CLS Holdings USA Buys Entry to Adult Market in Massachusetts

CLS Holdings USA (CSE:CLSH,OTCQB:CLSH) has completed a “major milestone,” in the eyes of one analyst, by securing a recreational marijuana state license holder in Massachusetts.

CLS has an option to acquire the license holder, In Good Health, a local medical dispensary based in Brockton. It received its recreational license for the state last Tuesday (September 17).

According to CLS, In Good Health currently serves over 25,000 enrolled patients and its entire operation could generate US$60 million in revenue a year, with gross profits of US$35 million.

In a statement, Jeff Binder, chairman and CEO of the public firm, said the license was one of the first to be handed out in the state. The executive added that he expects only 27 recreational licenses for retailers in Massachusetts, including the one for In Good Health.

The New England state launched sales of adult-use marijuana in November 2018.

CLS plans to roll out the sale of recreational cannabis products “in the coming weeks.”

“…We expect that In Good Health will quickly build a large and loyal customer base in the recreational cannabis market and become one of the larger recreational use dispensaries in the state,” Andrew Glashow, president and COO of CLS, said in a statement.

In a research note to investors, Canaccord Genuity praised the deal for CLS. However, the note indicates that the firm will most likely still need financial support to complete the acquisition of In Good Health.

Canaccord Genuity has a one year price target of C$1.50 for CLS. Shares of the US company opened on Monday (September 23) at a price of C$0.32.

The public firm expects to complete its acquisition of the cannabis company in January 2020.

According to data from Marijuana Business Daily, as of May, sales of recreational marijuana in the state had reached just under US$140 million in the aggregate since legalization.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.