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article imagePot packaging company sees significant growth with legalization

By Karen Graham     Jan 10, 2019 in Business
Marijuana suppliers, including KushCo Holdings, have seen their sales significantly increase now that three more U.S. states legalized marijuana in some form in November, and Canada's recreational cannabis market opened nationwide in October.
Founded in 2010, KushCo has sold more than one billion units and regularly services more than 5,000 legally operated medical and adult-use dispensaries, growers and producers across North America, South America and Europe reports New Cannabis Ventures.
KushCo is just one of a diverse group of businesses under the umbrella of its parent company, KushCo Holdings, Inc. Other businesses include Kush Supply Co., a sales platform that is the nation’s largest distributor of packaging, supplies and accessories.
Also included is Kush Energy, which provides ultra-pure hydrocarbon gases and solvents to the cannabis and CBD sector, Hybrid Creative, a premier creative design agency for cannabis and non-cannabis ventures, and Koleto Packaging Solutions, the research and development arm driving intellectual property development and acquisitions.
KushCo sees rapid sales acceleration
On January 8, 2019, KushCo Holdings updated its investors on its progress, reporting that sales had accelerated rapidly during the last quarter, showing a 186 percent increase in year-over-year revenues to $25.3 million, setting a new record for the company’s operational history.
KushCo's significant sales growth last quarter is directly attributed to marijuana legalization efforts, as well as the company's strategy that allowed it to enter new markets, including chemical solvents for extracting marijuana's chemical cannabinoids, and marijuana marketing, according to Motley Fool.
A strain on cash and operations is not a bad thing
CEO Nick Kovacevich has acknowledged that with the sudden growth in sales has added to the company's supply struggles. "While we are confident in the Company's upward trajectory, we acknowledge the impact that our dramatic growth has had on our gross margins, in particular, the utilization of air freight and additional cost incurring quality-control measures at our receiving warehouse to meet demand," he said.
With large markets opening in California and Canada, the company's operations are a bit strained and at the end of November 2018, the company had just $3 million in cash and equivalents on its books, down from the $13.5 million it had in August. But having these kinds of problems isn't necessarily a bad thing.
Markets are continuing to open up, like in Massachusetts, and then there is Michigan, which voted in November to legalize Marijuana for recreational use. KushCo shares on January 10, 2019, are trading at $6.43, up 0.24 or 3.88 percent as of 12:50 p.m.
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