It looks like the tax revenue assessment on recreational marijuana sales in Oregon by government officials may have underestimated just how big and robust the consumer market really is, with the initial forward projection of around $9 million for 2017 looking like it will be surpassed with ease. Subsequent to recreational sales being approved ahead of schedule via a bill signed by Governor Kate Brown, the amount of money taken in by dispensaries within just the first week alone has effectively crushed the official estimate, as some $11 million in sales were completed in the state’s first week of open commerce, and current estimates are that $3.5 million was taken in on day one. With tax revenues set to kick in this January, state coffers could be filling up vastly quicker (and to a much greater extent) than originally anticipated, especially when you consider Oregon’s first week of sales more than doubled those seen in Colorado ($5 million), and beat out Washington by a landslide (which did only $2 million in sales during week one). If this keeps up, tax revenues next year will be hefty indeed – forcing other state legislatures to take the issue even more seriously.
This is a very bullish indicator for the sector overall and should give investors significant pause, as these sales figures represent a clear shot across the bow of remaining holdout states which continue to be on the fence about essentially repealing federal marijuana prohibition via state-based legislative measures. With these kinds of sales figures coming out of Oregon on the heels of an early start, it’s only a matter of time before the cultural sea-change that is already evident from recent polling (which shows a majority of Americans are now in favor of decriminalization) puts a bright spotlight on cash-strapped holdout states, making legislators in those states appear to voters as somewhat insane for not simply regulating and taxing the substance. With the now strikingly obvious potential upside for things like education and law enforcement funding, many constituents around the country are starting to clamor after their state representatives to follow suit with states like Alaska, Colorado, Oregon and Washington. This is all extremely good news for various operators within what is projected by leading cannabis industry research firm, ArcView Group, as being a market which is on track to hit $11 billion within the next four years alone. And that figure seems pretty conservative to some analysts, given that between 2013 and 2014 the market grew by 80 percent, clocking in somewhere around $2.7 billion last year.
One of the areas of the marijuana sector that stands to gain the most growth-wise from a continuing shift towards recreational use across the country is baseline logistics, where things like grow op facilities, various industry-associated real estate elements, cultivation products, and controlled environment agriculture technologies reside. After all, supply origination within this industry – which is going to be driven more and more by commercial-scale premium strain quality cultivation as restrictions wane – is, in many respects, the foundation of the entire sector. Classic “pick and shovel” plays are looking like a solid target for investors seeking to profit off of the incremental, seemingly inevitable nationwide decriminalization of cannabis that is taking place as the so-called Green Rush progresses. And, as was the case with the repeal of alcohol prohibition, some of the biggest fortunes in the industry will likely arise from those companies who get the product origination and logistics right. Not to mention the businesses which service them. In fact, as is the case in the oil industry, where oilfield service companies like Halliburton are some of the top earners, businesses providing services and products to the core commodity originators could be the biggest names in the industry after it’s all said and done.
We’re talking businesses like development-stage alternative construction outfit, Cherubim Interests. With its core competencies in construction, finance and property management, as well as a wholly-owned subsidiary engaged in making and marketing portable, proprietary, and scalable cannabis cultivation systems: BudCube Cultivation Systems USA (BCS). In fact, Cherubim Interests, via its full-spectrum capabilities in alternative construction project development and turnkey cultivation systems, is poised to capture significant market share as the cannabis market continues to expand, thanks to its intelligent mix of baseline logistics offerings, whether that growth occurs here in the U.S., or abroad. The powerful combination of a real estate development and property management business model, empowered by a veteran team of managers and highly experienced directors, with the scalable cultivation tech provided by BCS, allows CHIT to strike hard and fast wherever in the world the cultivation of cannabis is made legal, and consumers stand ready to fuel retail market growth.
To this general end, CHIT has engaged Oregon-based consultation, research and development firm, DGrass Enterprises, which is led by a man with over a decade and a half of both indoor and outdoor cultivation experience, Dominic Grasseth. Grasseth, in addition to being CEO of DGrass Enterprises, is also the guy who opened the successful Eugene, Oregon-based retail and wholesale garden supply company, The Greener Side of Life, back in 2010. An enviably capable master gardener and horticultural expert, Grasseth has developed a skill set that will be invaluable to CHIT (and BCS) as the company continues to pursue its aggressive agenda of planned deployment and leasing of commercial cultivation facilities, wherever cultivation activities are made legal by legislators. A serial entrepreneur with vast sums of personal hands-on experience in the cultivation field, Grasseth is proficient across a wide array of pertinent disciplines, ranging from cultivation/production and extraction, to grow room design, consultation, and even the retail/marketing end of the business.
Moreover, CHIT recently announced that the company is taking huge strides towards fully shoring up its share price, via a series of intelligently-crafted initiatives designed to build shareholder equity, including strict maintenance of filing obligations in order to maintain seamless OTC Market disclosure, and amending the company’s corporate bylaws in order to create anti-dilutive convertible preferred shares. Furthermore, the company will act to insulate stockholders against past and future open market dilution by offering these shares via dividend payment, and using these convertible preferred shares as a form of currency in order to exchange outstanding derivative liabilities. In addition, CHIT plans to execute an S-1 filing that will enable holders of preferred shares (who’ve converted into specific, predetermined amounts of common stock) to see their securities become freely trading. This bold move by the company to reinforce the share price and build investor confidence, will simultaneously allow CHIT to retire much of its principal affiliate debt, with the interest being converted into restricted shares.
A clear sector strategy to capitalize on the cannabis industry’s most promising area, combined with share price strengthening initiatives has CHIT sitting pretty, even as Oregon leads by example, accelerating its recreational use retail timetable, and setting a new and unmistakable precedent for other states to follow.
Take a closer look, visit Cherubim Interests online at www.cherubiminterests.com
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