Next Green Wave & Junkyard: Mixing Craft Cannabis With Art
Next Green Wave Holdings Inc. (CA: NGW – $0.28 & US: NXGWF – $0.21) announced the launch of its third product line acquired under the SD Cannabis umbrella. This time with the influential illustrator and street artist Junkyard. The initial launch will be an oil extraction that will include a limited release collectable packaging designed by Junkyard. In addition, apparel releases and live painting appearances that cater to the craft cannabis culture will be announced throughout Southern California this summer, keeping this relationship and NGW in the minds of the Californian cannabis consumer.
Next Green Wave’s CEO Leigh Hughes expects this deal to be a key component of aggressively pursuing the Californian market, stating: “We’re thrilled to be working with Junkyard and believe his loyal fanbase and individual brand will add further strong impetus to our growth.”
Junkyard was also very complimentary of NGW and SD Cannabis, citing this relationship as a great match for himself: “We launched the Junkyard Cannabis brand with NGW and SDC as an extension of what is already happening in our fanbase. As a large portion of our fanbase are cannabis fans and consumers, it was a natural next step. Our team is excited to finally launch a premium brand with NGW and SDC. We have been looking for a partner that has the same aesthetic and attention to detail in their craft. It has been a fantastic process working alongside their team. Look out soon for products in California legal dispensaries.”
Junkyard is an illustrator and street artist who is known for some of his larger than life black and white murals and clothing. His distinct style and passion for craft high end concentrates will fill a gap in the market.
SD Cannabis Product Launches and Influencer Endorsements Continue Onward
Once again NGW management has made good on its word that revenue will be accelerated with the SD Cannabis acquisition. Junkyard’s product line joins Loki the Wolfdog and King Louie as three sources of near-term revenue for the Company. Investors should continue to expect steady news flow from NGW in the coming months regarding these three launches and the remaining brands it acquired as part of its SD Cannabis purchase.
These well thought out marketing campaigns should result in a wide reach across multiple aspects of the cannabis community in California. However, these campaigns don’t come for free. Consequently, it’s good to know that NGW has a strong cash position leading into these multiple product launches. Two weeks ago, NGW announced a $3 million CAD equity private placement along with a $3 million convertible note. NGW had $1.2 million in cash at the end of March 2019, so this existing cash balance plus recent cash infusion should be sufficient to carry on any marketing activities.
Investors are never a fan of dilution, but smart use of the funds to grow the business quickly should result in greater shareholder returns than if the Company was stagnant and constrained by cash with a smaller share float.
CEO Leigh Hughes Presents at Cannabis Europa
Leigh Hughes presented at Cannabis Europa in London last week, discussing the products that are entering the market and in demand. The large diversity of brands from the SD Cannabis acquisition along with the flagship grow operations in Coalinga and deal with Intrexon certainly was not lost on him, as he had to concisely explain how NGW’s brands reach different demographics with different cultures around cannabis use, from wellness to connoisseurs. Becoming a profitable cannabis conglomerate is no easy task, but NGW’s management team has demonstrated prudent behavior at this early stage of execution.
Conclusion: Stock Price Suffers From Summer Doldrums But Opportunity is Better Than Ever
Cannabis stocks, particularly microcaps listed on the CSE, have continued their multi-month downtrend and NGW is no exception. Investors can be assured that NGW’s stock, like the rest of the cannabis market, is dealing with a major pullback and can take solace that this is not an indictment of the Company’s ability to execute.
As Canadian investors and the CSE are the leaders when it comes to microcap cannabis investments, they might have come to the realization that the Canadian cannabis market is already getting to be a crowded space. As NGW is primarily focused on California, it is in a good position to differentiate itself from other CSE peers. In fact, NGW is uniquely positioned to aggressively pursue a full range of the cannabis market in California thanks to its proximity to market, partnerships and acquisitions.
We believe that opportunities are abound in this industry right now and that the sector has bottomed out. It’s a good time to do some bargain hunting in preparation of a reversal in prices to take place starting early fall. NGW is certainly on the top of our list of cannabis bargain hunting opportunities. Investors who can tolerate this volatility and are able to hold onto NGW for the next several quarters to give the Company some time to prove itself, should consider this a tremendous buying opportunity. Smallcaps Recommendation: BUY.
| Smallcaps Recommendation: Buy | Price Target: $1.78 | Latest Company Report (pdf) |
| For important disclosures, please read our disclaimer. | ||