Glass House Brands: Cannabis Company With High Optionality

Aaron Edelheit of Mindset Capital presented his investment thesis on Glass House Brands (Canada: GLAS, OTC: GLASF) at Best Ideas 2022.

Thesis summary:

There is a possibility that Glass House, which recently traded at around $4 per share, can earn more than $12 per share in cash flow when its new state of the art greenhouse is fully up and running and if — and yes, this is a big if — interstate commerce is allowed in the cannabis industry.

A caveat: interstate commerce is probably a long way off. As an option, the cash flow numbers are so enormous in an interstate commerce scenario that the upside potential of interstate commerce should be valued at something north of zero. Even if there is a 5% chance of interstate commerce happening, that option alone might be worth $12 per share (20 times $12 per share times 5%).

Even if interstate commerce never happens and if it is only allowed to sell in California, when Glass House gets to scale in its new state of the art greenhouse, it should generate somewhere between $2 and $6 per share in cash flow. This is still a stunning number and could send Glass House up 7 times and possibly more than 20 times from the recent share price.

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About the instructor:

Aaron M. Edelheit is the CEO and Founder of Mindset Capital, a private investment firm. Aaron also was the Chief Strategy Officer of FLO Technologies, after being one of the first investors in the company, helping the company grow from a pre-revenue startup to raising $28 million and launching in over 500 Home Depot stores. FLO was acquired in January of 2020 by Fortune Brands. In his previous role as CEO of The American Home, Aaron founded and grew a company from 16 rental homes to one that owned 2,500 single family rental homes and was sold in April 2015 to a publicly traded Real Estate Investment Trust. Aaron also founded and ran a successful money management firm, Sabre Value Management from 1998 to 2011. In 2018, IdeaPress published Aaron’s first book, The Hard Break: The Case for a 24/6 Lifestyle. The book makes the case for taking one day off from work, email and smartphones for a more productive, healthier and more creative life. Aaron currently serves on the board of Dignity Moves, which builds cost effective housing for those experiencing homelessness. He has also served on the boards of non-profits such as the Moishe House Foundation and Global Village Project. And he is also a member of Social Venture Partners in Santa Barbara, California. Aaron has also been featured and quoted in the Wall Street Journal, New York Times, Bloomberg, and CNBC among others and has given lectures on business and entrepreneurship in the U.S., Canada and South Africa.

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