With predictions that the legal cannabis
market will experience non-linear growth in the coming years underscored by ongoing
legalization of marijuana worldwide, companies big and small are hustling to
build their footprints to capture share in a market that Grand View Research forecasts will reach $146.4
billion by the end of 2025 (from $7.1 billion in 2016). Whether companies are touching the once-taboo
plant or operating in an ancillary segment, there is no shortfall of growth
opportunities as part of an abolishment of eight decades of cannabis
prohibition.
For its part, MassRoots (OTCQB: MSRT), a
technology and rewards platform at its core, is branching out into different
verticals. Since the start of 2019, the
company has penned two substantive agreements that have expanded MassRoots’
portfolio of products and services.
In mid-January, the Los Angeles-based
company partnered
with We are Kured, a subsidiary of New Age Brands (CSE: NF)(OTC:NWGFF), to
serve as the leading online retailer of We are Kured’s best-selling
CBD Pen. The handheld vaporizer pen
dispenses cannabidiol, or CBD, a THC-free constituent of hemp and cannabis
trumpeted for its therapeutic benefits relating to alleviating inflammation,
pain, anxiety, seizures and a host of other symptoms from a variety of maladies
without unpleasant side effects or psychotropic buzz often associated with
marijuana.
The pen represents a new revenue stream for
MassRoots as the first CBD product to be sold directly through the company’s
online platform and social media pages.
MassRoots has more than one million social media followers, in excess of
750,000 email subscribers and hundreds of thousands of unique monthly visitors
on its website and application to whom it can market the product.
This month, MassRoots entered a definitive
agreement to acquire supply-chain as a service company COWA Science Corp. in
an all-stock deal valued at approximately $5.78 million. The buyout terms are dependent upon COWA
Science meeting annual revenue milestones of $2.5 million and $7.5 million, as
well as other customary closing conditions.
In short, the terms specify that COWA shareholders are entitled to
additional shares if the sales milestones are hit within three years of the
effectiveness of the merger.
For 2018, unaudited financials show COWA
Science generated revenue of approximately $1.5 million by providing a variety
of products and services to its list of about 50 cannabis- and hemp-focused
clients. Upon completion of the
transaction, COWA will become a wholly-owned subsidiary of MassRoots.
MassRoots expects the acquisition to be
immediately accretive while diversifying its business. Management expects to build upon the existing
COWA Science business to offer a complete cannabis-centric suite covering the
full supply chain, including advertising, consumer packaging, process and
product development, growing supplements and nutrients, HVAC and more. On the whole, the new, bigger MassRoots
intends to provide a broad mix of offerings to hundreds of licensed cannabis
business in key markets across the country.
“Going forward, MassRoots is confident that
the addition of COWA Science will increase overall revenues and expand our
market presence, with the goal of generating positive cash-flows from
operations,” commented MassRoots CEO Isaac Dietrich in the press release on the
acquisition. Dietrich added that the decision
to bring COWA Science under his company’s umbrella came after several years of
following their business and growth trajectory.
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