Look for a significant jump in revenue this year from cannabis company Ionic Brands (Ionic Brands Stock Quote, Chart, News, Analysts, Financials CSE:IONC), says Clarus Securities analyst Noel Atkinson, who launched coverage of the stock on Thursday with a \u201cBuy\u201d rating and $0.45 target. Ionic Brands is a multi-state operator with business in the Pacific Northwest states of Washington and Oregon. The company is not a cannabis retail operator and is instead focused on manufacturing and wholesaling. Ionic has been busy recently, having undergone a one-for-six share consolidation in early February, closed on a $14.7-million private placement in early March and then on March 8 the company completed a major deal in acquiring Washington-based Cowlitz County Cannabis Cultivation for C$32 million paid in cash and shares. (All figures in US dollars except where noted otherwise.) In his comments on the Cowlitz acquisition, CEO and chairman John Gorst said the company is now emerging as \u2018Ionic Brands 2.0\u2019. \u201cWe believe our existing expertise in the Pacific Northwest markets of Washington and Oregon combined with our branding power and strategies will catapult both Cowlitz and Ionic product sales. This transaction has been in the making for over a year and during this time, the Company overcame some serious challenges. I am pleased to say that we are now ahead of this curve and have come out stronger with some even stronger partnerships and relationships,\u201d Gorst wrote in a press release. Looking at the deal, Atkinson said Cowlitz brings a leading pre-roll and concentrate producer on board with Ionic and broadens the company\u2019s product line while tripling pro-forma revenue, with significant cross-selling potential. \u201cIonic Brands has undergone a transformation over the past 12 months,\u201d Atkinson wrote in his report. \u201cManagement refocused operations on Ionic\u2019s home region of the Pacific Northwest (Washington and Oregon), and substantially reduced overhead expenses.\u201d \u201cIn March 2021, Ionic acquired large Washington producer Cowlitz County Cannabis, which basically tripled Ionic\u2019s revenue base and made it a top-three producer in Washington. The Company\u2019s debt holders simultaneously converted over 90 per cent of outstanding convertible debt (worth C$16.4 million) into preferred shares. Ionic is now one of the largest producers in a $2.5-billion (retail sales) regional market,\u201d Atkinson said. As for its Oregon business, Atkinson said Ionic has been licensing its products to a co-packer and is acquiring a licensed processor in the state to in-source production of vapes, edibles and concentrates. This should meaningfully raise potential revenues and profits, says Atkinson, while the company is expected to boost its distribution in Oregon as well. Atkinson noted that Ionic\u2019s products are currently carried in less than ten per cent of Oregon\u2019s dispensaries versus 75 per cent in Washington State. Atkinson said the Pacific Northwest is currently a unique cannabis environment, where the combined $2.5-billion in retails sales is behind only California and is still growing. At the same time, Atkinson sees the region as ripe for consolidation by larger US multi-state operators. Washington\u2019s state government was on the forefront in legalizing adult-use cannabis but it currently restricts publicly-traded entities and persons residing outside the state from owning cannabis operating licenses, a state of affairs that has effectively blocked entry by many multi-state operators, where currently Ionic an 4Front Ventures are the only publicly-traded cannabis companies in the state. This relative isolation could change, Atkinson said. \u201cFew MSOs operate in the Pacific Northwest due to the perceived competitive environment and Washington state regulations that restrict ownership of cannabis licenses by out-of-state entities (the last of its type in the U.S.), but recently we have seen substantially increased interest by national MSOs in open-license states such as California, Michigan, and Colorado, and we expect their eyes to also fall upon the Washington and Oregon markets in the near future. These are simply too large markets to ignore, and it will be far easier to buy a leading operator with established market share than to build from scratch,\u201d Atkinson wrote. Organic growth as well as contribution from Cowlitz should drive revenue growth over 2021 and 2022 for Ionic, says Atkinson, who is calling for full 2020 revenue and adjusted EBITDA of $9.6 million and negative $0.6 million, respectively, followed by 2021 revenue and EBITDA of $25.7 million and $4.4 million, respectively, and 2022 revenue and EBITDA of $38.0 million and $10.9 million, respectively. At the time of publication, Atkinson\u2019s $0.45 target price represented a projected 12-month return of 143 per cent. \u201cWe believe 2021 will be a watershed year for Ionic, thanks to the recent cleanup and strengthening of its balance sheet, the Cowlitz and Precision Alchemy acquisitions, and organic revenue growth of Ionic\u2019s own product lines in Washington and Oregon,\u201d Atkinson wrote.