A few weeks back, when every weed stock was tripling and empty shells were treated like Fortune 500 companies, I noted that only three companies were pure plays on the California recreational weed referendum.
One was Maple Leaf Green World (MGW.C) which went from $0.14 to $0.94 in two months on the back of a bog standard leaseback grow deal and a handful of ESL-standard news releases that I’d say has a worth closer to $0.20 (and a CEO who, if you call him, will tell you all sorts of things he shouldn’t).
Another was Tinley Beverage Company (TNY.C), a new client here at Equity.Guru, and the originator of a line of de-alcoholized alcohol drinks that replace the booze with THC, and have been test-selling hemp beverages in the retail space in California for several months. TNY has been powering upwards on the back of its plans.
And the other was Cannabis Royalties, which has got arms full of brands and products with California exposure, and will hit the public markets soon in a big way.
Kushtown USA has just arrived on the markets, RTOing into Finore Mining (FIN.C), and jumping like a maniac. Finore started trading in early October and didn’t see much love until two weeks later, when it launched up suddenly from $0.14 to $0.45 at the time of writing, up 32% Monday and up more than 220% since October 21.
Finore dealt away it’s Finnish copper project in the last couple of weeks for approx. $600k, clearing the way for a quick shift in business which the CSE doesn’t have a habit of getting in the way of. A $0.15 private placement financing was set to bring in another $2 million, making the growth of Kushtown a much easier task.
So what does Kushtown do, besides put words on your portfolio that your banker would frown at?
They do LIQUID EDIBLES.
There’s Kushtown sodas. Kushtown medicated water. And the kickers, inasmuch as I’d definitely stock them in my kitchen, Kushtown hot sauce and BBQ sauce.
What what.
Okay, I know what you’re thinking now. A few bottles of hot sauce made by hippies in a basement suite in Stockton, right? Wrong. Check the heck this out.
No, YOU shut up.
That’s 23 SKUs just in one shot. Let’s get into them.
Cherry Pie Kola, Chem Dawg Cherry Soda, Granny’s Apple Soda, Ginerjuana, Root Beer, Blueberry Dream Soda, Dr Durban Poison Soda, Pineapple Express Soda, Presidential OG Fuel, LA Confidential, Kosher OG Kola, Strawberry Wedding Cake Soda, Wet & Wild Strawberry Soda, Grandaddy Purple Grape, Pineapple Express Soda.. That’s basically a Jones Soda lineup for the head shop crowd.
On the non-carbonated front, you’ve got Platinum 06 Lemon Iced Tea, Maui Waui Punch, Moon Rock Punch, Hemperor’s Lemonade, and Kushtown medicated water. The hot sauce and BBQ sauce go under the Kushtown branding proper.
I don’t have info on sales, but I know this is a slick line up of brands that will probably contain some that are short lived while others will catch a wave of popularity.
That’s right – the sodas are labeled as having 150mg of THC in each bottle. That’s not a gentle buzz, that’s a gentle consummating of weed and head.
It appears maybe there’s been some updating of the labeling to focus more on the Kushtown brand of late. As you’ll see here. Eventually. Over on the side. There, that’s it.
Did you see it? Doesn’t matter.
I like to see, in cases like this, whether the product just looks good or actually plays well to its intended audience. Here’s a user review from a guy who, frankly, will put you to sleep, but seems to know his stuff and says these products will give you a solid night of buzz if you consume two bottles.
“Double rainbow,” he says, adding, “Little tip for you, I like to keep it in my mouth a little longer than usual, to give time for the alkaloids and medication in sublingually or through the membranes under the tongue and around the gums.”
This guy, who appears to have lost short term memory after a Kushtown soda and a bong hit, says, “It’ll knock you on your ass.”
Kushtown has the trademarks on all of the above and plans to take them wide as regulations evolve. Right now, in California, the company is doing good business even restricted to medical patients. If the recreational curtain rises, then business will expand outward quickly, and large retail chains that do decide to adapt will NO DOUBT be looking to do business with a handful of brands that can cover a lot of ground and deliver on a large order, rather than picking through 2000 artisanally-made gluten-free chocolate head kick power bars and test-selling Purple Widowmaker Hide-The-Children gummy bears.
One of the larger investors in this deal told me over the weekend that the company has been killing it over the last few years in the dispensary space in Cali, but have struggled through lack of startup capital. The RTO and subsequent financing absolutely fix that for the founders, and will have them in strong position to grow fast.
I’ve long said, since the first news release from Satori Resources that they were considering business opportunities in the ‘resources, agriculture, health and technology space’, that the great rush for marijuana exposure would eventually come down to brands, not growing. You don’t want to grow the coffee, you want to be franchising Starbucks stores.
Kushtown, to me, has more upside than a lot of the LPs in the Canadian space, strapped down as they are to zero marketing rules, tiny consumer numbers, and a competitive space that has 30+ companies licensed to serve a tiny fraction of the potential audience.
The big guys, like Aphria and Canopy Growth Corp, understand this and are furiously moving through the brand space looking for partners, acquisitions, licensing opportunities and ways to grow their own brands outwards from farming.
Kushtown, frankly, is a gimme. Look, if Tinley is a $20m company on the back of one SKU and a plan for three more, and Kushtown is a $12m company on current valuation with over 20 SKUs and existing business, that tells me Kushtown has some rapid jumps ahead.
And if it doesn’t fly up in share price quickly into stupid valuation territory, it’ll likely be snagged by a suitor quickly, which is why I bought some on the open market Friday and today signed on as a consultant.
Yes, another sponsor company signed in just a handful of days.. These are high times for Equity.Guru.
— Chris Parry
FULL DISCLOSURE: I am now a consultant for Kushtown USA, and own stock in the company. Do your own due diligence and hopefully you’ll come to the same conclusions I did.
What is your opinion on the massive sell off? profit taking weak hands or a pump and dump? This is quite the reversal only days after you posted your write up
Not a pump and dump. I know there’s money being spent on marketing programs right now. Two things: 1) Company just closed a .17 PP, so likely there’s been selling to help fill that. There’s a .27 PP in play as well, so that adds to that theory. 2) There’s been a sector wide downshift the last few days as folks take profits pre-referendum. I see the company as a long term play, not a referendum sell-off play, so I’m not bothered by it dropping for a moment.
What is your take on why TNY is moving today and FIN is at a stand still?
TNY dropped a nice newser about their upcoming energy shot SKU which the market loved. There’s something to be said for the thinking that the weed money is moving between companies, rather than being added to as new companies enter the space, which I think we saw with LIB and FIN seesawing the first few days they were live. TNY has the mo’, which takes away from others in the same space (Kushtown, like Tinley, is in that canna drink space).
Thanks Chris That does make sense. I even moved some from one company to another today. I am a very small player 😉