The widespread legalization of medical cannabis may be helping mankind deal with many unmet medical needs, but man’s best friend has been largely ignored.
Cannabis Therapy Corp., [OTC: CTCO] a development-stage nutraceutical firm developing cannabinoid-based medicinal products, is changing that by marketing products for pets. Earlier this year, the company entered into an exclusive licensing agreement with Canna-Pet LLC for exclusive worldwide rights to its hemp-based pet products made from low-THC cannabis plants.
With companies like PetSmart Inc. [NASDAQ: PETM] trading at a $6.8 billion market capitalization, it’s no secret that the pet industry is already quite large, consistently growing, and has shown to be virtually recession proof over the years. In fact, the American Pet Products Association (“APPA”) believes that U.S. consumers will spend approximately $58.51 billion on their pets this year, which is up from just $28.5 billion at the turn of the century.
Canna-Pet™ leads the industry with veterinarian recommended, legal, over-the-counter cannabidiol (“CBD”) products for pets made in the United States with industrial hemp. With years of animal research mirroring many human studies showing the benefits of CBD therapies, the company’s products may be able to help with inflammation, anxiety, pain, nausea, and other conditions.
Paving the Way for Revenue
This week, Cannabis Therapy Corp announced the launch of its newly redesigned Canna-Pet™ website, designed to improve functionality and customer support. Management plans to integrate proven digital marketing strategies in conjunction with the launch in order to boost sales over the coming quarters. The company anticipates recording this initial revenue during the first quarter of next year.
“This is a milestone event in the very short timeline since the inception of our company,” said Cannabis Therapy Corp. President and CEO Dr. Soren Mogelsvang. “Not only are we generating revenues [sic], but we are also capturing exceptional business intelligence as regards [sic] the marketing, sales and distribution of hemp-based products and CBD-enhanced products.”
With the near-term revenue generation, management indicated that it’s already well on the way to achieving “excellent projected return” on their investment in as little as six months “based on all early indications”. The company has also begun pursuing wholesale distribution agreements, which could dramatically increase revenue if major customers begin carrying the products.
Two Rapidly Growing Industries
Cannabis Therapy Corp. through its license agreement with Canna-Pet LLC is well positioned to capitalize on two rapidly growing industries. The medical cannabis industry has grown at a 16.2% CAGR between 2009 and 2014 to reach $2 billion in revenue, according to IBISWorld, while the pet industry has grown at an 8% CAGR to reach $58.51 billion in 2014, according to the American Pet Products Association.
Canna-Pet’s first-mover advantage in the space, combined with Cannabis Therapy’s access to the capital markets, could provide a significant advantage. With the increased attention being brought to CBD based product lines, nationally established pet supplement companies like Petmed Express Inc. [NASDAQ: PETS] or VAC Antech [NYSE: WOOF] may want to take notice.
Cannabinoid-based products have been shown in clinical research to have anti-tumor effects, anti-inflammatory effects, appetite stimulation effects, and pain modulation without psychoactive effects. As a supplement to traditional therapies, cannabinoids may also provide a more balanced and multimodal approach to caring for pets by reducing anxiety, aggression, sleeping disorders, and cognitive impairments.
Investors in the multi-billion dollar pet industry may want to take a look at Cannabis Therapy Corp. and its Canna-Pet™ product line given the potential and upcoming catalysts. With management indicating preliminary revenue disclosures in Q1 2015, investors should get an early glimpse at the products’ potential. The rapid growth in the medical cannabis and pet industries should also catalyze long-term growth.
It’s also worth noting that Cannabis Therapy Corp. has secured its own hemp supply through an agreement with Rocky Mountain Hemp Inc. On September 29, 2014, the company announced that it recently passed pre-harvest inspection by the Colorado Department of Agriculture, and harvested its first ever hemp crop which is now slated for near term product development and commercial applications.
Currently, the company trades with a market capitalization of approximately $30 million with 77.8 million shares outstanding. Capturing just a fraction of the rapidly growing and recession-proof pet industry could translate to significant revenue over the long run and ultimately unlock value for shareholders. Management’s first-mover advantage could enable it to capture significant market share in its niche.
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