As the United States cannabis industry grows into the $43 billion market its projected to be by 2025, more and more ancillary businesses are popping up to make money through the services they offer to cannabis operators.

These companies have an edge over plant-touching cannabis operators because they are allowed to list on major stock exchanges like the Nasdaq and New York Stock Exchange, a privilege that isn’t afforded to companies that work with the cannabis plant directly.

One of these companies is the OLB Group Inc. (Nasdaq: OLB) that offers ecommerce solutions to CBD and cannabis operators through its own proprietary software.

Its stock is trading for around $3 per share, which makes it a cheap “buy” for investors. That said, it’s important to do your due diligence before investing in any new company, and you’ve got the National Institute for Cannabis Investors (NICI) in your corner to do the heavy lifting for you.

That’s why my team put together this S.W.O.T. (strengths, weaknesses, opportunities, threats) analysis for OLB Group so that you have all the information you need to assess its viability, including our “risk score” for adding the company to your portfolio.

These analyses are a regular benefit for NICI Membership subscribers. Membership includes access to the model portfolio, a massive library of expert advice for how to make the most money from cannabis investing.

Click here for a sneak peek of your first pick.

Strengths

OLB’s platform is designed to be a one-stop shop for merchant solutions. Its leading eVance platform provides credit and debit-based payments for sales both online and in-store. Through its OmniSoft and SecurePay platforms, eVance users can access the cloud-based business management platform of OmniSoft, and the secured payment gateway of SecurePay. OLB collects processing and transaction fees based on volume and the services utilized.

In late 2021, OLB acquired a CBD merchant portfolio of over 1,500 merchants. Now, all 1,500 will use OLB’s payment processing platform. This group of CBD merchants has an estimated annual transaction volume of $400 million which translates to approximately $20 million of additional revenue for OLB based on its fee structure.

OLB is introducing two additional products and services to its suite – CrowdPay, and DMint. CrowdPay is a regulation A+ capital raising platform, and DMint will provide multiple cryptocurrency services including mining and lending.

OLB currently trades at just over three times its annual run rate sales. Larger companies in the same industry – like Shopify Inc. – trade anywhere from 7x, 10x even 38x their annual sales. On a comparable basis, OLB has room to grow in the market based on its price to sales ratio.

Weaknesses

A majority of OLB’s revenue comes from transaction and processing fees via its eVance payment services. Until it begins generating revenue from its new products, any slowdown in this one product will directly and majorly affect OLB’s bottom line.

As OLB grows, we are seeing substantial increases in operating costs at a rate faster than revenue growth, leading to deteriorating margins and even larger operating losses. This is explainable by OLB’s new ventures and upcoming products that required upfront costs before the recognition of any additional revenue.

Opportunities

OLB has announced two new additions to its suite of products – OmniSoft and CrowdPay. OLB stands to gain as it launches these new services and begins generating revenue through these two new products. These products specifically synergize well with OLB’s leading eVance platform. As such, there is the opportunity to eliminate redundancies and cut costs while growing both platforms.

OLB is also just beginning to get its cryptocurrency mining, lending, and transactional business underway. These operations stand can provide additional revenue generating opportunities for OLB.

With its acquisition of over 1,500 CBD merchant profiles, OLB can build a foothold as the premier payment processor for CBD sellers.

Threats

One of OLB’s latest ventures is in cryptocurrency mining. Cryptocurrency mining is reliant upon substantial expenditure of resources like electricity and natural gas. These energy costs will add up as mining operations begin.

In addition to these costs, state governments are exploring stricter regulations on crypto miners as a way to promote resource conservation and environmental protection. If more regulations come into play, additional costs may pass on to miners like OLB.

Company Risk Score: 73

We assign each company a “Risk Score,” which weighs the strengths, weaknesses, opportunities, and threats of the company – with the best possible score being 100.


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