California on Deck
Earlier this year 1933 announced its California operations were set to begin the manufacturing and distribution of its CBD and THC products under their suite of brands.
Today, they announced the first harvest from their California cultivation facility, signifying 1933 is on the path to selling products outside of Nevada for the first time.
With a smaller-scale operation, 10,000 sq. ft. of cultivation space and 10,000 sq. ft. of manufacturing and distribution space, 1933 is focused on selling high-quality products in the premium segment of the market.
Further, the company announced it was entering the California CBD market with their Canna Hemp after ensuring their wellness line was compliant with California’s strict “full-spectrum” requirements. Specifically, they are delivering 30,000 units to dispensaries this week after the first run passed compliance testing.
Market Update from Management
In the update, 1933 CEO Chris Rebentisch started by commenting on the company’s share price, acknowledging that their valuation has fallen along with the industry.
Moving forward, he cites the completion of two key capital projects as an opportunity to increase revenues and decrease margins and increase shareholder value. As the projects develop, the company should be able to control inputs and lower the cost of production, with a primary focus of profitability.
Their primary operations in Nevada continue to develop, with the biomass from their first harvest now being utilized to create concentrates for the Nevada market. The facility should be operating at full scale starting in March.
At the end of January, they submitted additional comments to obtain approval from regulators for the expansion of the THC extraction facility. Once final approval is obtained they will provide a construction schedule.
While there are a series of facility updates being made, the most notable is their work to complete the GMP hemp extraction lab, which they stated should be delivered mid-year. This will allow them to purchase cheap biomass and process it into higher-value distillate, increasing margins on CBD products.
On a high level, 1933’s stock price has suffered along with the rest of the marijuana industry. At these depressed valuations we have become intrigued by the opportunity. We will be diving deeper into the 1933 story over the coming quarters, watching closely as they execute throughout a pivotal 2020.
1933 Industries is a market awareness client of Capital 10X.
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