Most investors in the cannabis space are familiar with Glass House Brands (GLASF), which saw its stock price rise from under $2.50 to nearly $10.00 in the span of a year. By cornering California’s middle market for flower, the company has become a household name in the world’s largest cannabis market despite intense competition.

 

Leef Brands (LEEF.CN) (OTC: LEEED)  is a lesser-known player in California’s massive cannabis industry—but it’s following a familiar playbook. Like Glass House Brands, the company aims to scale up in a niche corner of the market with well-established expertise. But, while Glass House trades at a healthy multiple, Leef trades at less than one times sales.

 

Let’s explore why you might want to take a closer look at Leef Brands ahead of some big moves planned for 2025 and beyond.

A Focus on Bulk Extracts

Glass House Brands has built a strong reputation in cultivating top-notch cannabis flower. And after scaling up its indoor greenhouse operations, it has become one of the largest middle market flower producers in California (with plans to expand nationally). But, of course, flower isn’t the only way consumers like their cannabis.

 

Leef Brands has become an expert producer of extracts with a 5,000 sq. ft. facility using ethanol, hydrocarbon, and solvent extraction methods across a range of strains. These extracts already power many well-recognized brand names in the California market, including Kiva, Urbn Leaf, Mommoth, and Big Chief.

 

Tour Leef's extraction facility with CEO Micah Anderson

Scaling Up to Improve Margins

Leef Brands aims to follow Glass House Brands’ playbook in scaling up production after becoming a go-to leader in the space. But rather than indoor greenhouses, Leef Brands is building a massive 187-acre farm, Salisbury Canyon Ranch, which holds the largest land use permit in the county for outdoor and indoor cultivation.

 

The company recently completed Phase I construction and anticipates the first planting in the spring of 2025. By bringing cultivation in-house, the company will dramatically lower the cost of production for its extract products, resulting in substantially higher margins and the potential to capture more market share in California.

 

Interview with cannabis industry expert Jesse Redmond of Water Tower Research

Nationwide Potential

Glass House Brands and Leef Brands share a unique opportunity to expand across the nation when interstate commerce becomes legal. As leaders in the country’s most competitive market, they’re well-positioned to capitalize on higher-margin states where cannabis flower and extracts become legal as both partners and suppliers.

 

The difference is in stage and valuation. Glass House Brands is already worth nearly a half-billion dollars following its expansion, trading at nearly 3x sales. On the other hand, Leef Brands trades for just $36 million and 0.69x sales with its major catalysts ahead. The jump to 3x sales or beyond largely depends on its execution over the coming months.

 

Interview with Leef Brands CEO Micah Anderson

The Bottom Line

Most investors in the cannabis space are familiar with Glass House Brands (GLASF), but Leef Brands (LEEF.CN) may be a more compelling opportunity in 2025. With an existing client base and recognized expertise in extraction, the company is well-positioned to execute on its plans to cultivate, improve its margins, and capture market share.

 

For more information, visit the company’s website at www.leefbrands.com.