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This is a copy of the September 15th edition of our weekly Newsletter, which we have been publishing due to the fact October 2015.

Good friends,

We had been speaking this week with the Chief Tactic Officer at a cannabis operator to discover far more about the company’s plans and had been pretty intrigued to hear about its strategy. In essence, the firm desires to concentrate especially on agriculture, serving as a white-label item provider to brands. This is absolutely at odds with what we hear from most of the American operators, who want to concentrate on either brands and/or retail and who predict the cultivation and production side will turn out to be commoditized somewhat quickly. Our takeaway is that there are lots of approaches to potentially make worth in the market, but the crucial will be for providers to explicitly define and refine their strengths and then execute.

Final week, we discussed how the American multi-state operators (MSOs) are starting to differentiate in quite a few diverse approaches, and we touched upon the diverse varieties of worth creation as 1 of these elements. These days, we want to extend upon that theme. If the majority of operators do comply with by way of by de-emphasizing cultivation and even manufacturing, then maybe there will be tremendous worth creation by these who merely excel at huge-scale cultivation and manufacturing. A cannabis market supported by substantial contract manufacturing to make the items of CPG providers would make it comparable to most other industries. This enterprise model is becoming increasingly feasible, as previously several of the states had been forcing vertical integration, despite the fact that some nevertheless do. Furthermore, offered the fees of replicating cultivation and manufacturing facilities state-by-state offered the existing inability to ship item across state lines, the MSOs that want to concentrate on developing brands could be ideal served to save the capital expected to do create facilities and embrace contract manufacturing.

In Canada as properly, we are seeing providers choose diverse paths to worth creation. We have discussed in the previous that most Canadian provinces primarily locked out the licensed producers (LPs) from retail, which we nevertheless see as an location that continues to be underappreciated by the marketplace hence far. Retailers in Canada will take a major share of the total income, in our view, as they finish up potentially owning the consumer. Amongst the LPs, we are also seeing providers take diverse approaches. One particular current instance is the new class of extraction providers, which incorporate quite a few that have scaled up swiftly with sturdy income and a lot greater levels of profitability than the cultivators. Amongst the LPs that are focused on cultivation and production, some have pursued the export marketplace or participation in markets outdoors of Canada, such as a couple of that are CSE-listed and pursuing possibilities in the U.S. The concentrate beyond Canada is a prospective way to make further worth. Additional, quite a few LPs are purposefully minimizing their cultivation footprint to concentrate far more on branded items that will quickly be permissible. So, just like in the U.S., there are quite a few diverse approaches to make worth in Canada.

We will probably see even far more differentiation amongst the cannabis operators, several of whom inform primarily the similar story these days. We feel it is early to confidently project which models will win more than time. For investors, it is extremely significant to have an understanding of in which component of the provide chain providers intend to excel and to greater appreciate variations that will emerge. We will be publishing a believed leader guest post tomorrow that suggests the require for investors to have an understanding of the crucial efficiency indicators for the diverse sectors, which we feel is a timely discussion offered the concentrate on differentiation we anticipate.


Primarily based in Sonoma County, California, GABY is a U.S. focused customer packaged goods (CPG) firm with a manufacturing and distribution license in the state of California. With these licenses, and with relationships in more than three,400 retailers in the mainstream grocery sales channel, GABY is taking a exceptional strategy to cannabis and hemp-infused items by bridges the gap involving the licensed dispensary and mainstream markets.

To discover far more, visit GABY’s Investor Dashboard that we preserve on their behalf as a client of New Cannabis Ventures. Click the blue Stick to Enterprise button in order to remain up to date with their progress.


New Cannabis Ventures publishes curated articles as properly as exclusive news. Right here is some of the most exciting enterprise content material from this week:


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Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the efficiency of publicly-traded cannabis providers inside the day or more than longer time-frames. In addition to the complete Worldwide Cannabis Stock Index, we supply a loved ones of indices to track Canadian licensed producers as properly as the American Cannabis Operator Index.

View the Public Cannabis Enterprise Income Tracker, which ranks the major income making cannabis stocks that produce market sales of far more than US$5M per quarter.

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Uncover upcoming new listings with the curated  Cannabis Stock IPOs and New Problems Tracker.

Obtain your spot in the cannabis industry by going to our Careers and Jobs Page and discover which providers are hiring aggressively.

Sincerely,
Alan & Joel

Alan Brochstein, CFA
Primarily based in Houston, Alan leverages his encounter as founder of on the net communities 420 Investor, the 1st and nevertheless biggest due diligence platform focused on the publicly-traded stocks in the cannabis market. With his in depth network in the cannabis neighborhood, Alan continues to discover new approaches to connect the market and facilitate its sustainable development. At New Cannabis Ventures, he is accountable for content material improvement and strategic alliances. Just before shifting his concentrate to the cannabis market in early 2013, Alan, who started his profession on Wall Street in 1986, worked as an independent study analyst following more than two decades in study and portfolio management. A prolific writer, with more than 650 articles published due to the fact 2007 at In search of Alpha, exactly where he has 70,000 followers, Alan is a frequent speaker at market conferences and a frequent supply to the media, such as the NY Occasions, the Wall Street Journal, Fox Enterprise, and Bloomberg Television. Get in touch with Alan: Twitter | Facebook | LinkedIn | E-mail

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