Cannabis companies such as MedMen (OTC: MMNFF), Village Farms (NASDAQ: VFF), Veritas Farms Inc. (OTC: VFRMD) and GreenStar Biosciences Corp. (CSE: GSTR), show great potential
With the variety of cannabis companies on the North American market, it is a tough call for investors to pick the right stocks. Here, we present some of the marijuana and CBD companies with the best prospects to grow in the future.
MedMen is widely considered the best known cannabis retailer in the USA. The company currently operates 37 stores and has large flagship stores in Los Angeles, Las Vegas and New York. MedMen has a 7% market share in California, the largest legal cannabis market in the world.
The company’s sales have grown steadily over the past four quarters as MedMen has opened additional stores. In the fourth quarter of fiscal 2019, MedMen generated total sales of $42 million. Almost two-thirds of this amount was recovered in California.
Based on the experience of other consumer markets, retailers could control the supply chain in the cannabis industry. Most US states that legalize cannabis have strict regulations and limit the number of retail licenses allowed. This benefits MedMen as the company expands rapidly.
Wall Street analysts believe that MedMen has significant potential for growth. The company owns 92 retail licenses in twelve states, including the upcoming acquisitions. MedMen intends to take its successful business model in California to other states, particularly Florida.
MedMen’s biggest problem is that it is not yet profitable. However, the company has also spent a lot of money to finance its major expansion. Once this strategy slows down, MedMen wants to be on its way to profitability, as most new businesses pay for themselves within a year of opening.
Village Farms began as a greenhouse grower of products such as peppers, cucumbers and tomatoes. However, the Pure Sunfarms joint venture with Emerald Health Therapeutics has made Village Farms a fast growing cannabis producer.
Village Farms’ sales have increased, largely thanks to the joint venture. In the second quarter, the company recorded sales growth of 27% compared to the previous year.
Pure Sunfarms is well on its way to becoming one of Canada’s leading cannabis producers based on production capacity. The joint venture can currently grow 75,000 kilograms of cannabis on an annual basis. Capacity is expected to double by the end of next year with the addition of a second plant.
Village Farms does not only focus on the Canadian cannabis market. The company has started growing hemp in the USA. It is expected to sell hemp biomass in the fourth quarter of this year and start selling CBD oils in 2020. Village Farms intends to use its decades of experience in supplying products to major US retailers to become a major supplier of CBD hemp products.
Unlike many other cannabis producers, Village Farms is already profitable. The company recorded three consecutive quarters of profitability, although it has received some help from adjustments in the valuation of its biological assets.
Another promising hemp oil producer from the US that is already profitable is Veritas Farms Inc. (OTC: VFRMD). With the corporate headquarters in Lauderdale, Florida, Veritas Farms was established in 2015 and based the 140-acre industrial hemp farm and manufacturing facility in Pueblo, Colorado, where they produce 8 product categories with over 60 SKUs.
In Q2 2019 the company recorded $2.9 million in total revenue which is a 500% increase from the same period a year ago. The gross profits reached $1,523,413 that is an increase by almost 800%. These results have allowed Veritas to rapidly expand operations and reduce liabilities by over $1.3 million.
With successful advertising campaigns, their products are available at 4,500 retailers across the U.S. including 1,350 Kroger Family of Stores locations. They sell their products online too, not only within the country, but in other regions, such as the Carribean, Asia, and the lucrative European markets.
Veritas Farms’ approach focused on honesty, transparency and delivering high quality products made them one of the most respected and trusted CBD companies in the sector, yet it is still undervalued by investors. However, they may become one of the fastest-growing and most successful CBD players in the near future.
GreenStar Biosciences Corp.
Another company worth noting is GreenStar Biosciences Corp. (CSE: GSTR), a Canadian investor building a pipeline of most promising cannabis companies in North America. Taking from their experience in the Canadian cannabis market, GreenStar carefully selects and guides local competitors to success.
GreenStar has already created some successful partnerships. Cowlitz, a Washington state-based producer and distributor of recreational cannabis products is one of them. Cowlitz regularly generates a quarterly revenue of $4 million and growing. This young company, established in 2015, recorded a revenue of $14.6 million at the end of 2018.
Another partnership that GreenStar has built has a big potential for their future growth. Capri, the joint venture with Progressive Herbs Inc. is the exclusive owner of a patent-pending licence for a new cultivation technology. This technology allows producers to grow cannabis plants faster, with less resources and maintaining high quality and the highest THC level on the market.
If GreenStar continues to expand their portfolio with successful companies like Cowlitz and Capri, they will surely become one of the key players on the North American cannabis market.