Six weeks ago, 1933 Industries closed a non-brokered private placement (PP) raising $4.5 million (10 million shares at .45).
The PP was fully taken down by entrepreneur Paul Rosen, who sits on the boards of iAnthus (IAN.V), Hill Street Beverages (BEER.V) and High Tide Ventures (HITI.C).
The share price of IAN, BEER and HITI have gone up an average of 17% in 2019, while 1933 has risen 38% in the same time frame.
“1933’s business model incorporates cultivation, extraction, processing, manufacturing, branding, distribution, and ancillary services,” summarized Rosen, “There are only a handful of companies that have been able to accomplish this in a short period of time.”
1933 intends to launch one of Nevada’s largest hemp extraction facilities, and become a major player in the booming CBD (cannabinoid) industry – adding a significant revenue stream to its business model.
- Revenues of $12.6 million for the year
- Gross margins of 49%
- Total assets increased to $41 million
- Product offering expanded to over 120 SKU’s
- Retail footprint expanded to 600 stores
CBD is a non-psychoactive cannabis/hemp derivative, prescribed to treat pain, inflammation, stress and anxiety.
The CBD regulatory floodgates opened after U.S. President Trump signed the Farm Bill into law in December, 2018. The bill legalized the production of hemp, which contains high levels of CBD.
At the same time, CBD has experienced an accelerated consumer adoption-cycle – moving from health fad, to accepted medicine, to mainstream usage in the flutter of a humming bird’s wings.
Today, ABC News announced that “Kim Kardashian West had a CBD-themed baby shower”, inspiring co-host Michael Strahan to ask the ABC lifestyle correspondent, “Is it true that CBD is harvested through Willy Nelson’s tears”?
Although Ms. Kardashian has made no identifiable contributions to the fields of entertainment, fashion or business – millennial co-workers assure us that she is “an important influencer” who could “drag CBD even further into the mainstream.”
1933 Industries is collaborating with an engineering firm to complete an extensive research and development phase. The purpose of this collaboration is to create “a customized design for a larger, more efficient and more robust hemp processing laboratory than originally planned.”
The Hemp Lab is designed to conform to the new regulations set out by the recently passed “Farm bill” or Agricultural Improvement Act of 2018.
1933 plans to deploy a custom-built, ethanol extraction system with full chromatography abilities to allow for isolation of THC, CBD, CBN, CBG, CBC, and several other cannabinoids, including the ability to produce full spectrum and broad spectrum oils, as well as isolates.
1933’s hemp extraction equipment is currently being engineered to meet required GMP standards, which will allow TGIF to expand distribution into global markets.
The Hemp Lab’s increased monthly capacity is targeted at 68,000 kgs. of hemp biomass, producing approximately 5,000 kgs. of full spectrum oils or 4,500 kgs. of CBD isolate. This is a significant capacity bump from previous announcements.
CBD isolate is currently worth about $7.50 per gram, making the new production worth a potential $33 million a month in retail sales. Actual sales, cost-of-goods and profit margins still to be determined.
Once equipment and facility design is approved by the Clark County, construction will begin.
Subsequently, the customized equipment will be installed, tested and the Hemp Lab is expected to become operational by the end of the year.
“The Hemp Lab will not only have the ability to process CBD,” stated Chris Rebentisch, USA COO and Founder of Infused MFG, “but it will also have the flexibility to isolate cannabinoids that are emerging in popularity and uses such as CBN and CBG, at commercial scale volumes.”
1933 intends to used this new vertical is to “utilize all isolates” for its own proprietary consumer brands, while increasing margins and creating a recurring revenue stream from sale to other manufacturers.
Last year, the FDA approved the first drug containing CBD for the treatment of certain forms of epilepsy. In a recent interview with Brookings Institution, outgoing FDA commissioner Scott Gottlieb gives his take.
“We believe that the time and capital invested in the R&D of the hemp extraction facility will provide much larger returns for shareholders in the future,” stated Brayden Sutton, President and CEO.
Full Disclosure: 1933 Industries is an Equity Guru marketing client and we own the stock.