The cannabis industry is the world’s fastest growing industry, and this has created significant opportunities for investors. Over the next year, we expect to see significant consolidation in the cannabis industry and this is something we are monitoring closely.
Hemp has the potential to disrupt several prominent industries: advanced materials, cosmetics, energy, fiber and textiles, food and protein production and the health and wellness sectors. In addition, hemp is a natural source of CBD, the non-intoxicating component of cannabis that can be used for health and wellness purposes in jurisdictions where legally permitted.
Several European counties have already legalized hemp and this has become a global trend. Last year, the World Health Organization recommended that CBD be de-scheduled across 194 nations. These regulatory changes could pave the way for CBD to become a legal natural supplement globally and this would be a major catalyst for companies focused on this burgeoning market.
We have been closely following the CBD market and believe that it represents one of the most exciting opportunities. Today, we have highlighted 5 companies that have been actively capitalizing on the burgeoning CBD opportunity.
Canopy Growth Acquires United States Hemp Business
Last week, Canopy Growth Corporation (WEED.TO) (CGC) acquired AgriNextUSA, a hemp enterprise led by CEO Geoff Whaling, that has been at the forefront of the hemp industry in the USA. The acquisition will accelerate Canopy Growth’s entry into key American jurisdictions as regulations surrounding the full use of hemp as a crop begin to be implemented, thanks in part to the recently enacted 2018 US Farm Bill.
The vision proposed by AgriNextUSA and supported by Canopy Growth would involve creating Hemp Industrial Parks such as the one previously announced in New York State, where this super crop could be fast-tracked through a production cycle that would result in commercial applications for all parts of the plant, from root to tip. American farmers will benefit from a model that provides a single, regional destination for their hemp crops and connects them with the researchers, entrepreneurs and innovators whose ideas will turn their crops into new products and industries.
As previously mentioned, Canopy Growth is on track to build the first Hemp Industrial Park in the Southern Tier of New York State, after receiving a state license to produce and process hemp. The company committed to invest $100M to $150M (US) into a hemp operation that will lead to significant job creation and positive local economic impacts, as well as the production of high-quality CBD products that meet the unwavering quality and innovation standards that Canopy Growth is known for around the world.
Canopy Growth is in the middle of a major expansion when it comes to the CBD opportunity in the United States and we are favorable on the growth prospects associated with this. The Canadian cannabis producer has the most market share in Canada’s cannabis industry and has a leading position in several burgeoning international cannabis markets. We think the company’s initial moves in the United States can easily transition over to medical cannabis once legislation changes and this is something to be watching.
Isodiol is Capitalizing on the Global CBD Market
Isodiol International (ISOL.CN) (ISOLF) was an early mover on the CBD market and is in the middle of a major expansion that has been focused on capitalizing on the global CBD market. Prior to the passage of the 2018 Farm Bill, Isodiol had set its sights on the United States opportunity and we have been closely monitoring how the team executes on this.
Isodiol is in the middle of a major strategy change and we believe that these changes are significant and worth watching. Last month, the company announced plans to refocus its business strategy on core competencies and key market segments. During the last quarter, Isodiol made critical strategic decisions to streamline its business, reduce shareholder dilution, and cut costs while taking advantage of significant new opportunities provided by the recent legislation reform.
As part of these efforts, Isodiol has determined to focus on three primary strategic pillars: technology, branding, and retail. The company plans to divest of its cultivation and non-specialty manufacturing operations, which are market segments in which many new entrants have engaged in exorbitant and often irrational spending that is commoditizing basic hemp CBD ingredients and products and creating a price race to the bottom.
Last week, Isodiol International announced the launch of its products with Holland & Barrett International, beginning with an initial order of 10 SKUs of hemp-extract based cannabidiol (CBD) products from the company’s RapidCBD and Iso-Sport brand catalogues for more than US$1 million.
The launch has commenced online and more than 45,000 units are expected to be available in up to 800 Holland & Barrett stores throughout the United Kingdom and the Republic of Ireland by the end of March. Holland & Barrett is the largest health and wellness retailer in Europe, operating more than 1,300 stores, 10 million customer loyalty program members, and US$800 million in annual revenues.
The RapidCBD and Iso-Sport food supplement and cosmetic skin care products contain Isodiol’s proprietary ISO99 hemp extract and botanical blends that work synergistically to provide positive health and wellness benefits to the body and mind. All of the products in Isodiol’s program for Holland & Barrett are specially formulated for the U.K. and E.U. markets.
This announcement comes shortly after Isodiol announced a partnership with the Asian American Trade Associations Council (AATAC) for the company’s convenience store (C-Store) retail program into an initial 1,250 locations in the United States, with expansion plans of up to 10,000 additional locations. The company will launch its Fast CBD Relief brand from the CBD Naturals® brands portfolio as its flagship CBD products in its C-Store program.
Although Isodiol has significant advanced its fundamental story, the shares have been under pressure and this is an opportunity we have been closely following. The market responded favorably to some of the recent developments, but Isodiol has come well off its 2018 highs. With the CBD regulatory landscape shift in the United States (and all over the globe), we think Isodiol has significant catalysts for growth and we will monitor how the team executes on this.
1933 Industries: A CBD Leader that is Flying under the Radar
Although 1933 Industries (TGIF.CN) (TGIFF) has been a leader in the United States CBD market, the opportunity has been flying under the radar and we believe that this is an opportunity that investors need to be watching.
1933 Industries has an attractive operating structure and it is focused on the production of cannabis through its Alternative Medicine Association (AMA) subsidiary, the production and sale of industrial hemp-based and CBD infused products through its Infused MFG. subsidiary, and security and intelligence through its Spire Global Strategy subsidiary.
We are very excited about the way that Infused MFG. is levered to the burgeoning CBD opportunity in the United States. Last month, Infused announced that it has attained product distribution by more than 600 stores that are in 46 states. Demand for CBD products continues to increase and we are favorable on the leverage that 1933 Industries has to this market.
During the last year, Infused has significantly expanded its reach and continues to penetrate the United States market. Infused’s recognized brands, including Canna Hemp, Canna Hemp X, and Canna Hemp Paws are available in more than 250 retail stores in California, Nevada, Arizona, and Colorado, with the remainder distributed across the country. We are favorable on the growth prospects associated with this subsidiary and will monitor how it continues to expand.
1933 Industries understands the value of distribution and this has played a key role in its success. The company owns its distribution and we believe that this is an important aspect of the story when it comes to making sure that the right branding and messaging is delivered. We are favorable on 1933 Industries’ leverage to the United States CBD opportunity and the assets that it has in place to capitalize on it.
Last month, Infused’s products gained significant exposure at the WOW Creations Celebrity Gift Lounge which took place ahead of the 91st Academy Awards. The company was able to put its CBD Relief Cream and CBD Elixirs in the gift baskets that are given to all Oscar Nominees, presenters, A-Lister celebrities and industry influencers. 1933 Industries was the only CBD product featured in these gift baskets and we think this is a testament to the quality of products that is sold by Infused.
1933 Industries is focused on some of the most exciting verticals of the cannabis industry and is levered to some of the largest and the most significant markets in the United States. The company is led by a management team with a proven track record of success and we are favorable on their ability to create value for shareholders.
Relevium Technologies: An Emerging CBD Opportunity
Relevium Technologies (RLV.V) (RLVVF) is a company that is in the early innings of a major growth cycle and has been capitalizing on the CBD opportunity. One of the exciting aspects of this story is the avenues that the company has for distribution. This will play a key role in the company’s growth and we are monitoring how the team executes from here.
The company has done a fantastic job at securing distribution through massive retailers like Walmart.com and Amazon.com. The company’s products have been generating traction and we expect to see this trend continue and support growth. Going forward, we expect to see Relevium secure new strategic relationships and believe that this will be a catalyst for the business.
During the last quarter, Relevium’s subsidiary launched 30 new Bioganix Gold Series products, which are being offered exclusively to Walmart shoppers. We are favorable on this strategic relationship due to the visibility that it creates for the product and the revenue that is being generated. Relevium has a multi-faceted growth strategy that includes increased brand recognition as well as improved marketplace visibility. The company plans to accomplish this by increasing the number of market offerings which are expected to generate additional revenue from a completely different consumer audience.
Relevium is currently testing a complete line of dietary supplements that are derived from cannabis with an initial focus on hemp derived whole plant organic extract rich in CBD. The product line will be marketed through its brand LeefyLyfe and will be sold first in Europe and then in North America.
One of the reasons we are favorable on this opportunity is due to the quality of products and the focus on organic extracts. Relevium uses cannabinoids and ingredients that have achieved GRAS status (generally accepted as safe) to create brands that are sold via wholesale channels, retail channels and online distribution.
Earlier this month, Relevium Technologies released second quarter financial results that showed impressive growth. Relevium has significant growth prospects and we are monitoring how the team continues to execute and advance its fundamental story. We think the company is trading at an attractive valuation an is something we are watching.
Cannalife is Consolidating the CBD Industry
Cannalife Capital Corp. has been laser focused on the CBD market and plans to make strategic acquisitions of companies that leaders in this space. The company is focused on consolidating synergistic assets to increase revenues by unlocking new growth opportunities while lower scaling costs and increasing its reach.
Earlier this year, Cannalife announced its first transaction in the cannabis sector and signed a letter of intent to acquire BlueSky Biologicals, a manufacturer of hemp-based food and beverages, person care products, and pet care products. The company has been executing flawlessly and has been operating out of one of the world’s largest pharmaceutical-grade GMP compliant cannabinoid production facilities.
We are favorable on BlueSky’s product portfolio which is comprised of 14 market-ready products. Over the next year, the company plans to roll out new products and this is something to watch. The product line is comprised of all types of cannabinoid products (i.e. creams, tinctures, capsules, chocolate bars, beverages, sprays, and more) and we are favorable on the diversity of these products.
BlueSky represents a differentiated opportunity and has significant growth prospects. The company has exclusive access to the Chinese market through its joint venture partner and has signed global distribution contracts to initiate its product roll out. We are favorable on this aspect of the story and find the leverage to the Asian Pacific, European, and North American markets to be significant.
When it comes to distribution, BlueSky is extremely well positioned and has secured strategic relationships all over the globe. The company plans to start selling tinctures, capsules, pet sprays, and personal care cosmetics in the first quarter of 2019. In North America, Advantage Health Matters provides BlueSky access to more than 30,000 dispensaries, headshops, and local retailers. MarketHub also supports the company’s North American distribution strategy and is a mass market distributor with access to major big box retailers.
The European market represents a significant opportunity for BlueSky and has secured strategic relationships to support growth. The company is targeting the United Kingdom (U.K.), France, Germany, the Netherlands, Switzerland, and Bulgaria. We are favorable on this focus and believe that the company is focused on some of the most significant markets. BlueSky plans to start selling tinctures and capsules in the second quarter of 2019 and this is something to watch. Through IPS Pharmaceutical, the company has access to more than 4,500 pharmacies throughout the U.K. The relationship with Frenchtop is important and provides the company with access to almost every retail and grocery store in the Benelux region.
BlueSky is one of the few companies to have distribution in China and we are favorable on this aspect of the story. The relationship with Longrich provides the company with access to more than 150,000 retail stores. BlueSky also has an exclusive distribution arrangement to sell products to more than 36,000 pet stores.
Distribution is one of the most important aspects of business and this is especially important in the cannabis industry. In 2019, the company expects to generate more than $22 million in revenue through these distribution opportunities and we are bullish on this. BlueSky has been working tirelessly to increase its reach and we will monitor how the team continues to execute.
Cannalife plans to raise additional capital before going public and this is something we are watching. To learn more about this burgeoning opportunity, please reach out to firstname.lastname@example.org
Pursuant to an agreement between StoneBridge Partners LLC and Isodiol International (ISOLF) we have been hired for a period of 360 days beginning August 1, 2018 and ending August 1, 2019 to publicly disseminate information about (ISOLF) including on the Website and other media including Facebook and Twitter. We are being paid $5,000 per month (ISOLF) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero shares of (ISOLF), which we purchased in the open market. We plan to sell the “ZERO” shares of (ISOLF) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (ISOLF) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.
Pursuant to an agreement between StoneBridge Partners LLC and 1933 Industries we have been hired for a period of 180 days beginning January 9 , 2019 and ending July 9, 2019 to publicly disseminate information about (TGIF) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month for a period of 6 months. We own zero shares of (TGIF), which we purchased in the open market. We plan to sell the “ZERO” shares of (TGIF) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (TGIF) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.
Pursuant to an agreement between StoneBridge Partners LLC and Cannalife Capital Corp We have been hired for a period of 180 days beginning November 3 , 2018 and ending May 3, 2019 to publicly disseminate information about (PRIVATE) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month for a period of 6 months. We own zero shares of (PRIVATE), which we purchased in the open market. We plan to sell the “ZERO” shares of (PRIVATE) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (PRIVATE) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.