Nevada legalized recreational marijuana on July 1st, and since then this market has been on fire.
Since the demand for legal marijuana has significantly exceeded expectations businesses focused on this cash crop have done quite well.
According to the Nevada Department of Taxation, Nevada generated about $27 million in revenue in July from the sale of recreational marijuana. The state received approx. $3.7 million in revenue from marijuana taxes in the first month of recreational sales, more than what Colorado generated during its inaugural month.
Nevada: An Attractive Marijuana Market
The Nevada market is attractive to companies in and investors for several reasons. First, the city of Las Vegas attracts almost 43 million tourists a year. Second, the Nevada marijuana market allows for reciprocity for medical patients (meaning registered patients in a legal state can buy medical marijuana in Nevada). Lastly, demand for marijuana has also been well above expectations and this has been quite profitable for businesses.
Today, we want to highlight three companies that are capitalizing on Nevada’s marijuana market. Investors should keep an eye on these opportunities and reach out to email@example.com for more information.
Friday Night: Reports Strong Numbers
Friday Night Inc. (TGIF.CN) (VPGDF) has been a company we have highlighted on numerous occasions and we are favorable on it’s recent rally. Yesterday, Friday Night justified this rally after it released audited year-end financials for the period that ended on July 31st.
In this very short quarter for Friday Night and the company was only generating revenue for six-weeks. Despite this short period, Friday Night generated more than $1 million CAD in revenue and recorded gross profits of CAD $230,714. This was a major quarter for the company and during this time, Friday Night transitioned from its Las Vegas acquisition (on June 15th) and started to generate revenues.
Friday Night is building on these results and will release its first quarter financial results in mid-December. We are favorable on these numbers and believe that investors need to keep an eye on Friday Night.
ALQ: Capitalizing on the Nevada Market
Another company we are favorable on is ALQ Gold Corp. (name change under way), which is positioned as an Investment Company and thereby can acquire minority and majority interests in operating cannabis cultivators and brands.
ALQ is getting ready to make its first acquisition and we are favorable on its strategic approach to the U.S. cannabis industry. The company has Nevada in its sights and its first planned investment is the acquisition of Tahoe Hydro Corp., a Nevada-based cannabis cultivator that is in the middle of a major expansion.
At current production levels, Tahoe can generate $3.2 million in annual revenue. Upon completion of its expansion, Tahoe will generate approximately $6.6 million per year out of its Carson City facility.
Terra Tech: Watching from the Sidelines
Terra Tech (TRTC) was one of the first publicly traded marijuana stocks. The company is focused on the Nevada market and has four marijuana dispensaries operating under its Blüm subsidiary. The company also formed three subsidiaries (MediFarm, MediFarm I, and MediFarm II) to cultivate medical marijuana and/or operate dispensaries in Nevada. The state granted the subsidiaries four final dispensary licenses, two provisional cultivation licenses and two provisional production licenses.
In 2014, Terra Tech formed IVXX as its own line of branded cannabis flowers and concentrates. IVXX currently sells its products to medical cannabis dispensaries throughout California. The company plans to enter new state markets when it has the necessary licenses and IVXX will initially focus on the four dispensaries operated by MediFarm and MediFarm I in Nevada.
While we are favorable on Terra Tech’s opportunity, the company has been plagued by heavy insider selling, less-than-quality financing deals, and a weak balance sheet. We continue to think Terra Tech would be better off if it sold one of its subsidiaries and used that capital to accelerate growth within its cannabis division.
Source: Technical 420