iAnthus Capital Holdings Inc (CNSX:IAN) (OTCMKTS:ITHUF) (FRA:2IA) post-earnings conference call took place this morning. And as expected, the salient details within provided the most interesting color at a time where IAN’s quarterly financials meant little. We explore further.

Yesterday’s iAnthus Capital Holdings financials were, as anticipated, a relatively benign event (ER details can be found here). With MPX Bioceutical Corp. financials not yet consolidated—and with the company knee-deep in build out mode—IAN wasn’t expected to do much today; and not much it did. After a modest on-open purge which saw the stock touch 6’s territory on the CSE ($6.99 to be specific), dip buyers came in to stabilize IAN near the midpoint of its daily range. But by session’s end, late-day buying helped flip iAnthus stock from red to green, ending ↑1.74%.

Pivoting towards the company’s conference call (a.k.a. “main event”), several informative tidbits were disclosed. There was the usual hyper-focus on cost of capital, which iAnthus feels an additional 2% performance advantage versus its competitors can yield outsized gains in the common (similar to valuation disparities afforded to many industry leaders in different sectors). The company also gave additional color of MPX Bioceutical product penetration rates (90%) in Maryland and regional strategy. And the conference call wouldn’t be complete without the requisite big forward-looking expectations given to various analysts in attendance.

Just finished reading the entire iAnthus CC transcripts. One big takeaway was this quote about $IAN $ITHUF expectations: "The opportunity isn't just about [being]… a $10B company. It's about a $30B company, or $100 stock. But you don't get there just by wishing and hoping." — Benjamin A. Smith (@BenjaminA_Smith) April 2, 2019

But in our opinion, iAnthus’ musings on their recent interim agreement to acquire CBD For Life perked our interest the most. Why? Because by the sound of CEO Hadley Ford, the acquisition is a key segue into something much bigger. Take a look at this portion of the call transcripts:

“…But they (CPGs) are all actively interested in the world to CBD and if you’re going to be an MSO that matters in the United States… So if you don’t have a viable CBD business, you’re not going to have a cogent discussion with them. So strategically, it makes a lot of sense to have a CBD. So that in those discussions with potential partnerships with bigger, more established companies from a brand perspective.”

Of course, many investors could surmise that the CBD For Life acquisition was an important piece to the company’s operating strategy. Very few Tier-1 players are absent of CBD strategies—or thinking hard about acquiring them—in one form or another. But for the first time since that March 29th press release, iAnthus Capital Holdings is explicitly stating that CBD For Life is a key potentiator for CPG or retail partnerships down the line.

And we’ve recently witnessed the kind of positive effects these types of partnerships can generate.

On March 21st, Curaleaf Holdings lifted into blue sky breakout territory by smashing its previous all-time high by rising ↑31.86%, on volume which eclipsed the previous benchmark by ↑116.57%. The biggest catalyst in the equation: a distribution deal with CVS Health to begin selling CBD-infused products at 800 stores in eight states. Overall, CVS has a footprint that includes over 10,000 pharmacies worldwide. To date, the momentum is CURA stock still hasn’t abated, closing the session at $13.36/share today.

Not long after the Curaleaf news, The Walgreens pharmacy chain announced they will sell CBD-infused creams, sprays and transdermal patches in 1,500 stores across nine states. To date, the company declined to identify the brands it plans to carry, but several MSOs will compete to fill the void.

Of course, perhaps the strongest of the Tier-1 MSO names is Charlotte’s Web Holdings, which finished with its 6th record high close in eleven session. While CWEB hasn’t announced an official distribution deal, there’s speculation that such a deal is in the works. After all, remaining insulated within your own limited supply channel is a sure way to lose market share.

Final Thoughts

Although iAnthus’ acquisition of a relatively small CBD outfit went mostly unheralded, it’s clear the purchase could be a bigger deal than many realize. While CBD For Life’s modest 750 retail location footprint is dwarfed by larger power players in the industry, the piece puts iAnthus in the game as they attempt to woo CBD-interested conglomerates to the table.

Given the deal size, we’re under no illusions that happens right away. But it does give investors an important long-cycle catalyst to consider, while giving iAnthus a tangible starting point as they inevitably seek to wholesale CBD products on a national level.