- Supply shortfalls bedevil California cannabis
- NUGS on the lookout for grow facilities with existing infrastructure
- Cultivation capability expected to complement retail and distribution divisions
The decision by enterprising California outfit Cannabis Strategic Ventures, Inc. (OTC: NUGS) to enter the cannabis cultivation space could not have come at a better time (http://ibn.fm/dllEt). Supply in California is struggling to satisfy demand, resulting in a shortage of compliant product statewide. Even though the supply bottleneck is not entirely unexpected given the size of California’s market, which is projected to cross the $5 billion mark by 2019, it has been aggravated by new, tighter regulations that, very likely, resulted in the recall and destruction of product already on the market. As a result, additions to supply like those being planned by NUGS will be welcomed by consumers, who have been beset not only by product shortages, but also by limited choice and high prices (http://ibn.fm/Q3vZP).
Cannabis Strategic Ventures has already embarked on pre-acquisition due diligence for prospective cultivation properties located in states that have legalized cannabis. The company has identified several cannabis grow facilities in California and has begun analyzing these for possible acquisition. It is targeting several locations with areas exceeding 200,000 square feet that have existing cultivation infrastructure in place, since it wants to move into cultivation very quickly. NUGS believes that an involvement in cultivation will allow it to realize synergies that will reduce costs and augment the benefits offered by its retail brands. The acquisition of grow facilities will strengthen the strategy of vertical integration and diversification. NUGS plans to operate in the cannabis HR space, leveraging the institutional expertise of the Worldwide Staffing Group, which it is in talks to acquire. The cannabis staffing services will be under the aegis of subsidiary BudHire.
Through another subsidiary – Pure Applied Sciences (PAS) – NUGS markets the PureOrganix brand. This is a line of high quality concentrate, organic and pure cannabis oils that conform to Current Good Manufacturing Practices (cGMP) and meet FDA guidelines for Active Pharmaceuticals Ingredients (API). PAS has started production of Halo Filters, a patent pending, cannabis smoke filtration pre-roll cone. The Halo Filters line is based on an internally developed filtering technology that utilizes ultra-high quality fibers and proprietary manufacturing methodologies. Halo Filters reduce the harsh taste in cannabis smoke, as well as the levels of harmful chemicals, heavy metals and other toxins, while maintaining optimum taste and cannabinoid levels. Cannabis smoke can contain up to eight times the cyanide, three times the ammonia and two times the nitrous oxide of tobacco smoke.
NUGS has also cut an agreement to acquire the Fitamins CBD brand (http://ibn.fm/QgeZO). Products under the brand consist of vitamin- and hemp-derived CBD formulations, which will be distributed through Fitamins’ network of 600+ wholesalers catering to the Asian-American market. The agreement between the companies calls for Fitamins to produce a proprietary CBD product as part of NUGS’ brand portfolio, initially targeting United States distribution networks and eventually expanding into Asian markets that have legalized CBD products.
NUGS has now completed the acquisition of The Asher House Pet CBD brand, a line of U.S. hemp-derived cannabidiol (CBD) supplements for pets that has been garnering national attention. Increased market share and revenues are expected as NUGS provides the infrastructure to support enhanced marketing programs. With a finger in so many cannabis pies, NUGS is sure to find some that are good to the taste.
For more information, visit the company’s website at www.CannabisStrategic.com
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