Golden Leaf (GLH.C) seals deal on Nevada license

Golden Leaf Holdings (GLH.C) continued to build its closing streak when the company announced today that it had successfully wrapped up its previously announced acquisition of a cultivation and extraction license in Nevada from NevWa, LLC (doing business as Grassroots) indirectly, through a wholly-owned subsidiary of the company.

The transaction cost GLH US$2.125 million in cash and acquisition expenses of approximately US$112,000.

According to the news release, the license is based out of Sparks, Nevada, just east of the biggest little city in Nevada – Reno.

So, what does this mean?

Nevada offers reciprocity for patients, so that MMJ card holders from other states can legally obtain their medicine inside Nevada using their existing cards. This of course opens the state MMJ market to the more than 40 million tourists that visit the Silver State every year.

Adding to this, lawmakers have given their thumbs-up to a new regulatory structure that should see recreational marijuana a widely accessible thing in the state sometime in 2018.

Under Bill 487, the legalization of recreational marijuana will add to the battle-born state’s till with a 10% retail sales tax and a 15% grow tax placed on cultivators.

The approval given on a Sunday in early May, is expected to generate $70.0 million in state tax revenue in its first two years.

You may not find recreational weed on the strip – the old boys want you gambling, not eating – but a short walk off the gilded lane and you’ll be deep in Marley’s dream.

Colorado experienced a boost in tourism according to one report from Indianapolis-based Strategic Marketing & research which stated during the winter 2015-2016, 4% of people who vacationed in Colorado said legal marijuana motivated their trip, while 7% said it was the top three reasons why they traveled there and 12% had visited a dispensary during the stay, according to the Denver Post.

Las Vegas and Reno may experience the same boost when recreational marijuana comes into play. One might even argue the boost could be bigger since these places are already well-established vacation destinations.

GLH’s announcement today places it smack in the middle of this potentially explosive market with the possibility of first mover advantage. The company firmly believes it will be able to develop significant market penetration as such, driving brand equity and awareness.

Company CEO, Don Robinson, commented, “With the launch of the recreational cannabis market, a thriving tourism industry and the state’s reciprocity cannabis law provisions, GLH is well positioned to launch its portfolio of differentiated brands into dispensaries across the state. We believe that Nevada has strong market potential and the opportunity exists to build strong brand loyalty with visitors from around North America who will be introduced to the Company’s brands on store shelves.”

This could be good news for the company if it can continue to close, more specifically on the Chalice deal, and move ahead in a state which is expected to generate $630.0 million in marijuana sales in 2020.

 

FULL DISCLOSURE: Golden Leaf Holdings is an EQUITY.GURU client.

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