Rally On, Traders!

As they say, in any gold rush it's the guy who sells the shovels and prospecting gear that really cleans up. Take that "legal green" boom that's sweeping the continent, state by state. The growers and the retailers do OK but there's a lot of competition for every ounce sold at every level of the industry chain. 

We're more interested in the people who come up with a product, service or SYSTEM that every single player in the boom covets . . . companies with vision like Massroots (OTC:MSRT). With them, it doesn't matter who wins or loses on the front lines. As long as they're the company that keeps the back end running across the industry, the sweet cash flows.

Think of how Levi Strauss started. You don't hear about the individual "miners" 150 years after the gold rush. But the name of the guy who sold them all their pants has become a $6 billion behemoth. Now translate that to the GREEN gold rush we have today and the MSRT parallel is obvious.

MSRT has the potential to be the power behind the prospectors, the gold behind the green revolution. Check the latest headlines HERE. They're a news machine.

For one thing, they've just announced intent to buy a company called COWA Science that's already running a revenue rate north of $1.5 million a year selling those back end business systems to green industry hopefuls. We're looking at a complete shelf of solutions that people in other businesses take for granted:

* advertising (you need to be creative given regulatory headaches)
* packaging design
* product development 
* HVAC (a do-or-die necessity in the world of bright growhouse lights and hydration)
* office supplies, ingredient sourcing, etc. etc. etc.

MSRT thinks COWA can at least double that revenue rate and maybe QUINTUPLE in the foreseeable future just to earn out the sweetest incentives in the acquisition. On that basis, this deal can easily pay for itself at that point. From there, it's what we call accretive . . . good stuff!

And as a bonus, COWA has 50 clients already so MSRT gets a golden ticket to UPSELL those forward-thinking industry players. (By the way, you read that right. $1.5 million into 50 means each customer paid about $30,000 last year on average. How many hopefuls are there in this business? Thousands? Tens of thousands? The expansion opportunity hasn't even been scratched, just on the COWA side.)

What does MSRT have to upsell? The company first caught my eye for running an online directory service similar to what Yelp or LinkedIn operate in the established business world. Green retail can't promote itself on those platforms. They think they're above it, so fresh blood with new ideas has a gap there ready to fill.

There's already 1.3 MILLION downloads of the app so far. The audience is plugged in. It's practically a "green social network" in itself.

COWA customers can carve out a space there ahead of competitors. They can also differentiate themselves with other MSRT services. After all, who wants to be in a commodity business when you can be a star? This is already multi-BILLION dollar industry crowded with eager hopefuls with more ambition than acumen.

In the early stages all you needed was cash, a license and a storefront to open a store. Now that there are hundreds of stores in some states, ambition isn’t enough any more.

You need to think like an entrepreneur to make it work here in 2019. That’s where MSRT comes in. They’ve developed all the modern retail tools that store owners in other categories have been using for years.

Tools like loyalty programs. It seems like such a tiny thing, giving repeat customers perks and points. Turns out the clubs have probably saved the airlines over and over . . . it’s made them BILLIONS, literally a profit center.

MSRT has a loyalty program. They call it the WeedPass. At least 100 stores have joined the network in Denver and Los Angeles. No wait, that should be 140. The number actually jumped as much as 40% between press releases, a three-week period.

Yeah, 40 stores in 3 weeks. That’s how fast this program is spreading. The CEO is confident they’ll add “several hundred by early 2019,” which is, you know, NOW. In that scenario, expect a lot of news from MSRT on this front over the next few weeks.

That gets the clock ticking if you want to participate before the word gets out there on Wall Street. After all, this is finally a differentiated play on the Green World. Not just a me-too retailer or someone with oils or a farm somewhere. Finally a way forward.

And it’s definitely a way forward. MSRT wants to charge participating stores for membership in the program. Want to offer your best customers discounts and freebies? Pay a fee. Want to keep your customers from going elsewhere? Pay.

Right now the deal is simple. Spend $50, get a free movie ticket. Now that the program has gone digital with a points-based program in the works, flexibility increases. 

Say you’ve got a hot market and a consumer base that, let’s face it, doesn’t have the strongest attention span all the time. It costs more to attract these people. Retaining their loyalty costs even more.

It’s a kind of “frequent flyer” loyalty program where if someone in the right state spends enough, they get free movie or concert tickets. You know the target audience LOVES the nightlife. And where would they rather shop? Someplace that gives a free ticket or somewhere that doesn’t?

Of course it isn’t pure altruism. Say MSRT buys those tickets in bulk quantities for $5-$10 apiece. The dispensary buys them for $15-$20. It hands them out to anyone who spends $50 or more.

The shopper is happy because free show. The dispensary is happy because it spent $15 to take $50 in sales from competitors. And MSRT shareholders can cheer because at least $5 of that $15 was as close as it gets to pure profit.

Yeah, you read that right. MSRT found a way to turn as little as $5 into as much as $20. Classic entrepreneurial genius. But it’s just one of the ways this tiny start-up is “disrupting” the green industry.

Here's how the MSRT model works in general, whether it's COWA or the directory or the rewards program or a completely new angle. Take the supply chain. Everyone in this industry needs to buy stuff. They have to pay cash for regulatory reasons. Because most of them are very small entrepreneurial businesses, they don't get modern merchant terms. 

MSRT looked into the problem and that's where COWA came from, basically a way to let these scattered merchants pool their buying power and get better pricing. There's close to 10,000 licensed players in this business in the U.S. alone. That's a lot of pool!

Early stages now but the network generated $275,000 in business back in January. As mentioned, terms of the acquisition factor in revenue results as high as $7.5 million in the foreseeable future. This could be big.

After all, MSRT is still a startup itself, barely $12 million market cap as I write this. These numbers can be disruptive. Down at this scale, it's a tidal wave of cash. Even if the network only repeats last year's $1.5 million in revenue, it's a real game changer.

It's how any emerging market category gets credibility and scale: discounts for referrals, incentives for influential reviews, free samples in return for visibility.

MSRT is at the heart of that category. They're the social media network that makes it happen, bridging consumers with the retailers, brands and strain reviews they need to make informed decisions.

Traditional media players still have a hard time with these companies, Forbes says. As a result, just the ad revenue piece here is somewhere between "blue sky" and "green field" opportunity as the industry grows.

It starts with a new idea. Let me show you the Big Three charts in this space and then I’ll show you MSRT. Here’s the usual suspects, all trading alike:

And here’s MSRT. Similar arc in the last few months, but look at the SCALE on the price per share. When this one’s moving right, it’s truly unique. The lines are converging now . . . get ready for the next decisive twist.

The last one unleashed 35% in an uninterrupted burst! This one's just getting started, but WOW:

If you want to invest in the Green World, you can go with your favorite cookie cutter. Or you can throw your hat in with the company that’s helping me-too retailers establish a unique and value-added presence.

Who doesn’t like value? MSRT. It pays consumers rewards. It pays off for retailers. And from that growth curve, it's got the power to pay off for investors as well.

Ticker MSRT

MSRT is listed on the Over The Counter Markets

The company’s ticker is MSRT and is available through most online brokerage firms, for example:

Happy, Happy, Happy Trading!