Choom’s Niagara Jackpot Signals Buy Opportunity

Choom’s Niagara Jackpot Signals Buy Opportunity
Choom’s Niagara Jackpot Signals Buy Opportunity

  • First-day sales of >CAD$49,000 project to first-month revenues of approximately CAD $1.5 million
  • Niagara retail store is one of only 11, in a province with a population of >14 million
  • Choom building Canada-wide retail footprint
  • Lagging share price signals buying opportunity
 
It’s all in the numbers.

TSI reported earlier this week that Choom Holdings Inc (CAN: CHOO US: CHOOF) racked up more than CAD$49,000 in opening day sales for the Company’s new Niagara Falls retail cannabis dispensary, in the province of Ontario.

This projects to first-month revenues of approximately CAD $1.5 million. Choom President and CEO Chris Bogart framed the news.

“Doing over $49,000 in sales on the first day of operation is a great milestone for us and our team who have worked so hard to get where we are today.”

Yes, but at the same time, Choom’s first-day sales at Niagara are hardly surprising. Again, the numbers do the talking.


(customers dive into on cannabis products at Choom's new Niagara Falls dispensary)

The province of Ontario has a population of over 14 million people. Yet roughly 8 months following the national legalization of cannabis, the Province still has a meager 11 retail cannabis dispensaries – including Choom’s Niagara Falls store.

One dispensary per (roughly) 1.3 million people. It’s good to be a cannabis retail dispensary operator in Ontario.

TSI has crunched the numbers here in a previous TSI Exclusive. The best way to put Ontario’s cannabis retailing into context is to compare it with the province of Alberta – the location of Canada’s “cannabis capital”.

Calgary already has 29 cannabis stores. Ready for 25 more in the weeks ahead?

With the provincial government's decision to lift a moratorium on new stores, it's expected to clear five new stores to open in Alberta each week as pot supplies improve.


As TSI noted, once the new stores open Calgary will have more than 50 cannabis retail outlets, equating to roughly one dispensary per 30,000 people. A total of 197 development permits have already been approved by the city for potential additional dispensaries.

Obviously, Ontario has gone a much different route than Alberta, severely restricting the rate of new cannabis stores. The province has ironically dubbed this a “lottery” system for awarding new cannabis retail store licenses.

Now Choom (and its shareholders) has one of these ‘lottery tickets’. As the Company has already reported, they are holding a winner.

You would never know this by looking at Choom’s chart.



(chart courtesy of Stockcharts.com)

The Company was flying high in March 2019, with its share price trending above CAD$0.80. As of this writing, CHOO sits at $0.47. Opportunity knocks.

Choom is positioning itself as a major retail presence in Canada’s cannabis market. The Company has done its homework here.



And Choom is targeting all of Canada for its retail footprint.

Choom is (naturally) very active in Alberta: 30 sites leased/permitted, 19 applications under consideration by the AGLC, 9 stores completed, and 3 already open. The Company also has retail operations in British Columbia and has announced a move into Manitoba.

Many legal cannabis dispensaries in Canada are already reporting robust sales numbers. Again, further context is required.

While cannabis was legalized nationally in Canada in October 2018, projected (legal) sales of recreational cannabis in Canada this year amount to only 28% of the Canadian cannabis market. The remaining 72% is expected to flow to the black market in 2019.

Think “iceberg”. Today, the Canadian cannabis industry is still deriving its revenues from just the tip of this cannabis iceberg.

Tomorrow? More “lottery winners”: Canadian retail cannabis companies – and their shareholders.


 
DISCLOSURE: Choom Holdings Inc. is a paid client of The Seed Investor