During the last few months, we have been focused on Empower Clinics Inc. (CBDT.CN) (EPWCF) and believe that this is an opportunity that is flying under the radar.
We started following Empower in late 2018 and we are impressed with how the operation has evolved since then. We consider Empower to be a turnaround story in the making and believe that this is an opportunity to be watching.
The last few months have been significant for Empower Clinics and the recent developments have caught our attention. From the rollout of its franchise clinic program to the formation of strategic relationships, Empower has been nothing short of an execution story and has been able to significantly enhance its growth prospects.
During the last quarter, the cannabis sector has been under pressure and this put unnecessary pressure on Empower. During this time, the company reported several major developments and we believe that the market is missing out on something with this one. Today, we have issued an update on Empower and this is an opportunity to put on your radar.
Forms Joint Venture with Heritage Cannabis to Fuel Growth
Last week, Empower announced a major milestone and entered into a letter of intent to form a joint venture with Heritage Cannabis Holdings (CANN.CN) for the extraction of hemp for CBD oil production, and formulated CBD products. The joint venture will be owned 50/50 by each company and we are bullish on the growth prospects associated with this initiative.
We are favorable on what the companies bring to the joint venture and find this to be a significant aspect of the relationship. Heritage, via its wholly owned subsidiary Purefarma Solutions, will install extraction units and related downstream extraction equipment inside Empower’s existing 5,000 sq. ft. licensed hemp processing facility. Purefarma will also train and supervise the staff on the proprietary methods of extraction and oil production that it produces in Canada.
The joint venture will be equally funded by both companies with Heritage investing an initial $500,000 for start-up funds. Going forward, the joint venture plans to secure high quality hemp supply from local growers as construction is completed on the facility. Once operational, the joint venture will start producing proprietary branded products for Empower’s corporately owned physician staffed health clinics in Washington State, Oregon, Nevada, and Arizona.
From a distribution standpoint, the footprint that Empower has throughout the US will play a key role in the success of the joint venture and we are bullish on this aspect of the story. These clinics include Sun Valley Health, a subsidiary of Empower, which has direct marketing access to more than 165,000 patients as Sun Valley expands its franchised network nationwide. The joint venture plans to use formulations from Heritage in Canada, and plans to manufacture proprietary Sollievo branded products that Empower distributes throughout its clinic network.
One of the exciting aspects of the joint venture is related to the white label opportunity and the companies will also look to manufacture white label products for distributors throughout the US. The company it is currently in talks with several potential customers to produce tinctures, topicals, gel caps, and formulated bulk CBD oil.
Empower has commenced the process to access the more than 1,300 licensed hemp farmers in Oregon and we are favorable on this. These cultivators are known to produce some of the highest quality hemp bio-mass in the US and we find this be significant. Quality of products has become very important following the issues over at Juul and we believe that the joint venture has done a great job by focusing of safety and consistency.
An Opportunity to be Watching
Through a series of inorganic and organic growth initiatives, Empower has created a large-scale CBD business and we are favorable on this aspect of the story. The company has started selling its Sollievo products through its network of company-owned clinics and Sun Valley already has a well-established CBD product line. We expect Sun Valley’s CBD product line to be complimentary to what Empower has accomplished with its Sollievo brand and are bullish on the growth prospects associated with the CBD opportunity.
The last few months has been significant for Empower Clinics and we are excited about the franchise cannabis clinic model. One of the reasons we are favorable on the Empower opportunity is due to the business having multiple revenue streams that are complimentary to each other. We believe that the market under-appreciates the potential growth associated with these revenues streams and will monitor how the team continues to drive the story forward.
Another reason we are excited about the Empower opportunity is due to the existing infrastructure and platform in place. The company has a network of more than 165,000 patients and customers that will be able to benefit from having access to high-margin cannabis derivative products. We are favorable on the amount of revenue that can be generated from the sale of CBD products to Empower’s network and believe that the market has not assigned much value to this side of the business.
At current levels, we find the risk-reward scenario to be attractive and believe that this is an opportunity to be watching. To learn more about Empower Clinics, please reach out to firstname.lastname@example.org and you will be added to our distribution list.
Pursuant to an agreement between StoneBridge Partners LLC and Empower Clinics we have been hired for a period of 180 days beginning May 28, 2019 and ending November 28, 2019 to publicly disseminate information about (EPW) including on the Website and other media including Facebook and Twitter. We are being paid $6,000 per month (EPW) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero (0) shares of (EPW), which we purchased in the open market. We plan to sell the “ZERO” shares of (EPW) 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 (EPW) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.