Lineage Grow Company Ltd. (CSE: C.BUDD, Forum), a Company making inroads into the cannabis space, is giving investors a diversified way to play the lucrative U.S. growth story. Since listing its shares on the Canadian Securities Exchange in March, Lineage has maintained a torrid pace of acquisitions, having secured agreements to acquire high-quality assets in California, Oregon, Maryland, and Pennsylvania. With five acquisitions underway and a craft cannabis R&D centre in Washington, Lineage is one of the fastest-growing companies in the rapidly-evolving U.S. cannabis industry.
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Overview
The Company’s premiere project is the development of a vertically integrated operation in California’s Bay Area where Lineage is working towards the proposed acquisitions of a 43,500 sq. ft. craft-style operating production facility in Sacramento, and one of only 16 licensed dispensaries in San Jose. This project alone offers investors exposure to a proven operator that is primed to thrive in California – a market which is projected to reach USD $17 billion by 20211. Add to the picture two established dispensaries in Oregon and minority investments in Maryland and Pennsylvania - two coveted east-coast markets - and it is clear that Lineage is building a dynamic portfolio of U.S cannabis assets.
In December, Lineage announced the acquisition of two dispensaries in Oregon with a solid track record of serving the craft cannabis market and operating under the Terpene Station banner. While the Company works towards closing the Terpene Station acquisition, management is simultaneously evaluating cultivation and extraction opportunities with a view towards achieving full vertical integration in Oregon. More recently in June, the Company announced a binding letter of intent to acquire a 35% interest in Herbiculture Inc., one of the few licensed medical marijuana retailers operating in the state of Maryland, as well as an investment into a Pennsylvania grower/processor applicant operated by a group who has successfully secured 3 dispensary permits.
Overall, Lineage’s main value proposition is to operate scalable cultivation and extraction facilities while offering consumers a best-in-class retail experience to capture profits from seed to sale.
Investment Thesis
- Vertically-integrated in California with high-quality, low-cost production and barriers to entry
- Multi-state portfolio spread across the U.S.
- Focus on premium-quality branded craft cannabis products where margins remain robust
Corporate Strategy
Lineage is seeking to operate highly-efficient cultivation and extraction facilities combing craft-style techniques with the latest technological innovations to-date. Further down the value chain, Lineage is building out best-in-class retail concepts, including warm and inviting brick-and-mortar locations, as well as delivery and in-home shopping experiences. Overall, management intends to establish a strong foothold in states such as California which offer high-growth potential due to their market depth, supply-demand dynamics, and accommodative regulatory frameworks.
Outlook
Lineage is at the frontier of an emerging industry experiencing rapid growth. As one of the fastest growing operators in the space, Lineage presents attractive upside for investors looking to get in on the ground floor of an enterprise positioned to become one of the largest, full-scale cannabis holding companies in the industry. With multiple projects underway and a fully-stocked pipeline of new and exciting opportunities, Lineage represents an appealing vehicle for investors seeking exposure to the recreational cannabis opportunity in the U.S.
1 Source: ArcView December 2017
LineageGrow.com
FULL DISCLOSURE: Lineage Grow Company Ltd. is a paid client of Stockhouse Publishing.