iAnthus Capital Holdings Inc. (iAnthus) (OTC: ITHUF) (CSE: IAN) is a New York-based cannabis company that owns licensed cannabis cultivation and processing facilities and operates dispensaries across the states. In October 2018, iAnthus and MPX Bioceutical Corp. (MPX) announced their merger. It was valued at 835 million Canadian dollars, which made it the largest public cannabis transaction to date in the US. Headquartered in New York City, iAnthus operates its cultivation facilities and dispensaries in 11 states including Florida, Arizona, Nevada, and etc..
iAnthus harbors a diversified portfolio of cannabis brands including CBD For Life, MPX, and May Flower. By means of disciplined management and execution, iAnthus manages to make its brands successful and attractive to customers.
Analysis and Evaluation
The U.S. cannabis market is the most dynamic and rapidly evolving consumer market. It harbors unpredictable potentials and opportunities for growth and expansion. The cannabis industry today holds a $55 billion market share in legal-use cannabis consumer products. iAnthus seeks opportunities in it to scale operations and to pursue expansion into new markets.
Specifically, iAnthus encompasses a full spectrum of cannabis businesses, from cultivation, processing, packaging, to retail sales. At present, iAnthus has built the largest indoor cultivation facility in Florida and opened 30 dispensaries in major cities like Boston, Brooklyn, and Miami. Sales from over 2,300 retail locations across all 50 states are strongly supported by its cultivation facilities and expanding lab space.
Moreover, iAnthus establishes its leading position in the $10 billion THC brand market and $2 billion CBD sales market in the US. iAnthus has operations across 11 states, in which its THC and CBD products generated $120 million annual revenue. Additionally, in order to compete with peer companies on a national scale, iAnthus built differences in the retail market by renaming all stores under one name, one look, one look, and one experience, as “Be.”
On the other hand, iAnthus also seek opportunities in the F&B industry. During the investor presentation on January 9, 2020, Hadley Ford, CEO and director of iAnthus confirmed potentials of entering the F&B industry: “from the consumption aspect, CBD would cause disruption in the beverage industry. Alcohol is an analog to recreational marijuana.” He is seeking a better product that combines two sides of alcohol and hemp-derived extract, and then Hadley mentioned the problems resulted from selling licenses of a new beverage portfolio.
The acquisition of MPX provides iAnthus with a significant opportunity for expansion. To be more specific, the combination of iAnthus and MPX leads to a multi-state operator with operations in 11 states expanding from east coast to west coast and serving an incredible number of customer bases in over $10 billion cannabis market in 2019. Moreover, the merger offers iAnthus over 500,000 square feet of cultivation and processing space and licenses for operations in 68 retail locations.
Likewise, acquisition of CBD For Life served as a means to brand building, retail sales, and distribution to iAnthus. On June 28, 2019, iAnthus closed the acquisition of nationally distributed CBD products brand, CBD For Life for $10.4 Million. CBD For Life sells CBD containing wellness, self-care, and beauty products online and distributes to over 1,000 retail locations across 46 states. In addition, CBD For Life now as a subsidiary of iAnthus plans to expand through both wholesale and direct-to-consumer business model.
For retail product brands as CBD For Life, MPX, and May Flower, stock out is the most crucial problem. In order to support its subsidiaries, iAnthus intends to expand production capacity and increase cultivation sites in Nevada, Arizona, Massachusetts. On January 24, 2020, iAnthus got the license for its adult-use cultivation and production facility in Massachusetts. This 36,000 square foot facility directly supplies productions and processing of iAnthus’ high-quality flower, concentrates, edibles, and other products, distributed to 35 adult-use dispensaries currently licensed in the state. For additional retail and wholesale platform, iAnthus plans to open additional stores and cultivating campus in Florida. As for Maryland, MPX products present rapid retail revenue growth.
Along with acquisitions in line with operations in Southwest, iAnthus accelerates with full speed into the recreational market throughout 2020. Additionally, seeing the advantages to go forward, iAnthus entered OTC and CSE markets coded as ITHUF and IAN, being the first multi-state operator in the US to go public in Canada.
At present, iAnthus has a total of 700 employees. To iAnthus, company strategy & HR-team are regarded as the most valuable asset. Only through dedicated employees with accumulated experiences in manufacturing and marketing, iAnthus can deliver quality cannabis products to the broad audience in the cannabis market.
“The only long-term differentiating advantage a company has is its people. Anything else can be copied.”Hadley Ford, CEO and director of iAnthus
iAnthus announced $22.3 million net revenue in Q3 2019 and $10.7 million gross profit margin as 48.1% of net revenue. Revenue growth and gross profit margin improvement generate from lean initiatives in Massachusetts, Arizona, and Maryland. Adjusted EBITDA before biological assets was positive $2.2 million in Q3 2019, resulted from the change in fair value on financial assessment and goodwill of acquisitions.
Fiscal Q3 2019 financial results demonstrate growth opportunities in regional product sales. The largest opportunity exists in Florida, which is regarded as a robust high-growth market to iAnthus. Although the medical market in New York has lots of regulatory restrictions, iAnthus considers New York state as a greenfield market because of the shift to recreational sales. We are looking forward to the performance of iAnthus in Q4 2019.
Besides, Gotham Green Financing, an established investor in the cannabis industry, provides $100 million to fully fund to build out iAnthus’ existing market. As of December 20, 2019, Gotham Green has instilled $56 million of the total funding in iAnthus.
In aspects of regional cannabis markets, iAnthus initiated a series of activities and achieved great performances in Florida, Nevada, and Maryland. Looking at the cannabis market in 2020, iAnthus pursues potentials in applications for assets or acquisitions to build in cultivation sites Illinois, California, Miami, and Pennsylvania, regardless of heavy taxes and regulations.
Although there is little possibility for companies to get loans and insurances in the cannabis industry due to restricted banking bills, iAnthus sees potentials to get invested and financed in the prosperous stock market and a grand prospect for cannabis sales. iAnthus will continue its success in further penetrating existing territories to meet increased demand from the constantly evolving cannabis market.
Source: iAnthus Capital Holdings Inc.