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Saturday, November 28, 2020

Kush Bottles Inc (OTCMKTS:KSHB) Faces a Key Technical Test

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Kush Bottles Inc (OTCMKTS:KSHB) has continued to hold well above its 50-day simple moving average over the past three weeks. Going forward, how KSHB handles any possible test with the $5/share level will be key. The level was tested earlier this month and held with a strong bid. Note that this same was actually key long-term resistance going back to fall of 2016. That level was beaten on a breakout in January of this year. The growth trend will be somewhat confirmed if the stock is able to hold that level now as support.

Clearly, new catalysts will be a part of that picture. In that vein, the company just announced that it has entered into a strategic partnership with a leading cannabis ancillary fund, Merida Capital Partners, and has received a $6 million equity investment from Merida to accelerate its near and long-term growth strategy. According to the release, “Kush Bottles plans to use the proceeds to expand its product portfolio, build new distribution channels and penetrate new legalized markets.”

Kush Bottles Inc (OTCMKTS:KSHB) provides packaging products and solutions to producers, processors, and retailers operating in the regulated medical and recreational cannabis industry.

KSHB sells primarily into the b2b market, which includes legally operating medical and adult-use dispensaries, growers, and MIP producers (Marijuana Infused Products) in states with marijuana programs.

It offers pop top bottles; child resistant exit, paper exit, and foil barrier bags; tubes; and polystyrene, polypropylene, or silicone containers to urban farmers, greenhouse growers, and medical and recreational cannabis dispensaries.

According to the company’s press messaging, “Founded in 2010, Kush Bottles has sold more than 100 million bottles and regularly services thousands of customers across the United States and Canada. The company primarily services the B2B market, which includes legally operated medical and adult-use dispensaries, growers and marijuana-infused product manufacturers. Kush Bottles aims to be the gold standard for responsible branding and packaging in the cannabis industry.”

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Nicholas Kovacevich, Chairman and CEO of Kush Bottles, commented: “The Merida team’s deep understanding of the unique dynamics of the cannabis industry, strong industry networks and willingness to finance our growth will be invaluable as we exploit new opportunities and enter new markets. We plan to use this capital investment to expand our range of proprietary products to meet the needs of the industry, advance our M&A strategy to take advantage of consolidation in the industry and grow market share.”

Merida’s Managing Partner, Mitchell Baruchowitz, commented: “Since we first started discussing a partnership and investment in Kush Bottles nearly seven months ago, we have been deeply impressed by the vision of Nick and his team and the progress they have made strategically positioning Kush Bottles as much more than simply a packaging company. Kush Bottles’ acquisitions and in-house development efforts have established the Company as a critical link in the supply chain for more than 5,000 cannabis growers, extractors, manufacturers and retailers. The Merida team could not be more excited to put significant resources to work to build on this foundation to expand Kush Bottles’ leading position.”

Recent action has seen 1% eked out on for shareholders of the name during the trailing week. Traders should take note given the technical posture of the stock. KSHB has evidenced sudden upward volatility on many prior occasions. Moreover, the listing has witnessed a pop in interest, as transaction volume levels have recently pushed just under 130% above its longer-run average levels.

Currently trading at a market capitalization of $342.9M, KSHB has a significant war chest ($5.5M) of cash on the books, which is balanced by about $1.9M in total current liabilities. One should also note that debt has been growing over recent quarters. KSHB is pulling in trailing 12-month revenues of $25.2M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 257.9%. We will update the story again soon as developments transpire. Sign-up for continuing coverage on shares of $KSHB stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $KSHB, either long or short, and we have not been compensated for this article.

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