On November 14, 2017 we drove two hours east of Los Angles to a tiny desert town (pop. 30,000) called Adelanto – famous for having three prisons inside its city limits – two of them owned by the $3.1 billion Geo Group (GEO.NYSE) who claim to be operating “enhanced in-prison offender rehabilitation programs.”
Last year, the U.S. spent about $51 billion on the war on drugs. That’s a $450 bill for every U.S. taxpayer.
In 2015 (the most recent year with detailed statistics) there were 1,488,707 drug law violations. 84% were for possession, including 643,121 people arrested for marijuana possession.
Caging-up-humans is a profitable business.
But we try to steer clear of stocks that smell like human misery.
Marijuana, on the other hand, is right up our alley.
It so happens, Lifestyle Delivery Systems (LDS.C) has it’s manufacturing facility in Adelanto.
We spend a couple of hours with the CEO and Director, Brad Eckenweiler.
We had a few questions.
- Are you growing plants?
- What is an Isogenic strain?
- How do you control product from “contract growers”?
- Do you process dried leaf?
- What is fresh frozen material?
- How is the plant trimmed?
- How is the product stored?
- How do you track inventory?
- How does it move to the lab?
- What is your Cannastrip Production Capacity?
- What is the margin on each strip?
- How is the LDS technology unique?
- What are your 12-month milestones?
- What are your Q4, 2017 sales?
- What are your projected Q4, 2018 in
On January 1, 2018, the Adelanto prison guards can legally smoke pot in their backyards and on the front steps of their churches.
They will be guarding people arrested and incarcerated for the same behavior.
That’s a wholesale shift.
LDS is poised to benefit from these shifting tides.
The company doesn’t have to create a market.
It’s there, waiting.
Full Disclosure: LDS is an Equity Guru marketing client, we also own stock.