There has been a lot going on in the marijuana industry lately. Its the end of prohibition all over again. The newly elected prime minister of Canada Justin Trudeau promised to legalize marijuana. He now is in office and I believe he will legalize marijuana recreationally in the next few years. Which is obviously exciting news for many cannabis Companies. This is something to look forward to but there is no time frame established yet. Then in the US they have already legalized recreational Cannabis in four states. Colorado, Washington, Alaska and Oregon just became recreationally legal on Oct 1. In the coming year recreational use of Cannabis will likely expand into other states like California, Nevada and many others. Mexico is also looking at legalizing marijuana. So the whole industry is changing fast.
GOLDEN LEAF HOLDINGS is located in the US, currently only operating in Oregon located just outside of Portland.With plans to expand into Washington in 2015 and into Nevada in 2016.The company focuses on extracting the oil out of the cannabis plants and uses the oil to manufacture different consumer packaged goods. This is a little different then most marijuana plays is Golden Leaf is focused on the value added side of the business where most just grow and sell marijuana. They produce cannabis oil. They own two brands of cannabis oil PROPER and GOLDEN XTRX. They also own a dispensary called Left Coast Connection in Portland. There main property is a 96 acre property just outside of Portland. It is where their greenhouses and all other manufacturing, offices will be set up.
They are working on a deal in Washington right now. If they do expand into Washington that would almost triple their current potential customers. They have already legalized Marijuana recreationally in the states where the company plans to operate. Nevada and California are on the ballot in 2016 for recreational legalization.
Now if you want to look at what kind of revenue you can make in this business look at Colorado. The marijuana market last year was 700 million and is expected to be 1 Billion by 2016.In Colorado there is more revenue being generated with Marijuana then alcohol. Of that 700 million last year a surprising47 percent of that was for infused products. If the trend continues the infused market in Colorado will be worth 470 million in 2016. 1 Billion dollars of revenue is expected in 2016 in Colorado with a population of 5.356 Million. Its big business. Next year Colorado is expected to spend on average of $186.70 per person. on marijuana or marijuana infused products.
' More to the point, the infused-products percentage of that growing market also continues to expand exponentially, according to Keber, who explains, “47 percent of that $700 million made in Colorado was derived from 4.8 million infused products. When we got into this business in 2010, infused was less than 5 percent of a $60-70 million market, because manufacturers simply did not exist then at the scale they do now.'
Using the Colorado numbers as a reference for the potential in other states.
Colorado - 5.356 Million population - 1 Billion Market potential
Oregon - 3.97 Million people - 741 Million Market potential
Washington - 7.062 Million people - 1.3Billion Market potential
Nevada 2.839 Million people - 530 Million Dollar Market + 40 Million Tourists a year= Nevada is home to SinCity which will be a massive market for Cannabis. I think its hard to know how much revenue will actually come from tourists. I believe the Nevada market could be worth 1 Billion Market potential but its really hard to say.
California - 38.8 - 7.243 Billion potential. Obviously the monster in the west-coast is California with a population of almost 40 Million People. That my friends would be the game changer. California could create more then 7 Billion in Revenue from Cannabis. Right now its currently not legal recreationally in Nevada or California.
So even if Golden Leaf was able to get 10% of the market share. The company would have revenue of 74 million from Oregon and if they are to get 10% market share in Washington they would get another 130 Million revenue. Together the two could produce 200 Million in revenue. These numbers are based on the results from Colorado.
The fact that 47% of the revenue from last year was spent on infused products its great news for GLH as they are in the edibles business. Golden leaf just signed a big licensing deal with a Cannabis Major Dixie Elixirs. The deal see's Golden Leaf manufacturing and distributing Dixie Elixer products in Oregon. Dixie has a large product line wiith many sku's so there is big revenue potential. I encourage you to check out their website. https://dixieelixirs.com/very cool stuff. I believe the Dixie ceo Tripp Keber is great CEO he has been pounding the pavement getting this brand name out there for years. It seems to finally paying off. Dixie has made it clear that they are looking to expand this brand into other states. They have already dominated the Colorado market and now they are looking to expand their brand. Last week they signed deals for Oregon and Arizona. Below Tripp says that Dixie is looking to expand into Washington by doing a licensing agreement in Washington.
“By the end of 2015, you should see Dixie Brands fully operational in Arizona, Nevada and Oregon,” says Keber, adding, “Washington State is also something that we have all of our energies focused on from a licensing agreement perspective, and with great confidence we will see that come to fruition. ''
With the two companies looking to expand into Washington. Dixie looking to sign a licensing agreement and Golden Leaf wanting licensing deals. The two companies just signed a licensing deal for Oregon. I think its possible that if GLH expands to Washington soon that Dixie and Golden Leaf could team up in Washington. Below is from the last news release.
""Under the terms of the agreement, Golden Leaf, with primary business operations in Oregon, will initially commence with the manufacturing and wholesale distribution of Dixie's products in Oregon.Golden and Dixie will also begin working collaboratively to explore future opportunities in other jurisdictions for their collective portfolios of products.''
Just trying to connect the dots here.
So lets talk about Golden Leaf management team now. First of all when investing in any SmallCap company you always need to look at t the management team. If the management team doesn't has a proven track record you need to be cautious. Many of the management teams out there are very weak and wont achieve any real results. Lets just say that there will be many mickey mouse operations in the Cannabis space.The Golden Leaf team is definitely a proven team with many of their team holding senior roles with major Corporations. Goldman Sachs, Walt Disney, Mars, Cara, Ocean Spray, Walmart, Intel, Avamere, Syngenta. Success Entrepreneurs, a Harvard Grad.Definitely not your typical SmallCap company.
https://goldenleafholdings.com/team/
Golden Leafs management team is lead by their CEO Don Robinsonaka "the Candy Man" You may have never heard of Don Robinson but he is a seasoned vet when it comes to consumer packaged goods business. He was the former CEO of Mars for more then 20 years. Mars produces a lot more then just Mars bar they own several brands.
- MARS® - 3 MUSKETEERS® - BALISTO® - BOUNTY® - MALTESERS®- REVELS® - M&M'S® - SNICKERS® - DOVE® - GALAXY® -MILKY WAY® - TWIX®, -EXTRA® - ORBIT® - 5® - ALTOIDS® - DOUBLEMINT® - JUICY FRUIT® - LIFE SAVERS® - SKITTLES® - WRIGLEY'S SPEARMINT® - STARBURST® -LIFE SAVERS® - ALTOIDS® - JUICY FRUIT® - WRIGLEY'S SPEARMINT® -DOUBLEMINT® -
IMO this is a perfect fit a guy that worked in the edibles business for more then 20 years. With a similar product line as Dixie's.
Don was also the CEO of Cara for 7 years. Cara owns some of the big restaurant chains. https://www.cara.com/
Here are few of them:
- SWISS CHALET® - MILESTONE'S®- EAST SIDE MARIO'S® - CASEY'S®- MONTANA'S® - KELSEY'S®- HARVEY'S®
This guy is squeaky clean and he has had a very successful career. Im sure at this stage in his career Don Robinson can hand pick who he could work for. So the fact that he decided to come and work for Golden Leaf Holdings speaks volumes of what he thinks about this company.
Here are some interviews recently done with Don Robinson:
BNN Interview
Midas Letter Interview
What is Golden Leafs current revenue? The company is currently producing over $1 million USD per month in revenue. The companies revenue has a hockey stick curve. The only thing that's been holding them back is they have hit maximum capacity. So the company is in the process of bringing six more oil extraction machines before the end of 2015. Two already in October. Once these new extraction machines are all up and running and their new harvest of 400 plants comes in. They expect the revenue could grow to 3 Million Dollars a month. With this new deal signed with Dixie and the expected expansion into Washington the revenue should continue to rise.
The great thing about doing business in the US is the revenue is in USD. Which is trading substantially higher then the CAD. Golden Leaf's revenue is in USD the current exchange rate 1 USD for 1.33CAD. I see this as a big advantage. The CAD dollar seems to run with the price of commodities and the outlook for oil and many other commodities is not good.
Golden Leaf is currently listed on the Canadian Exchange under the symbol GLH.C and plans to be trading on the US OTC by the end of the year.The company currently has just over 61 Million Shares out at the moment. With a tiny market cap of 68 million the SP is currently trading at $1.11. When you compare GLH's market cap of 68 Million it is trading at a big discount to Canopy Growth which is trading over 240 million. I think if this team can execute like they have in the past this will easily be trading multiples of where it is now.
Don't believe a word I say though. I encourage everyone to do their own due diligence on any company you invest in.
I wish you you all the best.