Chemesis (CSI.C) plans to add 25,000 square feet of manufacturing space in California

Chemesis International (CSI.C) put down stakes in Cathedral City in order to capitalize on the nascent but lucrative recreational cannabis market in California.

Now the company has announced plans to grow it’s manufacturing capacity to keep pace with increasing public demand for cannabis-infused products.

Chemesis currently provides manufacturing, stocking, packaging, transport and distribution services in the Golden State with a 2,000 square foot facility operated by its wholly-owned subsidiary, Desert Zen.

The expansion plan for Desert Zen calls for an additional 25,000 square feet of manufacturing space, which management expects to be licensed and ready to begin operations by Q2 2019.

The new manufacturing space is meant to complement Chemesis’ recent commercialization of its state-of-the-art extraction facility, also located in Cathedral City.

More square feet means the inclusion of beverages, edibles and various other consumer goods to a portfolio which already boasts popular brands like California Sap and Jay & Silent Bob’s Private Stash.

“With the company’s recent acquisition of a new low temperature extraction methodology, we will also be able to expand our offerings to include other cannabinoids at higher concentration in our finished goods,” Chemesis CEO, Edgar Montero, said.

California dreams

California is not only huge in terms of geographical expanse, it’s an economic titan. In fact, if it seceded from the United States tomorrow and became a sovereign country, it would have the fifth largest GDP on the planet.

With almost 40 million residents, more than a million medical marijuana patients and an exploding recreational cannabis market, California’s cannabis industry could hit $5.1 billion by the end of 2019, according to BDS Analytics.

“The California market is a key part of Chemesis’ business plan and the company will continue to take advantage of upcoming opportunities in this market,” Montero said.

This focus on California will provide the financial base for Chemesis’ global aspirations of further expanding its reach into the emerging Latin America and EU cannabis markets.

Chemesis is currently building on its acquisition of Natural Ventures, Puerto Rico’s largest medical licensed cultivation and manufacturing cannabis company which serves over 30,000 patients.

The company also has interests in Colombia with the recently announced acquisition of La Finca, an integrated cannabis company which has been operational since October 2017.

The La Finca acquisition gives Chemesis access to over 1,000 acres of land for cultivation through relationships with over 2,000 farming families in various co-ops that comprise La Finca’s land package in Colombia.

Over the next 12 months, Chemesis has said it intends to continue growing its portfolio with new and unique oil extract formulations as well as third-party product lines.

Having a foot in the California legal cannabis market will power Chemesis’ first-mover efforts in Latin America as well as propel the company’s expansion into the EU.

Chemesis stocks took a beating along with the market at the end of last year, but progress and positive news flow have fueled a surge, sending SP up over 100% from $0.98 on Dec. 31, 2018 to $2.00 at the end of trading today.

Currently the company has 75,650,921 issued and outstanding shares with a market cap of $161.1 million.


–Gaalen Engen

Full Disclosure: Chemesis International is an Equity.Guru marketing client.

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