Cannabidiol, or CBD, is the main non-psychotropic active ingredient in cannabis and hemp. In the United States, passage of the 2018 Farm Bill led the federal government to declassify hemp as a dangerous drug, opening the doors for states to implement regulatory programs overseeing legal hemp production and processing. As a result, the CBD-in-everything-you-can-imagine trend has launched into the stratosphere, with products ranging from beverages to beauty aids to edibles to tinctures either on the market or about to be introduced. CBD has gone mainstream, with celebrities and athletes extolling its benefits.

One company very active in the space is SinglePoint Inc. (OTCQB: SING). The technology holdings and investment company operates in a variety of business verticals, including solar power and mobile payment solutions. Over the past couple of years SinglePoint has been aggressively growing its presence in the cannabis industry overall, and specifically in the hemp/CBD market.

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Flagship CBD Portal, and Much More

Launched in 2017, SinglePoint’s e-commerce site SingleSeed.com offers a wide variety of both in-house and third-party products ranging from topical creams to enhanced water to dog treats to vape cartridges. SinglePoint is actively growing the selection through its own product development efforts as well as through distribution partnerships with other brands.

To complement these efforts, the company operates a manufacturing facility in Carlsbad, California. The licensed factory provides formulation and production services for multiple brands, developing products both for its own SingleSeed brand as well as for partners on a white-label basis. Strategically located between Los Angeles and San Diego, the facility serves the world’s largest legal cannabis market (California) as well as the broader and recently-legalized national CBD market.

Expansion into the facility came as a result of SinglePoint’s 2017 acquisition of DIGS, an online, retail, and cannabis consulting company based in California. Carey Haas, DIGS CEO, recently stated that “Developing and manufacturing finished goods for clients of all sizes has been our key to success. With low minimum quantity orders, we are able to work with small clients and scale with them as they grow. Offering hemp topicals, lotions and vape pods and much more we are able to fulfill a vast array of services for clients. In just the last 60 days, we have moved into a larger facility, taken over $50,000 in orders, and acquired clients looking to increase production and reorder additional products.”

SinglePoint recently ensured consistent supply of high quality hemp for CBD processing through an agreement with hemp and CBD-isolate supplier JMSJ Holdings. The company also announced a deal to be the master distributor for a line of hemp CBD ‘cigarettes’ called Pure Hemp. SinglePoint aims to leverage its extensive distribution relationships as well as CEO Greg Lambrecht’s history with Premium Cigars International, an online and direct marketer of fine tobacco products he led to an IPO.

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Complementary Initiatives

Early in SinglePoint’s history, the company launched payment processing services into the burgeoning legal cannabis industry. That initial effort showed a lot of promise but ran into too many regulatory roadblocks to make it practical at such an early stage of the industry’s development. The company sees more opportunity now and is refocusing its payments and merchant services offerings in the cannabis and hemp spaces, alongside a variety of other retail business verticals. Developing these accounts could complement SinglePoint’s product distribution efforts by establishing trusted relationships with retailers in the space.

SinglePoint is also investigating the introduction of its highly successful Direct Solar model into the cannabis cultivation space. With high electricity costs among the biggest concerns for cannabis producers, the company sees a natural fit with small-scale solar operations. Direct Solar also has financing capabilities, making it as easy as possible for commercial customers to make the leap into solar.

Covering the Bases

SinglePoint is an investment company with disparate holdings, but there are definitely connectors amongst its businesses as they relate to the cannabis and hemp industries. The company offers equipment and consulting to growers, formulation and production of hemp-derived products, distribution through its online portal as well as through brick and mortar sites, its own retail product lines, and merchant services to retailers. That sort of comprehensive, vertically-integrated presence in the hemp CBD and cannabis world has been SinglePoint’s goal for some time. Through a flurry of recent developments, it is becoming clear the company is executing on all fronts in the high growth world of legal hemp and cannabis products. Stay tuned for further developments…

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About Robin Lefferts

Realize it or not, we are in the midst of an energy transformation away from fossil fuels.  Need evidence? Tesla recently shattered its record for electric cars delivered during a quarter. Ford is pumping $500 million into Tesla rival Rivian as the electric car industry heats up. Keeping promises made on the campaign trail, President Trump has been performing CPR on the coal industry since taking office, yet use of the dirty fuel is at a 41-year low.

Further, while financial institutions worldwide restrict investments in carbon-spewing fossil fuels, billionaire investors like Bill Gates, Jeff Bezos, Richard Branson, Mark Zuckerberg and Jack Ma are following market trends towards clean energy to protect against climate change.

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It’s a seismic trend shift that fully-reporting diversified holding company SinglePoint, Inc. (OTCQB: SING) intends to capitalize on as well.  In May, the company made its largest acquisition ever, bringing solar-broker upstart Direct Solar of America into its portfolio. It hasn’t taken long for SinglePoint to see the rewards of the novel business model.

Why Residential Solar?

Direct Solar has only been around for about 1-1/2 years. The company was born out of the vision of its CEO, Pablo Diaz, when his real estate development company was asked to bid the solar portion of a golf facility complex. Noticing the steep growth curve opportunity, Diaz founded Direct Solar with the plan of re-shaping the traditional solar sales business model with a process that could get solar onto more houses than ever before.

Being well attuned to the contracting space, Diaz recognized the high expense to assemble the necessary infrastructure and the lengthy time to action to penetrate multiple markets, much less the entire U.S. with a new solar company. He also was wise enough to see that, while it was a commercial job that introduced him to the market, residential comprised less than 1.5 percent of the $187 billion solar market in 2018.

A little more due diligence revealed that the default rate on residential solar is less than 1 percent. Diaz attributes this to the fact that homeowners are conditioned to pay their electric bill every month without fail.

The solution to offering homeowners affordable alternative energy was for Direct Solar to become the first company to employ a Rocket Mortgage business model, serving as a broker between contractors, lenders and consumers.

The process is brilliantly simple. Leveraging all available subsidies from local to federal, a network of licensed solar contractors and a group of money lenders, Direct Solar provides homeowners an opportunity to take money typically spent monthly on an electric bill and divert it to a solar system. Subsequently, the homeowner realizes not only the benefit of reliable energy, but economic benefits also, such as improved home value and electricity that is cheaper than buying from a utility company.

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Who Loves It?

Homeowners love Direct Solar because the company is a one-stop shop. Just like people go to Lending Club (NYSE: LC) to utilize the firm’s vast loan resources and technology to quickly vet lender’s varying covenants, Direct Solar saves people hours of wasted time and headache to find loan options.

The company is also versed in all the different solar subsidies for homeowners. For instance, the U.S. government offers a 30% tax credit for the whole installed cost of a system. On the state level, Illinois’ “Solar For All” program has made the state a veritable hotspot for the industry with lucrative subsidies to drive installations.

When consumers are educated that they can add a material asset to their home, save disposable income and do something good for the planet with the government paying perhaps for one-third or more of it, the option can be quite attractive.

Furthermore, consumers can enjoy Direct Solar curating the job for them. Not every contractor is perfect for every job. Rather than a homeowner meeting and trying to select from the contractors bag of goodies, Direct Solar makes sure that the contractor fits the customer’s complete needs.

Contractors love Direct Solar because they are bringing business from people actively looking to add solar to their home. To that point, Direct Solar is effectively a free advertiser and marketer bringing work to contractors. Customer acquisition is a financial burden for solar companies that often cannot be justified from either advertising or sales staff perspectives.

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That translates immediately to the top and bottom lines for contractors.

In order to readily penetrate new markets across the country without making a physical appearance, Direct Solar has created proprietary online training software to educate partners on the complete process. The company is already operating in eight states, with the entire nation now accessible with the software.

SinglePoint has been relatively hush-hush about another asset of Direct Solar that came with the acquisition called AI Live. A few teasers have been dropped here and there about the technology that will utilize artificial intelligence for a brand new means of lead generation in the solar market. All Diaz had to say about that in a recorded conversation with SinglePoint President Wil Ralston was that they’re currently working the kinks out of the technology and that it will help generate an entire new segment of business once completed.

Always creative in marketing, Direct Solar recently struck a deal to become the exclusive marketing partner to support the various fall sports programs for 47 Texas Schools across Dallas/Fort Worth, Houston, Austin and Waco. Between August 1 and December 31, 2019, any solar systems that are sold within these school districts will result in a $250 donation to the Fall Sports Booster Program at the school.

“We hope that this promotion will be a great success. Nothing would make me happier than to cut some very large checks at the end of the year to support these schools and their sport programs,” said Diaz in an announcement of the new inititative.

Sales Surging

SinglePoint made the acquisition of Direct Solar looking at trailing-twelve-month revenue of approximately $1.5 million. As a testament to demand, sales have been skyrocketing. From mid-May to mid-June (the first 30 days under SinglePoint ownership), the company signed contracts to deploy $1.7 million in solar systems, while widening its footprint into Tampa, Orlando and St. Louis, with the Miami markets coming soon.

The $1.7 million in revenue is expected to generate about $803,769 in gross profit and $361,541 in net profit.

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Based upon the latest figures (and likely factoring in seasonal factors), SinglePoint management forecasts 2019 revenue of $7.0 million.

The Cannabis Factor

SinglePoint is a holding company that fancies itself the Berkshire Hathaway (NYSE: BRK.A) of the OTC markets. SinglePoint CEO Greg Lambrecht made the comparison a little tongue-in-cheek in a call with RedChip Money Report’s Dave Gentry, but he was speaking in seriousness about how well recent investments are paying off.

The company has deepened its roots on several verticals in the cannabis space, an exploding market that dovetails extremely well with Direct Solar’s offerings. The initial focus may have been on residential, but the SinglePoint subsidiary is now finalizing development of a commercial lending solution that will serve small-to-medium businesses (SMBs), including those in the cannabis space, with a platform like its residential offering. The plan is to have the new business operations running in the coming weeks.

As explained by Diaz and attested to by Ralston, electricity is one of the single biggest expenses for cannabis cultivators. With lighting and HVAC (heating, ventilation, air conditioning) representing intense costs, solar is a natural solution to improve margins.

A lingering problem for the market has been that the traditional banking system stayed at arm’s length to marijuana companies because cannabis remains a Schedule I drug alongside heroin at the federal level. Wall Street moved a bit slow at first, but with the incessant flow of changing regulations in favor of cannabis in the Americas and abroad, big money has been steadily streaming into the cannabis markets to support innovation, which bodes well for a first mover like SinglePoint with Direct Solar.

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About Ash Stringer