Plus Products (PLUS-CSE / PLPRF:OTC) already has the #1 cannabis product in all of California, the largest and most competitive market for cannabis in the world – with almost no advertising! They are the leader.
And they are now about to roll out an entirely new line of CBD edibles across the country – in a direct-to-consumer model that is more profitable. Investors want to see a path towards positive cash flow and profits in marijuana stocks and I see Plus Products poised to deliver.
As they go national, Plus Products will lever the Internet and two high profile marketing partners – singer/songwriter John Legend and national mattress company Casper – with their brand of CBD edibles.
In one sense, that’s all you need to know. If you have a product good enough to be #1 in California – with no advertising – and you’re about to take that brand national, with higher margins – you’re going to leapfrog your previous success.
PLUS is also using its war chest – over US$30 million in treasury – for two other expansions: start selling their #1 brand of PLUS gummies in Nevada, and increase advertising in California to gain even more market share.
From these three large expansions – going national with their CBD by far the biggest – I expect growth for PLUS to continue in the coming quarters.
PLUS PRODUCTS HITS THE ACCELERATOR
Plus Products is the number one seller of cannabis gummies (the largest edibles segment by a huge margin) in the state of California with a 21% market share.
It isn’t even a close race.
Plus Products two main gummy products are #1 and #2 in California across all categories – that includes vapes, tinctures, flower, etc.. The next closest competing gummy product has only half the sales of Plus Product’s best seller. Leading cannabis market research group–BDS Analytics–confirm this.
This is the most important race in cannabis and Plus Products is holding down both of the top two spots.
PLUS achieved this dominant position on the strength of its product alone – NO MARKETING! Almost all of this growth to date has been word of mouth from satisfied customers.
Nothing reveals of the strength of a consumer brand more than satisfied customers who tell their friends. Plus Products is #1 because it has the best product.
Now the company is hitting the gas pedal on marketing.
But not just in California… instead Plus Products is rolling out marketing NATIONALLY with its CBD product.
Plus Products is taking arguably the strongest brand in cannabis onto the national stage just as the size of the CBD market is expected to explode.
With USD$34 million of cash in the bank, the company has the financial means to hit this hard at exactly the right moment.
John Legend Agrees With Me – Own The Leaders
Driving national awareness for the CBD product will be Grammy, Oscar, Emmy and Tony award winning John Legend (“All of Me”) with his 30 million social media followers and over 2 billion streams on Spotify.
Legend insisted on taking a Plus Products share position rather than just getting paid cash to act as an advocate for the brand. He knows – Own The Leaders! That has been my biggest investing lesson ever – own the leaders in the industry.
A social influencer on this scale is going to have an impact – consider that companies value this marketing stream enough to pay big influencers $100k plus for just a single post.
This is the most effective marketing nowadays. The Kardashians are a multi-billion dollar business because of social media.
John Legend has a long-term equity position in Plus Products.
There’s another leader partnering up with Plus Products – direct-to-consumer mattress company Casper who is now marketing Plus Products’ CBD gummies to consumers directly on their website.
Casper’s involvement is another huge validation of the power of the Plus Products brand. Casper has rocked an entire industry selling more than $400 million last year of mattresses-in-a-box and other sleep products, in a mostly direct-to-consumer channel–on their website!
Look, Casper could partner with any CBD company it wanted to.
They did their due diligence and partnered with Plus Products… which makes sense given that Plus Products is a dominant brand in the biggest cannabis market.
CBD is known as a product that can chill you out. A mattress company is the PERFECT partner.
And Casper’s online platform immediately gives Plus Products a national presence in front of a massive number of consumers who can right now – as of September 17th – buy Plus Products CBD gummies in 43 states.
The CBD gummies are also being sold directly through the Plus Products website.
Direct To Consumer Is MUCH More Profitable
Rolling out CBD nationally is huge for PLUS Products and its shareholders – not just for the volume of sales growth that it’s expected to bring in – but because direct to consumer is so much more profitable.
So far, Plus Products has only been selling THC and CBD products through third party locations in California. Going directly to the consumer instead is so significant because it cuts out two layers of middlemen.
When selling in stores instead of direct-to-consumer… Plus Products has to sell to a distributor who then marks the product up 30% and sells it to a retailer, who then marks it up 150% to sell it to the consumer.
The retailer’s selling price to the ultimate consumer is over $20 for PLUS’ brand of THC gummies – but Plus Products only gets $6 when it sells to the distributor. That’s a lot of lost margin!
Going direct-to-consumer, Plus Products will be receiving the $35 per tin (due to high demand for Hemp CBD) from the end customer, not $6 from a distributor. That’s an exponential increase!!
And investors should understand that while nationwide CBD sales are great by themselves, there’s another huge benefit. You see, the packaging, the product, everything looks the same as what a customer in California sees today. As the CBD goes national, it’s seeding the Plus Products brand across the country.
This national CBD roll-out will establish the brand so that when THC is legalized…..the Plus Products THC product is the natural choice in every state, just as it already is in California.
(Did you see last week where the governors of Pennsylvania, New York and Connecticut all said they were going to go full legal on marijuana – that should be a huge tailwind for US pot stocks this fall!)
Before I end this, just a quick note on the other two sales efforts that PLUS is ramping up.
Their THC gummies will soon be sold in Nevada.
Next to California, Nevada is going to be the next most valuable cannabis market. With 40 million tourists every year, analysts see $1.2 billion in cannabis spending in Nevada by 2022.
And important to note… Plus Products management is not expecting a slow revenue ramp up in Nevada. Their expectations are to have the #1 edibles position in Nevada by the end of Q1 2020. That would be just six months from now.
I would say that sounds crazy, but that is exactly how long it took them to achieve that feat in the California gummies market following full legalization… with hardly any marketing spending! The brand will already have name recognition in Nevada so it should actually be easier to ramp up revenue there.
Management’s confidence in the ability to grow in Nevada all comes down to the fact that the best product wins – and they believe that they have the best product. The word of mouth momentum that Plus Products created in California shows that.
If Nevada goes as expected, management plans to add another four states by the end of 2020. This is not a company that has small plans. The goal here is to be the leading brand in California first, the entire United States next and eventually the world.
And they have the balance sheet – US$30 million PLUS – to do it!
Lastly – a recent report released by Arcview Market Research and BDS Analytics noted that California cannabis sales will hit $3.1 billion in 2019 – and then quickly more than double again to $7.2 billion in 2024.
Already the biggest market by far… California by itself is projected to be 40% larger than the entire country of Canada and 253% larger than the next-largest state (Colorado) by 2024.
One in four dollars spent on legal cannabis in 2024 is expected to be spent in California. Plus Products will be ramping up their advertising in California in Q4 2019.
Win California, you should win the country. Win the USA and you win the world.
National CBD roll-out with Tier 1 partners. Expand gummy sales into Nevada. Beef up advertising in California. Investors are looking for a clear path to cash flow out of the cannabis sector, and Plus Products is positioned to deliver.
Plus Products has sponsored and reviewed this article. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.
Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.