Beacon Securities put out a note today on marijuana’s progress through several US states scheduled to vote on the topic of legalization on November 8. Seems the five states voting on recreational marijuana (no kids, it’s not just California) are all polling well for the yes vote.

California is 55% for and 38% against in the latest polling, with some 10x more money being spent promoting the yes side as there is on the no. Massachusetts is also voting, with yes leading by seven points, Arizona sees an 8 point gap for the positive, Nevada is tighter at 47-43 in support, and Maine looks like a cakewalk, with yes leading by 15 points.

Voting on medical marijuana on the same day are Florida (74-22), North Dakota (no polling), and Arkansas, which continues its history of being on the wrong side of history every single time, with the no’s leading by five points there. I guess nobody wants to harm the local meth industry.

But deeper in the Beacon note is coverage of our friends at Tinley which, I think, puts a little more information together and paints a more complete picture of that company’s fortunes going forward.

That coverage comes from Beacon’s institutional research desk, not the retail end, which means the info is going to the heavy hitters of that company’s client base, and that the companies mentioned are deemed of institutional quality.

So, stolen and reposted in its entirety:

Tinley produces the Hemplify line of beverages. Hemplify is made from the stalk of European industrial hemp, which contains terpenes and phytoconstituents, many of which are common to marijuana. One such ingredient, cannabidiol (CBD), is the chemical in medical marijuana which many believe provides the majority of the health benefits, however it does not get you ‘high’. Hemplify contains CBD, but does not contain tetrahydrocannabinol (THC) therefore it can provide many of the health benefits of medical marijuana to consumers who do not wish to get ‘high’. The absence of THC, coupled with the sourcing of CBD from imported hemp, enables Hemplify to be sold in regular stores (i.e., outside the dispensary system) in all 50 states without requiring consumers to have prescriptions. This results in an addressable market consisting of all 50 states (versus being limited to just the recreational marijuana states). Moreover, it enables the company to use mainstream beverage industry infrastructure such as formulators, bottlers, distributors and outsourced sales forces. Hemplify is manufactured in southern California by an outsourced, large-scale bottler (i.e., it does not have the capex associated with a bottling line). Further, because it can operate outside the dispensary system, it does not need to share economics with a local licensee or incur the capex associated with obtaining a marijuana license or building a licensed facility. Hemplify is available in tropical punch and berry passion flavours. The product has many of the “clean label” attributes currently in demand by premium and health food stores (i.e,. sugar free, vegan, non-GMO, gluten free, and “no artificial ingredients”). Hemplify began selling in stores approximately two months ago and it is gathering steam in terms of availability. On October 6, 2016, the company announced that it was available in 50 stores. Today, it is available in ~100 stores, ~90 of them are in California (the remainder are in five other states). The majority of these stores are head and “smoke” shops, with others being premium grocery and health food stores. It is also available online across all 50 states at http://drinkhemplify.com/ and on amazon.com. It typically retails for $4.99-5.99 per bottle. Regarding its growth strategy, management is working to be the first CBD drink to be picked up by a large distributor (i.e. those reaching 20K+ stores). To achieve this, it needs to demonstrate repeat orders by 30+ larger stores within a distributor’s delivery region. While there is no guarantee the company can achieve this milestone, the company believes it will be in a position to apply to such distributors within 6 months. Until then, it will continue to self-distribute and distribute via smaller distributors. Hemplify’s current marketing budget is ~$10K/month. The company plans to use its $4MM of cash to substantially increase its marketing spend to be competitive with other mainstream and specialty drink companies. Tinley has also developed a THC drink called Tinley ’27, which comes in four flavours – amaretto, dark Jamaican rum, gin, and Canadian Whisky. A positive election result in California’s ballot initiative is expected to allow THC drinks to be sold to a much larger base of consumers in the state and with significantly fewer purchase restrictions. Most THC drinks currently available in the state (i.e. via the current medical marijuana program) are craft and boutique-style products, and Tinley is working to exploit an early mover advantage for production of CPG-style drinks. To maximize distribution, Tinley has developed a turnkey solution for licensed cannabis producers to source and operate beverage bottling equipment to manufacture and resell the Tinley products using such producers’ own cannabis. It also enables these producers to develop their own products and operate a contract bottling business for other drinkable cannabis products. The company is presently in discussions with licensed producers in Canada and the U.S. to implement this turnkey solution. The form and structure of each of these agreements depend heavily on the regulatory requirements in each jurisdiction. Accordingly, the company is monitoring the November 8, 2016, ballot initiative on recreational legalization in in California, where Tinley’s current CBD bottling operations are based, as well as the expected unveiling of the Canadian regulatory framework.

— Chris Parry

FULL DISCLOSURE: Tinley is an Equity.Guru marketing client, and the author owns stock in the company.