Bottom Line and Supply Chain Improvements; Top Line Growth; Possible Expansion
LEEF Brands Inc. (CSE: LEEF) (OTCQB: LEEEF) is one of California’s leading cannabis extraction companies. LEEF has been generating about $30 million in annual revenue for the past three years and is now implementing plans that should improve that revenue number while also significantly improving the company’s margins. With a market cap around $24 million, LEEF currently trades well below the revenue multipliers of some of the more successful public cannabis companies. That ratio could correct itself if the company performs as it hopes in 2025.
In a recent interview, CEO Micah Anderson gives a detailed overview of the company’s history, expertise, current situation, and plans to grow in the coming years. We’ll break down some of the key passages here, and interested investors can watch the whole interview by following this link.
Company Overview
Here Anderson gives an overview of the company’s business strategy of providing cannabis extracts to leading consumer brands in California. Over the course of 10 years LEEF has become the state’s largest wholesale extraction company, with plans to expand beyond California in partnership with its brand customers currently operating in multiple states.
Production and Revenue Numbers
The CEO discusses the plan to increase both revenue and production levels. Revenue has stayed fairly constant, around $30 million over the past three years, but LEEF is taking concrete steps to boost both the top and bottom lines in 2025. The company has been teetering on becoming cash flow positive and believes it will achieve that in the next year.
The planting of the first 65 acres, out of the company’s 187 plantable acres, on LEEF’s wholly owned Salisbury Canyon Ranch in Santa Barbara County plays a major role in those growth plans while also providing supply chain stability. Anderson estimates that LEEF’s own cultivation can reduce material costs by anywhere from 40% to 65% depending on the type of feedstock used.
The Comparable
Here Anderson talks about the similarities and differences between LEEF Brands and Glass House Brands. Glass House has been successful in California with a business focused on cannabis flower products, while LEEF specializes in extracts. He characterizes the two companies as two sides of the same coin. Glass House trades with a market cap of around 2.5x revenue, while LEEF trades at a little less than 1x revenue. Anderson talks about how LEEF’s planned 2025 improvements could serve to close that gap.
Value Proposition
In this segment, Micah Anderson summarizes the value proposition that LEEF Brands offers to investors. Some of the themes include LEEF’s proven ability to compete in the world’s toughest market, the company’s extraction expertise, its broad array of very successful brand customers, and plans for the company’s imminent expansion.
The Upshot
There is a lot of information from the full interview to be gleaned about LEEF Brands, the state of the cannabis industry, and the road ahead. In general, cannabis companies were greatly overvalued in the initial wave of legalization. Following a sustained correction/downcycle, the market is starting to recognize companies that are actually performing well and making money. Keep an eye on LEEF Brands while the company, already in a dominant position in the nation’s largest legal market, looks to capitalize on that position in 2025.
