Friday Night Expands Distribution into California
January 3rd, 2018
Exclusive, News, Top News
The cannabis industry is projected to reach $50 billion over the coming years, according to Cowen & Co., driven by the legalization of medical and adult-use cannabis in states like California and Nevada. Despite this tremendous growth, investors may want to also consider the related hemp industry, which Brightfield Group anticipates will exceed $1 billion. Friday Night Inc. (CSE: TGIF) (OTCQB: TGIFF) provides investors with exposure to both of these rapidly growing markets.
California’s Hemp Industry
The hemp-based cannabidiol (CBD) market is projected to become a billion-dollar market in just three years, according to the Brightfield Group. After crossing the $170 million mark in 2016, the analyst projects a 55% compound annual growth rate over the next few years. California could experience some of the most significant growth given the legalization of both medical and adult-use cannabis next year – a move that could increase consumer exposure to cannabinoids.
“One of the most surprising things we found during this research was how many companies are currently operating in the space, and how few of them are generating significant revenue,” said Brightfield Director of Research Bethany Gomez. “Essentially, everyone is trying to do hemp, but only a handful are doing it well. It’s seen as easy because it can be sold online but, with restrictions on traditional marketing, it is very difficult to connect with your core customer.”
The hemp-based CBD market is a highly-fragmented space where distribution is a key bottleneck. Investors interested in the space should therefore seek out established companies that have existing distribution channels for their products, particularly in states like California that are likely to see a sharp increase demand next year. Furthermore, investors may want to consider companies that are diversified across other areas of the market to reduce risk.
Expanding into California
Friday Night Inc. (CSE: TGIF) is a Canadian public company that owns both cannabis and hemp-based assets in Las Vegas, Nevada. In addition to its 91% owned Alternative Medicine Association – a licensed medical and adult-use cannabis cultivation and production facility, the company owns 91% of Infused MSG, which produced hemp-based CBD products using high quality organic botanical ingredients that are thoughtfully crafted into premium products.
On December 15, the company announced that its Canna Hemp product line would be sold to cannabis dispensaries and other retail outlets in the State of California. Management indicated that it has already received multiple purchase orders from several California retailers, which represents the first step in its efforts to expand its brand into California. The state is widely seen as becoming a hub for nationwide cannabis brands given its large size.
Friday Night’s current distribution into existing dispensaries across California solves a key issue facing many other hemp-based CBD manufacturers. The exposure of its brands in these retail locations could also increase awareness and further differentiate its products from other companies developing CBD-based supplements. With a cannabis cultivation arm, the company is uniquely positioned to build upon these relationships and create diverse revenue ahead.
Friday Night Inc. (CSE: TGIF) (OTCQB: TGIFF) represents a compelling opportunity within the burgeoning hemp-based CBD industry. With the industry projected to exceed $1 billion over the near-term, investors may appreciate the company’s dual focus on cannabis and hemp, as well as its growing distribution in California’s market via dispensaries. Management plans to continue this expansion across California and into other states over the coming years.
The company reported revenue of $2.4 million Canadian and gross profit of $1.1 million Canadian in the quarter ending October 31, 2017. This is Friday Night’s first full quarterly report since Nevada legalized adult-use on July 1, 2017. According to Brayden Sutton, Friday Night CEO, “These results prove how large our footprint is becoming and attest to how healthy the market is in Nevada. Our team has worked incredibly hard to achieve such great results, and as we fine tune operations and expand our facilities and partnerships within and outside the state, we are getting very close to becoming cash flow positive.”
For more information, visit the company’s website at www.fridaynightinc.com.
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