22 December 2024

Howe Street Reporter Title

Chemesis (CSI.C) smacks another double


Ichiro Suzuki – a recently retired major league baseball player – hit only 117 home runs in 9,934 career at bats. That’s a 1.2% home run success ratio. Yet Suzuki is considered one of the most effective batters ever to play the game.

Why?

Because he specialised in singles, doubles and triples (short, sharp, surgical swings that put him on base and in a position to advance). He got on base 262 times in one season, 4,367 career-total.

Chemesis International’s (CSI.C) is the Ichiro Suzuki of cannabis companies.

While other companies swing for the fences (and often miss) Chemesis has incrementally built a portfolio of revenue-generating mid-sized cannabis business.

Example: On August 5, 2019 Chemesis announced that it has entered into a binding share exchange agreement with GSRX Industries to up its position in GSRX to about 66%.

Chemesis will hand over 7,291,874 common shares, while “GSRX will broaden Chemesis’ footprint and give it an immediate entry into U.S. states and territories where it is already established.”

“GSRX is primarily focused on acquiring and operating retail cannabis storefronts in Puerto Rico and California,” wrote Equity Guru’s Ethan Reyes, “Alongside its e-commerce site, the company has ‘five additional prequalified dispensary locations at various phases of development’ in Puerto and is currently in the midst of launching two hemp-based CBD dispensaries in Tennessee and Texas.”

Upon acquiring a controlling interest in GSRX pursuant to the Acquisition, Chemesis will effectively be a fully vertically-integrated, multi-state operator with assets in six states which includes California, Tennessee, Arizona, Michigan, Texas, and Puerto Rico, with significantly-enhanced consolidated gross revenue projections, estimated to be approximately $75,000,000 USD for the 2020 calendar year (on a fully consolidated basis)

On a day when the U.S. stock markets plummeted 2% after China devalued its currency and instructed state-owned firms to stop importing U.S. agricultural products – Chemesis has significant news. However, the TSX.V is closed for “Civic Day.”

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The last trading day, Friday August 2, 2019 – the CSI chart looked like this:

CSI’s manufacturing, extraction, distribution, and processing capabilities will complement GSRX’s cannabis dispensaries business.

Chemesis intends to manufacture finished goods for GSRX’s operating dispensaries, with the aim of further increasing margins and operational efficiencies.

GSRX’s asset portfolio includes:

  • Five operational dispensaries in Puerto Rico, which operate under Green Spirit Rx brand.
  • An additional five pre-qualified dispensaries in Puerto Rico with locations in large tourist centres and dense populations.
  • A fully licensed cannabis distribution centre in Point Arena, California. The distribution centre is expected to service over 400 dispensaries in Northern & Central California.
  • The Green Room, a boutique dispensary located in Point Arena California that has been owned and operated since April 2018.
  • A 4,500 ft2 large scale dispensary located in Palm Springs, California. The dispensary is currently undergoing renovations and expects to open by calendar Q1 2020.
  • Retail CBD stores in Texas and Tennessee, including Nashville, with products such as creams, balms, tinctures, pet products, face masks, vape pens, and soft gels.

GSRX has also submitted a “comprehensive business plan to the City of Riverbank, California”, which constitutes Phase l of its application for a retail location there.”

“GSRX has built an incredibly strong portfolio of retail and manufacturing assets and the company is realizing growth in all aspects of its operations,” stated Chemesis CEO Edgar Montero. “We believe the GSRX assets will be highly accretive, complementing the strengths of each company’s respective business lines.”

Chemesis now has 4 main branches of operation:

  • Cultivation:  Hemp cultivation in Michigan, grow facility in Puerto Rico with 30,000+ lb overall grow capacity. Grow opportunities currently under review in California. Also, a 1,000-acre Colombian grow facility in development.
  • Manufacturing: extractions, formulations and products, specializing in BHO, alcohol and CO2 extraction with the current capacity of over 2,000 lbs of raw material a day.
  • Distribution: With new regulations impacting the California market, Desert Zen has emerged as a fully compliant first mover. In the Puerto Rico market, CSI serves the entire island from seed to sale.
    Retail: Chemesis distributes and transports California Sap, Jay and Silent Bob’s Private Stash and third-party brands to over 600 dispensaries in California and Puerto Rico.
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Three weeks ago, CSI announced a partnership with U.S.-based Happy Tea, a brand of CBD-infused sachets and shots.

At the closing of the deal, CSI received a CND $5.2 million minimum purchase order.

Do-a-modest-deal-that-generates-revenue” is such a quaint concept that Chemesis may as well be huddling by an airtight stove, sipping Ovaltine while reciting “Grimms’ Fairy Tales” to the rosy-cheeked grandkids.

“CSI has also made great strides in Latin America, including in Colombia through its local subsidiary, La Finca Interacviva-Arachna Med SAS,” wrote Equity.Guru’s Ethan Reyes. “With nearly one billion people on both continents, it’s clear Chemesis has its eye on the Americas while others turn to Europe.”

Suzuki played 27 seasons, 18-plus in the Major Leagues for Seattle, the New York Yankees and Miami Marlins.

“Ichiro Suzuki is one of the greatest baseball players the world has ever seen,” stated Yankees’ GM Brian Cashman.

But specializing in small profitable moves, Chemesis, like Suzuki, may eventually become a legend.

Full Disclosure: Chemesis is an Equity Guru marketing client.

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