PLUS Products (PLUS.C) has obtained an option to purchase California-based cannabis oil manufacturer, Emerald Bay Wellness, for cash and stock considerations.

Emerald Bay has been one of PLUS’s largest suppliers of cannabis oil for over a year and if PLUS exercises the option, it will give them the ability to extract cannabis-oils in-house, so they could manage their own quality control and increase margins on the core edibles business.

Emerald Bay Wellness develops and manufactures quality cannabis oils and concentrates to accomplish their core goal of providing relief to patients in California.

The company chooses cannabis grown in California and supplies their oil products to manufacturers across plenty of fast growing market segments, including edibles, topicals and vapes. It also sells its own line of vapes, and THC and CBD salves and balms to California dispensaries.

Option details.

• A loan of $400,000 for Emerald Bay Extracts for the option.
• If the option is exercised, then Emerald Bay will get approximately $1.2 million subordinate voting shares of Plus, $250,000 in cash, and Emerald Bay will not have to repay the loan detailed above.
• Approximately 70% of the deal is subject to Emerald Bay hitting performance targets including revenue, which totals to nearly $28 million over the course of the 2 year earn-out period.

The emergence of social cannabis

Over the past year, the California cannabis market has been going through a rapid shift towards manufactured products using cannabis-oil, including vapes, concentrates and edibles. The products made up 56% of retail sales in Q1 2019, up from 49% in Q1 2018, according to BDS Analytics.

Social cannabis at a glance:

• 71 percent of cannabis consumers say they engage with the plant for social and/or recreational purposes
• About a third specifically consume prior to meeting with others
• 41 percent savor cannabis for date nights, as well as daytime fun

BDS Analytics anticipates the arrival of legal cannabis social clubs in 2019. Their research shows that a large population of cannabis users will jump at the chance to drink or eat their drug of choice at venues earmarked for legal public consumption.

The research firm anticipates progressive cities like Las Vegas, San Francisco, Denver and Boulder are likely to be the first on this new bandwagon, with other parts of the country, and indeed the world, looking on with interest.

Best Market

Plus Products joined more than 175 companies that cross-trade their shares in Canada and the U.S. on the OTCQX Best Market today.

This opens PLUS to a wider pool of both institutional and retail investors throughout the U.S., while opening up new vistas of transparency to their current and future shareholders on a recognized U.S. Securities trading platform.

PLUS Products shares are down $0.23 and are trading at $4.16.

The company has 24,330,799 shares issued and outstanding and a market cap of $106.8 million.

—Joseph Morton

Full Disclosure: PLUS Products is an Equity.Guru marketing client.