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Signal Bay Inc (OTCMKTS:SGBY) Looks Set To Grow With Quality Control Domination

Signal Bay Inc (OTCMKTS:SGBY) Looks Set To Grow With Quality Control Domination
Written by
Chris Sandburg
Published on
October 25, 2016
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The debate as to whether recreational marijuana should be legalized is coming to the fore in more and more states in the US every week, and with the topic on the near-term ballot in a large number of these states, markets are starting to take notice of potential opportunities. This added attention has translated to some upside momentum in certain players in the space, one of which is Signal Bay Inc (OTCMKTS:SGBY).­Medical marijuana is now legal in 25 states, and recreational marijuana legal in four, with this latter metric set to expand dramatically across the next decade. The industry is looking to catch up with other similar industries, and this has necessitated many different types of businesses and operations to kick off with a focus on marijuana and its satellite requirements. One of these, it could be argued one most important, is the need for quality testing. This is where Signal Bay comes in.The company is an Oregon-based self-styled life sciences entity, operating primarily through its three subsidiaries: EVIO Labs, Signal Bay Research, and Signal Bay Services.­ The latter two of these subsidiaries are essentially consulting and administrative aid entities, which provide – at the moment – bread-and-butter revenues for the company. The former, however EVIO, is where we see the real growth, and it's not just a prediction – this growth is already underway.By way of a quick introduction to EVIO, the subsidiary owns and operates testing laboratories, through which growers and retailers are able to verify the purity and quality of their product, and then use this verification as a marketing tool when it comes to end-user. Anything from pesticides, infectious diseases, mold and a variety of other contaminants can impact the quality of both medicinal and recreational marijuana, and as things stand, a very limited framework is in place across the US designed to meet these testing necessities.Signal Bay is trying to change that, and it has already had an impact in Oregon, one of the spearhead states when it comes to recreational marijuana legalization. By way of three testing laboratories, the company controls more than 95% of the legalized cannabis testing in Oregon, having established a dominant position among the above-mentioned manufacturers and retailers of the product.As with pretty much every other aspect of the industry, however, this is just the beginning, and growth looks set to be exponential across the coming decade. The next major market expected to open to companies such as Signal and, by proxy, EVIO, is California. On November 8, 2016, Californians will focus on proposal 64 – the ballot design to decide whether or not recreational marijuana should be legal for use in the state. If the balance goes in favor of legalization, companies such as Signal are going to see dramatic upturns in their market capitalizations basically overnight.Of course, many of these companies will likely come crashing down again once the dust settles, but we see Signal as having a strong enough operational framework and business plan to ride out the wave of hype and establish growth on the back of the legalization decision.With its three labs, EVIO has approximately 700 customers in place right now. Management expects to be operating 30 labs by 2020, and doing $45 million in annual revenues. The plan is to have one central lab in each state, and a number of satellite labs operating on a more restricted and small basis and answering to the central asset. Spoke and hub, as CEO William Waldrop describes it. This should help to minimize costs of expansion (which is always a tough thing to do in such a rapidly growing market) and help the company keep the rain on expenses as it attempts to expand to meet demand.The next major catalyst is the November 8 ballot. As mentioned, a thumbs-up for recreational legalization will serve up some immediate upside in the spectrum of marijuana stocks, and this is one that we expect can hold on to its gains long term.We're watching this space closely for more cannabis related opportunities with real potential, not just hype. Subscribe below and we will bring you our analysis completely free!Disclosure: We have no position in SGBY and have not been compensated for this article.

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