The state of Nevada has been one of the largest players in the cannabis sector. State data for the last month shows that dispensaries within the area sold nearly $425 million in full-year cannabis sales. Such sales have continued to be shown throughout the United States with the cannabis sector continuously growing throughout the country and globally.A market research carried out by CIBC World Markets shows that the global cannabis industry is expected to grow to $30 billion by 2020 with the sector’s growth driven primarily by the continued legalization of cannabis – both state and federal. The report further details that manufacturers are expected to reap nearly 85% - $850 million – of the $1 billion EBITDA expected from the sector globally by 2010 with retailers enjoying 15%. With this causal relationship continuing as is, states which have already legalized cannabis continue to reap the benefits associated with the booming industry. Furthermore, companies operating within the industry are further benefiting from this same boom.MJ Holdings Inc (OTCMKTS:MJNE) is one of the beneficiaries.The firm which has been a player within the sector for a long while during which period they have continued to grow their asset base within the sector. Their diversified portfolio has presented them with the ability to venture into all segments of the value chain thus allowed them to reap returns associated with each segment. Their acquisition strategy has continued to have an impact on their portfolio and consequently on their performance. As a result, their value proposition has continued to be shown through their continued rise in financial and share performance as well as growth parameters.Over the past two days, the firm’s share price has risen drastically. During this period, the price rose from $2 per share to their current price of $4.15 per share, an over 107% increase. During the same period, the share turnover also increased nearly 10-fold to over 240,000 shares per day. The last time such a number was shown was in mid-September when nearly 300,000 shares per day were traded, this being as a result of news which emanated from the company. Readers can review the above price action in the chart below: MJNE Daily ChartThe above price movement, as well as share turnover, is informative of momentum being currently experienced therefore some news either expected from the stock or which has already been released to the public. This piece has gone further and reviewed this so as to provide readers with an outlook towards the stock’s expected future performance.
A Brief Outlook of MJNE
MJ Holdings Inc is a holding company – diversified – operating primarily within the Nevada region. The firm provides management and consulting services within the cannabis industry to regulated players. The firm’s subsidiaries provide cultivation as well as production management services with others offering infrastructure development services. Their facilities located in Nevada provide them with the ability to use licensed cultivation methods to grow their produce.Moreover, the firm is also a major player in the acquisition segment and continues to scout for investment opportunities within the legalized cannabis sector. This approach allows them to venture both within other states within the US as well as into international markets.
Recent Developments
There are two events which have had an impact on the share price of MJNE: an announcement on a major purchase as well as recent news on the firm’s subsidiary. This section reviews both of the above.
The Q-Cup Purchase
Earlier this year, MJNE entered into an agreement which would see them exclusively distribute the Q-Cup – a cutting edge cannabis and CBD delivery system – on behalf of the patent holder, Healthier Choices Management Corp (OTCMKTS:HCMC) throughout the state of Nevada. This distribution would be carried out with the aid of Focus Distribution – a major distributor in the state.News of an initial shipment of 800,000 cups led to the initial share price surge. Through this, the firm was assured of significant revenue given especially that each cup was expected to retail at between $8 and $10. As such, the over $6.4 million pick which will be distributed between the three firms is bound to have an impact on the revenue of MJNE and consequently on their valuation.
License Application
MJ Holdings Inc has previously been interested in setting up different dispensaries within the Nevada region so as to grow their reach.This is soon to be achieved.Through their subsidiary, Red Earth, LLC, MJNE has tendered five Recreational Marijuana Establishment License applications which will see them open five dispensaries within the state. The firm expects to provide services to the underserved sections of the state thus tap into the $425 million in cannabis sales.The latter was further underscored by their CEO, Paris Balaouras who stated:
“Many of the areas where we seek to open our stores have been previously underserved in the growing recreational adult use marijuana market…”
Source:This venture will not only be important to the firm but also to the community around. The aim of MJNE is to not only increase shareholder value but also ensuring the surrounding community benefits from the same. As further stated by their CEO:
“…we look forward to creating jobs and supporting these communities.”
Source:The venture has continued to receive support from the local communities and their leaders and is thus expected to succeed at the review committee stage. This, therefore, speaks to the firm’s expected expedited financial performance growth and consequent share price growth going forward.
Conclusion
The tale told by the news on the firm speaks to an already growing entity. Be it the continued increase in sales or the vision driving their acquisitions and expansionary strategy, MJNE continues to offer more to their shareholders by the day. As a result, the firm’s expected performance is expected to be better going forward. We, therefore, remain bullish about MJNE.We will be updating our subscribers as soon as we know more. For the latest updates on MJNE, sign up below!Disclosure: We have no position in MJNE and have not been compensated for this article.
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