ManifestSeven: The Importance of Cannabis Distribution
November 23rd, 2020
App, Exclusive, News, Top Story
Most cannabis investors are familiar with cultivation operations and dispensaries, but distribution is quickly becoming one of the industry’s most important components. Although distribution plays a big role in other regulated industries, the cannabis industry has only begun recently to recognize the critical role of distributors in the ecosystem.
Let’s take a look at the growing role of distribution in cannabis and how investors can position themselves to profit from these trends.
A Growing Role in the Ecosystem
The cannabis industry began with a heavy focus on cultivators and dispensaries. Cultivators would produce raw cannabis flowers that would be sold in licensed dispensaries. With the rise of concentrates and edibles, the number of cannabis products has exploded to include everything from CBD-infused topicals to THC-infused beverages.
Many dispensaries want to focus on building relationships with customers rather than trying to source the right products and maintain supplier relationships. Similarly, many cultivators would prefer to focus on growing plants and producing top-notch products rather than marketing their products to dispensaries and managing deliveries.
Thought leader Sturges Karban, CEO of ManifestSeven, weighs in on the cannabis market
Distributors act as key intermediaries in the cannabis ecosystem by providing easy access to a wide range of different products. Dispensaries can have one receipt for 10 or 20 products with a single delivery driver that drops off products while cultivators can sell their products through a single source that often handles a lot of the sales and marketing efforts.
Investing in Cannabis Distribution
There are a growing number of distributors across the United States, but ManifestSeven Holdings Corporation (CSE: MSVN) (OTCMKTS: MNFSF) is one of the largest. With over 200 retail dispensary accounts in its network and 40,000 sq. ft. of operational space, the company covers approximately 88% of California’s sprawling cannabis market—or roughly 23 million people over 21 years old.
In addition to standard distribution, the company operates its own brick-and-mortar dispensaries along with an e-commerce presence. The company’s iconic 1-800-CANNABIS brand fields over 6,000 monthly calls while its subscription services and other efforts have led to a customer marketing database with more than 676,000 names.
The company has seen sequential growth in eight of the last nine quarters with a 300% compound annual growth rate in its revenue since inception. In the midst of the COVID-19 pandemic, the company was able to successfully raise capital and undergo a public listing on the CSE, enabling retail investors to participate in its upside potential.
Strong Third Quarter Growth
ManifestSeven Holdings Corporation (CSE: MSVN) (OTCMKTS: MNFSF) recently reported third quarter revenue that rose 64% year-over-year to $4.7 million, driven by growth in cannabis distribution, delivery and dispensary operations. Nine-month gross margins from cannabis operations also improved to 30% of revenue from 17% of revenue a year ago, suggesting an improvement in profitability.
In addition to top-line growth, the company reported a net loss that decreased 59% year-over-year to $1.9 million while adjusted EBITDA losses fell 69% year-over-year to $1.3 million. Management remains committed to achieving profitability over the near-term as it reduces operating expenses, improves margins and grows revenue.
Distribution plays a critical—and often underappreciated—role in the cannabis ecosystem. With 200+ dispensary accounts, 20+ commercial vehicles and 12 curated brands under focused distribution, ManifestSeven Holdings Corporation (CSE: MSVN) (OTCMKTS: MNFSF) has become one of the largest cannabis distributors in California with plans to expand nationwide and beyond in the future.
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