While COVID-19 has caused quite a bit of pain market wide, there is one sector that seems to be rebounding amid the pandemic. That sector is the cannabis sector. With demand climbing higher and expectations that the market will continue to grow, many investors are looking for strong options in the sector. One company, TransCanna (TCNAF), is making waves with one of the largest production facilities in the world that will produce $90 million in annual revenue once fully developed. Here’s why TCNAF should be on your watchlist.
What Is TransCanna
TransCanna is a cannabis company that’s located in California. However, the company is a bit different from what we expect when we talk about cannabis companies. Ultimately, TransCanna is working to build cannabis-centric brands, using nature to provide balance for consumers’ lives. In particular, the company is diligently working to make cannabis safe, approachable, and consistent.
Importantly, the company has seen rapid growth as of late. In fact, the company is currently working on scaling to take advantage of its vertically leveraged facility in Modesto California. Once complete, the facility will be one of the largest cannabis production facilities in the United States.
The Company Is Gearing Up For Incredible Growth
For TCNAF, the work to scale and bring the Modesto California facility online is a big move. Through the facility, TransCanna will have access to 39 million residents and generate traffic of around 240 million visits per year.
Aside from the value brought to the table by the company’s Modesto facility, TransCanna is growing through acquisitions. In fact, the company recently made two key acquisitions that will bring it to the next level:
- Soldaze – The recent acquisition of Soldaze was a strong move in the cannabis edibles space. Soldaze is a premium cannabis producer that has done quite a bit to revolutionize cannabis infused snacks. In fact, the company’s snacks are fruit-based, bringing a more healthy cannabis edible option to consumers.
- Lyfted Farms – TCNAF also recently acquired a premium indoor cannabis cultivator known as Lyfted Farms. Along with this acquisition, the company not only expanded its ability to grow large quantities of cannabis, but also extended its distribution network with a vast network provided through Lyfted Farms.
Solving A Big Problem In The California Cannabis Market
The California market is one of the largest in the United States cannabis space. While this is great news, it has also created some challenges. The truth of the matter is that California is a massive state with a very large population of cannabis consumers.
Unfortunately, due to the fact that there is such incredible demand in California, and regulatory restraints have been on production, meeting demand has been a real challenge. TCNAF plans on changing this. This is where the Modesto facility comes in.
Through its facility in Modesto, TransCanna has 196,000 square feet of production and manufacturing capacity, making it one of, if not, the largest cannabis production facility in the state. The company already has a solid plan on how it plans on using this square footage, which includes:
- 45,000 square feet of manufacturing capacity;
- 50,000 square feet of distribution, packaging and storage capacity;
- 60,000 square feet of indoor growth capacity;
- 5,000 square feet of independent lab testing capacity; and
- 36,000 square feet of offices equipment maintenance and employee areas.
This facility, combined with the company’s strong distribution strategy will likely help TCNAF take the California market by storm.
This Is Not A Hurry Up And Wait Situation
Many companies in the cannabis space have big plans, but nothing tangible in an effort to achieve their goals. TransCanna is not one of these companies.
At the moment, TCNAF is fully operational. In fact, the company holds three key licenses. These include cannabis cultivation, cannabis cultivation and nursery and cannabis distribution and light manufacturing licenses in the state of California.
Importantly, the company is putting these licenses to work.
In fact, aside from the large facility that is being built out in Modesto at the moment, the company also has a 10,000 square foot facility in the city where it produces dried flower as well as manufactures pre-rolled cannabis cigarettes and cigars.
The company’s product line also includes third-party concentrates. However, once the larger facility, known as the Daly Facility opens, the company intends on producing its own concentrates, which brings us to yet another reason to be excited about this stock:
Seed To Sale Control
As TransCanna continues to scale up, it is building out full control from seed to sale. At its Daly facility, the company will produce cannabis, manufacture its cannabis products, and distribute these products around the state and eventually, the nation. So, why is this important?
Well, the cannabis market is a highly fragmented one. In general, we have growers, then we have manufacturers. The disconnect here creates a few issues. Without control of growth, manufacturers have little control over quality and availability of cannabis for the manufacturing of their products. Moreover, adding a third player for distribution creates its own headache.
That’s what’s so impressive about the strategy at TCNAF. The company’s strategy includes full control. The company will grow its own cannabis, manufacture its own products, and distribute these products, giving it full control over the entire process and a great competitive advantage.
The Daly Facility Buildout Is Underway
At the moment, TransCanna is working hard to build out the Daly facility. Importantly, the company has been very transparent, providing a timeline on when each phase of the buildout should be completed. Here’s a quick look at this timeline:
- Phase 1 – In the first phase, TCNAF is working to build out manufacturing and distribution, which accounts for about 50,000 square feet of the facility. Once completed (expected completion date – June 30, 2020), this phase of the buildout is expected to lead to $30 million in annual revenues.
- Phase 2 – In the second phase of the buildout, the company will increase manufacturing and distribution capacity while building out lab, employee space and maintenance areas. It is expected that this phase of the buildout will be completed by November 15, 2020, generating an additional $20 million in annual revenues.
- Phase 3 – In the third phase, TCNAF will build out additional manufacturing and distribution capacity while also working on expanding growing space. It is expected that this phase will be completed by April 1, 2021, generating an additional $30 million in annual revenues.
- Phase 4 – Finally, in the last phase, the company will build out further growing space, employee areas and maintenance areas. This phase of the project is expected to be completed by June 30, 2021, adding $10 million in revenue capacity.
So, all together, the buildout will take about 14 months. Once complete, the facility is expected to generate $90 million in annual revenue, making it one of the largest revenue generating facilities in the global cannabis space.
A Diversified Product Offering
In order to meet the growing demand that we’re seeing in the cannabis space in California, TransCanna is offering up an incredibly diversified portfolio of products. This portfolio will include dry flower, pre-rolled cannabis cigarettes and cigars, edibles, salves, and concentrates.
By bringing diversity to its product offering, the company will be able to not only meet demand, but hedge its bets by not putting all of its eggs in one basket so to speak. Think about it, should the cannabis market be flooded with dried flower, the company’s other products will pick up the slack while the market balances out.
The Bottom Line
The bottom line here is simple. TransCanna is quickly building itself to become a leader in the California cannabis market. With one of the largest facilities in the space currently being built out, complete control from seed to sale, and a diverse product offering, TCNAF should be on any cannabis investor’s watchlist!
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