A True Trailblazer Enjoying Record Growth And With Massive Upside
For a storied cannabis brand with a market cap of only C$55 million, doesn’t that sound appealing?
The company’s plan is simple.
It is pursuing a strategy known as “vertical integration”.
The California-based cannabis pioneer only went public 12 months ago on the Canadian CSE exchange.
However, that was after 14 years as a thriving private firm that built a successful business model and trusted brand name product line.
And in the 12 months since?
The team has been laser-focused on enhancing the company’s supply chain to boost profit margins significantly.
By controlling every step of the sales process, the company is in a wonderful position. From growing its product, to packaging and shipping, to selling face-to-face to its legion of customers in four high-end stores in California and one in Oregon, this is a master plan in action.
Not only does it improve sales volume, but crucially it boosts profit margins too.
“ACCRETIVE ACQUISITIONS, AND FURTHER EXPANSION OF EXISTING BUSINESS UNITS AROUND THE MORE-THAN-30 CANNABIS LICENSES WE CURRENTLY HOLD, ALL WITH A GOAL OF INCREASING TOP LINE REVENUE, AND MORE IMPORTANTLY BOTTOM-LINE RESULTS”, SAYS PETER BILODEAU, CHAIRMAN AND INTERIM CEO.
But what does he mean?
BIGGER PROFITS? FIND OUT HOW VERTICAL INTEGRATION SUPPORTS FASTER GROWTH IN THIS EASY-ACCESS REPORT
Maximising cannabis margins through vertical integration
Successful business is often a game of managing the margins.
Whatever revenue gains are made elsewhere can be swallowed up by those costs.
Someone, somewhere is skimming off a 20% or 25% profit margin on this rival, whether it’s the daily farming routine, the packaging, the shipping, or sale from shelves in a front-facing store.
That extra 20% or 25%?
Peter Bilodeau is famously honest with his investors.
It’s one of the reasons they love him.
Straight talking, every step of the way.
“BACK IN NOVEMBER OF LAST YEAR, WE WERE BURNING CLOSE TO THREE-QUARTERS OF A MILLION DOLLARS A MONTH,” SAYS PETER.
“WE DISPLACED OTHER FLOWER PRODUCERS AND TOOK OVER OUR OWN SHELF SPACE WITH OUR OWN QUALITY FLOWER PRODUCTS. INSTEAD OF MAKING A 50% MARGIN, WE’RE NOW MAKING ROUGHLY A 75% MARGIN. THAT IS A BIG PART OF WHERE OUR PROFITABILITY TURNAROUND HAS COME ABOUT,” PETER EXPLAINS.
You see, this is vertical integration at work. Grow your product, ship your product yourself, package it up, and sell it in your own stores and beyond.
Leverage the true power of vertical integration success
HARBORSIDE INC (CSE: HBOR | OTCQX: HBORF)
Taking a cold, hard look at every tiny element of the supply chain doesn’t just mean stripping out costs with surgical precision.
The best businesses also add to top line growth.
Instead of laboriously growing every single cannabis plant from seed, Harborside (CSE: HBOR | OTCQX: HBORF) technicians take a cutting from a healthy plant and grow an entirely new herb. It’s faster. It’s more productive. It’s much cheaper.
“WHEN I FIRST WENT INTO OUR FARM IN NOVEMBER 2019, ONE OF THE QUESTIONS I ASKED WAS: ‘HOW COME WE’RE NOT SELLING OUR OWN CLONES?’ I WAS GIVEN EXCUSES!” LAUGHS PETER.
“I PUSHED AND PUSHED BECAUSE I DIDN’T BELIEVE THAT WE COULDN’T CAPITALIZE ON THIS OPPORTUNITY. I WOULDN’T BUY IT.”
“TODAY WE SELL OUR REGULAR CLONES FOR $12 TO $14 EACH. IN THE PAST THE BUSINESS WOULD HAVE PAID $6 TO $7 FOR EACH. BY SELLING THE ONES WE ALREADY GROW ON OUR FARM? EACH ONE COSTS US A FEW CENTS!”
That’s an instant 30,000% gain. On a single decision.
Growing a full plant from tiny seedling to mature shrub takes weeks. Cultivating a clone not only shortens the growing time but adds an extra in-house product that Harborside (CSE: HBOR | OTCQX: HBORF) can sell at the highest possible margin.
To leverage the true power of this vertical integration success, Bilodeau and Harborside (CSE: HBOR | OTCQX: HBORF) looking at accretive acquisitions, ones that enhance revenues, margins, bottom line, and shareholder returns.
They are on the hunt for targets up and down the retail chain that will add value and enable even greater growth.
But there’s something else.
It is difficult for multi-state operators or international cannabis producers to set up quickly in California.
As the largest local market in the world, there is already a lot of competition and difficult regulatory framework to work within.
The best hires, who understand local farming and the supply chain, are already taken. Licenses are required and not easy to obtain. Competition already exists. The barriers to entry are enormous.
Rather than attempt to compete with such established strong competition, it would make sense for any major new entrant into the Californian scene to buy what is already working.
And yet the shares are trading for LESS THAN ONE TIMES REVENUE.
At some point the market will correct this mistake and when it does, expect to see this stock rerate hard.
DOWNLOAD THE INSIDE TRACK ON HARBORSIDE INC. (CSE: HBOR | OTCQX: HBORF) WITH OUR FREE REPORT
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