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Ventura Cannabis and Wellness: DEEP DIVE

Ventura Cannabis and Wellness is building a brand in California through smart acquisitions

The cannabis company's strategy is to focus solely on the massive California market, where it plans to establish a network of dispensaries with owner-operators
OVERVIEW: VCAN The Big Picture
Ventura recently acquired the Amberlight dispensary in Portland, Oregon (photo courtesy of Leafly)
  • Vertically integrated cannabis company with a unique, revenue-generating business model

  • Deep pipeline of acquisition targets and a proven model

  • Strong sales from in-house cannabis brand forecast to bring in US$12 million in potential annual revenue

Ventura Cannabis and Wellness Corp (CSE:VCAN) is a vertically integrated, California-focused cannabis company currently building its distribution channels via revenue sharing agreements with dispensaries.

The company launched into the cannabis industry after a shareholder vote in April 2019 approving the change in business from addiction treatment to cannabis.

Based in Los Angeles, the company has ambitious plans to market its products to significant yet overlooked consumer segments: senior citizens, upwardly mobile middle-aged professionals and individuals suffering from addiction.

According to Ventura, the aforementioned groups are looking for “discrete and well-designed” products that also provide and accurate dosage of THC. Ventura is hoping to address the market with its CannaSun line of cannabis products, a revenue-generating company that currently sells vapes and oils in local Los Angeles.

Launched in November 2018, CannaSun is projected to pull in US$750,000 in total annual revenue just from its first-generation products sold in a small area of Los Angeles. At full capacity, Ventura estimates CannaSun to generate US$12 million in total annual revenue.

The company recently executed a key transaction designed to serve as a template for its operations going forward. In May 2019, Ventura acquired Amerlight, a Portland dispensary that will provide a model for its California dispensaries, for US$470,000.

Currrently, Ventura’s strategy is to focus solely on the California market, where it plans to establish a network of dispensaries with owner-operators. In doing that, Venture plans to acquire dispensaries under a revenue share guarantee structure, allowing it to take a percentage of gross revenue and give the owner-operator the ability to operate its business independently.

The acquisition model should provide a rapid return on invested capital, according to Ventura. The company projects a 12 to 18 month payback for cash invested into dispensary acquisitions through three different payment streams.

In the first stream, Ventura will have a fixed amount of at least 10% of revenue from each dispensary. Following the acquisition, Ventura will take premium shelf space to sell CannaSun products at an estimated 45% margin. Finally, once CannaSun is established, products are expected to increase cash return to Ventura via other local dispensaries.

Upcoming catalysts

  • Finalizing CannaSun second-generation product line for sale
  • Executed letter of intent to sell its detox business for US$1.4 million, in addition to the rights to supply cannabis to past, current and future patients for ten years
  • Annual revenue from Amberlight deal to reach US$900,000, with the full impact of the transaction to be apparent by 4Q 2019
  • New dispensary licenses granted in California
  • Projected annual revenues of US$20 million in FY2020 and US$40 million in FY2021

What the CEO says

With a strong balance sheet, significant revenue growth profile and a deep pipeline of acquisition targets, Ventura Cannabis is well positioned to execute its California strategy.

The company recently acquired a new cannabis dispensary in Oakland for US$1 million. The facility specializes in distributing cannabis to the Bay Area. Ventura expects the dispensary to bring in about $1 million in annual revenue.

The dispensary network will distribute Ventura’s CannaSun brand, along with other brands in development.

Discussing the latest acquisition, Ventura president Chris Heath said, “We continue to build out our large California dispensary network with this agreement.

“We see significant growth potential as we push our CannaSun product line, and other in-house brands currently in development, through their expanding customer base once we close.”

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

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Ventura Cannabis and Wellness Timeline

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