Knock Out – CWEB Punches Through with CBD Gummies and Strong Q1 Results

The market leader in hemp CBD extract products, Charlotte's Web Holdings (TSX:CWEB), had a blockbuster week after it officially unveiled its newest CBD product line—hemp extract-infused CBD Gummies—made with whole-plant extract from its prized hemp genetics and featuring synergistic functional ingredients to support specific health related functions including everyday stress, sleep, and recovery from exercise or active lifestyles.

Available in a variety of flavours, gummies are the latest addition to the Company's expanding line of CBD hemp-extract products. They are available for purchase through Charlotte's Web online store today, and begin shipping this week to retailers within the Company's growing network of more than 6000 locations across the United States.

"Gummies are a very popular edible format as a result of convenience and measurable consumption. This new delivery format from Charlotte's Web provides an easy bite-sized way to ingest full-spectrum hemp-extract CBD."

–  Charlotte's Web Associate Director of Product Development, Kelsey Morrison

Charlotte's Web also reported Q1 2019 results this week, showing organic consolidated year-on-year revenue growth of 66 percent to $21.7 million, gross profits of $15.9 million, and an adjusted EBITDA of $4.5 million.

The company generated net income of $2.3 million, and saw retail doors increase by more than 60% from 2018, to over 6,000 by May 8, 2019. CWEB also commenced digital advertising and ecommerce pilot programs with Google and Amazon this quarter, and doubled its hemp acreage planting to more than 700 acres.

The first quarter concluded with significant retail expansion for Charlotte's Web, as shipments commenced to three national brand supermarket/grocery and drugstore retailers in select states. Subsequent to the quarter, shipments commenced to a fourth national retailer and Charlotte's Web surpassed 6,000 retail locations now receiving shipments of the company's leading hemp CBD products. More than 2,300 new retail doors were added since the start of the year—more than all of 2018—significantly expanding the company's physical brick and mortar retail reach.

On Wednesday Elixinol Global (ASX: EXL) requested that trading be halted in connection with a capital raise, with the expectation that the halting period will last through June 5th.

That evening, the company announced that it had raised A$50 million selling shares at A$3.90, in a deal led by Bell Potter Securities.

This is the third and largest capital raise for the company, which completed an IPO in late 2017 at A$1.00, raising A$20 million. In September, it raised A$40 million, selling shares at A$1.85. The stock traded as high as A$5.93 in April.

"Elixinol plans to double its current production capacity in the US. Further, by securing additional raw materials, the Company will be well positioned to accelerate the growth of Elixinol branded CBD products and strategic opportunities.

– CEO of Elixinol Global, Paul Benhaim

MediPharm Labs Corp (TSXV: LABS) a leader in specialized, research-driven cannabis extraction and cannabinoid isolation, announced that it had entered into an agreement with Scotiabank—on behalf of a syndicate of underwriters including GMP Securities L.P. and BMO Capital Markets—to sell 10,815,000 common shares of the company at $5.55 per share for gross proceeds of $60 million.

The company has granted the underwriters an option to purchase up to an additional 1,622,250 shares on the same terms and conditions, exercisable at any time, in whole or in part, for a period of 30 days following the closing of the offering for over-allotment and market stabilization purposes.

The company plans to use the net proceeds from the offering to fund its ongoing capital expenditures at its Canadian and Australian facilities, for domestic and international expansions, research and development and general corporate purposes.

The cannabis-focused healthcare company, Bod Australia (ASX: BDA), announced it will supply its pharmaceutical-grade cannabis extract MediCabilis for a landmark 12-month trial related to post traumatic stress disorder (PTSD).

The $491 drug will be prescribed to 300 participants in oil form by approved prescribers in a network managed by Bod's research partner Cannabis Access Clinics (CAC). Patients will bear standard treatment costs for participating in the study, and will be eligible for rebates through Medicare or private insurance.

CAC has first-hand experience in PTSD treatment using medicinal cannabis and has previously reported positive effects of the drug on patient outcomes. The company will facilitate the trial and manage the process on behalf of Bod, from screening to recruitment.

  

Agriculture Victoria gave the green light to Althea Group Holdings (ASX: AGH) to begin cultivating hemp in the state, while Tissue Culture Australia has agreed to assist Althea in developing tissue cultures for its proposed growing facility.

The hemp cultivation licence now enables Althea to grow and process low-THC hemp plants, which the company plans to do at its Victorian production facility, which is planned for commissioning next year. Meanwhile, in parallel with obtaining the hemp cultivation licence, Althea has signed an exclusive agreement with Tissue Culture Australia to produce tissue culture protocols for cannabis plants.

Tissue cultures are believed to have advantages over traditional cannabis propagation in terms of yield, disease resistance and superior control over genetics. According to Althea, tissue culture is also in demand with hemp growers seeking large quantities of high-quality plants to begin outdoor cultivation.

"Being granted the hemp cultivation licence allows us to obtain hands-on production experience with cannabis plants in a tissue culture laboratory environment, immediately."

– Althea Director of Cultivation, Daniel Mansfield

Meanwhile, Green Growth Brands (CNSX: GGB) executed an arm's length definitive agreement to acquire all of the issued and outstanding shares of capital stock of Spring Oaks Greenhouses.

Spring Oaks holds a medical marijuana dispensary license and authorization to operate as a Medical Marijuana Treatment Centre in the state of Florida. The medical marijuana dispensary license, received in April of this year, authorizes Spring Oaks to initiate production, processing, and dispensing of medical marijuana and marijuana products.

The license grants the right, but not the obligation, to open up to 35 dispensaries, subject to an increase to 40 when the Florida Medical Marijuana program surpasses 300,000 patients. 

 

Plus Products Inc (CSE: PLUS) announced its expansion into the Nevada market, after entering into a definitive agreement to partner with TapRoot Holdings Inc, a vertically integrated cannabis company operating cultivation and manufacturing facilities in Las Vegas, Nevada.

PLUS believes that TapRoot has the facilities available for PLUS to easily and quickly deploy its machinery, ingredients, and people to ensure that the product remains consistent both in California and Nevada. As PLUS expands into jurisdictions outside of California, it will serve as the manufacturing operations partner to ensure quality and consistency across markets.

The company will also leverage TapRoot's extraction capabilities as a part of a supply agreement, and TapRoot will share in the economics of the deal through a revenue sharing model. In addition to TapRoot's extraction capabilities, it has also received 7 of the 61 newly issued retail licenses in December 2018.

"We want the PLUS customer to have the same experience with our products whether they buy it in LA or in Las Vegas. Partnering with the TapRoot team will let us realize that goal, and we are confident they are the right team to spearhead our expansion in Nevada."

– Co-founder and CEO of PLUS, Jake Heimark

Green Thumb Industries (CSE: GTII), announced that it closed on the acquisition of Integral Associates. The acquisition will include Integral Associates' three high-traffic Essence retail stores located across the Las Vegas area, eight additional retail licenses in Nevada, a West Hollywood retail license—one of only five with a consumption lounge and delivery service—and two cultivation and processing facilities known as Desert Grown Farms and Cannabiotix NV.

The acquisition adds to GTI's assets in Nevada, which the company entered in 2016 and where it operates retail and production facilities in Carson City.

The transaction, previously announced on November 13, 2018, was valued at approximately $290 million, which included $52 million in cash and the issuance of approximately 20.8 million Subordinate Voting Shares of GTI.

Finally, MGC Pharmaceuticals (ASX:MXC) informed the market that its non-pharmaceutical business units had made material revenue generation for the June quarter of nearly half a million dollars.

The company has received initial funds of €160,425 from its purchase order of €438,000 under its five-year supply agreement with private Canadian cannabis retail products company CannaGlobal and revenues from delivery of products to lifestyle and medical cannabis product manufacturer Mabsut Life.The first bulk order of cosmetics raw materials has been successfully completed and will be transported for CannaGlobal to manufacture in Switzerland.

That follows a payment of €108,000 received from Mabsut Life for completion of product orders in Q1 2019, as part of the company's existing supply agreement. Mabsut and MGC Pharma continue to work closely together, with Mabsut increasing sales and client retention for its CBD based vaporiser cartridge formula, marketed as PhenoPen. MGC Pharma is developing four new CBD strains to be used for the PhenoPen product.

"These sales are testament to the on-going relationship between the companies, and quality of the products we are able to provide for the growth, and diversified, revenue profile of MGC Pharma."

– Co-founder and managing director of MGC Pharma, Roby Zomer

Watch this space for future weekly updates.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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