Oldest U.S. Cannabis Retailer Goes Public with Big Expansion Plan
July 9th, 2019
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The U.S. cannabis industry is projected to reach $50 billion by 2026, according to Cowen & Co., driven by the legalization of adult-use cannabis across a growing number of jurisdictions.
California has already become the dominant force behind the country’s legal cannabis industry following the legalization of adult-use cannabis in 2016. The state generated about $3 billion in sales the following year, representing about 35 percent of all state-legal cannabis sales across the country — and these figures are rapidly growing.
Harborside Inc. (CSE: HBOR), the largest cannabis retailer in California, completed a reverse takeover with Lineage Grow Company last month to become a publicly-traded company. In addition to market access, the transaction provided the company with two Oregon dispensaries and other cultivation, distribution and retail assets.
The potential combined company has generated about C$400 million in cumulative revenue since its inception in 2006, which could make it one of the world’s largest cannabis companies with a three percent share of California’s entire retail cannabis market, assuming the execution of all outstanding merger agreements.
Let’s take a closer look at the company and how it’s positioned to grow even larger moving into 2019 and beyond as a publicly-traded company.
An Unparalleled Track Record
Most people in the cannabis industry are familiar with Steve DeAngelo — a decades-long cannabis advocate and businessman. As an advocate for a profitable, ethical and politically-engaged industry, he built Harborside into one of the most trusted and respected companies in an industry inundated with profit-hungry entrepreneurs. He was also instrumental in the passage of Prop 64 and other landmark legalization efforts.
Steve DeAngelo and dress wedding founded Harborside in 2006 and received the first six medical cannabis licenses in the United States. The company’s initial dispensary in Oakland, California was the first to offer products that were independently tested for contaminants by DeAngelo’s Steep Hill Labs. This uncompromising commitment to quality and safety helped set the brand apart from other dispensaries for years to come.
Over the following years, the company opened a second dispensary in San Jose, California and worked with FLRish, a for-profit company, to raise capital and provide management, infrastructure and financial services to its not-for-profit dispensaries. FLRish went on to partner with the dispensaries to develop a cultivation facility capable of producing clean, high-quality cannabis to sell to the dispensaries’ patients and other companies.
Since then, the company has attracted over 300,000 patients, captured three percent of the state’s market, and generated over C$400 million in revenue. The company also expanded its footprint to include eight dispensaries and two cultivation facilities across two states, each adhering to the gold standard that management has set for the industry in terms of regulatory compliance, product safety, industry expertise, customer service and other areas.
The company’s iconic Harborside dispensaries have set the industry standard with an unparalleled experience for both medical and recreational customers. Each store is bright and filled with knowledgeable staff that make it easy to find the perfect products. These attributes set the company apart from many other dispensaries that have a more “back alley” experience when it comes to buying cannabis products.
Ambitious Expansion Plans
Harborside plans to consolidate and expand its California retail footprint in the Bay Area over the coming quarters. For example, the company plans on opening its Harborside San Leandro dispensary in the City of San Leandro during the second quarter of this year. The company’s business model has involved establishing a grassroots and loyal customer following by providing best-in-class service and products. Harborside looks to expand their current footprint in California with an aggressive expansion strategy.
In addition to expanding its retail footprint, the company aims to enhance its manufacturing capabilities to meet demand and launch new branded products. The company’s Harborside brand has already become a trusted name in the mid-flower and concentrates market, and management plans to expand into high-grade flower, edibles, vapes and other product categories as well as target cost-conscious consumers through its Key brand.
With a 47-acre farm in Monterey County, the company already grows high-quality, pesticide-free cannabis outdoors under the sun. The low-cost nature of these production methods — compared to indoor greenhouses or hydroponics — means that the company could become a key player in the rapidly growing private label market for mid-grade flower and prerolls.
“The start of trading represents a significant milestone for Harborside, and we’re grateful for the support that we’ve received from the CSE throughout the process,” said Andrew Berman, CEO of Harborside after the stock began trading on the CSE. “We’re excited to move forward as a public company, with a vehicle that attracts growth capital from new investors, and continue maintaining Harborside’s status as California’s premier cannabis operator.”
Harborside Inc. (CSE: HBOR) has made tremendous strides in completing its reverse takeover to become a publicly-traded company while expanding its footprint in California and Oregon. Given its status as the largest cannabis retailer in California, it could become a staple for cannabis investor portfolios.
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