BLOCKStrain Technology Corp.’s (TSXV:DNAX) stock price could grow multifold as the Company’s customers and financial performance accelerates
SmallCapPower | June 15, 2018: BLOCKStrain Technology Corp. (TSXV:DNAX) is a unique software company focused on serving the cannabis industry through a proprietary platform that helps craft growers protect their intellectual property. Since its opening day close of $1.06, shares of BLOCKStrain have sank nearly 43% to current price of $0.60.
Absence of listed peers and lack of revenues makes valuing BLOCKStrain tricky and will likely depend primarily on its ability to build customers and deliver decent financial performance. BLOCKStrain currently trades at a market cap of $47 million, which could grow multifold as the Company’s customers and financial performance accelerates. As a result, investors wanting exposure to unique verticals within the cannabis space could look to BLOCKStrain driven by increased customer additions.
Investment thesis
- Unique software company focused on serving the cannabis industry
- Large and untapped opportunity
- WeedMD investment shows proof of concept
Unique software company focused on serving the cannabis industry
BLOCKStrain Technology is a software company focused exclusively on serving the cannabis industry. The Company has developed the first integrated blockchain platform, ‘BlockStrain,’ which registers and tracks intellectual property for the cannabis industry. The platform also streamlines genetic and mandatory quality-control testing process for legal cannabis, thereby significantly reducing administrative time and costs.
Strain Variety Protection Platform protects multiple players
Based on proprietary and cryptographically-secure blockchain technology, the platform could become a single and trusted database for cannabis strains, sourcing important information about the stream that could otherwise appear difficult to obtain. Information such as the global source of the strain, its potency, and chemical makeup globally. Today, BLOCKStrain’s platform is open to everyone and supports APIs that make it easy for testing providers, grow facilities, app and software developers, research groups and major supply-chain platforms to build cannabis-centric applications.
Key characteristics of BLOCKStrain
Large and untapped opportunity
To date, blockchain technology in the cannabis industry has been limited to the use of cryptocurrencies or digital currencies for consumer transactions. However, the opportunity beyond consumer transactions in the supply chain of the vast and growing cannabis industry that encompasses ~5,000 craft growers in Canada and ~50,000 in California, alone, presents a lucrative and untapped market opportunity for BLOCKStrain. The platform enables this large base of growers to protect and license their products and see the visibility of supply chain logistics in real-time, without having to worry about larger players stealing their genetics.
WeedMD investment shows proof of concept
WeedMD Inc. (TSXV:WMD), a Canadian producer of medical cannabis, has made a strategic investment of $500,000 in BLOCKStrain, making it Canada’s first licensed producer to integrate blockchain technology into its ecosystem. The deal also enables WeedMD to expand its wholesale genetics business. The addition of WeedMD serves as a proof-of-concept for BLOCKStrain and paves the way for many more such producers to adopt its platform. Recently, BLOCKStrain added another client, Abattis Bioceuticals Corp. (CSE:ATT), which further validates the platform. As per the partnership, Abattis plans to integrate BLOCKStrain’s proprietary technology into its product and service ecosystem, enabling Abattis clients to arrange for sales, shipping, testing and analysis of Abattis products. This ability should give clients comprehensive visibility over their products during the entire lifecycles.
Outlook and valuation
As one of the first software companies offering a blockchain platform that could revolutionize shipping and supply-chain in the cannabis industry, BLOCKStrain is uniquely positioned to serve craft growers, licensed producers, consumers, and regulators. With more than 5,000 craft growers in Canada and over 50,000 in California, alone, the target market for BLOCKStrain is compelling.
Since there are no listed peers in the blockchain/cannabis space, valuing BLOCKStrain is difficult and will likely depend primarily on its ability to build customers and generate revenues and profitability. BLOCKStrain currently trades at a market cap of $47 million, which could grow multifold as the Company’s customers and financial performance accelerates.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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