To conquer this market, Choom (CHOO.C) must run faster than a polar bear

Residents of Churchill, Manitoba were recently asked to leave their car doors unlocked in case the neighbours needed to escape from a polar bear.

On September 18, 2018 Choom (CHOO.C) announced that it has applied for a Master Retail License to sell recreational cannabis in Manitoba, Canada.

The Master Retail License would give Choom the go-ahead to operate retail cannabis stores and an e-commerce platform in Manitoba.

Manitoba covers 649,950 square kilometers and has a population of 1.3 million.

With a land mass 7 X bigger than Portugal – and the same number of people as San Antonio, Texas – Manitoba is not going to rival NYC or Paris for economic or cultural relevance.

In fact, your average Vancouverite would be hard-pressed to extrapolate on Manitoba’s virtues beyond that the fact that “it is a strategic location to survive a tidal wave.”

For a cannabis investor, does Manitoba matter?

Yes.

It matters for the same reason the rest of Canada matters.

Canada is the first G20 nation to legalize recreational marijuana.

In a recent report, The Canadian Imperial Bank of Commerce projected that Canadians will consume 800,000 kilograms of cannabis per year, “the vast majority of which will be for recreational use.”

“We believe that by 2020, the legal market for adult-use cannabis will approach $6.5 billion in retail sales,” stated the CIBC report. “For context, this is greater than the amount of spirits sold in this country, and approaches wine in scale.”

$6.5 billion is worth fighting over but the battle for market share in Canada is really a proxy fight for future international markets.

It’s a safe bet that in 5 years, Canada will not be the only G20 nation with legal recreational weed.

With its large area and small population, Manitoba presents unique retail challenges.

As a shareholder, I want Choom to fight for market share in Manitoba.

More importantly, I want them to transport that expertise into new markets when the opportunity arises.

Choom Highlights:

  • Secured the rights of up to 52 retail opportunities in western Canada
  • 29 leases in highly strategic locations in Alberta with 28 applications
  • 17 retail opportunities in B.C.
  • 6 retail opportunities in Saskatchewan
  • Development Permits in 11 municipalities
  • On-going retail store buildouts

Choom is executing an aggressive expansion plan to create a significant retail brand in the Canadian adult use market and is committed to developing and acquiring retail stores as a top priority.

In the September 18, 2018 news release Choom warns that “the retail opportunities are subject to all necessary governmental and municipal approvals being granted.”

We first wrote about Choom on May 4, 2018:   The notion of a “rich farmer” is almost an oxymoron. Like “Jumbo Shrimp” “Civil War” or “New Classic”. Do you know any rich farmers? Do they exist?

People with dirt under their fingernails usually reap modest economic rewards. For this reason, the original wave of licensed marijuana growers is morphing into cannabis retailers and branders.

Sex – and its nerdy cousin “hipsterism” are going to be at the forefront of recreational weed marketing initiatives.

“Choom recognizes that we’ve just started paddling into a wave that will only build momentum once legalization is in place,” stated Choom’s CEO Chris Bogart in May, “In every major market, Colorado, Washington, California, we’ve seen adult-use grow year over year by double digits. Choom sees the same growth potential in a legal adult-use market for Canada as just the beginning.”

“Manitoba represents another step in our strategy to build one of the largest private retail networks across Canada and establishing Choom as a dominant Canadian cannabis brand,” states Bogart.

“The Request for Proposal (RFP} process is highly competitive,” adds Bogart, “and receiving one of the master licenses will give us the ability to sell directly to consumers- either in store or online.”

Manitoba factoids:

  • Honey Dill was invented here.
  • Winnie The Pooh was named after Winnipeg, Manitoba.
  • 19-time winner of “The Slurpee Capital of the World”.

“Consumers in Manitoba can expect style and sophistication when they walk into a Choom store,” stated Bogart, “We remain committed to pursuing more retail opportunities across Canada, and Manitoba is an important part of our national strategy.”

Let’s see if Choom can out-run a polar bear.

Full Disclosure: Choom is an Equity Guru marketing client, and we own stock.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

2 comments

  1. K W Reply

    Love your articles but didn’t like the “put a dog in that fight” reference. Please don’t make any references that could be interpreted to legitimize cruelty to people or animals. Some people are not mature enough to take them in context.

  2. Lukas Kane Post authorReply

    KW, thank you for reading and also for your comment. We could discuss further whether the phrase “put a dog in that fight” legitimizes animal cruelty. But I fear a mutually satisfying conclusion would not be reached. And since I did once hear Mel Gibson (anti-Semite, convicted woman-beater) use the same phrase – I’ve decided to give you the benefit of the doubt. The offending sentence has been amended to: “As a shareholder, I want Choom to fight for market share in Manitoba.”

Leave a Reply

Your email address will not be published. Required fields are marked *