Although High Tide Inc. (TSX Venture: HITI) (Nasdaq: HITI) (FRA: 2LYA) has been highly focused on capturing market share of the Canadian cannabis retail industry, the business has made significant advancements on the international side of the market and we are favorable on how the management team has executed.

In late 2021, High Tide completed the acquisition of 80% of NuLeaf Naturals and received the option to acquire the remaining 20% at any time. The transaction provided the company with leverage to the United States and we consider this asset to be a core pillar of High Tide’s multi-national expansion strategy.

NuLeaf was founded in 2014 and is focused on the production and distribution of premium cannabinoid wellness products. The company can produce 60,000 plant-based softgels per hour and has a significant amount of distribution reach. NuLeaf recently secured an expansion with Sprouts Farmers Market from 33 retail locations to an additional 235 stores.

We expect the acquisition to prove to be immediately accretive and will monitor how High Tide benefits from having additional distributional channels. Since inception, NuLeaf has served approximately 330,000 unique customers through its e-commerce platform and hundreds of thousands of other customers through a variety of distribution channels.

We consider the amount of existing distribution to be an important aspect of the NuLeaf acquisition and are favorable on the infrastructure it provides High Tide in the US. Going forward, the company plans to use NuLeaf’s cGMP-certified facility to produce licensed THC-infused edible and drinkable products (when US federal regulations allow for it) and we are bullish on the potential value that can be generated through this over the long-term.

An EU Growth Story in the Making

Earlier this week, High Tide reported that its United Kingdom (UK) based subsidiary (Blessed CBD) has entered the German cannabidiol (CBD) market by starting to sell its full spectrum CBD oils, gummies, capsules, creams and balms, through its e-commerce platform. We are favorable on the expansion and consider Germany to be an attractive way to gain leverage to additional markets in the European Union (EU).

According to Fortune Business Insights, the global CBD market to be a $56 billion market by 2028. Over the next few months, High Tide plans to release new CBD product categories in Germany and fulfillment will be completed at its warehouse in Amsterdam. We believe the business is positioned to record strong growth on the international side of the business in the back half of the year and will monitor how this aspect of the story continues to evolve.

During the last year, the cannabis sector has been under heavy pressure and High Tide has been impacted by the trend. We believe the management team is creating a track record of success and are bullish on the amount of potential catalysts for growth that High Tide has. We believe the opportunity is flying under the radar and will continue to closely follow the story.

If you are interested in learning more about High Tide’s multi-national growth strategy, please send an email to support@technical420.com with the subject “High Tide Expands into Germany” to be added to our distribution list.

Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.