|Since marijuana stocks hit the market, investors venturing into the sector have been able to reap serious profits, some over 1000% in a very short time span. In fact, in 2017, Canopy Growth (WEED: TSX) and Aurora Cannabis (ACB: TSX) were among the list of Canada’s best-performing stocks. (Global News Money: June 30, 2018: Could Pot Stocks Make You Rich?)
So is it too late? Did you miss the boat by not getting in on some of the more popular ones such as Canopy Growth or Aurora Cannabis at the beginning – and the latest stock craze, Tilray (TLRY: NASDAQ) which started trading on the Nasdaq in July, thereby becoming the first cannabis producer to complete an IPO on a U.S. stock exchange, at $17 USD which in 2 months sits around $100/share (as of September 24, 2018)? Probably not.
There are still companies venturing into this potentially very lucrative business with solid growth potential. Chemesis International Inc. (CSI:CSE) (CADMF:NASDAQ), previously known as Canadian Mining Corp. is a company that is worth a look. I have been following it since it was a mining company and was trading at a fraction of what it is today. With its’ current stock price currently sitting around $1.53 CDN (as of September 24, 2018) and with recent aggressive expansion activity, it could present an attractive and affordable buy. Keep in mind also that a stock that is at $1.50 can have a greater chance of higher percentage gains over the day than say, a stock that is listed at $60. It does not take much to do the math that $1 gain on a $1.77 stock represents a 50% gain vs $1 gain on a $60 stock representing an approximately 1.6% gain. But it also works in reverse so be careful and do your due diligence.
The overall development plan presented by Chemesis makes it an interesting pick as far as the lower priced marijuana stocks go. A fully compliant seed-to-sale company, specializing in extraction techniques for the medical marijuana market, operations are currently based in Puerto Rico and California. Since the legalization of the medical marijuana market in Puerto Rico in May 2017, Chemesis has been an innovative leader selling cannabis products in approximately seven locations across the state.
With regards to offerings, Chemesis is presenting potential clients numerous forms of extractions, formulations and products, with a specialization in BHO Extraction, Alchohol Extraction, and CO2 Extraction with a current capability production of 2,000 pounds a day.
Latest forecasts present an expected annual revenue of $6.7 million over the next 4 years with a net income of $2.8 million for the Puerto Rico market alone. (Investment News Network: 2018 Article: Bringing Vertically-Integrated Cannabis to Puerto Rico and California)
With the continual activities to grow the market stake in California, Chemesis ‘expected annual revenue in that state is projected to reach $61.5 million by year four with a net income of $27.2 million. The current medical marijuana market in California is estimated to be $3.7 billion in 2018 reaching $5.1 billion in 2019, leaving plenty of room for Chemesis to continue revenue growth.’ (Investment News Network: 2018 Article: Bringing Vertically-Integrated Cannabis to Puerto Rico and California)
In addition to developing their market reach in Puerto Rico and California, Chemesis intends to further expand operations globally within the realms of cultivation, manufacturing, distribution and retail sales.
Recent acquisitions as part of their planned growth include (as per their news releases):
Natural Ventures (Puerto Rico)
Chemesis holds an 80% stake in Puerto Rican based Natural Ventures, a manufacturer and distributor of cannabis products. Natural Ventures is licensed to cultivate 100,000 sq. ft. of cannabis and currently holds a 35,000 sq. ft. manufacturing plant and has strategically aligned with major brands in the cannabis industry worldwide. The acquisition is poised to position Chemesis as a leader in both medical and recreational cannabis cultivation and manufacturing.
SAP Global (Cathedral City, California)
SAP Global, a founding member of the National Cannabis Industry Association (NCIA) manufactures and distributes recreational cannabis products throughout California. Currently, the company has the capacity to produce 2,000 pounds a day of raw material. Chemesis has an 80% stake in the company.
California SAP (Cathedral City, California)
An award winning company focused on the California and Nevada markets, produces the highest quality CO2 extracts resulting in a high concentrate cannabis oil composed of 89% THC. As of July 2018, Chemesis has an exclusive agreement allowing for the sale and distribution of 100 litres of high quality tested cannabis oil per month. The agreement also allows Chemesis to increase its distribution and sales networks.
Desert Zen (Cathedral City, California)
Chemesis acquired 100% of Desert Zen in August 2018. It is a licenced recreational and medicinal cannabis manufacturer, distributor and transport company. The company has a tracking and monitoring system to ensure products meet all safety standards. Desert Zen also has a large network of established farmers and dispensaries throughout California.
Desert Zen is actively seeking cultivators and manufacturers to join their sales, distribution and transportation network as well as distributors and dispensaries to feature their products in the Desert Zen catalogue.
In addition to the acquisitions, Chemesis recently closed $25 million CDN in equity financing with Alumina Partners, LLC. This will allow Chemesis to continue its growth strategy with financial support and funding available at their discretion. Their strategy will allow for shareholder protection as Chemesis strategically grows to meet demands in California and globally.
With their current strategic ability to offer clients a large variety of extractions, formulations and products combined with an aggressive global development plan, Chemesis is one to watch as its’ reach continues on beyond the borders of California and Puerto Rico in both the medical marijuana market and the adult-use market presenting the very real potential to produce some serious gains for investors in the burgeoning and very lucrative cannabis market.
Dr. Kal Kotecha
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