The U.S. medical and recreational cannabis industry is expected to become a multi-billion dollar market over the coming years. With medical legalization in over 20 states and recreational legalization in two states, the U.S. is leading the world in liberalization of cannabis laws to lower crime and increase tax revenue. These trends are quickly catching the attention of investors in the space.
Interactive Health Network Inc. (OTC: IGRW) develops high quality nutraceuticals and lifestyle products with a focus on the medical cannabis market. Through Here We Grow Stores and BIOTEL, the company has become a national leader in the retail of horticulture supplies and cannabis services with locations in states like Colorado and an e-commerce platform that enables it to sell nationwide and worldwide.
Investors may want to take a closer look at the stock given its unique fully integrated approach and existing revenue base. In the rapidly growing cannabis industry, Interactive Health Network offers an alternative to pharmaceutical plays like GW Pharmaceuticals plc (NASDAQ: GWPH), or to companies targeting cultivation, either under Canada’s new MMPR licenses, like Creative Edge Nutrition Inc. (OTC: FITX), or in select U.S. locations, like Terra Tech Corp. (OTC: TRTC).
HWG & BIOTEL Acquisitions
Interactive Health Network began its foray into the cannabis industry with the acquisition of Here We Grow Stores in April 2014. With approximately $750,000 in annual revenues, the hydroponics retailer has developed a store concept that demonstrates the equipment, nutrition, and techniques used in growing medical and recreational cannabis plants both at home and commercially.
The existing revenue sets the company apart from others in the industry trying to target the same hydroponics retail space. For instance, Greengro Technologies Inc. (OTC: GRNH) announced the opening of its first and second brick-and-mortar retail locations under the Vertical Hydrogarden brand name, which it anticipates will serve as proof-of-concept for a larger scale rollout in the future.
In a recent CannabisFN interview, Interactive Health Network EVP of Marketing Cesar Vazquez discusses the company’s integrated approach in the emerging legal cannabis sector.
In May 2014, the company announced the acquisition of BIOTEL, a managed service provider in the legal cannabis market that is expected to generate about $1 million in annual revenue beginning in 2014. As its second acquisition in the cannabis space, the move helps expand its footprint and establish itself as a product and services provider to the medical and recreational cannabis markets.
These two businesses combine to provide exposure to both the products and services needed within the medical and recreational cannabis industry. With over 1,000 customers and 100 medical cannabis stores signed up with HWG, the company has a unique opportunity to leverage the synergies between these businesses to unlock long-term value for shareholders over time.
The businesses also supplement the company’s existing nutraceuticals business, focused on advances in health and anti-aging supplements. With a product line-up created by UCLA scientists with over 20 years of research, the company’s Wellness Builder division focuses on fucoidan-based formulas that are intended to address the needs of individuals suffering from degenerative diseases syndrome.
Growth Potential Ahead
Interactive Health Network plans to grow revenue by expanding its brick-and-mortar footprint, building out its e-commerce presence, and introducing new products into the market. After building a retail showroom and becoming a top five Colorado retailer in 2013, management has been successful in executing its business plans to this point.
The company recently established an e-commerce website at www.herewegrowstore.com to sell its products throughout the U.S. and internationally, while establishing EBay and Amazon stores to broaden its distribution. Social media and other advertising will help expand sales through these distribution channels over time.
In the near future, management also plans to expand its locations into the City of Aurora near Denver, Colorado, as well as in other states like Arizona, Michigan, and Washington State. The company’s turnkey 2,000 to 3,000 square foot locations make expansion a relatively simple process after establishing its initial show room in Colorado that served as a critical proof of concept.
Finally, management plans to grow its store brands by establishing its own product lines that are manufactured in China and imported into the U.S. These products are anticipated to include things like hoods, ballasts, fans, bulbs, nutrient lines, and other components commonly used in hydroponics. By establishing its own brands, the firm hopes to realize higher margins and customer loyalty long-term.
Interactive Health Network has made significant progress in improving its financial condition and transparency. In May, the company announced that it was undergoing an audit to become a fully reporting company on the OTCQB by the fourth quarter of its fiscal year ended September 30, 2014. The move to become more transparent should help improve shareholder value by reducing risk and uncertainty.
Soon after, the company announced that it also canceled 1.25 billion shares of stock, reducing its shares outstanding by more than 23%. Management indicated that the cancellation would be the first of three large cancellations of common stock that would be returned to the treasury. The cancellation of stock helps improve shareholder value by reducing dilution and increasing per-share metrics.
Investors interested in learning more about Interactive Health Corp. should visit the following resources:
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