As much of the mainstream financial media is covering the more major earning figures released today, such as cannabis giant Cronos Group , it’s easy to miss some of the smaller companies whose recently reported growth figures are extremely impressive even in sectors as young as marijuana. One of those companies is Plus Products Inc (CSE: PLUS), which provided its unaudited revenue estimates today which, among other things, showed a 776 percent increase in sales.
The company, which operates primarily in California, saw Q4 2018 revenues at $3.4 million, a 776 percent increase from the same time last year. Most of this drastic increase came from the new brand portfolio of cannabis products the company released.
Plus’s cash balance increased to $22.9 million as well, as opposed to the $0.3 million during the same time last year. While much of this increase came from the company’s IPO, even before this happened in October, cash reserves were at $11.1 million, which means that reserves doubled over the past six months.
While officially unaudited, reports from other analytics firms are verifying that Plus Products sales in the fourth quarter were particularly strong. According to BDS Analytics, the company’s Q4 sales increased by 39.6 percent in comparison to the previous quarter. Another retail analytics company, Headset, found that one of Plus’s CBD gummies was the top-selling branded product out of 20,000 different products sold in the cannabis sector across California.
“We are proud that in a year where the greater legal California cannabis market shrank and underperformed expectations, PLUS had significant growth in both revenue and market share. When the legal market shrinks in its first year of enforcement, the most likely culprit is an increase in underground markets sales as some businesses struggle to figure out how to adapt to the new legal landscape,” said PLUS Products co-founder and CEO Jake Heimark. “We believe regulation is ultimately best for the consumer because it ensures businesses will be held accountable to create safe products that are consistent in quality and dosage. For the legal industry to grow and thrive, regulation needs to be uniform and clear so that businesses of all sizes can adapt, and we hope that in 2019 increased enforcement and regulatory clarity will help drive growth in the legal market and help make cannabis safe and approachable for everyone.”
What Heimark is referring to is the growing black-market presence in California, with many companies in this space seeing reductions in sales and growth. According to a new report from the Cannabis Advisory Committee on California’s first year of legal pot sales, the current enforcement situations is mainly “fragmented and uncoordinated” despite best efforts. “Lack of enforcement is creating a thriving environment for the unregulated underground market,” read the report, which said the problem is getting worse instead of better. At the moment, around 80 percent of the cannabis sold in the state comes from black market sources.
While this is troubling for the legitimate cannabis providers in the state, it does mean there is still a significant opportunity for companies to gobble up this massive percentage in the future should authorities crack down on this illicit activity.