Rally On, Traders!
The Colorado green boom is big business, with more potential consumers than 60 countries including New Zealand, Finland, Norway and so on. And since 2014, it's become famous for getting friendly with one commodity in particular. You know the one. The state keeps careful records and its 5.6 million population spent about $1.5 billion last year alone.
But until a few months ago the Mile High state of mind was only available to private investors. Public companies were locked out. Denver didn't want outside money and expertise horning in on the local boom. Then the rules changed and the borders opened to big wheels like Medicine Man Technologies
(OTC:MDCL).
The funny story about MDCL is that they were doing nicely working with Colorado growers and retailers as consultants, always one step removed from the real action. Revenue soared 168% last year and is already adding another
65% to that base here in 2019. Cash is flowing and liquid reserves have doubled.
However, MDCL management just wasn't satisfied taking a consultant's cut. They knew the business inside and out. People on their team literally wrote the book on how to operate in this space. They were raking in millions helping entrepreneurs around the country design better grow operations, run tighter retail stores and bring scientific reliability to what's otherwise a wild-and-woolly landscape.
It was great. But they were still eager to get more involved in the plant itself where the source of all wealth in this business derives. They literally wanted to get their hands dirty, especially in Colorado where the mountains shut outsiders out. I can't argue with them.
When the barriers came down, MDCL went in fast and furious, buying the state's biggest sustainable grow operation (it's also the biggest on the continent) and the associated retail / extraction businesses. The
guy selling it is ambitious and near legendary in the industry.
He's thrown numbers like $20 million in revenue around. That's barely a scratch on the $1.5 billion Mile High opportunity, but it just shows you how fragmented the landscape is in this state when the largest "green gold" farm in America has only captured 1% market share so far.
MDCL isn't putting him out to pasture either. He's joining the board of directors and sharing his know-how to help take the company as a whole to the next level. After all, he knows Colorado. He's already built a sprawling 36-acre operation there that complies to the state's rigid regulations, where every sprout is electronically tagged and tracked from seed to sale.
Other people would probably have been happy to pause at that point and digest the acquisitions before moving on. MDCL, on the other hand, knows exactly what it wants. Days after closing the Colorado deal, they expanded into Colombia, which has the climate and space to have become famous in other commodities and is now emerging as a leading exporter of legal "green gold"
products.
That transaction bought them a 271-acre farm and all the associated regulatory paperwork in exchange for about $5.4 million. Do the math. The Colorado operation was 1/7 the size and can ultimately support 1/7 the plants. Its visionary founder poured $10 million into it because he saw a path toward taking $20 million a year in revenue out of that ground.
Multiply his dream by 700% the acreage and MDCL may have made one of the great bargains of our generation. After all, the MDCL team is eager to bring new efficiencies and scientific methods to the Colombian side. They have decades of expertise and plenty of outlets here in the U.S., including their own retail presence and indoor cultivation.
That was practically a "model home" style proof of concept for them in the past, a way to prove that their consultants could actually walk the talk and back up the theories with operations that deliver real cash flow. But now it's something more.
Colorado may still be closed to plants grown elsewhere, but extracts and pharmaceutical ingredients follow different standards. I'm thinking this operation is about to ramp up fast. And in that scenario, every investor hunting angles on this industry (especially one as historically closed as Colorado) should be paying attention.
After all, the chart speaks for itself. I think it's just getting started, much as I think the MDCL management team is still in the early stages of what might just be a plan for outright industry domination.
Happy, Happy, Happy Trading!
