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‘Rapid’ cannabis ad spending a win for venture-listed Lift: GMP Securities

Shares (LIFT.V) have fallen over 60 per cent since their debut on the TSX Venture exchange in mid-September.
Shares (LIFT.V) have fallen over 60 per cent since their debut on the TSX Venture exchange in mid-September.

A Toronto-based cannabis data firm and online review platform could be an early opportunity for investors to gain exposure to surging ad spending by Canadian licensed producers, according to analysts at GMP Securities.

Lift & Co. Corp provides market information, offers specialized retail training, helps consumers discover the right pot products, and even hosts events like the Canadian Cannabis Awards.

Shares (LIFT.V) have fallen over 60 per cent since their debut on the TSX Venture exchange in mid-September.

Lift reported revenue of $3.7 million for the 12 months ended on Sept 30, a 232 per cent increase year-over-year. The five-year-old company, with a nearly $18 million market capitalization, has yet to realize a profit from operations.

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GMP analyst Martin Landry said in a “stocks to watch” report on Wednesday that ads on Lift’s website are frequently purchased by licensed cannabis producers. He notes they command a higher-than-average price-per-impression, thanks to the targeted nature of the site.

According to the Cannabis Act, producers cannot take out print advertisements, broadcast commercials or use celebrity endorsements, contests or sponsorships to promote their products.

That narrow scope bodes well for Lift, Landry said. The company’s partners include Canopy Growth Corp. (WEED.TO) brands Tweed and Spectrum Cannabis, as well as Aphria Inc. (APHA.TO) and CannTrust Holdings Inc. (TRST.TO), according to its website.

“Lift is a young company which provides investors an early opportunity to gain exposure to the rapidly increasing marketing spend,” Landry wrote.

“Licensed producers will devote considerable efforts to build their brands within strict regulations.”

GMP has not initiated formal research coverage on Lift, and maintains no ratings, earnings forecasts or price targets on the stock.

Dealing dope data

Current regulations restrict the amount of consumer data licensed producers can collect, and most provinces do not allow their participation at the retail level.

Landry sees Lift’s growing data set becoming an increasingly valuable resource to help producers predict consumer behaviour and demographics. The company sells data through a monthly subscription service, or on a per report basis.

Landry also predicts Lift could see a bump in retail training revenue thanks to Ontario regulations mandating managers and employees at private retail stores complete a training course approved by the Alcohol and Gaming Commission of Ontario.

The province said it will issue up to 25 licenses for the first phase of private stores set to open on April 1, 2019.

So far, Lift has signed multi-year contracts to train retail workers with the Nova Scotia Liquor Corporation, the Prince Edward Island Cannabis Management Corporation, and the Yukon Liquor Corporation.

The company also offers a tablet-based “cannabis concierge” service that leverages its review data to assist sales clerks’ recommendations to customers.

Landry calls Lift an “early entry in a cannabis marketing machine,” while warning the company could face competition if retailers choose to develop comparable in-house services.

He said while Lift has a first-mover advantage in the space, “We have limited visibility on the path to profitability.”

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