New York, New York (NetworkNewsWire) – A new report out from
Hexa Research projects that the domestic market for medical
marijuana is slated to grow over 250 percent by 2024 to reach a new
worth of nearly $20 billion (1). Globally, the market is estimated
as reaching some $55.8 billion by 2025. Players in the space are
banking on this incredible growth, executing their individual
strategies to take part in the vast opportunities.
SinglePoint, Inc. (SING) (SING
Profile) employs a diversified
acquisition-based strategy and is moving toward select
joint-ventures to further enhance revenue growth potential as an
increasingly cannabis-focused holding company. The goal of any
company is growing value, and whether we are talking about up and
coming growers like Supreme
Pharmaceuticals, Inc. (SPRWF), cannabinoid
medicine developers such as Emerald Health Therapeutics,
Inc. (EMH:CA), suppliers of proprietary cultivation
systems like Surna, Inc. (SRNA), or a holding
company like General Cannabis Corp. (CANN),
revenue growth and expansion are common objectives.
Analysis of publicly available 2016 data by Marijuana Business
Daily offers investors clear insight into why companies are looking
to gobble up broader footings in this market. One key data point
shows that over 64 percent
of medical marijuana patients were qualified under chronic or
severe pain conditions. Pharmaceutical pain management is a
$32.3 billion
market in and of itself and is slated to grow at an 8.1 percent
CAGR through 2022. Given increased attention to the opioid epidemic
in the U.S. and a resounding chorus of voices citing intriguing
data such as the 23 percent
decrease in hospitalization rates for opioid abuse in states that
legalized medical marijuana, we can see clearly why companies
want to get their hands on as much of this industry as they can
(and fast).
It’s no wonder established sector operators (and even new
entrants), many of whom are locked into a single revenue-generating
vector, are thinking about intelligently branching out the way
SinglePoint, Inc. (SING) has over the
past year. The real appeal of such a diversified acquisition
strategy has the potential to not only accelerate revenue growth by
establishing a more robust set of revenue streams, but to gain a
more dominant and solid overall footing within the industry. Why
just be an isolated cultivator, equipment supplier, or cannabis
medicines developer when one can put together a series of proven,
profitable entities of this type and become a real powerhouse
operation in this seemingly unstoppable and rapidly growing
industry?
Take a look at how SinglePoint has evolved so quickly, going
from a core emphasis on advanced payment technologies and
full-service mobile technologies leveraging the company’s SingleSeed
subsidiary, to a full-fledged holding company specializing in
acquiring small to mid-sized companies, and thus judiciously
layering up profitable, parallel interests in the ultra-hot
cannabis business. Ever since the acquisition of a strategic stake
in revolutionary vape pen filling/sealing system developer and B2C
purveyor Jacksam Corp. (dba Convectium) in
March (http://nnw.fm/3YFg6), SinglePoint has been on a real
tear. Two months later, SinglePoint snapped up 90 percent of
California-based cultivation hardware supplier and cannabis
consulting outfit Discount Indoor Garden Supply (“DIGS”) Hydro
(http://nnw.fm/oh7ZW), and more recently
acquired a 51 percent stake in Arizona-based medical marijuana
distribution outfit Dr. FeelGood (http://nnw.fm/5rT6R). SinglePoint CEO Greg Lambrecht,
noted in a recent interview
on MoneyTV with Donald Baillargeon how sage use of its public
vehicle has allowed the company to rapidly piece together a much
more stable footing in the cannabis industry that already delivered
a substantial increase in revenues. The acquisition of DIGS Hydro
and Convectium, according to Lambrecht, has increased revenues a
whopping 378 times compared to Q1 2017.
For a well-positioned operation like SinglePoint, this is music
to investors’ ears and Lambrecht also recently pointed out that the
company is looking to do more select joint-ventures as well, in
addition to further acquisitions that will bring in yet more
revenue streams. Looking at Convectium’s revolutionary 710Shark
(produced under the BlackoutX brand), which can fill and pack over
100 cartridges for vape pens in 30 seconds at around half the price
per machine of the industry standard, it’s easy to understand how
Convectium is able to project a 150 percent increase in sales this
year to some $3.5 million. This easy-to-use beauty is the only
known machine on the market today that can fill cartridges or
disposables on this scale for wholesale distribution and the
machine utilizes a state-of-the-art dual-heat injection technology
that can fill many different types of disposables, using even the
thickest of oils. The 710Shark even comes with a 1 horsepower
California Air Tools 5.5 gallon, ultra-quiet, oil-free air
compressor. The 710 Seal
Machine is the other end of the BlackoutX "Fill Seal Sell"
System and collectively represents the first such end-to-end system
on the market, allowing for easy production of childproof blister
packs from loaded cartridges/disposables. Convectium also provides
a suite of B2C offerings, which SinglePoint will offer through the
SingleSeed platform.
DIGS Hydro is already quite well established in retail via an
extensive online
catalog featuring a wide variety of growing supplies, as well
as equipment ranging from HVAC to complete surveillance systems
that are tailored to secure a particular grow op. Furthermore, the
company provides a number of mission-critical design, construction
and maintenance services, covering indoor, greenhouse, and
aquaponic setups. This acquisition also grants SinglePoint access
to some talented new personnel, such as DIGS Hydro’s top man Carey
Haas, who has over 25 years in the industry and will be
instrumental to SinglePoint’s decision-making process moving
forward on the cannabis side of the business. Recent estimates for
the California cannabis market are very promising, with New Frontier’s
analysis recently noted in the LA Times projecting 12 percent
CAGR over the next eight years to $6.6 billion. This could make the
DIGS Hydro acquisition a big feather in SinglePoint’s cap,
particularly as the rest of its diversified acquisition strategy
plays out.
Dr. FeelGood already has an established
presence on the widely used cannabis locator site Weedmaps,
with a 4.9 out of 5 star rating, and a recent announcement
indicates that the company is set to release an app to compete
directly with the likes of Weedmaps in just three months’ time.
This proprietary mobile application will not only enhance the user
experience, it will enable licensing of the technology to other
distribution entities in the U.S. once the app is complete. The new
app will add substantial weight to Dr. FeelGood’s overall presence,
which also consists of a wide variety of B2B and B2C distributed
products. By leveraging SinglePoint’s existing location-based
delivery technology, the app, which has been on the drawing board
at Dr. FeelGood for some time now, will take full advantage of
additional features like a directory and ordering system. In this
way, the app will offer consumers a souped-up and feature-rich
version of already successful, similar offerings in the space.
This diversified approach by SinglePoint to the cannabis sector
is something for investors to take note of in comparison with other
operators in the space today, especially considering how
investor-accessible SING’s share price currently is at less than a
dime per share. As the pot market continues to mature, we will most
likely see an increased drive towards diversification by
established sector operators and new entrants alike, with other
companies seeking to emulate the roll-up strategy of companies like
SinglePoint. This rising trend was mapped out nicely by a recent article
in Marijuana Business Daily, highlighting the substantial
uptick of M&A activity in the sector. In particular, the
Viridian “Deal Tracker” data shows 126 such deals were executed
from January 2016 to March 2017 (most likely a conservative
estimate).
Supreme Pharmaceuticals, Inc. (SPRWF) has
pulled back a bit to around $1.02 from highs of early 2017 when it
was $1.41 and charging strong, coming off of a banner 2016 that saw
completion of the company’s first sale of
cannabis genetics to another Canadian Licensed Producer, as
well as some $70 million
in private
placements. This was all subsequent to reception of ACMPR
(Access to Cannabis for Medical Purposes Regulations) permission to
sell product by the company’s wholly-owned 7ACRES subsidiary in
June this year and an uplisting
from CSE to the TSX.V exchange. Supreme is quickly realizing
its stated mission of producing consistently high-quality cannabis
in large quantities for the commercial market and even with a
342,000-square-foot production space at the company’s hybrid
greenhouse facility, many investors have not heard the last of this
up-and-coming cultivator when it comes to sales.
Surna, Inc. (SRNA) recently initiated a
comprehensive new branding strategy, including the launch of
a new website, in an effort in to draw greater
attention to the company’s emergence as a go-to solutions provider
for many in the cultivation industry’ particularly for grow ops
looking to optimize energy, water usage, and ultimately crop
yields. Surna prides itself on providing cutting-edge industrial
technology and products for commercial indoor cannabis cultivators.
The company’s user-friendly new site is tailored to Surna’s key
demographics, such as engineers and contractors tasked with
configuring indoor grow ops in the U.S. and Canada, and it is set
up in such a way as to facilitate partnering opportunities with
those key demos. The company notes that demand for its systems
comes primarily from the construction of new cultivation facilities
in North America, and said it anticipates more revenue
opportunities as more cultivation facilities become licensed amid
regulatory changes. Surna reported $1.742 million in second-quarter
revenues, and recently landed $1.3 million contract that is
currently in the engineering phase.
Emerald Health Therapeutics, Inc. (EMH:CA) is a
serious contender in cannabinoid formulations for medicinal and/or
recreational use. Emerald Health has one of the top batches of
cannabis genetics in the sector today under the company’s thumb, as
well as advanced R&D and extraction technology at its disposal.
The last of which is a key point to take note of, given that
cannabis oils have seen exceptional increases in demand, with
Health Canada data alone showing an 871 percent
increase in the amount sold to Canadian clients from Q4 2016 to
Q4 2017 (Jan 1 – March 31). Emerald Health Therapeutics announced
back in June that the company is laser-focused on heading towards
pharmaceutical formulations and clinical studies, having
established an Advisory Board containing several highly reputable
doctors and professors, who will provide the much-needed strategic
guidance for this process.
General Cannabis Corp. (CANN) is a bit more
like SinglePoint in its approach to the sector and is designed as a
synergistic holding company that provides a one-stop-shop for
finding the best cannabis industry service providers. With
competencies spanning real estate, consulting, security, financing
and infrastructure product distribution, General Cannabis is well
on its way to becoming an industry institution. Furthermore,
General Cannabis has organized its architecture of subsidiaries to
take full advantage of symbiotic relationships between them. Next
Big Crop, which represents the company’s operations segment, offers
highly professional consulting on cultivation, processing and sales
of cannabis via a full-cycle platform replete with hands-on
experience rendered techniques. Iron Protection Group is CANN’s
security subsidiary and has had its capabilities prominently
featured in The New York Times; capabilities only further
enhanced by the recent
acquisition of Mile High Protection Services as the company
seeks to expand an already sizeable position in Colorado’s thriving
cannabis market. Chiefton Supply Co. is the apparel wing of the
operation and, together with CANN’s brand development and design
subsidiary, Chiefton Design, provides a rich and compelling
marketing presence for the company. Q2 results for
CANN showed revenue up 19 percent year over year, driven in
large part by the success of the Next Big Crop subsidiary, which
posted a 403 percent increase in revenues over the aforementioned
period.
The broader cannabis industry is budding with potential, and the
lineup of innovators in this global market provides investors a
diverse array of investment opportunities. For SinglePoint, a
diversified acquisition strategy puts the company a unique position
to explore and acquire various targets that keep the company among
the leading cannabis plays as it continues to grow its
valuation.
Editorial Sources
1) Hexa Research: http://nnw.fm/aH2Ri
2) Grand View Research http://nnw.fm/PiO4d
For more information on SinglePoint please visit: Singlepoint
(SING) or www.SinglePoint.com
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