The public markets have sometimes been good for cannabis companies, sometimes not so much. A look at trailing twelve-month performance of two leading industry ETFs, an easy way to examine industry performance, indicates that now is one of the more favorable times. The AdvisorShares Pure US Cannabis ETF (NYSE Arca: MSOS) has climbed 7,000% over the last 12 months, while (NYSE Arca: YOLO) is up approximately 221% in that same time frame. Considering these numbers, which are surely not a predictor of future or individual company performance, it could be a good time to bring a solid, high-performing cannabis company public.
Gage Growth Corp. (d/b/a Gage Cannabis Co.) is in the process of doing just that. The company anticipates debuting as early as Tuesday, April 6, 2021, on the Canadian Securities Exchange under the ticker symbol ‘GAGE.’ Gage is fully operational in Michigan in both the medical and recreational markets, controls all stages of its business from seed to sale, has an exclusive partnership with the renowned Cookies brand and is on a steep growth curve.
Why Should Investors Consider Gage?
First, let’s talk about Michigan. With a total population of about 10 million, Michigan is the nation’s 10th most populous state. It also features one of the highest cannabis consumption rates in the country. Michigan approved medical cannabis back in 2008, and adult-use cannabis has been available since 2019. At the time of full legalization, Michigan ranked behind only California in terms of numbers of patients and the state currently has about 245,000 active medical patients. Adult-use sales have grown 585% from January 2020 to January 2021.
The company currently operates seven retail dispensaries, with plans to have 20+ locations open by the end of 2021. At that point, 90% of Michigan’s population will live within an hour’s drive of a Gage location. Gage has three cultivation and three processing facilities to directly supply its outlets. The company also engages contract growers to provide further cultivation capacity to bring its total footprint to over 250,000 square feet to meet escalating demand, with output increasing from just 200 lbs/month in January 2020 to 1,500 lbs/month today to to 3,000 lbs/month by June 2021. Its cost-efficient indoor production methods turn out consistent, high quality cannabis that has thus far consistently been sold out as soon as it hits the dispensaries.
Cookies Kalamazoo location – operated by Gage Growth Corp.
Gage offers a clean, contemporary, and inviting consumer experience which dovetails nicely with its diverse premium product lines. The stores have garnered awards for best design from ADCANN, Leafbuyer, and the Detroit Metro Times. Its flower products average over $15/gram, and average basket size in Gage stores exceeded the state average by 93% in 2020 ($164 compared to Michigan average of $85).
Major players in the cannabis industry have taken notice. Jason Wild, a widely recognized as one of the premier investors in the cannabis space, runs JW Asset Management, a $2 billion fund with consistently high returns. He has historically focused on the health care sector but has been instrumental in many large cannabis deals over the last several years as well, including Canopy Growth (TSX:WEED)(NASDAQ:CGC) and TerrAscend Corp. (CSE:TER) (OTC:TRSSF). Mr. Wild has been a key investor in Gage from the inception as the company raised more than $100 million in equity capital over the last three years or so. In fact, he invested more than $40 million in Gage’s most recent Reg A+ financing, continuing to support the company financially.
Gage is on a steep growth trajectory, and the imminent introduction to the public markets could serve to steepen that curve even further with a wider range of financing options available to the company. Gage is looking to dominate the lucrative Michigan market in the short term, but its ambitions don’t stop at the border. The company sees opportunities to apply its successful Michigan model in other markets eventually, and smart financing coupled with strategic acquisition is an essential part of those opportunities.
Investors looking for high growth cannabis companies with proven leadership and premium brands would do well to investigate Gage Growth Corp. They’ve been hard at work for over three years building the foundation, and this week’s CSE listing provides public company investors the opportunity to get in on the lower floors of what Gage anticipates will be a towering figure in the industry for years to come.