California’s adult-use market became the world’s largest cannabis economy at the beginning of the year when the state legalized recreational marijuana. Companies both large and small have declared the state to be one of, if not the most important geographical region for legalized weed in the world today. However, an overcrowded field and low-barriers to entry make finding the right pot stock play a questionable move for potential investors.
Two companies are exploiting the California market through a direct-to-consumer dispensary model that has the potential to create immediate brand recognition and long-term staying power, both of which are significant upsides for investors looking to filter through the noise of this new market. While not necessarily a huge secret, dispensaries offer a unique opportunity for companies to establish themselves in the market while at the same time creating an accessible path for future growth and expansion.
A couple of pot stocks understand this secret and are poised to bring investors and current shareholders a healthy return on investment through an innovative branding and distribution model. Here are two pot stocks establishing themselves through dispensaries in California of which investors should take notice:
Pineapple Express Inc.
In early January the aptly named Pineapple Express, Inc. (OTCMKTS: PNPL) announced the filing of a Form 10 Registration Statement with the Securities and Exchange Commission. The move registered the company’s common stock under the Securities Exchange Act of 1934, as amended, giving shareholders and new investors alike an open, more transparent, more reliable pot stock at which to examine.
Based out of the mecca of the marijuana world right now, Los Angeles, California, Pineapple Express provides capital and offers consulting and technology services to burgeoning cannabis businesses. Though admittedly hampered by federal prohibition, this legal weed stock has a substantial positive upside that should keep investors interest piqued.
In late February the company finally announced the implementation of its plan to bring a “franchise business model” for retail cannabis stores in California. According to a statement, the model will include exclusive licensing of the company’s name and logo, as well as pre-packaged store layouts and use of its patented “Top-Shelf” Safe Display System for inventory management and security -- in other words, they are creating the McDonald’s of weed.
“We have spent considerable resources on our branding, store design, and patented equipment aimed at modernizing the cannabis retail dispensary experience while increasing oversight and operational efficiency,” said Matthew Feinstein, CEO of Pineapple Express in a statement. “We are now in the initial stages of developing several of these Pineapple Express branded stores in Los Angeles and surrounding counties in Southern California.”
Trading at $1.30 per share, this penny pot stock has a tremendous upside that appears to be floating under the radar of the cannabis stock community currently. But with a bold strategy for the future, they are a company worth a second look.
GreenGro Technologies Inc.
Earlier this year aquaponic and hydroponic company GreenGro Technologies, Inc. (OTC PINK:GRNH) announced a set of five key milestones the company hopes to achieve in 2018, based off of recent legislative victories legal cannabis has seen across the United States. Among the company’s top priorities for the new year was to increase market share in California; a lofty goal considering just how crowded the market has become since January 1.
Outside of their core business operations, such as the sale of greenhouses through subsidiary Vertical Hydrogardens, GreenGro intuitively plans to attack the California market at the ground level, through the expansion of their dispensary stores under the “igot420” brand name. In late February, the company announced the planned opening of its Cathedral City-based dispensary, which should happen on April 20, barring any delays in their application for a temporary license to sell recreational cannabis in California.
The dispensary would be the second in California, with the first one is located in North Hollywood. According to a statement, the store, which has been in operation since October of 2017, is over 14,000 square feet. With proceeds from a $4 million financing the previous year, GreenGro built out the dispensary and plans to move forward by extending the brand to a third and fourth store.
“As the burgeoning cannabis business begins to reach maturity, more and more of today’s entrepreneurs will look for new and innovative methods to maximize their earnings potential,” said James Haas, Chairman and Chief Executive Officer of GreenGro Technologies, Inc. “This change in the industry’s dynamic can potentially result in greater demand for our state-of-the-art turnkey dispensaries, which can increase profits of a dispensary by as much as 50 percent at the retail store level.”
This penny pot stock trades low, but that is soon going to change as the dispensary business model takes hold. In an overcrowded field full of cultivators and distributors, any marijuana business going directly to the customer is betting big on their chances to succeed.
*Editor’s Note: The author of this article has no position in any of the stocks mentioned nor in any competitor stocks.The opinions expressed are solely his own and do not necessarily represent the views of PotNetwork.
*Photo Credit: By Laurie Avocado ( Medical Marijuana]) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons