The last time we talked about General Cannabis Corp (OTCMKTS:CANN), the stock was facing its most bearish run that ended up pushing it to all-time lows. Fast forward, things have changed and the stock is back to winning ways as it continues to erase losses accrued for the better part of the year.
General Cannabis share price had been on a downtrend since the start of the year, a sell-off that pushed it to a 52-week low of $1.08. The drop presented a unique buying opportunity to investors who took note of our advice and ramped up position in the stock.
Green Cannabis has since bounced back 140%, as some investors took note of the management team decisions that seem to have accelerated growth consequently triggering renewed investor interest.
The stock is currently trading in a $2.47 to $3.08 trading range with a daily trading volume average of 1.5 million and 30 day average of 280.9 million.
Green Cannabis upward momentum faces immediate resistance at the $2.80 handle. A close above this mark could see the stock making a push for the $3.20 handle, which is another resistance level pending further upward movement. On the downside, the stock faces immediate support at $2.40 below which it could drop to the $2 handle, another key support level.
Before we take, a look at what is causing the stock to spike higher it is important to understand what the company does and its operating environment.
General Cannabis Core Business
General Cannabis is a Denver-based company that bills itself as a leader in the cannabis industry. The company offers a variety of products and services to companies in the sector. Its integrated solutions range from operational and compliance to security, marketing and financing needs.
The company owns a number of subsidiaries including Chiefton Supply, Next Big Corp, Iron Protection all of which have stakes in the multi-billion medical marijuana business.
Key Stock Drivers
Stellar financial results have been the key driver of General Cannabis from its 52-week low. Record revenues for the three months ended September 30, 2017, strengthened investor confidence on the stock, triggering a buying spree.
Total revenues in the quarter came in at $980,000, representing a 21% year-over-year increase. Record revenues in the Operations segment which registered a 210% increase as well as 227% growth in Next Big Corp accounted for a good chunk of the record revenues.
Chief Executive Officer, Robert Frichtel, expects further revenues given the high demand for services in Next Big Corp segment. The unit helps companies submit applications for medical and recreational marijuana business licenses from which it generates some returns.
“We remain focused on managing discretionary spending throughout the quarter and enter the end of the year poised for growth. We continue to spend on infrastructure and people that will drive future profitability. We are committed to building and expanding the best platform in the regulated cannabis industry and providing our customers with the highest quality services,” said Mr. Frichtel added.
Miles High Acquisition
The acquisition of Miles High Corporation which offers security services to the hospitality industry has also strengthened investor confidence in Green Cannabis long-term prospects. The acquisition is poised to complement the company’s current security business that is being run by the Iron Protection Group.
The acquisition expands Green Cannabis footprint within the Colorado cannabis security market in addition to helping expand the security business into other industries.
GC Finance Arizona Acquisition
As part of the revenue diversification strategy, General Cannabis acquired GC Finance Arizona in June. The acquisition has since expanded the company’s footprint into the business of producing and distributing medical marijuana-infused products.
GC Finance produces and distributes a full line of medical marijuana products led by Dixie Elixirs and Edibles products in the state of Arizona. The company joined General Cannabis with 14,000 square feet of idle space and gross revenue of $194,000 in 2017
“We look forward to working with our partners to introduce and produce the highest quality infused products for the medical marijuana industry in the state of Arizona,” said Michael Feinsod. “Closing on this milestone expands our public company platform and further diversifies our revenue stream, which will create significant shareholder value.”
The two acquisitions affirm the diversified nature of General Cannabis revenue streams. With the international market for cannabis expected to grow to $31.4 billion by 2021, the company remains well positioned to generate significant returns given its investments. The global market is currently worth $7.7 billion with the U.S accounting for 90% of total sales.
General Cannabis is without a doubt growing at an impressive rate if its recent quarter earnings is anything to go by. Further growth in revenues should lead to positive cash flows which should in return strengthen investors’ confidence leading to an increase in share price.
We will be updating our subscribers as soon as we know more. For the latest updates on CANN, sign up below!
Image courtesy of David Gach via Flickr
Disclosure: We have no position in CANN and have not been compensated for this article.