1933 Industries (TGIF.C) enlists 3 Sixty Risk (SAFE.C) to secure Nevada pot operations

On July 11, 2019, 3 Sixty Risk Solutions (SAFE.C) announced it would be offering its services to 1933 Industries (TGIF.C) to keep the company’s Nevada operations secure.

This deal marks the company’s first American expansion and a crucial step after establishing itself in the Canadian cannabis sector.

In a recent story, equity.guru’s Joseph Morton spoke with 3 Sixty’s CEO, Tom Gerstenecker, about the company’s growth strategy:

Their projections for 2020 include pushing beyond the U.S. into Mexico and Europe, which should give them a substantial boost towards becoming a global power in the security markets.

The company says it has already established a beachhead within the state, having secured the necessary licensing and facilities in Nevada to begin offering their full suite of security services by month’s end.

What 3 Sixty offers:

  • Security consulting
  • Protective guarding
  • Security management services

The company projects their entry into Nevada to be a lucrative one, providing multi-year, recurring revenue exceeding “$2,000,000 USD annually with gross margins of roughly 20% and adjusted EBITDA in line with Canadian operations.”

We are pleased that since going public we have meaningfully grown our Canadian business and we have established international operations in the US…There is a large financial opportunity in Nevada, and we believe that this expansion, predicated on our successful model in Canada, will serve as a launch pad for 3 Sixty’s growth ambitions in the US.

–Thomas Gerstenecker

Nevada has proven itself to be a significant market for recreational cannabis. Between April 2018 and March 2019, combined sales of medical and recreational cannabis exceeded USD$600M, with the most recent data showing a 21% year-over-year increase in sales.

 What 1933 needs securing

Well, a lot. For starters, the company has a 91% stake in Alternative Medicine Association which is licensed as both a cultivation facility and a production facility for cannabis-infused edibles.

Infused MFG, a wholly-owned subsidiary of 1933, is entirely devoted to acquiring and designing hemp and CBD-infused products for retail sale.

The company also owns Spire Global Strategies, a provider of “security programs, compliance, information technology, buildout design, and due diligence services” for the legal cannabis, mining and investment sectors.

Source: 1933’s investor factsheet

And it goes without saying that 1933 isn’t exactly operating in Sunnyvale, USA, home of the world’s biggest farmer’s market. In 2017, Nevada had the third highest robbery rate nationwide.

Robbing other drug dealers is a safe bet as they can’t exactly go to the police. But since there is new evidence to suggest legal dispensaries are pushing black market drug dealers out of business, its possible the risk for legal dispensaries and wholesalers is that much higher.

It’s a great move by 1933 to proactively secure their cash crop, even if the market doesn’t agree. TGIF is down 4.7% to $0.41 on today’s news while SAFE is holding steady at $0.20.

 

–Ethan Reyes

Full disclosure: 1933 Industries and 3 Sixty Secure are equity.guru marketing clients.

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.

1933 Industries

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