With the early November marijuana recreational legalization ballot now seemingly a thing of the distant past in the OTC space, the initial buzz has died down, and the fog is starting to clear. Companies that have nothing but tenuous links to the sector gained hundreds of percentage points – companies that have an empty greenhouse on the Nevada border somewhere, for example – but these gains are now diminishing. Markets are realizing that a company needs proper operational activity, and specifically relating to the plant itself, to justify a market cap boost.
We’re on the lookout for some of the companies that have the strongest ties to the understory (and in turn, stand to gain the most) but that are solid fundamentally and ready go when the growth phase comes.
KAYA HLDGS INC COM USD0.001(OTCMKTS:KAYS) is one such stock.
The company is a marijuana retailer and grower, headquartered in Florida but operationally based out of Oregon. Through it’s network, Kaya owns and operates legal marijuana dispensaries (primarily medical at this stage, but expanding into recreational as the opportunities arise), retailing a host of different forms of the plant, including butane hash oil and CO2 oil extract; high grade oils and tinctures; high CBD, low THC strains; various marijuana infused tinctures; and a range of edibles, candies, that sort of thing.
The company generates sales through two existing “shack” dispensaries, which are located in high profile retail parks and are designed to look clean, inviting, all the things you’d expect in a local Starbucks Corporation (NASDAQ:SBUX), but with marijuana behind the counter, not coffee.
The difference with this one, and the thing that separates it from some of the other stocks in the space, is that Kaya generates revenues through the sale of marijuana it purchases and grows, and it does so to an established customer base. Images released by the company show people queuing up around the block to get in its lead Oregon store on 4/20. Other images show packed stores, with branded clothed staff members and a flurry of strains and varieties on offer.
All this equates to some considerable sales volume. The company moves a lot of product considering that – right now – it’s just two stores. This year Kaya is on target for a little over $1 million in sales. Next year it expects to double this, and more, as it brings two marijuana superstores into the fray. Again, there are images available of these superstores, and they look impressive. Here’s one:
Markets are clicking to these factors and the company is running up as s result. Kays’ market cap is up 100% on its December open, on record volume. The next major catalyst comes just before markets take a break for the holidays, and traders are loading up ahead of the event. What is it? A conference call scheduled for December 20, at which management will discuss operations, recent developments and growth plans for the future. The event will include new video of the 2 existing Kaya Shack Marijuana Dispensaries and the Company’s Grow Facility, as well as discussion on the two new Kaya Shack Marijuana Superstores under construction and pending licensing, operations including the state of the market and the impact that the recent election results will have on strategy.
It’s going to be a big event for a small, growing company, and shareholders are increasing their exposure in anticipation of an aggressive, but sound, operational strategy announcement as far as national rollout is concerned. It’s not without its risks, of course – cash is just $41K and debt is a considerable $3.8 million. Kays is probably going to raise near term, to take advantage of the expansion opportunities. This will be dilutive, which is never ideal for shareholders. That said, there’s opportunity right now for what we might call real companies in marijuana, and this is one.
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Disclosure: We have no position in KAYS and have not been compensated for this article.