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3 U.S. Ancillary Cannabis Stocks You Should Be Watching

Jul 20, 2017 • 11:54 AM EDT
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5 MIN READ  •  By Michael Berger
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Dowload our mid-year report covering the leaders of the cannabis industry —-> HERE

Although the United States marijuana market is attractive, companies that touch the actual plant are under the microscope.

Although recent studies have shown that marijuana has medical benefits, it is still illegal at the Federal level and the new White House administration has not made the situation any easier.

Banks have been closing marijuana accounts left and right, and companies that touch the plant are having trouble depositing their cash. When it comes to publicly traded marijuana companies based in the United States, we prefer companies that do not touch the plant and have highlighted three ancillary companies that investors should be watching.

GrowGeneration: Expect to See Continued Growth

GrowGeneration Corp. (GRWG) is one of the largest specialty retail hydroponic and organic gardening stores in the United States. The company has 13 locations in Colorado, California, Washington and Nevada, and sells to commercial and home cannabis growers.

The company is utilizing a growth strategy focused on both organic and inorganic initiatives. We are favorable on this strategy and the recent execution and will monitor how these initiatives benefited the top- and bottom-line. In late May, GrowGeneration acquired Seattle Hydro Spot to serve as a retail and warehouse location that services a growing number of both commercial and home growers in the Northwest market. Seattle Hydro Spot was previously working with 50 of the approximately 2,000 commercial growers in the Northwest.

Management expects Washington state to be one of the fastest growing markets over next few years and believes this acquisition makes them a leader in the Northwest region. We are favorable on GrowGeneration due to its recent execution, its footprint of hydroponic stores, and its growth opportunity based on its geographic diversity.

MassRoots: Improves Platform and Completes Acquisition

MassRoots (MSRT) has come off its July lows after the company completed the acquisition of Odava for $1.75 million in an essentially all-stock transaction (paid $35,000 in cash). Odava was founded in 2016 to provide dispensaries with compliant point-of-sale and inventory management software for cannabis dispensaries and growers. Odava’s system is priced on a per-transaction basis.

Odava has a product for both the retail and the cultivation market. The retail product is a point-of-sale solution that tracks the sale of both recreational and medical marijuana according to the laws in Oregon, Alaska, and Colorado (plans to enter California). The cultivation product is an inventory tracking system that provides compliance, bank and retail integration among other capabilities.

MassRoots continues to focus on improving and refining its product to be in-line with what the market needs and we are favorable on the Odava acquisition. The company has been executing on cost cutting initiatives and we continue to remain favorable on the long-term outlook.

Kush Bottles: Executing on All Cylinders

Kush Bottles (KSHB) markets and sells packaging products and solutions to clients in the medical and recreational cannabis industry. The company has continued to execute and recently added two new distribution partners in Hawaii and Puerto Rico.

Kush Bottles recently reported third quarter earnings and recorded more than 100% revenue growth when compared to the prior year’s period. This growth was the result of organic and inorganic growth initiative’s, specifically the acquisition of CMP Wellness, a California-based distributor of vaporizers, cartridges and accessories, as well as the acquisition of the online distribution platform. Going forward, the company is focused on leveraging cross-selling opportunities and increasing market share through these acquisitions.

We are favorable on Kush Bottles and consider it to be one of the top ancillary cannabis investment opportunities. The company is levered to an emerging global cannabis market and expect to see continued growth as it penetrates new markets and capitalizes on new opportunities.


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Paid affiliate.This report was authored by and is property of Mushroomstocks.  All information and data relied upon in drafting this report is publicly available.  The author believes and considers its sources to be reliable, but does not guarantee the accuracy or completeness of any information contained in this report.  Any and all information, data, analyses and opinions are provided for informational purposes only and is not intended, in any manner, as investment advice.  Any projections or other information generated by Mushroomstocks regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.  None of the material contained in this report is intended as a solution or offer to sell or purchase a specific stock or any other investment.  This report is not directed to, or intended for distribution or use by, any person or entity that is a citizen, resident or located in any municipality, state, country or other jurisdiction where the distribution, publication, availability, or use of this report is contrary to any governing law or regulation.  The securities discussed in this report may not be eligible for purchase and/or sale in certain jurisdictions or by particular individuals.  It is important that you check any and all governing laws and/or regulations that may be applicable in your jurisdiction.  Investing in securities of issuers organized outside of the United States, including ADRs, entail certain risks.  The securities of non-United States issuers may not be registered with, nor be subject to the reporting requirements of the United States Securities and Exchange Commission.  Please contact a Financial Advisor for professional advice regarding any and all securities investments.  This report is intended for informational purposes only

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.


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