I know you’ve heard of edibles. But have you heard of drinkables? If not put it on your radar – it could be the next big thing in cannabis.
Constellation Brands (STZ), the third-largest beer maker in the US and distributor of Corona, sent shock waves through the cannabis industry two weeks ago when it announced a $200 million investment in Canopy Growth Corp (TWMJF), the largest cannabis company in the world.
The plan is to develop cannabis-infused drinks – also known as drinkables.
The deal looks like a game changer.
Not only does it get big alcohol directly involved in the cannabis industry, it also sets the stage for an explosion in the popularity of drinkables.
This mega-deal between Constellation and Canopy got me thinking – are there other cannabis companies that specialize in drinkables that will benefit from this trend?
After spending a few hours looking for tickers, I uncovered three little-know cannabis companies that specialize in drinkables.
For the time being, I am going to share the one I believe has the highest probability of long-term success.
Tinley Beverage Company (CNSX: TNY) is a Canadian cannabis company that specializes in hemp extract and THC infused drinkables.
Shares are listed on the Canadian Stock Exchange under the ticker symbol TNY and in US OTC markets under the ticker symbol QRSRF.
With a market cap of just $27 million, this is an early stage cannabis company that I would classify as high risk. Not only are smaller stocks vulnerable to extreme volatility, but also because Tinley operates in the US where medical and recreational cannabis are both still illegal at the federal level.
However, despite the risk, I also see a unique opportunity to invest in a very young company with some of the most innovative drinkables in the cannabis industry.
Tinley consists of two companies.
Tinley Tonics & Hemplify sell two hemp-extract products – a chocolate hemp extract squeeze and hemplify vitality elixir. Take a look below.
The goal of these products isn’t to get the user stoned. These hemp extract products are daily supplements similar to taking vitamins – designed to promote health and wellness.
They are available in retail locations in California and online nationwide through Amazon. No medical recommendation or dispensary membership is required.
The second company is The Tinley Collective – a California Co-Operative Corporation that provides medical cannabis to its members under California’s medical cannabis program.
This company has some really interesting things going on.
It has created a line of cannabis-infused non-alcoholic liquors that are designed to look and taste like the real thing.
Take a look at their products below and you’ll understand the concept.
The objective is to create the social effect of enjoying a cocktail while consuming cannabis for medical or recreational purposes.
These products have both medical and recreational applications.
I have never heard of anything like this in the cannabis industry. It’s a pretty radical concept.
Tinley is Working Hard to Expand its Distribution Network
Tinley is still in the early stages of commercializing its drinkables. There was no revenue in 2016 and revenue in the first six months of 2017 came in at around $50,000.
The goal moving forward for these products is pretty simple – expand the distribution network, gain new customers and grow revenue. Tinley has been working hard to make that happen.
On January 16, 2017, the Tinley announced that its wholly-owned subsidiary, Hemplify Inc. had signed with LA Distribution Co. for distribution of Hemplify throughout Los Angeles County and Orange County. LA Distribution Co. is a leading wholesale distributor that serves over 2,000 businesses. It has a strong track record of identifying and being early adopters of healthy and innovative beverages.
On March 28, 2017, Tinley announced that it has retained Critical Mass Group to grow its sales and manufacturing functions. Critical Mass has a proven track record of helping growing beverage companies maximize their success and profitability by optimizing supply chain management, marketing, sales and distribution.
On June 21, 2017, Tinley announced the launch of its creamy chocolate squeeze supplement. This Hemp Extract Squeeze Supplement (“HES”) is designed to be mixed with Tinley’s cannabis beverages to create chocolate rum and chocolate amaretto desserts and cocktails which would be the first product to be branded under the “Tinley Tonics” banner to be aligned with the Tinley-branded cannabis drinks.
The company’s key distributors have agreed to distribute this product at existing retail locations of the Hemplify drinks and expect to place the product in coffee shops and cafes to be sold as an add-in to coffee and smoothies.
As you can see, Tinley has a lot going on right now. I’m eager to see the next quarterly report to see how its efforts are paying off.
Investors are Pricing in a lot of Good News
Tinley has a market cap of $25 million. Considering the company reported revenue of just $50,000 in the first six months of 2017, that is a steep valuation.
Tinley will need to show material sales growth in early 2018 when recreational cannabis goes legal in California to justify its share price.
Tinley Looks Well Capitalized with $3.9 Million Cash on the Balance Sheet
Shareholders are eager to see Tinley grow sales and turn a profit. However, the company has a strong financial profile that gives it time to grow.
Tinley is well capitalized with cash and working capital of $3.9 million. That should give Tinley at least a two-year window to grow its brand.
Shares are Advancing Toward the 52-week High
Tinley ripped higher in the fall of 2016 with the broader cannabis sector.
Since then shares have generally been weak, trading in a narrow range 50% below the 52-week high.
More recently shares have been strengthening again. It looks like Tinley wants to make a run back to the 52-week high and then looking for a breakout into fresh powder. Take a look below.
The Big Picture
Drinkables could be one of the fastest growing cannabis sub-industries. Tinley is an early stage cannabis company specializing in drinkables. The company is executing an aggressive plan to expand its distribution network and grow sales. If the drinkables market catches on, Tinley is in position to cash in. I view Tinley as a high-risk cannabis stock and a peripheral holding in a diversified cannabis portfolio.