Marijuana may not be legal across the country just yet, but that doesn't mean the hemp craze hasn't been taking off. Many companies have been getting in on cannabidiol-derived hemp products, which currently offer companies the best way to get into the cannabis market without having to worry about crossing state lines. From beverages to food products to personal care, cannabis companies have been looking for ways to offer a variety of CBD products to as many customers as possible.
One company that has done a terrific job of expanding its reach this year is Green Growth Brands (OTC: GGBXF). Last year, the Toronto-based company made a name for itself when it made a bid to buy Canadian producer Aphria (NYSE: APHA). Although that deal didn't end up panning out, the company has gone on to grow its business and expand into several areas.
Opened its 100th store
Unlike many other cannabis companies, Green Growth has strategically focused on placing its Seventh Sense branded CBD shops in shopping malls throughout the country. It took the company just seven months to reach 100 mall-based locations, and it's planning to open even more. The company's Seventh Sense stores sell personal-care and beauty products infused with CBD. In addition to launching its own stores, Green Growth has partnered with Abercrombie & Fitch, American Eagle, and DSW, which is owned by Designer Brands. The moves have positioned the company in strategic locations frequented by younger consumers to help reach a key demographic.
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Multistate expansion continues
The passing of the farm bill late last year paved the way for hemp-based CBD to be sold across the country, and nearly all the states have enacted some sort of hemp legislation.
In addition to just hemp, Green Growth has been expanding into new marijuana markets as well and has a presence in Nevada and Massachusetts. Most recently, Green Growth acquired Florida-based Spring Oaks for an approximate value of $54.65 million. The acquisition gives Green Growth the opportunity to expand into the Florida market and would allow the company to open as many as 35 dispensaries through Spring Oaks' medical marijuana dispensary license. Florida has been a hot market, with more than 300,000 patients already enrolled in the state's medical marijuana program.
Results are pouring in
Green Growth has already seen its strategy translate into significant sales: In its most recent quarterly results, for the period ending March 31, the company's sales reached $5.6 million. Although profitability isn't in sight just yet, with the company's loss reaching more than $15 million, that shouldn't come as much of a surprise given how quickly and how aggressively Green Growth has been expanding. In the trailing nine months, the company's revenues have topped $8.6 million.
Key takeaways for investors
With a market cap of around $250 million, Green Growth is still a fairly small player in the industry, but its growth initiatives could quickly make it much bigger. By tapping into some large markets and the hemp hype, Green Growth is in a good position to succeed, especially in light of the strong partnerships it has secured thus far. The company has put itself in a unique position that could carve out a strong niche for itself, especially among younger, health-conscious consumers.
However, the stock needs some positive results to help turn things around, as it has fallen more than 60% this year. That's likely been due to the company's inability to turn a profit and also investors simply no longer being as optimistic about pot stocks
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This article was originally published on Fool.com