Signal Bay Makes Strategic Acquisition in the $850M Cannabis Testing Market
Ryan Allway
September 23rd, 2015
News, Top Story
Oregon has been on the forefront of the cannabis industry for many years. After legalizing medical marijuana back in 1998 and recreational marijuana last year, the state has been a pioneer when it comes to important issues like reprieve for prior crimes. Measure 91 promises to open up a $450 million market for the state by 2020, according to New Frontier Financials projections, creating jobs, raising tax revenue, and yielding opportunities for investors.
Under the new regulations, Oregonians will be permitted to grow limited amounts of marijuana on their property and possess personal amounts in limited quantities, while the Oregon Liquor Control Commission is empowered with taxing, licensing, and regulating recreational marijuana grown, sold, and processed for commercial purposes. The OLCC is currently finalizing regulations to accept and issue licenses to grow, process, and retail recreational marijuana.
These regulations include extensive compliance testing requirements designed to ensure that marijuana is safe for consumers. Under the new rules, the OLCC will issue licenses to labs that are certified by the Oregon Health Authority, which will test for mold, mildew, and pesticides, as well as THC and CBD levels. House Bill 3460 reinforced the notion that patient safety will continue to be a major concern, creating substantial demand for testing.
Attractive Industry Subset
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Signal Bay Inc. (OTC Pink: SGBY), a provider of cannabis research, consulting, and licensing application support, as well as testing services, recently announced the completion of its acquisition of CannAlytical Research – a Bend, Oregon-based cannabis testing lab equipped with the latest high-performance equipment. With a history of providing compliance testing since May of 2014, the laboratory has strong brand equity and existing customers.
“We are excited to be a part of this burgeoning market,” said Signal Bay CEO William Waldrop in a recent press release. “The team at CannAlytical Research has been building a foundation, steadily growing their testing services and are primed to be a significant player in the $10 million Oregon testing market as projected by GreenWave Advisors.”
According to GreenWave Advisors, a comprehensive independent research firm focused on the emerging legal cannabis industry, cannabis testing is projected to generate north of $850 million in revenue by 2020. The analysts believe that there will be a little more than five million pounds of marijuana to be tested in 2020, which – when combined with data analytics, consulting, and other services – could generate more than $850 million.
“It’s an exciting time to be in lab testing, because it’s one of the subsectors within the cannabis industry that we believe is sustainable as laws change,” said GreenWave Advisors Founder Matthew Karnes. “We view this as the most attractive subsector of the industry.”
There are a number of different opportunities to invest in the legal cannabis industry, ranging from device-makers like MCig Inc. (OTCQB: MCIG) to scientific firms like Med-Cannabis Pharma Inc. (OTCQB: MCPI), but the cannabis testing industry may be the most attractive subset given its regulatory-driven growth and significant unmet need in a market that’s poised to grow over the coming years. With its recent acquisition, the company enters the space alongside other companies like DigiPath Inc. (OTCQB: DIGP) in Nevada and CannLabs Inc. (OTCQB: CANL) in Colorado.
Building an Expert Network
Cannabis testing represents only a small fraction of Signal Bay’s long-term aspirations within the cannabis industry. Through its Consultant Marketplace, the company connects cannabis businesses with vetted industry experts with proven experience. The platform matches candidates to projects, manages the bidding and selection process, and processes payments, while taking a percentage fee from the overall transaction.
The innovative platform provides a way for the company to directly participate in the industry’s upside in a scalable way, while quietly building a large database of both consultants and companies that it can leverage down the road. For instance, the company could reach out to Oregon-based companies seeking compliance-testing with an offer to do business through its new CannAlytics Research subsidiary that specializes in the space.
Finally, the platform extends beyond consultants and into automated data solutions to help with things like cannabis pricing. Through its CANNAiQ™ B2B information portal, the company provides an enterprise version of MassRoots Inc.’s (OTCQB: MSRT) consumer platform. CannaiQ provides national wholesale spot prices and a six-month forward curve and other useful data designed to help growers and producers better manage inventory.
Looking Ahead
Signal Bay trades with a market capitalization of $3.5 million, according to OTC Markets, which represents a fraction of its potential if successful in executing on its plans. With an experienced board that includes Electrum Partners and Oregon Retailers of Cannabis Association’s Casey Houlihan, the company appears well positioned to continue executing on its consultant network and build up a presence in numerous other verticals, like cannabis testing.
Moving forward, the company has a number of potential catalysts on the horizon. Management is investigating the proposed “research” license mentioned in Oregon’s HB3400, for example, which could lead to a move into the pharmaceutical side of the space alongside companies like GW Pharmaceuticals plc (NASDAQ: GWPH) or Insys Therapeutics Inc. (NASDAQ: INSY).
For more information, visit the company’s website at www.signalbay.com.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
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.Disclaimer: Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.
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