Chemesis International Continues To Aggressively Build Out Its U.S. Footprint

Chemesis International Continues To Aggressively Build Out Its U.S. Footprint

During the last quarter, the cannabis sector has been under considerable pressure and we have been closely following this trend. Although companies continue to execute, the sector has been trading lower on average and we expect this trend to reverse in the coming weeks. The recent decline has brought valuations back down to earth and we want to highlight a company that was impacted by this.

The company, Chemesis International Inc. (CSE: CSI) (OTC: CADMF) (FRA: CWAA) has been nothing short of an execution story and we are favorable on the growth prospects associated with the continued execution.  A few weeks ago, Chemesis issued an operational update for its operating entities in the US, Puerto Rico and Colombia. The update highlighted all aspects of the business and we are favorable on the way this story has advanced over the last year.

Today, we have issued an update on Chemesis and believe that this is an opportunity to be watching. During the last month, the company has been under considerable pressure and has traded lower with the rest of the cannabis sector. The recent decline has put Chemesis back on our radar and we will continue to watch how the team continues to execute.

A US Execution Story in the Making

When looking at Chemesis, we are most excited about the leverage it has to the US market. We are especially favorable on the company’s leverage to the California market and expect this market to be a major growth driver on a going forward basis. Over the next year, we expect the US market to be a major revenue generator for the overall business and will monitor how the team continues to execute on this side of the business.

In the operational update, Chemesis announced that the operations team in California has currently processed more than 3,000 pounds of trim in July and continues to ramp up production at its extraction facilities. We are bullish on the growth prospects associated with this market and are favorable on the way that Chemesis has advanced this operation.

One of the areas that Chemesis is focused on is increased the number of SKUs in its THC infused product portfolio with a focus on beverages, edibles and topicals. The company is on track to fulfill its recently announced a partnership with Happy Tea to manufacture and distribute 3 SKU’s which will be expanding to 9 SKU’s as the brand develops new offerings. Chemesis received a $4,000,000 USD minimum purchase order to manufacture and distribute these products, and we are bullish on the growth prospects associated with this relationship.

Chemesis is one of the few companies to be levered to Puerto Rico and we are favorable on the way this market has advanced over the last year. When it comes to the cannabis opportunity in Puerto Rico, Chemesis has been laser focused on execution and continues to work closely with PR ONE to meet the previously announced $6,000,000 USD annual minimum purchase order.

A few months ago, Chemesis reported to have increased its Puerto Rico cultivation and manufacturing operations after seeing a significant increase in demand for cannabis on the island. Chemesis via Natural Ventures has the ability to produce more than 9,000 pounds of cannabis per year. Once the expansion is complete, the company will be able to produce approx. 30,000 pounds per year and this is something to be monitoring. This expansion allows Natural Ventures to fulfill the previously announced agreements with third-party brands and we are bullish on this aspect of the business.

Through a strategic relationship with VividGro, Chemesis will receive the state-of-the-art LED lighting systems and environmental controls. Natural Ventures has completed the previously announced LED lighting upgrade that was associated with this partnership and this allows the company to operate more efficiently and have lower energy costs. VividGro is a leader in agricultural technology for consumer and commercial applications and we find this relationship to be significant. In addition to the lighting technology, VividGro will also provide the necessary support in all aspects of the build out and this partnership should allow Chemesis to reduce its overhead costs, while increasing production, and maintaining quality.

Last month, Chemesis reported a significant development and received hemp cultivation and processing licenses in Michigan. The company is continuing efforts to plant its first 13 acres of hemp in Michigan and we will monitor how the team is able to execute on this. The move into Michigan represents a major step forward in the company’s planned expansion in the Midwest and will monitor how the team continues to execute.

In late April, Chemesis reported plans to expand and target emerging cannabis markets in the Midwest region of the US. With a population of almost 10 million, Michigan represents a large market and will create additional awareness for Chemesis and its suite of proprietary cannabis products. The granting of hemp licenses in Michigan is just the start of a major expansion and the company plans to continue to evaluate assets and apply for licensing in Wisconsin, Illinois, Missouri, and Michigan.

We have been bullish on the Michigan cannabis market and will monitor how Chemesis is able to expand on its position in this market. In November 2018, Michigan legalized recreational cannabis through the passing of the Michigan Regulation and Taxation of Marijuana Act. According to New Frontier Data, Michigan is expected to be a $755.7 million market by 2020 and represents a major opportunity for Chemesis.

Through its Desert Zen facility, the company also offers distribution and transportation services to cannabis brands which increases efficiency and reduces wait times for companies. This asset continues to operate and provide services for third-party and in-house brands. The team is highly focused on expanding its reach and entering additional dispensaries throughout California and we are favorable on the growth prospects associated with this.

During the last year, the company has been highly focused on the CBD opportunity and we are favorable on this side of the business. Chemesis’ Arizona CBD manufacturing facility is operational and is continuing to provide third-party manufacturing services and continues to work towards GMP certification.

Takes Controlling Interest In GSRX Industries

Today, Chemesis announced it has acquired a controlling interest (66.3%) in GSRX Industries. This relationship continues to prove to be advantageous for the company, as it brings access to GSRX’s dispensary and retail cannabis network. GSRX has steadily increased revenues and continues to grow its dispensary network throughout Puerto Rico, California, Tennessee.

As Chemesis has continued to execute and advance its fundamental story, this investment has started to make a lot more sense. The investment is a part of the company’s’ retail expansion strategy and we are favorable on this aspect of the business. Going forward, Chemesis plans to continue to explore additional opportunities to expand its retail footprint and we will monitor how the team continues to execute.

One of the strategic relationships that Chemesis has entered into is with Rapid Dose which continues to work with the company in its efforts to commercialize its Quickstrip Oral Thin Strips in Puerto Rico, California and Michigan. We are favorable on the smokeless product market and believe that this relationship provides attractive leverage to this vertical of the industry.

Colombia Represents a Major Growth Opportunity

In the operational update, Chemesis issued an update on La Finca which is highly focused on the Colombian cannabis opportunity. La Finca is on track to increase its land package by 10,000 acres within the next three years and the company continues to increase its seed stock to ensure that it is able to significantly increase the planted acreage.

An important part of this update is related to La Finca starting agronomic evaluations in three of the twelve subregions defined by the ICA (Ministry of Agriculture). This is a necessary step as a prerequisite for obtaining commercial cultivar certification per seed type on each of the 12 subregions. Within six months, La Finca expects to have completed all requirements in order to start its propagation plan.

La Finca’s plan remains on track for both the extraction and cosmetics manufacturing lab. The facilities are being constructed under GMP and EU GMP standards in preparation for future exports to international markets. La Finca’s facilities are strategically located next to Bogotá’s international airport, considered a major hub for international flights connecting the América’s and Europe as well as the Caribbean. La Finca is working closely with regulators and is on track to obtain THC cultivation and manufacturing of THC derivatives licenses. This allows Chemesis to partake in one of the fastest growing medical cannabis markets in the world as a potential supplier of CBD and THC raw materials and finished products.

Recent Decline Makes Chemesis an Opportunity to Watch

2019 has been a banner year for Chemesis and we are bullish on the growth prospects associated with the current expansion. Over the next year, we expect to see the company enter new markets and expect this to be a catalyst for growth. We are most excited about the leverage to the California market and will monitor how Michigan operations continue to ramp up. Going forward, we expect to see Chemesis record strong growth and expect US operations to be the primary growth driver.

During the last year, Chemesis has been executing on a multi-faceted growth strategy and has leverage to some of the most attractive cannabis markets. We are bullish on the economics associated with the cannabis cultivation opportunity in Colombia and will monitor how the management team continues to advance this aspect of the operation.

Although Chemesis has been nothing short of an execution story, the shares have been trending lower and this is an opportunity to be watching. If you are interested in learning more about Chemesis International, please reach out to

Pursuant to an agreement between StoneBridge Partners LLC and Chemesis International we have been hired for a period of 365 days beginning July 15, 2018 and ending July 15, 2019 to publicly disseminate information about (CSI) including on the Website and other media including Facebook and Twitter. We are being paid $5,000 per month for a period of 3 months. We own zero shares of (CSI), which we purchased in the open market. We plan to sell the “ZERO” shares of (CSI) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (CSI) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information. This contract has been renewed for a period of 180 days beginning on August 2, 2019 and ending on February 2, 2019.


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Published at Mon, 05 Aug 2019 11:17:25 +0000

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