CBDWire Editorial Coverage: The number of adults in America who want marijuana legalized has nearly doubled since 2000, according to the latest Pew Research Center survey, which indicates 61 percent are now in favor (http://cnw.fm/1CdYE). During that same interval, the industry has evolved from a taboo underground into a clean and professional marketplace. Now the cannabis industry is on track to outpace the manufacturing sector in terms of job creation by 2020 (http://cnw.fm/ae5YX). The multiple, increasingly interwoven verticals now present in this booming industry run the gamut. However, payment solutions, such as those offered by Global Payout, Inc. (OTC: GOHE) (GOHE Profile), represent some of the most high-potential integrations. Other key verticals here, such as digital advertising and marketing from companies such as mCig, Inc. (OTCQB: MCIG), or the news, print and digital multimedia offerings of Freedom Leaf, Inc. (OTCQB: FRLF), further underscore how developed the sector has become. This is true even before one considers verticals like the packaging, branding and compliance solutions provided by companies such as Kush Bottles, Inc. (OTCQB: KSHB), or the hydroponic and indoor growing systems developed by Solis Tek, Inc. (OTCQB: SLTK).
Strategic Partnerships Detail Diversity
The numerous strategic partnerships developed by Global Payout, Inc.’s (OTC: GOHE) majority-owned subsidiary MoneyTrac Technology, Inc. (“MTRAC”) in recent months brilliantly reveal the intersect potential of cannabis, finance, compliance and banking. Moreover, with the completion of the requisite due diligence and final steps needed for a Regulation D, Rule 506(c) security offering, MTRAC is now poised to offer the cash-driven cannabis industry a helping hand via the launch of its MTRAC-Token (http://cnw.fm/Jf5Ra). Because the federal government’s regulations discourage banks from handling the proceeds of marijuana transactions, thousands of profitable businesses, often doing hundreds of thousands of dollars a month in sales legalized by their respective states, have had to risk managing day-to-day operations entirely in cash (http://cnw.fm/0ZTzc).
Cannabis Goes Crypto Cashless
By harnessing the power of blockchain technology, MTRAC-Token will offer the cannabis industry a cryptocurrency-based and decentralized non-cash payment system that lends itself to regulatory compliance. The company has even tapped full-service blockchain technology and token accelerator Pegasus Fintech, Inc., to assist in ensuring that accredited investors hop on board. Investors who may have otherwise shied away from financially backing the cannabis industry will subsequently get a unique opportunity to access the 15 to 26 percent CAGR leading analysts have projected for this sector over the next several years (http://cnw.fm/9wngD). Worth nearly $8 billion already (http://cnw.fm/r8H8c), the North American cannabis industry is still woefully underserved when it comes to basic but essential financial services.
A similar deal was more recently finalized with California-based GreenBox POS, LLC, whereby MTRAC will serve as a strategic sales and marketing resource to help nurture GeenBox’s advanced POS (point of sale) software and technology out of beta and into the market (http://cnw.fm/Df7yl). MTRAC CEO Vanessa Luna commented on the rich operational feature set of GreenBox’s POS platform, explaining that the “details, intricacies and overall effectiveness” of the technology is unrivaled by anything the company has seen before. Spanning everything from compliance, financial audit prep and expense tracking to tax payments and data fidelity controls, the sophistication of GreenBox’s software suite is rivaled only by its custom-built blockchain KIOSK solutions for cashless operations.
Compliance is Key
Having completed a joint-venture partnership agreement with compliance software and merchant payment solutions innovator Integrated Compliance Solutions, LLC, earlier this year, MTRAC is clearly pulling out all the stops to put together a robust de-risking solution for the retail cannabis space (http://cnw.fm/ITkO1). By leveraging the company’s core fintech competencies and a growing network of strategic partners, Global Payout is unifying the concepts of “seed to bank” and “banking the unbankable” in a compliance-centric fashion expected to appease even the most stringent of regulators. This is a move by the company that is commensurate with the maturation of the sector into a fully modern and respectable industry — an industry on the road to potentially becoming a $24 billion-plus nationwide market by 2025 and that now has the muscle of California, the nation’s highest gross domestic product state, firmly behind it (http://cnw.fm/3DnZi).
Why it’s Worth the Fight
With over 100 million Americans suffering from some form of chronic pain and over 2 million addicted to prescription pain killers such as opioids, the development of compliance-friendly solutions to legal cannabis financing by Global Payout could be akin to a lifesaving measure because of the drug’s reputation as a less dangerous pain relief alternative. The importance of seeking such solutions is addressed in a recent report by the National Academies of Sciences, Engineering, and Medicine Committee on “The Health Effects of Cannabis and Cannabinoids,” which noted that “evidence regarding the short- and long-term health effects of cannabis use remains elusive” despite myriad studies that have examined cannabis use in all its forms, and that “often these research conclusions are not appropriately synthesized, translated for, or communicated to policy makers, health care providers, state health officials, or other stakeholders who have been charged with influencing and enacting policies, procedures, and laws related to cannabis use.” (http://cnw.fm/2lCHx). Another data point of importance is North America’s dominance of the $5.5 billion chronic pain therapy market (http://cnw.fm/4NIfq), nearly $2 billion of which is represented by the top three Medicare opioids.
Expanding Retail Network
The execution of a sales partnership and commission agreement in early February with Eyechronic cannabis media network operator and award-winning retail technology company Eyeconic.tv will allow MTRAC to reach customers in-store at the nearly 300 medical and retail dispensaries in Eyechronic’s nationwide partner network (http://cnw.fm/4X9xd). Combined with the already sizeable network of dispensaries MTRAC has cultivated relationships with via its PotSaver brand publication, the Eyechronic deal will give Global Payout serious ground game in California.
Sales and Marketing Support
MTRAC is wasting no time capitalizing on this advantage. The company recently expanded the sales team for its PotSaver brand in order to extend its reach beyond the thriving San Diego market into the surrounding metro areas. This includes the massive Los Angeles market, where many dispensaries have already received their licenses. This expansion is shrewdly timed to fully enable the debut of the company’s premier LA publication, slated for the second quarter of 2018 (http://cnw.fm/eWy6K). The retail technology benefits of the Eyechronic deal will overlap nicely with the sales and marketing management agreement signed earlier this year with High Grade Management Group, Inc. The deal is designed to facilitate the launch of High Grade’s Apple Vapes line of products through a sophisticated marketing campaign (http://cnw.fm/If2VZ).
The concentrates that go into vape cartridges are the fastest-growing segment of the cannabis market, and vapes are the largest slice of the pie across the major state markets. Up 37.5 percent in Colorado last year alone, concentrates easily outpaced the 25 percent growth seen by edibles, raking in $131 million in that state alone (http://cnw.fm/S3n4X). As further evidence of the potential for MTRAC’s vapes deal with California marijuana delivery service Eaze tracked a whopping 400 percent growth rate for its vape cartridges from 2015 to 2016 (http://cnw.fm/oQZ0d).
A Wide Open Market
From payment solutions and vaporizer pens to multimedia and advertising, the sheer variety of heavily integrated verticals now present within the cannabis sector is dizzying. And Global Payout is by no means alone in its efforts to bring cannabis consumer solutions to market.
Although perhaps more often referenced as a cannabinoid R&D biotech company known for its industrial hemp and nutraceutical and pharmaceutical products, mCig, Inc. (OTCQB: MCIG) has made significant strides of late via the company’s Obitx, Inc. (OBITX) subsidiary, to become a leader in digital advertising and marketing for the cannabis industry (http://cnw.fm/xCl85). The recent announcement of an S-1 registration, with the intent to spin off subsidiary Obitx into its own separate public company, marks a major milestone for this heavily diversified sector operator. The company’s announcement in late January (http://cnw.fm/1tKqt) that mCig will expand beyond its already full spectrum of hemp CBD skin products into CBD-based pet wellness products that directly address the $110 billion global pet care market (http://cnw.fm/ZsaJ3) provides further evidence of its diversification.
Another heavy hitter in cannabis sector digital media is the increasingly vertically integrated Freedom Leaf, Inc. (OTCQB: FRLF), which has established itself as a leading go-to resource for news and information via the company’s flagship publication, Freedom Leaf Magazine (http://cnw.fm/0wuI9). Freedom Leaf has also made strides of late to leverage the company’s considerable business consulting, as well as M&A expertise, in order to branch out further into the product end of the market. The company’s recent joint venture supply agreement with NutraFuels, Inc. (OTC: NTFU), whereby Freedom Leaf will assist in the formulation, blending and private labeling of NutraFuels’ Ayurvedic Breathable Vapor Oils, is a hallmark of this trend (http://cnw.fm/1QiSd). In support of this move, the company also fully acquired the Spanish hemp products producer Green Market Europe S.L., in January (http://cnw.fm/hQHO6). Green Market has indoor facilities totaling over 64,000 square feet and over 200 acres of outdoor production space.
Widely known in the industry for its packaging, supplies and accessories, Kush Bottles, Inc. (OTCQB: KSHB) recently announced a $6 million investment from private equity fund Merida Capital Partners, which will help the company reach out into new distribution channels and invest in new products (http://cnw.fm/1pKoE). This announcement followed fast on the heels of a sweeping Future Farm Technologies, Inc. (OTC: FFRMF) deal, which has Kush Bottles supporting Future Farm’s expansion into new cannabis and hemp territories such as California, Massachusetts, Maine, Florida and Puerto Rico (http://cnw.fm/s9PLf). Kush was selected by Future Farm because of the company’s superb reputation for high-quality cannabis packaging and branding, as well as tailored compliance solutions.
Branching out in a different way, Solis Tek, Inc. (OTCQB: SLTK) represents another key vertical of the matured cannabis market — one that is at the heart of the entire industry: growing hardware. As Kevin Kuethe, COO of cultivator and biopharma R&D powerhouse GB Sciences recently put it, GB’s “heaviest yields to date” can be chalked up in part to the ability of the Solis Tek fixtures and lights to deliver a hearty “diet of light” that closely mimics sunlight (http://cnw.fm/jE12T). For GB Sciences, which is geared towards standardized cultivation and consistent quality, Solis Tek’s focus on science sets the company’s hardware apart from the competition. Consistent quality and high yields are the name of the game for many cultivators, and dominating this essential vertical is SLTK’s specialty.
Diversity Comes of Age
It is evident that more and more sector operators are looking to diversify into complementary, upward parallels. And while the advanced payment solutions developed by a company such as Global Payout might be the low-hanging fruit due largely to the need to overcome banking regulatory compliance hurdles, it is the growing diversity of this truly modern industry that should instill investors with confidence in its future.
For more information on Global Payout, Inc., visit Global Payout, Inc. (GOHE).
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