When Tranzbyte Corp. (OTCMKTS:ERBB) and Medbox Inc. (OTCMKTS:MDBX) both announced they would be unveiling vending machines to dispense medical marijuana and/or recreational marijuana, fans and supporters of hemp/pot applauded the ease of access, but even some of the most die-hard supporters saw potential problems. Although the machines made by MDBX and ERBB would only dispense marijuana if a strong verification procedure had been successfully performed, there was just something a little un-nerving about an un-manned metal box that - given the right hacking capabilities - could be fooled into giving marijuana to someone who shouldn't have it. Or barring that, the machines (which are admittedly solid and stout) could still be vandalized, broken, or even outright stolen if left unprotected. Those are long shots, granted, but thieves know few bounds.
The philosophical underpinnings that prompted the devices to be made by Medbox and Tranzbyte, however, are still sound... consumers want convenience, and vendors don't want to have to incur the expense of staffing retail outlets whenever and wherever a consumer gets the urge.
Enter American Heritage International Inc. (OTCBB:AHII). No, it's not marijuana play. It's also not a maker of marijuana vending machines. It's an electronic cigarette maker still in its initial expansion phase, and seeing the potential of vending machines (but without the risk and potential legal hurdles of marijuana vending machines), the company announced this morning it has inked a deal with a major operator of vending machines to sell its e-cigs.
Initial, American Heritage International will see its line of electronic cigarettes sold in 330 vending machines in the Las Vegas area. The vendor has thousands of self-serve vending spots under its umbrella, however, so this relationship could open a lot of doors for AHII.
And, it's very much a right time/right place/right product situation for American Heritage International Inc. Last year, e-cig sales surpassed the $1 billion mark, and are projected to drive $3 billion in revenue this year. By 2047, electronic cigarette sales are projected to surpass sales of traditional tobacco cigarettes. The high-growth period for these stocks is going to be the ramp-up in sales over the next few years, and with no clear leader in the fast-growing space yet [NJOY owns 40% of the market, but that's a tentative lead], AHII has just as much opportunity to take the lead as anyone else in the electronic cigarette space.
Indeed, American Heritage may have something of an inside route to the leaderboard of the e-cig world. Its cigarettes are the only ones that actually look like a real cigarette rather than a ballpoint pen, and its cigarettes are the only e-cigs that are currently made in the United States where their manufacture can be monitored; most others are made in China. Better still, in recent comparative testing, most consumers preferred AHII electronic cigarettes to other brands. For the same reason the company's products are favorites in retail establishments, its products should do well in vending machines.
Bottom line? While it may not be game-changing for the company, adding 330 vending machines to its distribution network is nothing to sneeze at. In time it will make a noticeable dent in the American Heritage International Inc. top line, and that's without the vending company adding the electronic cigarettes to other locations. If and when other locations are added, it could be a real boon for AHII, in terms of revenue as well as sheer exposure. Perhaps best of all, unlike the vending machines being made by Tranzbyte or Medbox, e-cigs aren't likely to hit any kind of regulatory or legal headwind except for those that are already in place for traditional tobacco cigarettes.
For more on American Heritage, its investor presentation PDF offers the most insight. The corporate website can be found here.
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