The medical cannabis industry has grown at a 16.2% CAGR between 2009 and 2014 to reach $2 billion in annual revenue, according to IBIS World. With the legalization of adult-use cannabis in several states, including Colorado and Washington, the market is poised to grow significantly faster and larger in 2015 and beyond. Investors looking to capitalize on these trends have many different options for building exposure into their portfolios.
In this article, we’ll take a look at Crown Marketing Inc. (OTC: CWNM) and its plans to become a leader in cannabis research, development, and licensing.
Most investors look for growth rates and profitability when evaluating stocks. With low overhead, high margins, and recurring cash flow, licensing companies are among the most attractive investments in the market. The key to success in licensing is the development of unique and proprietary intellectual property (“IP”) held in a patent portfolio, as well as the sales and marketing needed to license the IP to various end markets.
Crown Marketing plans to become a premier licensing play in the cannabis industry. Through its Crown Laboratories subsidiary, the company is developing unique approaches targeting both greenhouse technology design to optimize growing and proprietary strains aimed at treating common ailments and medical conditions. Management is developing these concepts to target both the cannabis and Traditional Chinese Medicine (“TCM”) industries.
Along these same lines, the company plans to acquire land in Southern California for commercial and mixed-use applications. Management aims to lease the land to cannabis growers in a model that’s very similar to licensing in that it generates predictable recurring income over time without taking on a lot of risk. In addition, the strategy provides an avenue to upsell growers on its unique agroponic technology solutions.
Crown Marketing’s dual focus on greenhouse technologies and plant genetics separate it from competitors focused on only a single market, like GreenGro Technologies Inc. (OTC: GRNH). By taking a diversified approach to the industry, the company isn’t necessarily relying on solely the cannabis industry or solely the TCM industry to drive its growth. The combination could also generate smoother revenue and income over time.
In the growing technology space, the company is investigating different lighting solutions in agroponic applications, exploring soil types ideal for various growing conditions, looking at energy water effects, and leveraging cloud computing to automate and simplify the growing process. The goal is to take the product designs and license them to manufacturers that would then sell to end markets like cannabis growers and cultivators.
In the plant genetics space, the company is investigating the application of common herbs (including marijuana and its components) on diabetes, prostate health, and cardiovascular disease. Management hopes to develop proprietary blends and strains that can be out-licensed to biopharmaceutical companies to continue development through clinical trials in exchange for licensing fees and potential royalty payments.
Investors have many options when investing within the cannabis industry, ranging from vapor manufacturers like Vape Holdings Inc. (OTC: VAPE) to approved Canadian growers like Tweed Marijuana Inc. (OTC: TWMJF). With its diversified approach to the industry, cannabis investors may want to take a closer look at Crown Marketing as it looks to implement a licensing model to capitalize on the industry’s projected growth.
Management is just getting its start within the industry, which means that there may be many near-term catalysts that could drive the stock higher. At the same time, the long-term potential of its overarching business plan could have more attractive economics than many other investments within the cannabis industry.
For more information, visit the company’s website at www.cwnmusa.com.
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