I missed it. Y’all can point and laugh, but when folks said to me a year ago, “Hey, what about iAnthus Capital?” (IAN.C), I shrugged and said, “I can’t keep an eye on everyone,” and went back to my toys because it was small and US focused and meh.

iAnthus, to me, back then, was going after a more dangerous play than their Canadian-focused counterparts. Dispensary licenses in US states which haven’t yet figured out how to divvy up their dispensary licenses? In a country where dispensaries are federally illegal?

K, cool story, but I have real deals to consider.

But what’s happened in the last six months since is, iAnthus burst through the back door of our little soiree, drank all our booze, ran naked through the house, and tore off down the street with the whole party following them chanting “IAN! IAN!”

Okay, my metaphors need work. What I’m saying is, iAnthus went on a streak.

“You’re my boy, blue.”

A streak doesn’t even cover it. A streak implies a short burst.

IAnthus has stomped the field for half a year now, while their competitors were looking for exits.

That’s no bullshit promo run, that’s sustained delivery of news and deals and laying out a plan that makes sense and showing folks the investors behind the deal have faith in the long term plan.

Having actually looked deep at the company recently, I can see why.

Regular readers know of our ongoing coverage, mostly negative, of MedMen (MMEN.C), a dispensary chain that came out of the gate with a valuation that put each of their dispensaries at a $115m asset value, despite them not actually owning most/some of those dispensaries.

We could talk about the copious exec compensation bonuses and the share structure that gives three execs 99.3% of the voting power, but we’ve done that already.

We’re going to assume that, if you like MedMen despite those issues, you’re a fan of US dispensary networks and think that’s where the big money is and, you know, we’d actually agree with that concept, if not your selection.

Funny thing though:

When I tweeted that, IAN was trading at around $5. Now it’s $6.25.

MMEN was trading at around $4.50. It’s still trading at around $4.50.

At the time, a colleague had pointed out how IAN was just about the only weed deal up from it’s January share price, with Cannaroyalty (CRZ.C) being another.

Compared that to the industry high flyer, Aurora (ACB.T):

Aurora has a lot going for it, but it’s also spent a lot of money and cashed a lot of stock to do deals that, right now, haven’t benefited them in share price. The sector as a whole is taking heat, admittedly, but not iAnthus.

iAnthus just keeps whirring. Here’s why:

Hadley Ford, CEO of iAnthus, is a smart cat. I feel like I can rely on him to protect my investment. That’s not something you can say about everyone in the weed space.

And his plan, to roll out fully vertically integrated, licensed grows and dispensaries in multiple US states, is a good one. When federal laws move to legalizing marijuana, and they will, massive players in pharma, beverages, tobacco, and retail, will be looking to buy instant national revenue on their way in late. Owning a grow in Vermont or a dispensary in New York won’t get them out of bed.

This will:

The fine print here is important – much of this hasn’t been built out yet. But it’s been licensed, and iAnthus owns 100% of it.

What has been built is small so far, but the next few quarters will see a real bump in growth and news.

FLORIDA: 

iAnthus picked up substantially all of the assets of GrowHealthy Holdings in January of this year, giving them active control of one of only 13 current medical marijuana licenses in that state.

The license gives them the ability to cultivate, process, transport, and dispense full-strength medical cannabis as a Medical Marijuana Treatment Center.

That includes a 200k sq. ft. cultivation and processing facility and a 4.5k sq.ft. dispensary location in Palm Beach County, with the opportunity to open as many as 30 total dispensaries across the state, and to provide state-wide sales by virtue of a delivery service.

The plan is to locate future dispensaries in high traffic areas of dense population: Palm Beach County (Q4), Orlando (Q4), Tampa (Q3), with five more to be announced soon.

Cultivation is currently underway in a 25k sq. ft. initial grow and process build out, with product being stockpiled for future sale.

An important thing to note is that these dispensaries are allowed to be transport hubs, meaning they don’t rely on walk-in traffic. Indeed, one dispensary can transport product to your door anywhere in Florida.

MASSACHUSETTS:

It’s early in the canna-life of Massachusetts, but iAnthus is right there in the thick of it. The company has received the final nod to begin ops at their 36k sq. ft grow and process facility in Holliston, which is happening now.

Their flagship dispensary will be on Harvard Avenue, which a fair number of college students have been known to frequent. That shop is now open with a full suite of products, and two more locations have been secured through lease and option to lease agreements,.

Also important:

[iAnthus dispensary brand] Mayflower launched its patient home delivery program on June 25, which now services the towns of Arlington, Boston, Brookline, Cambridge, Charleston, Chelsea, East Boston, Everett, Malden, Medford, Milton, Quincy, Revere, Somerville, and Watertown.

Says the company, ‘Only 24 dispensaries have opened within the last four years in Massachusetts, which provides an attractive competitive landscape for Mayflower’s market entry.’

NEW YORK:

There are ten medical marijuana ‘registered organization’ licenses in New York State, which allow a company to be a vertical integrator.

[iAnthus subsidiary] Citiva’s license includes a cultivation and processing facility and four dispensary locations, which will be located in Brooklyn, Staten Island, Dutchess County, and Chemung County. Citiva received its license in August 2017 and is currently in the process of building out its team and facilities.

MedMen is paying bulk dollars for store rent on Fifth Avenue.

iAnthus is planning a store in the hipster hub of Brooklyn, across from the Barclay’s Center, home of the NBA’s Brooklyn Nets and the NHL’s New York Islanders.

That dispensary will be one of three permitted in the borough of Brooklyn, home to 2.6 million people. That’s a LOT of potential customers, before you even get into the other locations they’re working on, namely upstate NY (Elmira, pop: 70k), mid New York (Poughkeepsie, pop: 300k), and Staten Island (500k). The Staten Island location will be the *only* registered organization serving that city.

VERMONT:

iAnthus has one of only five licenses given up by the state, and has a small weed grow and a dispensary in Brandon, VT. A second dispensary location has just been approved by the state, and will open in Williston.

Once again, the physical location of the stores is important, but more important is they permit the company to engage in home delivery across the state, which saw the company earn $1m in revenues in 2017. The company is building out a production kitchen and processing facilities in what is, it must be said, a pretty little facility.

NEW MEXICO:

While NM is the only state iAntus is doing business in that isn’t home to a 100% owned facility, that’s only because the way NM regulates their industry would make it hard to own a grow and a dispensary chain. So, instead, IAN manages things for the license holders.

In partnership with Reynold Greenleaf & Associates, iAnthus manages four licenses that include the following: six dispensaries with plans to add two more in 2018; one 10,000 square foot manufacturing facility; cultivation space across three facilities with 1,200 plants under cultivation.

IAN has 24% equity ownership of the management company, Reynold Greenleaf & Associates.

…Reynold Greenleaf & Associates, generates revenue through various contractual agreements managing the license holders, including working capital loans, IP and trademark licensing, various consulting services and equipment and real estate leasing.

I’m good with this setup. It gives them a foothold in the state, and it’s a state with a history of cannabis acceptance, even if it does look like a scene out of Breaking Bad.

COLORADO: 

“Colorado is where some really interesting things in the industry happen, and we felt we needed to be represented there,” said CEO Hadley Ford when asked about his place in the most active per square foot weed scene in the US.

iAnthus bought a 1500 sq ft dispensary and 12k sq ft grow in Breckenridge, CO, which gives it a third of all business in that ski resort town.

The company also ahs a strategic deal with The Green Solution (TGS), which has opened 13 dispensaries and borrowed $7.5m from IAN to do it.

IN CONCLUSION:

Jesus, that took some work. iAnthus has been busy and, while they’re not telling the world their dispensaries are worth $115m each, they’re definitely covering a lot of states, which will put them in great stead when the big fish come along, post legalization, and are looking to buy something with national presence.

iAnthus *will* need to raise money at some point, to pay for their plans and execute more stores and grows. I’m cool with that, because did you see that stock chart? Hell, raise money now. That’s fine. We cool.

I took me eye off iAnthus and missed a hell of an ‘against the sector’ run, but I think there’s more room to move, they’re in the right part of the weed space, and there’s going to be a land rush for these licenses which IAN is already dominating hard.

Lastly – they’re a client now. That tweet up top, where one day I actually looked at these guys and found, heck, they’re like the thing MedMen wants to be, only they’re not jacked up five times in market cap, was well timed. iAnthus saw it, and it coincided with a nice market run, so we began to talk and last week they became a client of ours.

We’re EXTREMELY happy with that. Good people doing good things, hitting milestones, turning the sector around, with big upside and in the biggest potential markets in North America.

That’s execution right there.

— Chris Parry

FULL DISCLOSURE: IAN is an Equity.Guru marketing client, and we’ll be looking for good entry points going forward.

Written By:

Chris Parry

A multi-Webster Award winner for excellence in BC journalism, Parry is the founder and publisher of Equity.Guru, which he built with the specific plan to blend old school reporting with stock promotion, in a way that puts the emphasis on truth, high standards, and ethics. Parry is a veteran of TV, radio, and print, and consults with public companies to help them figure out their storylines, lay down achievable milestones, and improve their communication with shareholders, while also posting regular deep dive analysis of companies in the public spotlight.

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