2020 was a banner year for the Canadian cannabis industry and we partly attribute the growth to the launch of cannabis 2.0 products. From vape pens to beverages, the cannabis 2.0 market is comprised of high-margin cannabis derivative products and consumer demand for these products has been steadily increasing.
During the last year, we have focused on identifying Canadian companies that are capitalizing on the cannabis 2.0 market. We believe these companies are well positioned to benefit from being levered to a burgeoning vertical of the cannabis industry. We primarily prefer smaller operators to leading Canadian Licensed Producers (LPs) due to the valuations that are associated with them.
Over the next year, we expect to see several cannabis 2.0 companies to be acquired by large-scale Canadian LPs. These operators could be immediately accretive to large companies that are focused on gaining market share in Canada. We believe the merger of Aphria Inc. (APHA.TO) (APHA) and Tilray Inc. (TLRY) accelerated the consolidation trend in the cannabis industry. Over the next 12 to 18 months, we expect to see a substantial increase in the amount of merger and acquisition (M&A) activity and want to highlight a plant-based extraction company that could benefit from this trend.
The company, Pure Extracts Technologies Corp. (CSE: PULL) (OTC: PRXTF) (XFRA: A2QJAJ) represents a diversified growth opportunity and is focused on cannabis, hemp, functional mushrooms, and the psychedelic sector. The company operates out of a state-of-the-art processing facility that has been constructed to European Union GMP standards. Since the facility is constructed to these standards, Pure Extracts can export products and formulations into European jurisdictions where legislation permits
Last week, Pure Extracts reported an important development and commenced production of approximately 50,000 Pure Chews edible gummy packs. The company expects to generate approx. $200,000 (CAD) from the production run and we are favorable on the continued execution. Recent data shows that consumer demand for gummies is strong in British Columbia, Alberta, Saskatchewan, and Ontario. We are favorable on Pure Extracts’ ability to produce products that consumers demand and find the versatility of its facility to be an important part of the long-term story.
All of Pure Extract’s edible products utilize a proprietary manufacturing system that is licensed from US based Taste-T, which is the manufacturer of Margarita Chill and Fireball Cinnamon products. There has been significant demand for these gummies in the US and we are favorable on the relationship for Pure Extracts. By having access to these edible products, the company has been able to further differentiate itself from other companies that are focused on the Canadian cannabis 2.0 market.
The next step for Pure Extracts is selling the products through its distribution partner and we are favorable on the visibility that is associated with this growth initiative. We believe the management team is creating a track record of execution and will be monitoring how the story advances over the next quarter.
Enters Michigan Via Strategic Joint Venture
A few weeks ago, Pure Extracts signed a letter of intent to form a joint venture with an affiliate of a publicly traded multi-state operator (MSO) to install a cannabis and hemp extraction system in an existing Michigan facility. The MSO initially focused on the cannabis opportunity in Oregon and owns a portfolio of premium cannabis products that can be purchased at more than 100 dispensaries in Michigan.
As it relates to the Michigan joint venture, the companies plan to combine forces and we are favorable on the expertise and assets that are provided by each operator. The MSO’s affiliate adds local permitting, licensing and marketing expertise to the joint venture, while Pure Extracts plans to contribute a mix of equipment and cash to rapidly scale-up to capitalize on the increasing demand for recreational cannabis concentrates and edibles in Michigan.
Going forward, the companies plan to utilize 2,600 sq. ft. of existing space in the MSO’s facility to execute on a unique and targeted growth strategy. From a geographic standpoint, the facility is strategically located in central Michigan and is approx. two hours away from several major markets. We consider the central location of the facility to be of importance since the joint venture will be able to focus on several attractive markets in the state.
Pure Extracts expects to start selling products by the fourth quarter and we will monitor how the relationship advances ahead of the planned launch. With around 400 open dispensaries in Michigan, the market provides Pure Extract with a major potential growth catalyst and we will monitor how the brand is able to capture market share over the long-term.
A Growth Story that is Trading for a Discount
During the last month, Pure Extracts has come under heavy pressure and this is a trend that caught our attention. The recent price movements come after the company reported a series of important milestones and we believe it has an attractive risk-reward profile at current levels.
The biggest potential growth catalyst for Pure Extracts is the granting of a Dealer’s License from Health Canada. We expect the company to be granted this license and are favorable on how its facility has been constructed to meet EU GMP standards. With this certification, Pure Extracts is well positioned to capitalize on burgeoning international markets in the EU and this is a market we are bullish on.
We consider Pure Extracts to be a differentiated opportunity and believe that our readers should be aware of it. If you are interested in learning more about Pure Extracts, please send an email to support@technical420.com with the subject “Pure Extracts” to be added to our distribution list.
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Pursuant to an agreement between StoneBridge Partners LLC and Pure Extracts Technologies Corp. we have been hired for a period of 180 days beginning November 1, 2020 and ending May 1, 2021 to publicly disseminate information about (PULL) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month (PULL) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own one hundred seventy six thousand eight hundred and twenty nine (176,829) shares of (PULL), which we purchased via private placement. We plan to sell the “ZERO” shares of (PULL) 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 (PULL) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.
This press release may include predictions, estimates or other information that might be considered forward-looking within the meaning of applicable securities laws, including statements related to the Company’s ability to support its continued growth and fund the business’ sales and financial goals for at least the remainder of fiscal 2021 with proceeds remaining from its recent offering. While these forward-looking statements represent the Company’s current judgments, they are subject to risks and uncertainties that could cause actual results to differ materially, including risks and uncertainties associated with market conditions. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the opinions of the Company’s management only as of the date of this release. Please keep in mind that the Company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. When used herein, words such as: “potential,” “expect”, “look forward,” “believe,” “dedicated,” “building,” or variations of such words and similar expressions are intended to identify forward-looking statements.
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.
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Pure Extracts Just Entered One Of The Top 3 Cannabis Markets By Revenue In The US - Technical420 - Technical420
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