- Booming cannabis industry still in early stages and fragmented
- Industry consolidation inevitable
- Prospective opportunities likely with consolidators
From the shadows, cannabis has surged into the spotlight, establishing medical credence and economic clout along the way. The nascent industry has shaken off early trepidations and has now become a serious and respected sector in the financial arena. Consensus is that both the cannabis markets and the industry itself are just in their early stages and are expected to grow exponentially from here.
Much like the early days of the internet gold rush, a multiplicity of business enterprises are sweeping over the cannabis industry, and, just like the internet, some of these enterprises will win and some will fail. Akin to early cyberspace companies, budding cannabis stocks have been on a tear over the last few years. Reflecting the internet antecedent, there’s certain to be consolidation in what’s now a fragmented cornucopia of cannabis companies. Historical precedents suggest that future opportunities in the sector may very well reside in the consolidators.
With a blueprint for success, C21 Investments Inc. (CSE: CXXI) is rapidly building a vertically integrated cannabis conglomerate through a series of strategic and accretive acquisitions. The company targets select opportunities in licensed, operating, revenue producing cannabis businesses spanning from seed to sale – including cultivation, processing, production and retail operations. C21 purchases 100 percent of these targeted businesses and increases intrinsic value through supply chain optimization, operational efficiencies, quality manufacturing and brand extension, as well as through maximizing retail channels and distribution. In the last nine months, the company has completed four significant acquisitions – three in just the last 90 days (http://cnw.fm/M7hoo) – and has a signed definitive agreement for another acquisition in place.
The acquisition spree and trajectory of C21 Investments caught the attention of Kaspar Equity Research (http://cnw.fm/K8POo), which is asserting that C21 is well positioned for future growth opportunities in the cannabis sector. Based on the recent and prospective acquisitions, skilled and experienced management, access to capital and market growth, Kaspar Equity Research just issued a ‘Buy’ recommendation (http://cnw.fm/imVk1) on C21 Investments. The report states in part, “C21’s relative valuation in comparison to competitors is also a lucrative piece of this investment thesis as the analysis indicates that C21 is potentially undervalued based exclusively on the market capitalization-to-sales ratio.”
The pace and quality of C21’s acquisitions can be attributed to the caliber of its management team. C21 Investments is led by Robert Cheney, CEO, president and director, a corporate securities lawyer and entrepreneur with a background in media, film, internet technology and telecommunications. He has surrounded himself with a team of seasoned professionals from finance, horticulture, operations, marketing and sales. Cheney’s experience and skill-set in the execution of M&A transactions drives C21’s corporate strategy: creating value through the disciplined consolidation of a fragmented fledgling industry while building scale and life-style brands as a consumer-driven products company.
Well financed, C21 closed the final tranche (http://cnw.fm/v1fEP) of a syndicated private placement early this year with total gross proceeds of C$14,888,000. The company already owns Silver State Relief in Nevada as well as Phantom Farms, Eco Firma Farms and Pure Green in Oregon. The company also has a definitive agreement in place to acquire Swell Companies in Oregon. These brands produce and distribute a broad range of THC and CBD products from cannabis flowers, pre-rolls, cannabis oil and vaporizer cartridges. In addition, the company is in active discussions to acquire even more operations which are expected to not only increase revenue and EBITDA, but also add to C21’s proven ability to aggressively compete in the explosive growth of the cannabis industry.
Reacting to all the recent attention, C21 CEO Robert Cheney told Insider Financial (http://cnw.fm/7yk7D), “Investors continue to show confidence in the company and its strategy. With the closing of several acquisitions and others due shortly, we are providing investors with the opportunity to invest in a vertically integrated cannabis company that cultivates, processes, and distributes quality cannabis and hemp-derived consumer products in the United States.”
If history is any indicator consolidation in the fast-growing cannabis market is likely to be very rewarding.
For more information, visit the company’s website at www.CXXI.ca
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