Kush Bottles Inc (OTCMKTS:KSHB) is one the most interesting cannabis companies in the public markets. It picked up strength on the back of the recreational legalization ballots towards the end of 2016. The company gained more than 253% between August and November. Kush just made an announcement that could help it push it further up.
The announcement was the acquisition by Kush of another cannabis paraphernalia retailer – a company called CMP Wellness. CMP is a privately held distributor of vaporizers, cartridges and accessories based in Los Angeles, and it has been in business since 2013. That is not a long time, but we dug into the company a little bit and anecdotal evidence suggests that its reputation falls in line with that which Kush is striving to achieve – a relatively high-end brand with a decent following among cannabis users, both recreational and medical.
The acquisition came through a $1.5 million cash payment and the issuance of 7.8 million shares of Kush stock. What is most attractive about this acquisition is the growth reported by CMP over the last 24 months. For the 12 months to August 2015, CMP Reported revenues of $0.8 million. During the subsequent 12 months, this grew to $3.1 million. For the six months to February 28, 2017, the same figure hit $4.4 million. Based on current share price, the acquisition valued CMP at somewhere in the region of $20 million. In a growth industry like this, and with an established brand in place, that’s not bad.
The company is also moving its headquarters, essentially quadrupling its space to accommodate continued growth.
The new facility will allow the company to provide a wider array of products, better service, and quicker delivery times to key markets.