The development of cannabis and its by-products has created a $22 billion industry across the globe. While this begun with medical cannabis, the morphosis has led to the adoption of recreational cannabis by companies hoping to expand their product lines. As a result, further research has been going into the field and this has allowed for companies to establish different strains which are useful for different medical and recreational uses.
Presently, companies are continuously working towards venturing into all segments of the value chain. This has been a learning phase for most of these institutions and most are still working towards being experts at a specific part of this entire chain. This isn’t the case for Isodiol International Inc (OTCMKTS:ISOLF).
The firm has been insistent on harnessing their prowess in the field to get into all segments of the value chain. The result of this has been that they have successfully ventured into all segments of the value chain, from development to sale of hemp across different continents.
Despite this seemingly successful venture, ISOLF’s share price suffered a major blow in 2018 courtesy of a major bear run hit them throughout the period. During this period, as with other major cannabis operators, the company’s share price declined drastically, falling from $12 per share to lows of $.783 per share, a 93.5% price decline. Moreover, the period between June and December showed the highest share turnover, which was driven by the federal legalization of cannabis across Canada.
Readers can review the above price action in the chart below:
As at the end of the past week, however, this trend reversed.
The market witnessed a 33% increase in the share price which rose from $.9 per share to $1.2 per share. This has, however, declined mildly to $1.04 which is the firm’s current share price as seen in the chart below.
While the price is yet to recover to its past highs, the slow jump is price speaks to the current outlook by investors. As such, this piece looks at the recent news and publications by the company and tries to establish which of these drove the price to spike as it did.
History of ISOLF
Before looking at the company’s recent developments, let us have a look at the company’s historical information.
ISOLF is a Vancouver-based company which was formed back in 2014. The firm operates within the cannabis market, specifically within the development, marketing and sale of hemp-based products. Over time, the firm’s reach has grown through to Canada, Asia, Europe, and Latin America.
Generally, its products include hemp-based oils, personal care cannabis products, based on micro-encapsulation and nanotechnology. Finally, there are pharmaceutical products for the treatment of life-threatening and non-life-threatening sicknesses.
ISOLF: Current Developments
There are a number of issues which ISOLF has been looking at in a bid to grow its business case. These include its strategic reorientation, improving their top-level management and a new acquisition. These are discussed below:
The Strategic Reorientation
ISOLF recently made an announcement that they were working towards realigning their core competencies and strategy. In a move which would see them redirect their financial and operational capacities to other segments, the firm expects that they will benefit much more (financially) from this new focus.
First, the firm announced plans to divest from cultivation and non-specialty manufacturing operations. According to the firm, these segments have continued to see numerous entities venture into them and invest unnecessary amounts therein. The result is therefore excess supply from these segments, the result of which is lower prices as well as the firm losing its edge in value addition and differentiation.
In the words of the Company’s CEO, Marcos Agramont:
“…many new entrants have engaged in exorbitant and often irrational spending that is commoditizing basic hemp CBD ingredients and products and creating a price race to the bottom.”
The firm also provided information as to which three sectors they would be focusing on.
First is beverage whereby they would develop their competences in the retail beverage segment. Here, the focus will be on 1 oz. and 2 oz standard beverage shots and topicals. As with such investments, the price will be that the firm will need to invest in acquisitions, research and development as well as in the growth of its staff competencies.
In general, the above will require the firm to understand the retail space and grow its knowledge base therein. This is expected to present a problem with the execution risk, however, given the new entrant into the board, it is clear that ISOLF is ready for this.
In line with this, the firm hired industry executive, Kevin Swadish to join the board as the Chief Revenue Officer. His role will be to oversee the revenue strategies set by the board and ensure they are executed. Moreover, given the expertise which Mr. Kevin brings to the board, his role in the formulation will also be crucial in ensuring that ISOLF achieves the set targets for the beverage division (which is a new competence the firm is working towards developing).
The second is in value-added bulk ingredients. This segment remains one of ISOLF’s largest segments and presents them with a huge potential for growth. The opportunity is in the firm successfully growing its enhanced cannabinoid isolates, multi-spectrum isolates, and distillate ingredients. Eventually, the above will be targeted towards medical and pharmaceutical growth opportunities across the medical community.
Finally, there is specialty contract manufacturing. This ties in with their research and development division. The firm is working towards growing this by beating their peers in terms of pricing while maintaining high-quality standards. Through harnessing their knowledge base, the firm is working towards ensuring that they can produce as many of the products which they seek therefore clear their development pipeline.
Addition to their Portfolio
ISOLF has in the past week announced that they would be acquiring CBD Naturals® beverage brands and its portfolio of intellectual property. As a result, they would obtain a total of five new drugs: Rasa, Bliss Me, Hemp Rain, Fast CBD, and Simplex as well as receive additional financing for these assets. Furthermore, ISOLF will also receive product placement in over 1,000 retail locations across the United States. In total, the transaction includes a total of 15 brands, 50 proprietary ingredients, and product formulas and 40 brand domain names. It will also add up to 100,000 units of inventory.
Through this, ISOLF expects that their product line will continue to grow. Furthermore, given that the firm has continued to invest in research and development in the past, the move presents them with a spectacular position to continue with this process. The product placement will also be important as ISOLF can market their products through this platform. Courtesy of the transaction, the inventory which ISOLF will need to market has grown greatly,
Eventually, through the additional inventory and structured marketing campaign, ISOLF will achieve its growth strategy and consequently its revenue growth thresholds.
ISOLF has adopted a new strategy and already put the structures and people in place to ensure this is achieved. Through the additional product and growing base, we expect that the firm will continue to grow and are therefore bullish about the stock.
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Disclosure: We have no position in ISOLF and have not been compensated for this article.