Every day brings the Canadian Cannabis Industry closer to legalization. Bill C-45 is set to pass this summer, and that will trigger massive retail opportunities. Key cannabis industry players are lining up, and teaming up, to put frameworks in place to reach retail markets. Savvy investors know the profit potential in pot sales. Curious media organizations have even begun hiring cannabis columnists to cover emerging industry news.
By January, the market capitalization numbers of Canada’s top grossing cannabis companies had reached the billions. Canopy Growth Corp’s (OTC: TWMJF) (TSX: WEED) market cap tops the list at $4.987 billion. Aurora Cannabis (OTC: ACBFF) comes in at a close second with a market cap of $4.391 billion. Aphria Inc.’s (OTC: APHQF) ranks third with market cap at $2.26 billion, and The Cronos Group (CVE: MJN) takes fourth place with a market cap of $1.43 billion. Aphria’s stock soared after it announced in December that it had struck a deal tosupply medical marijuana through Shoppers Drug Mart’s online site. These are some pretty impressive names and numbers—especially when you consider the fact that marijuana used to be a black market.
Rapidly gaining ground in the industry, HIKU Brands, (CSE:HIKU; OTCBB:DJACF), recently created as the result of a merger between DOJA Cannabis in the west and Tokyo Smoke in the east, was just awarded, one of only four master retail licenses in the Province of Manitoba’s highly competitive Request for Proposal (RFP) process for the right to operate private retail cannabis stores. To put it in perspective—there were 120 applicants for retail licenses in Manitoba. The License gives Tokyo Smoke, HIKU’s wholly owned retail subsidiary, the ability to operate legal retail cannabis stores and an online cannabis sales platform in Manitoba. Manitoba was the first Province in Canada to issue private cannabis retail licenses; Alberta, British Columbia, Saskatchewan and Newfoundland will soon carry out their private licensing processes and Tokyo Smoke, HIKU’s wholly owned retail subsidiary, is poised to win more retail licenses across Canada.
HIKU’s Manitoba cannabis retail license win validates its visionary vertically integrated business plan and positions HIKU as a formative cannabis retail player in Canada amongst industry heavyweights. A strategic financing of $12.5 million, led by Aphria, bolsters HIKU’s cash position to approximately $32.6 million. HIKU shares currently trade about CAD $3.02, resulting in a market cap of $396 million — the company is on a trajectory to become one of the industry’s top investment bets.
“This achievement is a validation of our business model and vision of creating an unsurpassed retail experience for cannabis consumers”, said Alan Gertner, CEO of HIKU. “We look forward to participating in future licensing processes across the country to grow our national retail footprint and bring our unique retail experience to more Canadians.”
It also creates a pathway to significant revenue and cash flow potential. It is also confirmation of HIKU’s ability to execute on retail, as this is the first RFP process in the world to legally retail cannabis.
Notably, the three other parties selected are Canopy and Delta 9, a joint venture between Canada's largest cannabis producer and a local Manitoba producer; NAC, a clinic group based in Manitoba with significant shareholdings from First Nations; and a syndicate of five companies, including US- based Native Roots, Colorado's largest dispensary chain.
HIKU plans to leverage this win to expand its National retail footprint even further, and open cannabis retail outlets in other Provinces, including BC, Alberta, Saskatchewan and Newfoundland.
The retail win in Manitoba positions HIKU as the go-to public company play for Canadian cannabis retail exposure.
Trent Kitsch, President of HIKU Brands, believes that the cannabis industry will eventually resemble the alcohol industry in the sense that there will be the mass consumption brands that people buy because they’re cheap and readily available, but there will “also be the Grey Goose’s and Patron’s that grab attention through quality, reputation and uniqueness in an extremely competitive market.”
With regulatory hurdles disappearing like smoke, the stage is getting set for a competition to develop the ultimate magic elixir — the ‘Grey Goose’ of the flourishing cannabis industry.
One thing is certain: the deal between Kitsch and Gertner consolidated two key cannabis brand focused companies, into what now resembles a rising conglomerate, and it puts industry leaders and visionaries at the helm of one of the most unique and potentially profitable investment vehicles in the Cannabis space.
Canopy Growth Corp, (OTC: TWMJF) (TSX: WEED) formerly Tweed Marijuana Inc., was founded by Bruce Linton in 2014, and is based in Smiths Falls, Ontario. Canopy is the first federally regulated, publicly traded cannabis producer in North America and is Canada’s largest producer. The company was described as "one of the world’s premier exporters of marijuana" by the Financial Post in 2016.
Aurora Cannabis (TSXV: ACB) (OTC: ACBFF) is a licensed producer of medical cannabis with a 55,200-square-foot facility in Mountain View county, Alberta. Recently, Aurora entered an agreement to buy CanniMed Therapeutics Inc., another Canadian-based medical cannabis company.
Aphria Inc. (OTC: APHQF) was founded in 2011 and is headquartered in Leamington, Ontario. The company calls itself one of the lowest cost producers of marijuana, and produces dry cannabis as well as cannabis oil of varying qualities and strength. Its cannabis is 100 per cent greenhouse grown.
The Cronos Group (CVE: MJN) formerly known as PharmaCan Capital, was founded in 2012 and is based in Toronto. Cronos is a geographically diversified and vertically integrated cannabis group that operates within Health Canada’s Access to Cannabis for Medical Purposes Regulations, and distributes globally.
For a more detailed look at HIKU Brands Company (CSE:HIKU; OTCBB:DJACF), please visit Streetsignals.com for an in-depth overview of the company.
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