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General Cannabis, Traction for Growth, California Effect and a Financial Review
General Cannabis Corp. (OTCQB: CANN) provides services to the regulated cannabis industry in the United States. The company engages in the acquisition and leasing of cultivation space and related facilities to licensed marijuana growers and dispensary owners.
General Cannabis Corporation is a comprehensive resource for the regulated Cannabis Industry. They are a partner to the cultivation, production and retail side of the cannabis business. They do this through a combination of operating divisions such as real estate, consulting, security, financing and the distribution of important infrastructure products to grow facilities and dispensaries.
Recent Events
February 21, 2018. CANN has hired cannabis industry veteran Joe Hodas as Chief Operating Officer (COO). Leveraging his recent experience in helping drive Dixie Brands, Inc.’s national expansion efforts across multiple states and brand lines, Hodas will be responsible for driving revenue and efficiency across all of General Cannabis’ (GC) existing lines of business, including: Iron Protection Group (security and cash transportation services); Chiefton (apparel and marketing consulting); and Next Big Crop (operations consulting and products), as well as General Cannabis’ corporate infrastructure. https://www.generalcann.com/general-cannabis-taps-industry-leader-joe-hodas-for-coo-role-in-preparation-for-growth-in-multiple-markets/
February 2, 2018. General Cannabis Corp. announced that its client, Green Leaf Medical LLC, a leading grower and supplier of medical cannabis in Maryland, has successfully harvested its first crop and has passed all state-required laboratory tests. Now producing an estimated 500-600 pounds of high-quality medical marijuana on a monthly basis, Green Leaf is one of the leading fully approved suppliers in Maryland. https://www.generalcann.com/general-cannabis-client-green-leaf-medical-successfully-harvests-first-crop-major-expansion-underway/
December 21, 2017. CANN signed a $955,000 two-year contract today to manage a grow facility in California. This represents the largest single contract the company has undertaken since inception. The Company also plans to provide significant other services, including hardware and supply procurement, in addition to the initial contract terms. https://www.generalcann.com/general-cannabis-inks-major-grow-facility-contract-in-california/
Business Segments
General Cannabis The team is ready to turn your dreams into reality. Our property & capital solutions provide an excellent opportunity for dispensaries and cultivators to establish long term leases with peace of mind from a cannabis friendly corporation.
- Pueblo Real Estate – CANN has a property that has 5000 sq. ft of indoor grow with plenty of acreage to expand with greenhouses, MIPs kitchens, or extraction facilities.
- The Greenhouse – is a 16,056 square-foot facility that will be converted to serve as a leading shared workspace for entrepreneurs, professionals and others serving the cannabis industry. Clients will be able to lease space to use as offices, meeting rooms, lecture, educational and networking facilities, as well as individual workstations. The greenhouse has approximately 5,000 square feet on its ground floor that is dedicated to a consumer banking design.
- Desert Creations – has built a state of the art manufacturing facility in Phoenix, AZ to bring marijuana-infused products to the Arizona medical marijuana market. We work with producers in other states through contract manufacturing or licensing agreements to produce and market their products in Arizona.
- Due Diligence – General Cannabis provides intensive due diligence trips for institutional analysts and investors. Their two-day visits include trips of multiple grow and dispensary facilities and meetings with high level executives and operators in the Colorado cannabis industry.
Next Big Crop joined General Cannabis in 2015, bringing their professional consulting platform with them. Formed by Rich Cardinal in 2013, Next Big Crop’s mission is to offer top-notch consulting services in an industry that, until recently, has lacked standardization and large-scale agricultural principals.
Chiefton Supply Co. is a Colorado Cannabis apparel company. Chiefton Supply Co. is led by passionate individuals with an unrelenting commitment to creating art centered, cannabis apparel. The company believes in creating garments that embrace the legality and prosperity of the cannabis industry, and showcasing it with fresh, creative designs.
Iron Protection Group is a wholly owned subsidiary of General Cannabis. Founded in 2014, IPG quickly rose to prominence as the premier provider of security within the cannabis industry in Colorado. The segment provides security for product and cash shipments.
Chiefton Design delivers brand development and design to the legal cannabis market. Whether it’s creating a full branding package for your business, a specific project, or a unique application, the creative team will collaborate to execute the vision for your brand.
FYE & Q4 2017 Financial Data
Annual revenues in 2017 increased by $540,000 to approximately $3,522,000, or 15%, when compared to annual 2016 revenues of approximately $2,982,000.
These increases were driven by record revenues in the Operations segment, Next Big Crop, which had increased revenues of 323% and 193%, respectively, for the three and twelve months ended December 31, 2017, compared to the same periods for 2016. As the number of states with regulated marijuana markets has increased, Next Big Crop has found a steady increase in demand for its services.
The Marketing segment, Chiefton, experienced 95% and 26%, respectively, increases in revenue during the three and twelve months ended December 31, 2017 when compared to 2016.
The Security segment, Iron Protection Group, experienced 11% and 16%, respectively, decreases in revenue during the three and twelve months ended December 31, 2017, when compared to 2016. As previously discussed, IPG is impacted by the decrease in wholesale cannabis prices in Colorado. In late August 2017 CANN acquired Mile High Protection Services, which provides them the opportunity to expand their security business into the non-cannabis space.
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Elimination of debt
General Cannabis has paid down all of its existing long-term debt. In addition to raising $4 million through a capital raise in 2017, they have received an additional $3.5 million in funds through the exercise of warrants and stock options in 2018. CANN used a portion of these funds to pay off the remaining $1,621,250 due under the 12% Notes in January 2018, and to pay off the $1,370,000 due under the Infinity Note in February 2018.
Stock Influences and Risk Factors
The California Effect, a large tailwind for cannabis sector, could positively impact the company’s performance;
The company is showing a high growth model and further revenue growth could impact the share price;
Marijuana is still illegal at the Federal level and any negative movement by the DOJ against cannabis could impact the company;
The company may need to raise cash in the future and could use dilutive measures for funding;
There is a lot of competition in the cannabis sector and CANN could lose market share to a competitor.
Stock Chart
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