The much-anticipated Michigan-based Gage Growth Corp. began trading today on the Canadian Securities Exchange (CSE) under the symbol “GAGE”. We’ll be going over some key highlights’ investors need to know about GAGE, and why we think Gage Growth Corp. will be a cannabis stock you’ll want to keep your eyes on in 2021!
Lock-Up Agreements are in Place for the Offering
It is typical for insiders of a company to enter into lock-up agreements to prevent them from selling shares for a period. This IPO is no exception, with the company’s founders, directors and offers entering a voluntary lock-up agreement, which represents 67% of the voting rights (72% on a fully diluted basis). 10% of the locked-up securities will be released on the listing date, with 15% locked for three months and 75% released after six months.
GAGE Closed its Regulation A in January, Raising US$50 Million
The company announced the final closing of its oversubscribed Regulation A, Tier 2 equity financing in January. It has raised $50 million in return for 28,571,400 subordinate voting shares at $1.75 each. The company stated that it expected to use the Regulation A proceeds to grow its retail footprint and scale its business in the growing Michigan cannabis market.
GAGE is Centered in Michigan, a Cannabis Hotbed with Over a Decade of Legal Medical Use
Michigan is one of the fastest-growing markets for cannabis. "We realized in the early days that Michigan was going to be a top-five cannabis market in the US, and we invested heavily in our human capital and hard assets so that the company is well-positioned to dominate this market," Gage CEO Fabian Monaco said. The state’s medical marijuana program has been in existence for over a decade, which has laid a foundation for the recreational market.
December 2019 was the first month of legal adult-use sales and produced revenue of $7 million. In 2020, the Michigan market delivered almost $1 billion in sales. January 2021 saw sales of $108 million, annualized to 1.3 billion. The company believes that this trajectory could make Michigan one of the top five cannabis markets in the US for 2021.
Gage Growth has an Exclusive Partnership with a Cookies
Gage Growth Group has an exclusive partnership with Cookies, a leading lifestyle and cannabis brand, in the state of Michigan. Cookies was founded by master grower Jai and famed rapper and entrepreneur Berner. Together, the duo is responsible for crafting one of the most sought out strains known “Girl Scout Cookies”. In addition to operating these dispensaries, Gage holds exclusive rights to the cultivation, processing and retail sale of all Cookies brand products in Michigan. One Cookies dispensary is located in Kalamazoo, with the other located on Detroit’s 8 Mile. The company currently also operates five Gage-branded dispensaries in the state.
GAGE Has Excellent Metrics for the Dispensaries It Operates and Plans to Grow Its Retail Footprint
Gage currently operates seven dispensaries and plans to average one new store a month for 2021. Gage plans to operate 20 dispensaries by the year’s end. Gage’s metrics for operating their dispensaries are some of the highest in the industry. Using the average basket calculation of dividing total retail sales by the total number of transactions, the company’s average basket in 2020 was a healthy $164 compared to the estimated average state basket of $85. Gage is targeting an average of $1 million in sales per month for each dispensary it operates. It is currently exceeding that measure.
GAGE has Three Processing Centers to Serve Their Dispensaries
Gage operates three licensed cultivation and processing centers in the state of Michigan, which serve the dispensaries they operate in Michigan. The company grows its plants using sustainable and responsible 100% hydroponic cultivation methods. They are committed to high-quality, low-cost indoor production, growing their product in small batches and enabling the production to operate at scale.
Growing Canadian Market For Gage Growth Group
Gage also has a growing brand in Canada and is known for their top shelf cannabis in key markets like the province of Ontario. In addition to GAGE growing its footprint in Canada, the company has also entered into a retail license agreement and support agreement with Cookies Retail Corp Canada, to open Cookies branded stores in the Province of Ontario. However, on September 27th 2020, GAGE and Cookies Retail Canada Corp entered into an assignment agreement to assign the rights, titled and Ontario Cookies Agreement to Cookies Retail Canada Corp also known as Cookies Canada, in exchange GAGE received 4,000,000 shares of Cookies Canada and certain rights to maintain an 80% interest stake in Cookies Canada. Cookies is a massive brand in the United States and with the brand known for its superb quality, its set to do quite well as Canadians are quite the “chronnoisseur”, and already seek top shelf cannabis such as GAGE Cannabis products.
Gage Growth Group Has a Leadership Team Well-Versed in the Cannabis Industry
Gage Growth Corp’s Chairman Bruce Linton was the former CEO and chairman of Canopy Growth Corp. He brings a wide array of unmatched strategic and capital markets support and has served as an executive for companies in similar industries. Fabian Monaco, the company’s CEO and Director, has over ten years of capital markets, investment banking and legal operations experience. He has a great deal of experience in an advisory role for the cannabis industry. Michael Hermiz is the company’s co-founder and director. He founded a federally licensed producer in Canada and has a track record of success in a variety of industries.
Gage Growth Corp is a strong player in the formidable Michigan cannabis market. They have built a substantial infrastructure in the cultivation, processing and retail merchandising of their product and have built a relationship with a premium brand in Cookies. The interest in the company’s Regulation A offering was strong and with the proceeds of their IPO, the company is poised to continue growing.
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