Exclusive Onsite CEO Interview with Lifestyle Delivery Systems: Up and Running in a $5 Billion Market


Ryan Allway

November 17th, 2017

Exclusive, News, Top News


There’s little doubt that the legalization of recreational marijuana in California will be a watershed moment for the North American cannabis industry. Despite the enormous opportunity, there are only a handful of public companies for investors to choose from when looking for exposure to the state’s burgeoning industry. Lifestyle Delivery Systems Inc. (CSE: LDS) (OTCQB: LDSYF) is one low-risk, high-reward opportunity to consider.

California’s Burgeoning Market

California voters approved Proposition 64 – or the Adult Use of Marijuana Act – last November to legalize the recreational use of marijuana. On November 9, 2016, California citizens gained the right to use and grow marijuana for personal use. On January 1, 2018, California will launch a scheme to tax and sell recreational marijuana statewide. This will mirror the recreational markets already in place in states like Colorado and Washington.

Also see: How Big is California’s Marijuana Market, Really?

New Frontier estimates that California’s cannabis industry will top $6.5 billion by 2020, making it the largest cannabis market in the world. Over the next three years, the analyst projects that annual legal cannabis sales will grow at a 23.1% compound annual growth rate from $2.8 billion in 2016 to $6.5 billion by 2020. These trends are driven by the state’s 39.2 million residents, which eclipse the six nearest legal marijuana states combined, as well as the approximately 251 million people who visit the state every year.

Since the state’s existing marijuana industry is largely unregulated, there is no empirical data providing accurate statistics regarding the number of nurseries, growers, manufacturers, and dispensaries. But a “back of the napkin” approach suggests that between 70% and 90% of these cannabis firms will either not be properly licensed or will not be able to provide a clear “chain of title” and some 80% of existing cannabis is contaminated with pesticides.

Growing Facility Up and Running

Lifestyle Delivery Systems Inc. (CSE: LDS) (OTCQB: LDSYF) aims to capitalize on these dynamics with its 20,000 sq. ft. facility located in Adelanto, CA (known as the “Green Zone”). After spending $6 million to retrofit and equip the facility, the operation is up and running with eight isogenic rooms, an agricultural nursery, a cultivation division, three distillation and extraction labs, and a manufacturing division for sublingual dissolvable strips (CannaStrips).

On October 31, the company announced that it began extraction and distillation of raw fresh frozen plant material for the purpose of conversion into medicinal cannabis products. An independent third party laboratory showed no trace amounts of pesticides, fungicides, mold, or infestation, while the fresh frozen whole plant material is designed to preserve the complex array of cannabinoids, terpenes, and flavonoids.

 

 

LDS CEO Brad Eckenweiler lays out the case for investors, saying, “Only a handful of companies will be positioned to participate in the estimated $3 billion market of medicinal and adult-use cannabis oils in 2018 and we’re one of those few that are properly licensed and that can scale with organic grade quality biomass, predicated on sales. In addition, because we don’t have any middle men or brokers to deal with, our margins are extremely attractive.”

In terms of future expansion, the company purchased 24.25 acres of additional land in Adelanto, CA that would enable it to create up to 30 indoor grow facilities. Management’s goal is to create relationships with other license holders that would use its unaltered, organic-grade seeds and follow its time-tested procedures to grow high-quality cannabis products. The company’s innovative CannaStrips also provide a unique delivery mechanism.

Looking Ahead

Lifestyle Delivery Systems Inc. (CSE: LDS) (OTCQB: LDSYF) represents a compelling investment opportunity in the cannabis industry. With an existing facility up and running in California, the company is unique positioned to capitalize on the state’s legalization of recreational marijuana next year. Its additional land purchase and CannaStrip technology enable more scalable revenue and higher margin products.

For more information, visit the company’s website at www.lifestyledeliverysystems.com.

Ryan Allway

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


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