Blum Holdings Inc (BLMH)

[La Puma]

Agree.

I really like the business growth and strategic activities the company has identified, stated, and then subsequently executed.

As you have stated, cultivation is the growth engine for them and many fail to see it. I do see that now and remain very intrigued by their prospects long term, with one major caveat I’ll outline below. But before I get there:

I really don’t like the dilutive financing and the RS only allows it to <potentially> continue. I understand it is one of very few funding options available and likely the best from their perspective. (Best of several bad options) Of course, they could achieve profits greater than the note amounts due prior to the maturity date, and pay off with free cash generated from the business. But I see them as unlikely to do so even if they become wildly profitable. But that, best case, is 2-3 Q out, in my opinion. Meanwhile...dilution.

One final point here and I’d like your critical take here, as I think you are qualified to weigh in:

Terra Tech is constrained by the MJ market conditions, red tape, lack of legal clarity, etc... they are limited by this, AND it is a major reason many are not yet in the space.

WHEN the market opens up (federally legal, traditional banking options, etc...) whatever Terra Tech will have built will be readily, rapidly, and rather easily replicated on an even larger scale. Give me $500MM dollars and I could do it in 9 months. There is nuance to the plant, but lets not compare growing weed to the Apollo program. Its agriculture. Expertise? Everyone has a price. For $1-$2M/yr I’m sure the best growers could be enticed to consult.

The infrastructure they have is all very easily replicated.

The brand will have some value but there are local pizza shops with 3x the stores, 2x the revenue, and 10x the brand awareness. Easily dominated.

My point, I don’t see much of a competitive advantage for them once things open up.

Puma