When we examine the cannabis patch, we see the super-dominant producers as the obvious spotlight plays, but the more important opportunity may be in companies like Kush Bottles Inc (OTCMKTS:KSHB). This is a supplier of products relevant to the cannabis space, with containers and other “paraphernalia” related to the consumer end at market. But now, according to a release this week, the company is expanding to become a possibly important supplier for the industrial side of the CBD and cannabis space.
Specifically, the company just announced that it has launched Kush Energy, a new division focused on supplying the cannabis industry with tested, high-quality solvents and hydrocarbons, which are essential in the extraction process for the production of products including oils, edibles, and waxes. According to the release, “The Company acquired Summit Innovations in May of 2018, and now, with the launch of Kush Energy, has successfully completed a full integration.”
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, “Kush Bottles, Inc. (OTCQB: KSHB) is a dynamic sales platform that provides unique products and services for both businesses and consumers in the cannabis industry. Founded in 2010 as a packaging and supplies company for dispensaries and growers, Kush Bottles has sold more than 100 million units and now regularly services more than 5,000 legally operated medical and adult-use dispensaries, growers, and producers across North America, South America, and Europe. The Company has facilities in the three largest U.S. cannabis markets and a local sales presence in every major U.S. cannabis market.”
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The action here has been relatively flat over the past week, but volume has been ticking higher on an average basis. That’s important because KSHB is working with a very tight float of just 9.6 million shares.
“This is yet another example of our successful strategy of purchasing complementary businesses, integrating them into the Kush Bottles platform, and then driving significant organic growth,” said Nick Kovacevich, CEO of Kush Bottles. “Cannabis extraction is an ultra-high growth segment of the legal cannabis industry, and we have diversified our offering to capture reoccurring revenues from this demographic with many products – hydrocarbons and solvents being the most recent additions. Kush Energy’s customers also utilize our other product lines such as packaging and vaping equipment allowing a great cross-selling scenario. We expect this new division to make a major impact on our total company revenues and gross margins.”
Earning a current market cap value of $304M, KSHB has a significant war chest ($3.6M) of cash on the books, which is balanced by about $2.6M 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 $40.8M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 173.4%. This may be a very interesting story and we will look forward to updating it again soon. 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.