INLB - Item 9 Labs (INLB) - Implementing Another Leg of the Growth Strategy
Acquisition Growth Plan. Item 9 Labs has entered into an Asset Purchase Agreement for an existing dispensary license and storefront in Adams County, CO. The national acquisition growth plan is another leg in the Company's strategy for its Unity Rd. franchise operations, complementing the traditional franchise operation as well as the "Local Alliance" program whereby existing cannabis dispensary owners and dispensary license holders can partner with Unity Rd.Details. While Item 9 Labs did not provide cost or a specific location, it is anticipated the location will open within the next 4-6 months once receiving approval from the Colorado Marijuana Enforcement Division. We expect Item 9 Labs will initially operate the location as a Company-owned dispensary while seeking a franchise partner to ultimately purchase the location.Just the Beginning. We believe this purchase to be just the beginning. Item 9 Labs is in multiple ongoing negotiations with other Colorado dispensaries to become Unity Rd. shops. Given management's background in owning and/or operating Colorado-based cannabis companies, we believe the Colorado market presents a perfect starting point. The Company also is targeting Arizona, Montana, and Oklahoma for opportunities to implement its acquisition growth plan.Potential for Cultivation Expansion. One of the key elements of the Item 9 Labs strategy is to open cultivation operations once a critical mass of dispensaries are opened in a region. With this being the second Colorado location, the Company is another step closer to achieving this goal.Maintaining Outperform and $4.00 PT. We are maintaining our Outperform rating and $4.00 12-month price target on INLB shares. Item 9 is combining a traditional cannabis cultivation operation with an asset light franchise dispensary model to expand across the nation. We believe the combination creates a differentiated business model that offers premium products and distribution through an expanding network of dispensary franchises. Read More >>