RE:RE:RE:RE:RE:RE:Let’s Use Our Main Advantage I look at Nextleaf as a well designed business with a pocket full of lottery tickets.
On extraction and distillation services, they should be a large competitor in the space. They'll grow as the market does and should have sustainable revenue. Their machine already is a leap forward in tech. This alone warrants a higher price than they have now but whatever, the market does what it does. Sales figures and contracts should wake up the price.
The IP side is a bit more interesting. Other than small modifications to maximize hemp extraction or scale to larger throughput, their machine is what it is. That's a good thing because the hemp industry in the US has the same extraction bottleneck. CBD should be officially regulated literally any day now. Once that's sorted the hemp CBD industry will be off to the races. Coke and Pepsi are already scooping up brands. In my ideal universe this means:
- Nextleaf has the opportunity to partner with large players in the hemp industry to licence the use of their closed loop system; or sells CBD distillate legally to US CPG.
- The growing CO2 extraction space in hemp use Nextleafs auxillary extraction IP for their services.
- Their rapid emulsion tech is picked up by one or various CBD CGP (Pepsi, Coke, Lays Frito, etc)
If any of this occurs the value becomes cartoonish. Their manufacturing IP long term has the potential to dwarf processing sales. This doesn't even include eventual US legalization of THC.
I've looked around at biosynthesis (Willow) as a potential disruptor but the focus in that industry seems to be medical at the moment. It's also years of testing away from demonstrating stability as an ingredient and it's unclear if that product could be vaped, as it would theoretically lack terpines and other plant based flavors profiles. I'll continue to watch but for now its clear skys on the extraction competitor IP front. Biosythesis is an interesting endeavor though. Will continue to follow.
Nextleaf also has their own patents in cannabinoids with their Thc-O-Acetate with the intention of medical use. I consider this when analyzing value with the same weight I give a Lottomax ticket to my personal finances. Great if it works but I wouldn't call it an investment.
For this to implode they would need to impare themselves.
As a profitable sustainable processor, their stock value should grow exponentially then consistently as the market expands.
If their IP takes off as the CBD market (and potential US THC) organizes into a coherent supply chain, then the value play here becomes almost silly.
Worst case scenario, they're a profitable processor worth more than $0.18. If I was about to start an national industry from scratch (Hemp CBD) this is the tech I'd want.