The days of the Canadian advantage in the cannabis sector could be coming to an end with the recent passing of the US Secure and Fair Enforcement (SAFE) Banking Act by the House Financial Services Committee. Already there has been a surge from US cannabis companies over the last year, through innovation and strategic marketing from players such as Plus Products Inc. (OTC:PLSPF) (CSE:PLUS), Curaleaf Holdings Inc. (OTC:CURLF) (CSE:CURA), Trulieve Cannabis Corp. (OTC:TCNNF) (CSE:TRUL), Charlotte’s Web Holdings Inc. (OTC:CWBHF) (CSE:CWEB), and KushCo Holdings, Inc. (OTC:KSHB).
With massive markets such as California officially coming on line at the beginning of 2018, there has been a boost coming from innovators such as Plus Products Inc. (OTC:PLSPF) (CSE:PLUS), whose proprietary infused gummies are dominating the California edibles market.
As of the beginning of April, Plus Products Inc. (OTC:PLSPF) (CSE:PLUS) offerings including the #1-selling Sour Watermelon and #3 Restore-Blackberry Lemon products hold five of the top 10 selling products in the state—and two of the top five.
For groups such as Plus Products Inc. (OTC:PLSPF) (CSE:PLUS), the potential passing of the SAFE Act can only be beneficial, as it could provide a wider scope of potential financial options going forward, and open up the entire cannabis market to a larger audience of potential investors.
FEDS MOVING FORWARD WITH SAFE
Next on deck for the SAFE Act bill is expected to be voted on by the entire House of Representatives within the next few weeks. Already the legislation has 152 cosponsors—the most support a standalone cannabis bill has earned to date in the House, and representing more than a third of the House of Representatives.
This is only the third time in history that such a bill has cleared a congressional committee.
Senators from Colorado and Oregon are expected to file companion legislation soon but whether it will advance to a vote in the Senate remains uncertain.
The upcoming vote in the House is one of the last steps in a campaign by marijuana activists over the last year to win cannabis companies the right to gain full access to financial services, including bank accounts, lines of credit, and credit cards.
INNOVATION LEADING GROWTH
Adding to its premiere lineup of products, Plus Products Inc. (OTC:PLSPF) (CSE:PLUS) recently announced the launch of its latest offering, Mango CBD Relief.
The new product will contain 4.5MG of CBD and .5MG of THC in each gummy. The new product is already available on shelves of some of 250+ retailers in California currently carrying the PLUS product line.
As part of a coordinated launch campaign with retailers, Plus Products Inc. (OTC:PLSPF) (CSE:PLUS) will also retire its previous “CBD Relief” product, “Pineapple Coconut CBD Relief”. According to BDS Analytics, Pineapple Coconut CBD Relief was the top selling CBD edible in the California market in Q4 2018, and the #8 overall edibles product, as measured by units and dollars sold.
“Mango CBD Relief is a reimagining of what it means to deliver a high quality CBD experience. As one of the leading brands in California, the largest cannabis market in the world, PLUS is in a unique position to test products at scale,” said Jake Heimark, CEO of Plus Products Inc. (OTC:PLSPF) (CSE:PLUS). “We leverage our brand position to work directly with customers who love our products and develop new products based on their feedback. With their help, we found that the inclusion of a small amount of THC and other balancing compounds in our CBD Relief product led to a consistently better consumer experience.”
SOARING CBD DEMAND
Through regularly conducted customer research, Plus Products Inc. (OTC:PLSPF) (CSE:PLUS) has been running feedback to its labs to enhance its products. Increasingly lately, many PLUS customers had indicated feeling greater therapeutic effects from using CBD when they pair it with a small amount of THC. This newest CBD Relief formulation does just that, by offering a deliberate, proprietary blend of cannabinoids, terpenes and flavonoids.
“California’s consumers have made PLUS a leading cannabis brand in the State. Direct feedback from consumers in California, which is the largest and most competitive cannabis market in the world, will enable brands like PLUS to have a significant product edge when launching products in other jurisdictions” said Jake Heimark. “If you win California, you can win the world.”
WIN CALIFORNIA, WIN THE WORLD
The success of Plus Products Inc. (OTC:PLSPF) (CSE:PLUS) highlights the importance of an edibles subsection of a growing US cannabis market. According to a recent BDS Analytics report, projected sales for the edibles market are set to surpass $4.1 billion by 2022.
Where California goes, so should the market pay attention, as the Golden State’s size and high demands for new cannabis products are second to none in the US, and possibly even the entire legalized country of Canada.
For comparison, Canada is only expected to yield $2.7 billion in 2019 legal sales, whereas California already hit $2.5 billion in sales in 2018, and is expected to grow rapidly.
Over the course of its long history since legalizing medical marijuana, California has grown its product selection to more than 250 brands of edibles.
Along the way for that growth, Plus Products Inc. (OTC:PLSPF) (CSE:PLUS) succeeded in securing most of the top spots in the edibles sector through its high-quality (and highly popular) cannabis gummies.
GREEN LOOKING GROWTH PATTERN
As more financial instruments are opened up to the cannabis sector, bigger players will begin backing companies such as Plus Products Inc. (OTC:PLSPF) (CSE:PLUS). Already, the company has attracted the support of successful hedge fund, Tiger Global Management—known for turning small companies in rapidly growing industries into multi-billion-dollar businesses.
Most recently, Tiger was notably responsible for aiding the build out of the popular e-cigarette product, JUUL. Under Tiger’s tutelage, JUUL grew over 40 months to the point where tobacco giant Altria paid $12.8 billion for a 35% interest in the company—giving JUUL a $38 billion value. Now Tiger hopes it can repeat a similar success with the PLUS brand story.
Already the confidence is paying off, as last month the company completed a CAD$25M financing round led by Gotham Green and Stable Road. As well, new coverage on the company was initiated, this time by equity analyst Bobby Burleson of Canaccord Genuity.
Burleson saw the importance of California as a staging ground, stating in his report: “As the world’s fifth largest economy and the most visited tourist destination in North America, California is uniquely positioned to significantly influence the global cannabis market following the advent of legal recreational cannabis."
The company has also grown internally, with the latest announcement of the appointments of new Chief Financial Officer, Jon Paul and new Chief Strategy Officer, Craig Heimark (who will also remain as Chairman, Secretary, and a Director of PLUS.
Paul brings more than 30 years of experience in senior financial management, including roles as CFO and senior financial consultant at both private and public companies across a number of industries including consumer products, health care, and telecom. Over the last year, prior to the appointment, Paul was acting as a senior financial advisor for PLUS, bringing an expertise across disciplines including buy-side M&A strategy through integration, as well as strategic planning in rapidly scaling businesses and positions PLUS uniquely in the cannabis space.
FURTHER CALIFORNIA AND US CANNABIS DEVELOPMENTS
Curaleaf Holdings Inc. (OTC:CURLF) (CSE:CURA)
Integrated medical and wellness cannabis operator Curaleaf Holdings is currently topping the list for US reporting companies, in terms of quarterly sales. The company cultivates, processes, markets, and markets a range of cannabis products across multiple operating markets, including flower, pre-rolls and flower pods, dry-herb vaporizer cartridges, concentrates for vaporizing, concentrates for dabbing, tinctures, lozenges, capsules, and edibles. At the beginning of this year, Curaleaf had reported 42 dispensaries and boasted a presence across 13 key states. More recently, the company scored a big with for distribution, signing a deal with the CVS pharmacy chain to sell hemp products in over 800 stores across 10 states.
Trulieve Cannabis Corp. (OTC:TCNNF) (CSE:TRUL)
The national presence of Trulieve Cannabis has grown, with its strategy to bring together operations in multiple states, including California, Florida, and Massachusetts. Back in February, the company announced it had inked a deal with Colorado-based Love’s Oven LLC to bring their edible cannabis-infused baked goods, craft concentrates, and other products to Florida's growing patient base. Most recently, Trulieve signed an agreement with California-based Blue River Extracts & Terpenes™ to bring their award-winning terpene extracts and other trademark branded products to the growing patient base in the company’s home state of Florida.
Charlotte’s Web Holdings Inc. (OTC:CWBHF) (CSE:CWEB)
Bolstered by the company’s proprietary hemp genetics, Charlotte’s Web products are now available in approximately 3,680 retail locations. Since its inception, the company has established a reputation as the top provider of non-GMO, high-quality cannabis products. Last year the company’s cultivation truly took off, reporting a 2018 harvest that resulted in 675,000 pounds of raw hemp—a marked improvement compared to only 63,000 pounds in 2017. The record harvest was attributed to excellent growing conditions and the unique expertise CWEB has accumulated over the past five years of cultivating the complex hemp plant.
KushCo Holdings, Inc. (OTC:KSHB)
Unique among other companies in the space, KushCo isn’t actually processing any marijuana at all. It does, however, serve as a parent company to a variety of different businesses, providing products and services critical for the production and distribution of cannabis products. Back in March, KushCo secured a long-term production and distribution contract with IEKO corporation. Following the agreement, Kushco and IEKO will work together in developing formulations as well as products meant for the CBD and cannabis processing industries, all made sustainable and environmentally friendly by employing proprietary technology and biodegradable materials.
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