GrowGeneration Corp (OTCMKTS: GRWG) Is Off To A Great Start

With the number of cannabis growers and producers continuing to rise as the cannabis industry grows, the demand for businesses that provide services, products, and equipment for cannabis growers and producers will also increase. According to New Frontier Data, the U.S. cannabis market was $5.7 billion in 2015 and is expected to have reached $7.2 billion at the end of 2016. By 2020 the market is estimated to reach over $23 billion with a compound annual growth rate of 32%.Currently, it is estimated that there are roughly 1,000 hydroponic stores in operation in the U.S. GrowGeneration Corp (OTCMKTS: GRWG) is one such business that is capitalizing on this peripheral segment on the cannabis industry.A little background on the company for the benefit of those that do not know of GrowGeneration Corp (GrowGen). Instead of growing its own cannabis, the company aims to be the preferred retail stop for those looking to grow marijuana indoors. GrowGen owns and operates specialty retail hydroponic and organic gardening stores. The company carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state-of-the-art hydroponic equipment to be used indoors and outdoors by commercial and home growers. The company’s stated mission is to own and operate GrowGeneration branded stores in all the major legalized cannabis states. Currently, GrowGen has 12 stores, which includes 10 locations in Colorado, 1 location in California and 1 location in Nevada.GrowGeneration Corp. has recently put into effect an aggressive plan to expand into California. On February 15, 2017 the company announced that it has acquired all of the assets of Sonoma Hydro and signed a 5-year lease on an 8,000 square foot facility in Santa Rosa, CA. The Sonoma Hydro location, one of the original hydroponic stores in what is known as the Emerald Triangle, will serve as a retail and warehouse location servicing the growing number of both commercial and home growers in the Northern California market. The Northern California market, dubbed the "Emerald Triangle" by industry participants due to the high concentration of cannabis cultivators in the region. This makes the region particularly important to GrowGen. Commenting on GrowGen's acquisition in Northern California, Darren Lampert, Co-Founder and CEO, said:

"Acquiring Sonoma Hydro, one of the original hydroponic retailers in Sonoma County, solidifies and strengthens our position in both Sonoma County and neighboring Mendocino County, both of which are abundant with cultivators. Increasing our warehouse and retail showroom space, will allow us to stock at inventory levels and sizes to attract the large commercial growers. With the cultivation licenses being issued this year in Sonoma County, GrowGen is now well positioned to gain new business. California is a major marketplace that the Company is developing, and plans to add several locations in the coming months."

Funding for the expansion was recently secured by GrowGen in the form of $1,650,000 in equity financing from Merida Capital Partners, a cannabis infrastructure fund. The new capital is to continue fueling its expansion plans primarily in California and the West Coast. The transaction was priced at $2.00 with a warrant to purchase common shares at $2.75. The transaction, when factoring in warrant exercises, will total $3.92M in capital into the Company. The warrant is callable when GrowGen trades at $4.12 or higher.On April 03, 2017, GrowGeneration Corp. reported record financial results for its fiscal year ended December 31, 2016. The results show a record year for the company. Some of the highlights include the following:

• Full-year revenues up 130% to $8.0 million
• Fourth quarter revenues up 130% to $2.4 million
• Full-year same-store sales increase 50% or $1.4 million
• Full-year net loss decreased to $431,246, inclusive of $304,123 in non-cash depreciation and stock-based compensation costs
• The Company has $1.2 million in cash as of March 31, 2017

Since its inception to the OTC market on November 11,2016, GRWG stock has traded as high as $3.43 on its initial run-up, and as low as low as $1.50. It is currently trading at $2.00 with steady volume. The company’s current market capitalization stands at $25.09 million, on 12.55 million shares outstanding as of March 31, 2017In its early stages as an OTC publicly traded company, GrowGen is showing all the signs of a well-managed company, in a rapidly growing industry that expects growth in the demand for their products. This is a favorable position for GrowGen to be in, and one that is appealing to investors. The next 2 to 3 quarters should tell the story of where GrowGen goes from here. We will be updating our subscribers as soon as we know more. For the latest updates on GRWG, sign up below!Disclosure: We have no position in GRWG and have not been compensated for this article.