demands on the industry are beginning to generate revenue for such ancillary providers and also provide investors with a lower-risk entry point to the cannabis industry as these ancillary providers have no direct plant contact.
This was highlighted by Innovation Shares, a provider of thematic ETFs who recently announced changes in its monthly rebalance of The Cannabis ETF and has added four companies to the portfolio: Valens GroWorks Inc., EnWave Corp., cbdMD Inc. and Fire & Flower Holdings while removing three other companies: CannTrust Holdings, Vivo Cannabis and Innovative Industrial Properties.
"We are excited to expand THCX’s footprint in the various cannabis industry sub-themes by including three companies whose businesses revolve around ancillary services and CBD-based consumer products," said Matt Markiewicz, Managing Director of Innovation Shares. "In particular, Valens, EnWave, and cbdMD all operate at the crossroads of science and technology which should appeal to investors who are looking for differentiated exposure outside of a traditional seed-to-sale story."
Global Payout Inc. (OTC: GOHE) and its wholly-owned subsidiary, MTrac Tech Corporation yesterday announced that as the Company enters the last month of the third quarter of 2019 it has reached a point where it is effectively processing tens of millions of dollars in daily transaction volume across its growing base of clients in the multibillion-dollar cannabis industry.
As demonstrated in the Company’s recent Q2 disclosure detailing Company financials, MTrac’s growth trajectory has remained positive and has continued to gain significant traction throughout the year. This growth can be attributed to the successful strengthening of their foothold and market reach in what has become one of the most dynamic industries in today’s economy. This feat has been accomplished in part through MTrac’s success in securing several strategic service agreements with some of the largest companies within the cannabis industry today.
The company has recently signed a new account application with an anticipated 34 locations and has applications coming in weekly for the services offered through MTrac.
In addition to their expanding market reach, the Company is also fully engaged with key legislative partners in different states to help push for the adoption of their system as a means of providing merchants within these states with a viable and compliant payment processing alternative to cash as they remain focused on delivering “The Key to Cashless®” to as much of this diverse and expanding industry as possible.
In April, the Company announced it had acquired a 20% ownership interest in Natural Plant Extract of California (“NPE”) to establish a joint venture to create VivaBuds, a California marijuana delivery company that offers customers a dynamic opportunity to purchase low-cost premium cannabis products directly from farmers using a “Tell a Friend” approach. For more information, please visit the VivaBuds website at www.VivaBuds.com. The VivaBuds mobile application is currently live on Google Play and available for download on all Android devices.
“We are extremely pleased to have officially launched our delivery service throughout the San Fernando Valley, where demand for cannabis continues to increase unabatedly,” said CEO of MCOA, Mr Donald Steinberg. “We believe that by providing delivery and our high-quality premium products to our consumers, we will increase revenues, expand margins, and improve our overall brand recognition. I am confident that this new endeavour dovetails perfectly with our commitment to become a global leader in the legal production, processing, and distribution of cannabis products. Going forward, management will continue to leverage strategic operations and decisions that enhance value for all our shareholders.”
According to August 15, 2019, Los Angeles Times article, California is on pace to secure $3.1 billion in licensed cannabis sales in 2019, representing the largest legal marijuana market in the world. Legal sales have increased from approximately $2.5 billion in 2018, the first year of licensed cannabis sales in California, according to the analysis by sales-tracking firms Arcview Market Research and BDS Analytics.
KushCo Holdings, Inc. (OTC: KSHB), the premier producer of ancillary products and services to cannabis and hemp industries recently announced that it has closed on a $50 million credit facility (the “Facility”) with Monroe Capital LLC (“Monroe”), consisting of a $35 million revolving line of credit and an accordion of up to $15 million that will be available subject to covenant compliance and borrowing base availability.
The Facility will be for a term of five years and will be used for working capital and driving organic growth, as well as for potential acquisitions.
“KushCo continues to execute on its less dilutive financing strategy that will provide the capital necessary to support our continued operations and acquisitive growth,” commented Nick Kovacevich, KushCo’s Chief Executive Officer. “We are excited to partner with an entrepreneurial-focused private credit firm such as Monroe, and we have plans to grow our businesses together providing critical products and services to the cannabis and CBD industry. As the size of our customer’s business grows, it’s imperative to have an adequately sized credit facility that will increase as our business grows.”
“We’re excited to enter this hyper-growth industry with the Company,” commented Ted Koenig, President and CEO of Monroe. “They are a best in class business in a unique position to take advantage of opportunities in this emerging business sector and we look forward to supporting their continued growth and capital needs.”
MariMed Hemp, a subsidiary of MariMed, Inc. (OTCQB: MRMD), a leading multi-state cannabis and hemp operator focused on health and wellness, launched the Hemp Engine™, a turnkey retail marketing platform for the fast-growing CBD sector last month.
The platform supports sales and marketing decisions for a wide range of CBD products based on quality, popularity and price point, allowing distributors and retailers to maximize returns and increase sales efficiency. Co-developed with Sprout™, the leading CRM provider to the cannabis industry, the platform is driven by proprietary data and technology.
The Hemp Engine solution includes a complete “store-within-a-store” package, pre-stocked with a range of CBD products centered on a retailer’s particular criteria. The platform collects real-time data and pre-screens the data for quality and content. The system helps the retailer by reducing the time and risk typically involved in choosing among a wide and sometimes confusing array of CBD products. The package also includes electronic tablets that provide store customers interactive, educational information about CBD product attributes, benefits and usage at the point-of-sale.
“Hemp Engine creates powerful new distribution opportunities for our hemp-derived CBD brands,” commented MariMed CEO, Robert Fireman. “It will help us further penetrate the growing hemp space. We expect to deliver the first in-store installations over the next several weeks.”
Earlier this year, the company converted its $30 million debenture into one-third equity ownership of GenCanna Global, Inc., the Kentucky-based, national leader in cultivation and production of seed-to-sale cGMP quality CBD. MariMed Hemp was established to augment this investment and capitalize on MariMed’s marketing expertise with a new family of CBD brands.
According to Rick Granoff, Co-Founder of the Hemp Engine, “The Hemp Engine addresses the major needs of retailers and consumers as CBD popularity and consumption continues to grow. As a one-stop-shop that greatly simplifies decision making for both groups, it demonstrates MariMed’s continued thought leadership in health and wellness and industry-leading innovative approach to the CBD space.”
While there has been a heavy focus on cultivation and production in the cannabis industry for the last few years, the industry is now reaching a new turning point in which ancillary services and infrastructure are becoming more paramount. This growth in the cannabis ancillary market is not only providing the industry with more efficient technology and services but is also beginning to bring in more investment opportunities, with more diversified options than the standard production story we’ve seen so far.
For investors following cannabis stocks, Investor Ideas has created a stock directory of publicly traded CSE, TSX, TSXV, OTC, NASDAQ, NYSE, ASX Marijuana/Hemp Stocks
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