The House of Green

The flourishing cannabis market

19 Nov 2020 / Corporate research

The House of Green Limited (THOG) seeks to become the largest commercial cannabis grower/processor on the island of Guernsey, with ambitions to become a significant participant in the UK, EU and global cannabis markets. With 15 acres of greenhouses currently under long leases, it expects to start its cultivation activities in 1Q’21. It has established a fully equipped extraction facility on a 20,000 sq. ft. site in Guernsey, and is producing cannabidiol (CBD) distillate using its patented extraction technology. Benefiting from the abundance of available greenhouses in Guernsey, THOG expects all cannabis biomass materials processed by the company to be sourced locally from within the Channel Islands from 2021, although it will have the ability to import biomass should that be necessary. With the UK CBD market expected to grow to £1bn by 2025 and the potential for further relaxation of legislation, demand for high-quality cannabis products for therapeutic and medicinal uses will continue to rise.

  • Next milestone: THOG completed its first batch of sample cannabis oil for distribution to potential customers and testing in October 2020, and expects to have the first Guernsey-grown, high-yielding cannabis harvest from one of its partner growers by the end of November 2020.
  • Capital raise: THOG is seeking to raise a further £1.5m-£2m, which will provide additional working capital for the next 12 months and expand production capacity in its extraction facility. Assuming the quality of the oil meets market expectations and management’s revenue generation target is achieved, THOG should become highly cash-generative.
  • Team: Founded by Charlie Murray in 2018, THOG is now under the leadership of CEO Paul Smith, who has broad experience in startups and business management, and has brought together an international team with relevant cannabis sector experience. Gary Tucker leads the extraction operation. He holds six US patents relating to cannabis processing and extraction hardware, which are in the process of being transferred to THOG. THOG benefits from individuals on the board who are very experienced in the cannabis sector and who operate in highly regulated industries, such as the finance sector.
  • Risks: As well as being an early-stage company with a limited track record, THOG is operating in a highly regulated sector. Any changes in regulations regarding cannabis and its derived products could affect the company’s business. THOG’s success will also depend on its ability to develop wholesale and retail distribution relationships.
  • Investment summary: Since inception, THOG has made considerable progress towards its goal of being a significant cannabis grower and processer on the island of Guernsey, with 15 acres of greenhouses leased, multiple partner growers signed up and a fully operational extraction facility. The acquisitions of Naked Leaf and Oak & Crane have also successfully expanded the company’s operations across the cannabis value chain. It is still early days for significant revenue generation. However, if the company manages to successfully generate sales, THOG’s business may well present an exciting opportunity for investors in the cannabis sector.
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