The U.S. cannabis industry grew 64% in 2013 and is expected to reach $2.34 billion in size by the end of 2014, according to ArcView Market Research. With a growing number of public companies capitalizing on the interest in the space, investors have no shortage of opportunities to put their capital to work, from established firms like GW Pharmaceuticals plc (NASDAQ: GWPH) to recent entrants to the market.
In this article, we’ll take a look at Agritek Holdings Inc. (OTC: AGTK), which sets itself apart from others in the space as a fully-reporting company and a pioneer in many areas of the industry.
Agritek Holdings, Inc. (AGTK) provides innovative patient and agricultural solutions with the goal of becoming a leader in compassionate care technology for the medical marijuana industry. While it does not grow, harvest, or distribute cannabis, the company provides real estate management and health and wellness product lines, including beverages, vaporizers, and accessories under the Mont Blunt™ brand.
In July, the company announced a $400,000 cash infusion from a private equity fund in order to expand its Mont Blunt™ marketing campaign and begin building out its Colorado-based agricultural facility. The capital infusion is part of the $1.5 million committed in total by an investor syndicate, which should accelerate the company’s business plan and ultimately unlock value for shareholders. After this $400k infusion, the Company has $800,000 remaining availability on the current commitment, and management believes there will be additional borrowings available from this and/or other lenders.
A few days following that announcement, the company executed a long-term lease agreement of an additional 40 acres in Pueblo, Colorado, bringing its total land holdings to over 120 acres zoned for its planned agricultural and cultivation facility located in Pueblo County, Colorado. In addition, AGTK executed a long-term non-federal water rights contract for 10 years, which gives it a distinct advantage in attracting tenants. Finally, in a press release just last week, the company announced that they have entered into an agreement to purchase another 3.5 acres in Nevada’s “Green Zone” and will lease back the land which has already been granted a special use permit for medical marijuana production in North Las Vegas.
Management plans to sublease the agricultural property to licensed marijuana producers and then offer those producers means to not only commercialize their harvest, but to add additional revenue streams by licensing its Mont Blunt™ brand name and distribution capabilities. By profiting from both the growing and distribution of high-grade cannabis products, the company provides investors with a unique legal way to capitalize on the industry.
Agritek Holdings, Inc. initially launched its Mont Blunt™ brand of products in February 2014, with a new e-commerce website located at www.montblunt.com. The product line sets itself apart from others on the market by offering a clean and affordable alternative to smokers, while mimicking the physical sensations that smokers often require in order to get the optimal experience when smoking.
The starter kit is priced at $59.99 and comes with a stainless atomizer with a lithium-ion rechargeable battery, a USB charger, a wall charger, a hard plastic carrying case for travel, and a designer display box. Subscription cartridges enable a recurring revenue model while providing users with alternative flavors and convenience to recharge their initial starter kit over time. For those that want to add a little “bling” to their smoking experience, the Company has plans to launch a high-end designer line of vaporizers and accessories under the Mont Blunt brand, catering to sophisticates and VIP’s.
In May, the company announced an exclusive celebrity marketing agreement for its new e-cigarette line, Mont Blunt ™ with Tara Reid, star of the hit movies Sharknado and American Pie, as well as an actress on television shows like Saved by the Bell and Days of Our Lives. The endorsement could further the company’s objective to have a leading position in the e-cigarette market with a focus on tobacco-alternatives like cannabis.
The company’s combination of a high quality, premium product, a celebrity endorsement and its network of growers through its agricultural operations yield a fully-integrated but diversified play in the cannabis industry. In effect, the model is similar to that of Dixie Elixirs in terms of Mont Blunt, while its real estate business makes it the largest publicly traded cannabis-related landowner.
As of July 22, 2014, AGTK trades with a market capitalization of approximately $13 million with 62,655,006 shares outstanding, according to OTC Markets, making it one of the smallest companies by market capitalization in the industry. With the CEO still holding a large amount of the outstanding shares, there’s little question that management remains confident in the company’s future.
In the past, Agritek Holdings, Inc.’s predecessor MediSwipe built up a $20 million per month processing business, demonstrating management’s ability to execute. The move into land ownership and cannabis branding presents much greater opportunities that don’t rely on regulatory approvals, as compared to GW Pharmaceuticals or GrowBlox Sciences (OTC: GBLX) that are reliant upon government approval for commercialization.
Investors may want to take a closer look at the stock given these positive attributes and the many upcoming catalysts that could drive it higher. If successful, the company could be operating one of the premier brands in cannabis while simultaneously growing a base of suppliers through its land management business – an attractive and diversified position in a rapidly growing industry.
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