California is the world’s biggest legal cannabis market, and it’s a trend-setter for the rest of the country.
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The state’s legal pot industry is also in something of a “Wild West” phase, with the retail sector particularly fragmented.
Retail consists of 650 mostly independent locations — with no brand currently owning more than 2.5% of locations or 4% of total market share.
In short, California cannabis is a young, fast-growing sector in great need of consolidation.
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It’s an opportunity tailor-made for GABY Inc. (GABY.CN; GABLF.OTC) and its high-octane CEO Margot Micallef.
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As you’re about to see, Micallef’s track record at delivering extraordinary growth and profits to investors makes her the ideal person to consolidate California’s fragmented cannabis sector and generate big gains for shareholders.
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A $3.8 Billion Market That’s Only Getting Bigger
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GABY’s strategy is focused strictly on California, and the graph below underlines the wisdom of that strategy.
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The state’s legal cannabis market generated $3.8 billion in revenues in 2020, an amount that is expected to grow to $7.2 billion by 2024.
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This kind of explosive growth is why — rather than targeting multiple markets — GABY is laser-focused on building a dominant presence in what is by far the largest cannabis market in the world.
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Micallef is intent on a strategy centered on going narrow and deep in California (as opposed to the multi-state, shallow-and-wide tack taken by many cannabis companies).
Moreover, with so much of California’s retail sector so fragmented, GABY sees a ripe opportunity to up the industry’s game in terms of retail branding.
As you’re about to see, the company is already succeeding in this approach — resulting in a business that seems poised to explode in both size and profits.
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A Foundational Transaction:
GABY’s Big Move Into Retail
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You’re very fortunate to be reading this at this moment, as GABY has just completed a merger that officially begins its entry into cannabis retail.
GABY just started trading again last week, after a pause for the Canadian Stock Exchange to bless the company’s acquisition of Mankind Dispensary.
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Mankind is one of the oldest retail brands in California, with estimated 2020 revenues of US$28.5 million, EBITDA of US$5.5 million and earnings of US$3.8 million.
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Those metrics, respectively, represent 1.3x, 6.6x and 9.6x year-on-year growth rates.
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To this deal, GABY brings a vertically integrated supply chain, downstream of cultivation, that encompasses manufacturing and distribution as well.
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Its proprietary brands, which include Sonoma Pacific flower products and Lulu’s edibles, have quickly found their way onto Mankind’s shelf.
It’s all part of a strategy to increase both retail and distribution margin by placing proprietary products on shelf in its owned dispensaries.
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The First Key Step Toward Dominating
A Fragmented Industry
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As hinted, the Mankind transaction is merely a launching pad for GABY’s ambitious plans to consolidate the state’s cannabis sector.
Micallef and team plan to build on Mankind’s success by bringing a consistent brand to stores that meets the expectations of the legacy consumer, while at the same time providing a welcoming environment for the mainstream customer.
And by bringing key elements of modern retail to its operations, GABY will offer:
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• An omni-channel experience: Providing seamless shopping whether a customer wants to walk into a store, pick up at curbside or have their product delivered
• Economies of scale: By employing a consolidation model similar to fast food franchising, GABY can achieve efficiencies by standardizing operations
• Data-driven product development: Point-of-sale tracking will allow GABY to optimize its proprietary product mix for improved margins and more repeat business
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All this has the potential to translate into a re-rating in GABY’s share price, as it executes on this high-growth, high-margin strategy and stays active on the M&A front.
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Margot Micallef: A Seasoned Hand At Retail Consolidation
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Both tasks are right in Micallef’s wheelhouse. Hers is a resume that includes:
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• A stint as Senior VP for Shaw, one of Canada’s largest communications companies — there she oversaw $15 billion in transactions, which helped increase revenue 10-fold (from C$230 million to more than C$2 billion)
• Growing Vista Radio from 0 to 50 stations and increasing its EBITDA by 500% before a C$50 million exit
• Acquiring and growing the master franchise rights for several retail brands in Canada, achieving a 21% compound annual growth rate in one brand and overseeing C$450 million in chainwide revenue across over 800 locations in another
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Clearly, this is a leader that understands how to grow and consolidate in the retail industry and how to deliver serious shareholder value.
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Jump On Board A Profit & Growth Engine
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Micallef also brings a deeply personal connection to GABY, having lost her sister to cancer and having seen cannabis vastly improve her sister’s quality of life.
Micallef is behind GABY 100 percent — a commitment that includes having invested more than C$8 million of her own money alongside her shareholders.
It’s always smart to bet on successful, top-quality management and a proven strategy. And in GABY, you get a leader and a company with all the tools to profitably consolidate California’s massive cannabis sector.
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Simply put, this is your chance to get on the ground floor of what promises to be one of the cannabis sector’s biggest success stories in the next few years.
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With a compelling, vertically-integrated go-to-market strategy and an eye squarely on aggressive growth, GABY Inc. is primed to tame the Wild West that is California cannabis, and make its shareholders extraordinary profits in the process.
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