How TransCanna is Looking to Dominate a Fractured Market
California is the crown jewel of the emerging American cannabis industry. Thanks to its 40+ million people, the Golden State is the largest cannabis market in the world. Despite this, companies are struggling to find success. This is thanks in no small part to the increasingly stringent regulations implemented by local legislatures statewide.
While the use of cannabis cannot be outlawed in California, legislatures throughout the state have the authority to ban cannabis businesses, including dispensaries and growing facilities. Much to the dismay of those seeking to establish significant market share, the vast majority of municipalities in the state have chosen to shun legalized cannabis.
Local ordinances are constantly evolving, so companies must be sure to adhere to newly passed measures. If they don’t, their business can suffer. Some growers in Anza, California learned this the hard way recently when their growing operations were raided during a city-wide sweep of illegal growing operations. The sweep was preceded by local authorities passing increased regulations on growing operations. Some of these growers were previously authorized to grow cannabis but were unable to adhere to these new regulations, resulting in their operations being shut down.
These increasingly strict guidelines being set statewide have decreased the supply of high quality and compliant cannabis. Companies that can fill this void stand to realize significant market share. In addition, having distribution that is able to work within these ever-tightening regulations will be key to the success of producers in the state.
A Contender Emerges
TransCanna Holdings (CSE: TCAN) (OTCPK: TCNAF) (FSE: TH8) is looking to become a dominant player in California by becoming a vertically integrated producer of cannabis and cannabis derivatives. The company was formed in 2017 and quickly went about acquiring an impressive array of assets, including a 196,000 sq. ft. cannabis manufacturing facility located in Modesto, California that will be the central focus of TransCanna’s business plan. The facility is designed to be a vertically integrated consumer packaged goods facility, with the space and modifications necessary to do everything from growing cannabis to oil extraction and turning those oils into finished products ready for retail.
CEO Jim Pakulis recently did a walkthrough of the newly renovated facility for investors. He highlighted a number of improvements to the facility that he believes will bring value to operations, including purpose-built doors and loading docks, a sealed off warehouse, food-grade manufacturing areas and extraction equipment capable of processing hundreds of pounds of dried cannabis per hour.
Particularly important was their automated trimming and bottling lines. Cannabis trimming and packaging are the most labor-intensive parts of the cannabis production process, so automation will save the company significant capital. These cost savings will allow TransCanna to be more price competitive and increase their market share.
Video source: The Green Scene Podcast YouTube
Building a Suite of Brands
Just in the last month, TransCanna has entered into agreements to acquire three companies that produce products that management believes will drive their business plans. First to be acquired was Belville, a producer of CBD-infused coconut oils. TransCanna plans to turn Belville into a complete hemp division, which will expand from coconut oil to a complete suite of CBD-infused products.
Next up was SolDaze, a leading producer of cannabis-infused fruit snacks. Management did extensive due diligence on the cannabis snack market and came away particularly impressed with SolDaze’s mango snacks, believing they are a superior product to other market offerings. TransCanna plans on manufacturing SolDaze’s products in their Modesto facility.
Finally, management purchased Lyfted Farms, a local licensed cannabis producer. Management believes their growing revenues and premium offerings set them apart from other growers in the area, as evidenced by their products being the best-selling brand in local dispensaries. The Lyfted Farms team will join TransCanna and head-up their growing operations.
Management is also bringing a local Modesto brewery, Persuasion Brewing, onboard to establish a cannabis-infused beverage line. TransCanna will build out a production line in their facility and the Persuasion Brewing team will use their extensive experience to manufacture non-alcoholic CBD-infused beer. Management expects to later expand into an entire line of beverages, infused with both CBD and THC.
A Giant in the Making
TransCanna has wasted no time in meeting California’s need for high-quality cannabis products that meet various state and local regulations. Two years after being formed, the company has acquired one of the premier cannabis production facilities in the country and multiple high-growth cannabis brands. Once operations are fully underway at their facility, expect them to generate revenues that rival some of the much larger companies in the industry.
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TransCanna Holdings is a paid client of The Cannabis Investor.
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