Investor sentiments on Blue Line Protection Group Inc (OTCMKTS:BLPG) were recently strengthened, as a newly created state-chartered bank could serve marijuana businesses in Los Angeles. The business model of BLPG, which, among other activities, transports cash from marijuana shops to banks, could be largely benefited by the new measures. Market participants are aware and recently pushed up the share price making more than 100% stock gains.
The stock price declined in January after making 52-week highs thanks to the legalization of recreational cannabis in California. While the stock declined in January and February from the $0.10 mark and hit the lows of $0.04, we remained bullish on the stock. In our view, the growth of the cannabis industry in the US will definitely help BLPG.
The trading volume clearly indicates that the upward trend in the stock price could continue. BLPG needs to close above the $0.10 level to tick up higher. On the downside, a closure below the $0.06 level could see the stock plunging even further; back to $0.04. However, after the recent news, we don’t expect a low of selling pressure. Thus, the upside moves are more likely.
Before we look at the stock catalysts likely to move the price in the near future, let us first understand what Blue Line Protection does in pursuit of growth and shareholder value.
Blue Line Protection Group, founded in 2006, is headquartered in Lakewood, Colorado. The company provides consulting, armed security, compliance and investigations, transportation and secure vaulting services to banks, businesses, and government entities who need to protect their assets, licenses, and clients. Besides providing risk mitigation services, Blue Line serves banks and credit unions by providing currency processing and transportation solutions.
There are a number of videos about the operations of Blue Line Protection Group. You can easily check them. However, in this article, we want to highlight the following one, wherein the CEO, Dan Allen, explains how BLPG helps banks profit from the emerging cannabis industry:
The following are the main reasons that make us remain bullish about this name.
Blue Line Protection keeps growing at a high pace
In 2017, BLPG positioned itself as “the key provider in compliance and currency transportation services for the legal cannabis industry.” While the company transported nearly $400 million for its clients across Colorado, the key feature is that BLPG is acquiring a lot of know-how that will help the company compete at a national level. Keep in mind that the amount of money to be made once BLPG works for several states at the same time will be larger than now. The following words are in line with this rationale:
“As the industry expands to new states, Blue Line’s risk mitigation services will be crucial to the health and longevity of a compliant and responsible industry.” said Dan Allen, Blue Line’s CEO
Other Players and Professionals want to work with BLPG
New agreements with other players in the industry are always well regarded by the market. They show that the company has acquired sufficient expertise and know-how to retain the attention of the industry. In this particular case, the agreement signed with Hypur, a financial technology company in Scottsdale, Arizona, is a good example. Please read what this new partner says about BLPG:
“We’ve partnered with Blue Line because of the exceptional safety and soundness of its services for the past four years in Colorado. They are the most comprehensive cash transportation and audit firm we have found. By combining its services with Hypur’s proactive compliance, enhanced due diligence and beneficial ownership technologies, we are confident that no other solution in the United States can enable financial institutions to bank both cannabis and money service businesses in a more transparent and compliant manner,” says Christopher E. Galvin, Founder and CEO of Hypur.
This agreement will allow Blue Line to expand into five additional states with marijuana-related business and money service business markets over the next 12 to 14 months. It is quite beneficial. While the market did not respond positively to the announcement on January 16, 2018, it may do it in the next quarterly earnings release. As a result, we will be ready to assess the new financial figures to be released in 2018. They could really surprise.
There is more. In January 2017, Christopher E. Galvin accepted to be the new chairman of the Board of Directors. Keep in mind that he brings his expertise in other public companies as well as fintech and technology solutions industries. On top of it, it is very relevant to note that with this new leader, the company will try to tap into new revenue channels nationwide.
A new Bank to serve marijuana businesses in LA
Undoubtedly, the most celebrated announcement by the market was the following news:
What does it mean for BLPG? It seems to be exactly what we were looking for. The marijuana industry is having issues with major banks. They require extensive paperwork to comply with the federal regulations thus the services given to cannabis shops are little. As a result, BLPG may also have difficulties in working with banks.
If Los Angeles goes ahead and creates a bank specialized in working with cannabis businesses, the workload and business opportunities for BLPG could flourish. The share price could turn higher. Thus, be alert.
Currently trading with a market cap of $8.4 million, BLPG is an exciting story among small caps. In our view, the market is not reacting well to the good steps of BLPG. In addition to the previous announcements, nothing happened in the market when, in February, BLPG established a new cash vaulting and processing facility in Nevada. What’s our take? Market participants seem to be only studying the financials of the company, which, in our opinion, is a mistake and gives us a little edge over them.
To sum up, be ready to assess the next quarterly and annual report, which we expect it in April 2018. It may surprise other market participants and make the share price run.
Disclosure: We have no position in BLPG and have not been compensated for this article.
Image courtesy of Chris DiGiamo via Flickr.