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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