Friday Night Inc (CNSX:TGIF) is undoubtedly enjoying success and investor support as it taps into the burgeoning recreational cannabis market in the US state of Nevada.
Shares have rocketed almost 315% in the last three months alone to stand at C$0.83.
That's not bad for a firm, which only started life in its present guise as Friday Night Inc in June last year. It was formerly Quikflo Health.
And news now that neighbouring California has become the sixth US state to allow the sale of recreational marijuana can only enhance and bolster the firm's prospects within a growing industry.
Canna Hemp and California..
Indeed, its Canna Hemp line has received multiple purchase orders from several California retailers, marking the first step of the firm's bid to expand it brand into the state.
California is expected to become one of the largest cannabis markets in the world.
Nevada got the recreational green light in July 2017, while medical pot was approved in the state in 2013.
The new Friday Night last year bought a 91% stake in Alternate Medicine Association (AMA), a licensed medical marijuana producer - only the second firm to get such a licence in Nevada and the very first in Las Vegas.
It already had sales of US$200,000 a month when acquired and the firm is now looking to increase AMA's growing facilities as the market rapidly grows.
The group also acquired a 91% stake - is Infused Mfg - a company that provides legal hemp-derived and cannabidiol (or CBD) products.
Increasing the AMA operation..
Last August, Friday Night struck a deal to buy 1.39 acres of land for US$432,000 in Clark County to increase the AMA operation and today announced a further expansion as it struck an agreement to buy a further 2.78 acres directly connected to the site.
"This will allow Friday Night to expand its cultivation center in phases and can accommodate an additional 150,000 square feet of cultivation space as more supply is needed in the rapidly expanding Las Vegas market," the company said.
What's more, just before Christmas, the firm revealed it was set to buy Body & Mind Inc (BAM) in a game-changing all share deal worth C$115mln.
It reported that it would make the merged company among the largest cultivation and production companies in the US state of Nevada.
Body & Mind Inc produces flower, oil extracts and edibles at its current facility and expects within the latter part of 2018 to be in facilities providing around 50,000 square feet and has around 130,000 square feet of facility projects under development.
Also in December, the firm inked a production deal with a major dispensary chain in Nevada.
The chain will supply trim as a raw material to the group's production subsidiary AMA, who will extract and process the materials into high grade concentrates. This is key because raw material is in short supply.
First quarter numbers cheer..
First quarter results posted last month underlined the strength of the opportunity in Nevada.
Gross revenue for the three months to end October was around C$2.5mln, with gross profit at around C$1.33mln. The group had cash at the end of the period of C$5.6mln.
"Our team has worked incredibly hard to achieve such great results, and as we fine tune operations and expand our facilities and partnerships within and outside the state, we are getting very close to becoming cash flow positive," said Brayden Sutton. chief executive.
The firm said the cannabis market in Nevada had grown dramatically since recreational use was approved at the beginning of July and the firm believes revenue growth will continue.
The firm is projecting production facility sales of $5mln for 2017; $20 mln for 2018, and $50 million in production sales in 2019.
Meanwhile in California, sales of the drug for recreational use kicked off on Monday after Californians voted to legalise it in 2016.
The state of California as a whole is expected to rake in a whopping US$7bn from marijuana sales in a few years, compared to US$6.6bn of the entire market in the country in 2016, according to New Frontier Data, which tracks the cannabis industry.
"Cannabis is now legal in the most populous state in the country," said New Frontier in its annual report.
This "dramatically” increases the total potential size of the industry, it added.
California is home to 40 million people and has 165 million visitors a year.
A unique opportunity..
CFN Media Group, a creative agency dedicated to legal cannabis, said Friday Night represented a 'unique opportunity within the burgeoning industry'.
It has moved to double its cultivation footprint in Nevada through two possible acquisitions, while divesting its CBD (cannabidiol) assets, it said in an article.
Last month, Friday Night announced that it would buy Body & Mind Inc in an all share deal, making the combined company one of the largest cultivation and production companies in Nevada.
It has also announced a letter of intent to acquire Harvest Foundation LLC, a 10,000 sq ft cannabis cultivation facility adjacent to its Alternative Medicine Association (AMA) property, for US$1 million in cash, 10mln shares and warrants.
"After acquiring new cultivation space in Nevada, the company is positioned to more than double its existing production capacity in the near-term," said CFN.
"Management’s plans to spin out the Infused MFG business could also help unlock value by enabling new management to focus squarely on CBD and investors to better value each component."