TREES Corporation (CANN)

[daytrader15]

Release: General Cannabis Corp (OTCMKTS:CANN) Is Way Ahead Of The Crowd In Pot Stocks

https://www.insiderfinancial.com/general-cannabis-corp-otcmktscann-is-way-ahead-of-the-crowd-in-pot-stocks/118312/

An investor seeking a diversified exposure to the burgeoning cannabis industry in the US should focus on General Cannabis Corp (OTCMKTS:CANN). The company bills itself as an all solutions entity, and it’s exactly that. From banking, to distribution, to consulting, General Cannabis has revenue streams coming in from multiple sources, and as the industry expands on the back of the recreational push, we think the company is going to benefit from this expansion by way of growth of its own.

We just recently got an operational update, alongside some numbers, and these serve as a nice platform from which to build a thesis. Here’s are the highlights, and what we’re looking for moving forward.

First, a quick look at the chart. The chart below illustrates circa six months’ worth of action in CANN, and it’s similar to pretty much every company in the space right now, with a couple of key differences.



First, volume started to pick up much earlier than many of its so-called peers. We see this as a sign that markets pegged this one as being one of the likely strong candidates early on, and loaded up before the competition heated up (and by proxy, the price of an exposure increased). Second, that while the company rocketed ahead of the vote, it hasn’t corrected anywhere near as harshly as some of the other in the space. Again, for us, this says a lot. Yes, it’s 22% or so off highs, but that’s child’s play when you look at some of the smaller fish.

Both of these elements, for us, indicate longer term strength, and underpin a bullish bias from a technical perspective. But that’s not all, of course. The numbers point towards future strength as well.

During the third quarter of 2016 (three months ended September 30), General Cannabis generated a little over $810K revenues, with the vast majority of these revenues deriving from the service side of its operations (as opposed to tenant and product). This is up 37% on the $593K recorded a year earlier. Another highlight is the growth of the company’s product retail business, revenues from which grew more than 740% year over year third quarter, accounting for a little over $80K of the third quarter total, versus just $9.5K a year earlier.

Looking at full year, management expects approximately $3.1 million in 2016 full year revenues, compared to just $1.7 million last year. The important thing to note here is that while many companies in this space right now are basing valuations on potential revenues post legalization. General Cannabis has been expanding its top-line to a high degree before the vote took place. To put this another way, if the company can grow like this before recreational cannabis is legal in markets like California and Nevada, it can surely grow exponentially after legalization is in place (which now, of course, it is).

Cash position isn’t too bad, with the company having picked up $3 million on the back of a debt financing in September. This sort of financing isn’t great for shareholders, of course, but CANN expects to put the capital raised towards acquisition, which should serve to boost revenue potential heading into early 2017.

The bottom line here is we could go on all day about General Cannabis and its operations, its potential and its various ventures, but we could do the same about 100 other companies in the cannabis space right now that have experienced similar, or larger, gains over the last few weeks. What we couldn’t do with the others, is point to a solid thesis based on strengthening operations and expanding revenues.

With General Cannabis, we can.

There’s always a degree of risk on these ones – the run up seen across the last two months has left many players in the space overvalued to varying degrees, and that makes it tough to find companies with any run room left on current fundamentals – but we think CANN is ahead of the bunch.