Plus Products Inc Takes Stronghold in World’s Largest Cannabis Market
If there’s any cannabis company that could do with a name change, it’s Plus Products Inc (OTCMKTS:PLPRF, CNSX:PLUS).
Despite a name that will only make sense to cannabis-loving Californians, Plus Products is actually a leading cannabis edibles manufacturer in the Golden State, the largest and most competitive pot market in the world.
Plus Products only went public in December 2018, so it’s not a big surprise to know that Wall Street isn’t familiar with the company (yet).
But Plus Products has a lot going for it: a huge cash position, strong revenue growth, a loyal customer base, new products, and a recent acquisition that extends its lead in the edibles market. All that points to excellent short- and long-term growth potential.
Plus Products Inc Overview
San Mateo, California-based Plus Products manufactures cannabis-infused edible products to the regulated medical and recreational markets in California. (Source: “Investors,” Plus Products Inc, last accessed March 22, 2019.)
Founded by a chef from a Michelin Star restaurant, an Ivy League chemist, and food manufacturing experts, Plus Products’ mission is to make cannabis safe and approachable.
The company sells its products under the “PLUS” brand to dispensaries and delivery service customers. Some of the company’s most popular products include pink lemonade-, sour watermelon-, and sour blueberry-flavored gummies. (Source: Ibid.)
|PLPRF Stock Information|
|Market Cap||$107.9 million|
|Shares Outstanding||24.1 million|
|50-Day Moving Average||$5.06|
|200-Day Moving Average||$4.96|
(Source: “Plus Products Inc. (PLPRF),” Yahoo! Finance, last accessed March 22, 2019.)
Unfortunately, Plus Products stock went public during the biggest December sell-off to hit Wall Street since the Great Depression. That made its debut look less than enthralling. But it’s not the company’s fault.
If anything, 2019 has been more indicative of Plus Products Inc’s potential. Over the first six weeks of the year, the PLPRF stock price soared 97%, hitting an intra-day high of $6.01 on February 8.
After trading in a tight range, Plus Products stock gave up some ground in the first week of March. This happened to be the same time frame that the broader markets experienced their worst week so far in 2019.
Plus Products’ share price has since settled into another tight trading range, with support near $4.50.
Judging by the number of encouraging press releases coming from Plus Products, it’s only a matter of time until PLPRF stock begins to trend higher.
Chart courtesy of StockCharts.com
Plus Products Inc Leads California Edibles Market
In late January, Plus Products announced that, during the fourth quarter of 2018, the company secured its position as the No. 1 cannabis-infused edibles brand in California.
According to BD Analytics, the leading independent cannabis retail sales analytics company, Plus Products was also home to three of the top five best-selling branded products in all product categories (including edibles, topicals, vaporizers, and flower) during the fourth quarter. (Source: “Plus Extends Lead In California Edibles Market With 3 Of Top 5 Cannabis Products in Q4,” Plus Products Inc, January 31, 2019.)
PLUS “Uplift” and PLUS “Restore” remained the No. 1 and No. 2 best-selling stock keeping units (SKUs). PLUS “CBD Relief” was the No. 5 best-selling SKU, and the top cannabidiol (CBD)-only SKU.
“We are proud that we have not only maintained, but continued to grow our position as the market leader in Q4. We hope to continue this momentum into 2019 not only in California, but in other jurisdictions as well,” said CEO Jake Heimark. (Source: Ibid.)
Plus Products Inc Acquires Cannabis-Infused Baked Goods Brand
In December 2018, Plus Products announced that it had acquired California-based cannabis-infused baked goods brand GOOD CO-OP, Inc. in an all-share transaction.
This strategic acquisition gives Plus Products a foothold in the third-largest edibles category, baked goods. Excluding tinctures, the baked goods category accounted for 13% of the overall edibles market in 2018. (Source: “Plus Acquires Cannabis-Infused Baked Goods Brand GOOD CO-OP Solidifying Its Position As The #1 Edibles Brand,” Plus Products Inc, December 3, 2018.)
GOOD CO-OP’s products include cannabis-infused brownies and other baked goods without preservatives or additives. They have been featured in Fortune, Vice Magazine, and Eater.
With the approximately $1.5-million deal, Plus Products also secured 4,800 square feet of manufacturing space in Northern California. The company also has a 12,000-square-foot manufacturing facility in Southern California.
Q3 Revenue Advances 617% to $2.6 Million
On November 30, 2018, Plus Products announced its financial results for the third quarter ended September 30.
The company reported record third-quarter revenue of $2.6 million, a 617% increase over the $356,865 reported in the same prior-year period and a 60% increase over the previous quarter. (Source: “Plus Revenue Grows 617% To $2.56 Million In Q318,” Plus Products Inc, November 30, 2018.)
Plus Products reported a third-quarter net loss of $1.8 million ($0.08 per share), compared to a loss of $1.2 million ($0.10 per share) in the same prior-year period.
The higher figure was mainly attributed to additional capital expenditures.
This included leasehold improvements on production machinery, professional and consulting fees in preparation for cannabis sales becoming legal in California effective January 1, 2018, and preparation for the company’s initial public offering (IPO)—as well as additional expenditures for sales and marketing.
The company ended the third quarter with a strong cash position of $11.1 million prior to closing a CA$20.0-million IPO on October 26, 2018.
For the first nine months of 2018, total revenue increased significantly (631%) to $5.0 million, from $685,151 in 2017. Plus Products began selling to distributors in the retail market on January 1, 2018. (Source: Ibid.)
Plus Products Inc has a stronghold in a very lucrative niche market: marijuana edibles, the segment of the cannabis market with the most growth potential in the United States.
The company has a strong cash position, a strong market penetration, a strategic acquisition strategy, popular products, and loyal customers. The company’s first-to-market advantage is also helping it expand its wildly popular brand outside of California.
All of this has helped Plus Products become the leading edibles brand in the largest and most competitive cannabis market in the world. You can look forward to Plus Products “extending the brand beyond California in 2019.” (Source: Ibid.)