RE:RE:RE:RE:RE:OK campus articleThanks Benedictus, appreciate your thoughtful comments.
Here's the deal. Only time will tell if Sunniva is the Canopy of California, but they are certainly modelling their business after what Canopy did in Canada: that's the obvious blueprint, so their strategy is actually very clear and well-defined. But Sunniva's got one major advantage over Canopy, apart from the fact that MJ including edibles is completely legal from the start and they can make a ton of money right away. While Canopy initially achieved their production scale by converting warehouses, Sunniva has this massive purpose-built greenhouse right from the start. Nobody in the States has anything like it, and in case of margin compression and something like a price war, Sunniva aren't going to be the ones going out of business. The benefits of this state of the art facility aren't that it's shiny and new. The benefits are that its high degree of automation, computerized control and its optimal use of the sun's energy greatly reduce labor costs, electricity costs and water waste, while also enabling the production of the most finely calibrated, highest quality, repeatable product at large and consistent quantities. This is the cornerstone of all that Sunniva is doing in California, and it's a persistent advantage that will never go away. Everything else flows from this.
I, too, wasn't floored by the Paradiso teaser, but the reality is that you can't convey a brand's value and appeal in the name + logo powerpoint presentation format. They've recently hired a VP marketing so we can only hope they'll get it right, but ultimately iconic brands achieve their stature over time - they can't be willed into existence. Brand perception is a fickle and subjective thing, but Sunniva has some objective factors on its side, namely the high quality, high quantity nature of its product. Providing a reliable supply of consistent, compliant flower and extracts is what's going to earn Sunniva brands their shelf space and staying power. I don't think this has anything to do with NHS... NHS was a purposeful strategic acquisition Sunniva made in early 2017 and isn't a more intrinsic part of its corporate identity than anything else is.
You see companies like MMEN, MPX and IAN expand very quickly through dilutive acquisitions and capital expenditures, but Sunniva has a superior strategy for the long term. Because they started with the "hardest", most expensive parts first (the cultivation campus and to a lesser degree the extraction facility), and financed them with minimal dilution, Sunniva will be able to fund the relatively "easy" parts like retail expansions (5-10 stores in the next 12-18 months) largely through their own operating income, and the share price will grow in parallel with the market cap. By May of next year, both Phase 1 of the cultivation campus and the extraction factory will be in full production, and you can be sure the revenue generated will be more than enough to pay for everything that needs to be paid for.