Cost-Saving, Weed-Drying Machines
a "Pick & Shovels" Marijuana Play
Written by: Trent Blair
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Signing a deal with any of the big 3 or even a smaller producer would attract significant investor and media attention all at once. Those producers that do sign with EnWave will likely become the low-cost producers in the industry while those that don't sign will have to deal with much higher labor, electricity and shipping costs.
Sales to weed producers has a much faster sales cycle and higher royalties per machine than their food business. They get 2-3 times as much royalties per machine with weed versus food. In food they get $200-400K per 100KW machine.
So, they can get up to $1.2 million per machine with weed producers. This and shorter sales cycles is why they should focus a lot of their attention on the weed opportunity.
The main business is licensing machines to food producers. It lowers costs plus makes the food taste and look better. They have agreements with big well-known companies like Jacks Links, Perdue Farms and Hormel. They have signed many deals over the years and are starting to ramp up sales. They first proved the technology out with Moon Cheese.
Moon Cheese is a crunchy cheese chip that is healthy and shelf stable. It tastes really good to me. It's average review on Amazon is 4.2 stars. ENW is cash flow positive from operations with approximately $9 million in cash to ramp up sales if needed. Once royalties get above a certain amount they will start to pay them out as dividends.
They also have a deal with the U.S. Army to develop low weight, nutrient rich, and improved quality. While this is just experimental right now if they end up with a great product this could result in a huge contract with the Army.