Green Growth Brands Inc: A Retail Cannabis Giant in the Making

Green Growth Brands Inc: A Retail Cannabis Giant in the Making
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Keep Green Growth Brands Inc on Your Investing Radar

Green Growth Brands Inc (OTCMKTS:GGBXF, CNSX:GGB) is one of those truly overlooked cannabis stocks that investors should keep on their radar.

Like the overall cannabis stock market, Green Growth Brands stock has been on a downward trajectory in 2019. The company only went public in November 2018 through a reverse takeover, and it has had a rough ride since then.

As of this writing, GGBXF stock is changing hands at $1.18 and has lost about 68% of its value in 2019. And it doesn’t appear that the bloodletting is over.

That said, Green Growth Brands has tremendous long-term growth potential and is worth keeping an eye on—especially once the cannabis stock market bottoms.

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GGBXF Stock Overview

Green Growth Brands Inc is a cannabis company with operations in Nevada, Florida, and Massachusetts.

Wherein many cannabis firms are headed by people experienced with marijuana, Green Growth Brands is backed by the Schottenstein family, who are behind retail giant Designer Brands Inc (NYSE:DBI). One of their brands is the shoe store chain DSW, which carries Green Growth Brands cannabidiol (CBD) products. (Source: “Letter to Shareholders Q4 and Full Year 2019,” Green Growth Brands Inc, October 23, 2019.)

The entire executive team has an enviable track record working in the retail sector.

Chief Executive Officer Peter Horvath has worked with DSW, Victoria’s Secret, and American Eagle Outfitters. Chief Marketing Officer Jane Parish has worked with Victoria’s Secret, Tommy Hilfiger, and Calvin Klein. Chief Strategy Officer Kellie Wurtzman has worked with Victoria’s Secret, Luxottica, and Virgin Entertainment. (Source: “Our Team,” Green Growth Brands Inc, last accessed October 25, 2019.)

The seasoned executive team of retail experts has been promoting the company’s many brands, including “Seventh Sense,” “Green Lily,” and “Meri + Jayne.” Green Growth Brands also has a licensing agreement with the “Greg Norman” brand to develop a line of CBD-infused personal care products.

Over the last year, Green Growth Brands has evolved from having one dispensary and a limited number of CBD products.

Today, the company has entered three key U.S. states, established a brand footprint in more than 200 of the best malls in the U.S., and is on track to open 47 cannabis dispensaries. (Source: Green Growth Brands Inc, October 23, 2019, op. cit.)

The company operates two “The+Source” retail locations in Nevada, which, along with two cultivation facilities, have the potential to deliver $40.0 million in annual revenue. These operations will serve as the models for future dispensaries throughout Nevada, Massachusetts, and Florida.

To that end, Green Growth Brands expects to open its first dispensary in Florida by spring 2020. In Massachusetts, its first dispensary is under construction, and should also be open for business in spring 2020.

GGBXF Stock Information

Market Cap $224.6 Million
52-Week Change 63.6%
52-Week High $5.21
52-Week Low $0.72
Shares Outstanding 188.2 Million
50-Day Moving Average $1.18
200-Day Moving Average $2.10

(Source: “Green Growth Brands Inc (GGBXF),” Yahoo! Finance, last accessed October 28, 2019.)

Green Growth Brands Opens its 150th CBD Shop

On October 3, Green Growth Brands announced that it opened its 150th Seventh Sense botanical therapy mall-based shop. The first Seventh Sense shop opened in February. (Source: “Green Growth Brands Opens 150th CBD Shop and Provides Progress Update,” Green Growth Brands Inc, October 3, 2019.)

The 150 shops operate in 35 states and are expected to add up to 200 locations by the start of the 2019 holiday shopping season. In the ramp-up to the holiday season, Seventh Sense is launching its first national media campaign, focused on digital and branded media partnerships.

Q4 Revenue Up 29% But Losses Mount

On October 23, Green Growth Brands announced its financial results for the fourth quarter and fiscal year ended June 30. Total revenue for the fourth quarter was up 29% quarter-over-quarter, at $7.2 million. (Source: “Green Growth Brands Fourth Quarter Revenue Increases 29% Quarter-Over-Quarter to $7.2 Million,” Green Growth Brands Inc, October 23, 2019.)

Revenue from its multi-state operations, which consisted primarily of sales from one dispensary in Las Vegas (The+Source) was $5.5 million, a sequential growth of seven percent. CBD revenue was up 271% quarter-over-quarter at $1.7 million.

Growth Brands reported a fourth-quarter net loss of $0.19 per share, compared to a net loss of $0.04 per share in the same prior-year period.

Revenue for fiscal 2019 came in at $15.7 million.

The company reported a full-year loss of more than $64.0 million, or $0.40 per share. Management blamed the higher net loss on delays related to its Nevada dispensaries and on higher-than-expected capital expenditures.

New Developments

Subsequent to the end of the fourth quarter, Green Growth Brands Inc completed a CA$50.2-million bought deal and will combine that with a backstop commitment from the Schottenstein family of up to CA$102.7 million. (Source: Ibid.)

The company will use the proceeds for opening new retail locations, acquisitions, and capital expenditures.

In July, Green Growth Brands announced that it acquired MXY Holdings, the parent company of Moxie Cannabis, for CA$310.0 million. (Source” Green Growth Brands to Create First ‘360 Degree’ Cannabis Company Through a Combination with MXY Holdings LLC,” Green Growth Brands, July 9, 2019.)

The deal creates one of the first cannabis companies with comprehensive CBD and tetrahydrocannabinol (THC) product lines.

Then in August, Green Growth Brands announced that it had completed the acquisition of Florida-based Spring Oaks. Through this acquisition, Green Growth will be able to open and operate up to 35 licenses in the Sunshine State. (Source: “Green Growth Brands Announces Acquisition Closing of Florida-Based Spring Oaks,” Cision, August 1, 2019

To help stem losses, the company reported in September that it was laying off about five percent of its workforce, or about 50 employees, from its headquarters in Columbus, Ohio.

Analyst Take

Green Growth Brands Inc could be a retail giant in the making. As mentioned earlier, the company has opened 150 shops in just nine months and expects to have up to 200 locations operating in time for the holiday shopping season.

The company is on track to open 47 dispensaries in three states, establishing the only vertical CBD distribution network in the country.

In 2020, Green Growth Brands is transitioning from foundation-building to operating and executing, which is expected to result in huge sequential growth. In the first quarter of 2020, the company’s CBD revenue is expected to grow by about 200%.