Heritage Cannabis is pioneering the seed-to-sale cannabis model

• Holding company with a variety of synergistic businesses as subsidiaries
• Well-positioned to become a major player in the medical and recreational cannabis sectors
• Highly scalable business model that allows for revenue generation from a variety of sources

What Heritage Cannabis does:

Heritage Cannabis Holdings Corp (CSE:CANN) is a seed-to-sale, vertically integrated cannabis business with five operating subsidiaries. As the parent company, Heritage is focused on providing the resources for its five current operating subsidiaries to advance their products or services to compete domestically and internationally.

Based in Toronto, the company currently has two Health Canada approved licenced producers, through its subsidiaries Voyage Cannabis and CannaCure Corp, which are both regulated under the Cannabis Act Regulations.

CannaCure brings a 122,000 square foot facility that acts as a flexible space to allow for partnership opportunities, such as toll manufacturing and co-branding optionality. The Fort Erie, Ontario facility has a total indoor grow space of nearly 25,000 square feet.

Meanwhile, with a strong emphasis on cannabis oils, Voyage’s offerings include a full and unique line of cannabis products for both the medical and recreational markets. The subsidiary also has a fully licensed indoor production facility with 13 acres under ownership that is zoned for cannabis cultivation. The company operates under a seed-to-sale model that encompasses production through to retail, for both medical and recreational use.

Another subsidiary, Purafarma Solutions provides extraction services and specializes in the development of medicinal grade cannabis formulations for pharmaceutical, recreational and cosmeceutical markets. Purefarma is sought after to perform extraction by licensed producers, many of which do not have the extraction capability to meet market demands or their contractual commitments.

Meanwhile, BriteLife Sciences Ltd adds critical medicinal cannabis expertise to the company’s arsenal. The subsidiary is developing various medical-related proprietary branded products and partnerships with industry leaders in the therapeutics space.

Heritage’s final subsidiary, Endocanna Health Inc, is a biotech company that provides personalized, scientifically-based resources, tools and solutions to support an optimal outcome for consumers when incorporating cannabinoid products into their health and wellness goals.

How is it doing:

In June, Heritage Cannabis launched RADsicles, its new cannabis edible ‘freezie’ just in time for summer.

The company said the blue raspberry, cherry, cream soda, and grape-flavoured RADsicles will soon be available for purchase at provincial boards and retailers, as it has already shipped the first products to the Ontario Cannabis Store.

In addition to RADsicles, Heritage noted it is set to launch five more products this summer, including Live Rosin Concentrate, Live CBD Concentrate, and Softgel Capsules, as well as RAD Reefer and Doobies.  

The products will be available initially in British Columbia by mid-June, with other provinces being targeted shortly thereafter.

Earlier in the month, the company announced its wholly-owned Voyage Cannabis Corp subsidiary has received its cannabis research licence under Health Canada’s Cannabis Act and Cannabis Regulations.

Heritage said the licence will allow it to conduct research, analysis and trials for the assessment and development of its growing portfolio of differentiated medical and recreational cannabis products. 

As well, the company noted that it hopes to use the licence to conduct controlled trials of its cannabis extracts, concentrates and oils, including vaporizers, topicals, beverages and edible products, operating from its extraction and manufacturing facility in Falkland, British Columbia, subject to the conditions outlined by Health Canada.   

Also in June, Heritage Cannabis said it has signed a non-binding letter of intent to purchase California-based Bloom Brands, a collection of recreational cannabis brands.

Under the terms of the agreement, Bloom will receive about US$15 million in Heritage shares in two tranches, one of US$7.5 million in shares at a deemed value of C$0.14 each followed by a second tranche of shares six months after closing at a deemed value of either C$0.16 per share, or a 15% discount to the 15-day volume-weighted average price, whichever is greater.

The deal also includes potential milestone payments of up to an additional US$17 million of Heritage shares, which will be contingent on Bloom achieving certain financial targets over a 12-month period.

Heritage said the acquisition will provide it with an immediate market footprint in California, New Mexico, Oklahoma, Washington, Nevada, and Arizona and also immediately creates a revenue-generating US platform solidifying its cannabis strategy to establish its distribution platform in nine states.

The transaction is expected to close by the end of July, although there can be no assurance the deal will be completed on the arranged terms.

Meanwhile in May, the company revealed a five-year partnership with Como Health LLC, doing business as 3Fifteen Primo Cannabis, which will see Heritage produce branded products for medical cannabis consumers in the US state of Missouri. 

Under the partnership agreement, Heritage will supply production equipment to 3Fifteen, provide training and supervision of staff on its proprietary methods of extraction and oil production, and shelf minimums with be granted for Heritage’s branded products in 3Fifteen’s Missouri dispensaries.  

3Fifteen Primo Cannabis holds five dispensary licenses in Missouri, two of which are in operation and three are in the construction phase, and owns one of only 11 manufacturing licenses approved to operate in the State.

And, Heritage reported the launch of its ArthroCBD hemp brand in the US, a softgel capsule with 25 mg of CBD and 6 mg of Beta caryophyllene created to help people seeking “symptomatic relief.” The company said it is formulated using VESIsorb technology, which boosts absorption, compared to other oral CBD products on the market.

Other announcements by Heritage Cannabis during the month of May include the receipt an expanded order from Saskatchewan’s Weed Pool Cannabis Co-operative for an additional 31 stock keeping units (SKUs) that will soon be available to consumers in that province, and revealing its products are available for purchase on the CannMart online platform, which is owned by Namaste Technologies Inc (CVE:N) (OTCMKTS:NXTTF).    

Inflection points:

• Continued sales growth in Alberta and elsewhere
• Exporting to Brazil
• $12 million financing to purchase biomass, packaging materials and equipment

What the boss says:

Heritage Cannabis CEO Clint Sharples has said he is excited to grow the company’s presence in North America and abroad.

“Following on our recent announcement of a bulk CBD product supply agreement in Brazil, we are pleased to be further expanding our reach beyond Canada and the US with our full-spectrum, high-quality extractions and medical softgel capsules,” Sharples said in a January statement.

“The Brazilian market for pharmaceutical cannabis and hemp products is in a high growth phase and the Agreement with Entourage Phytolab will facilitate Heritage’s growth in 2021.”

Contact Sean at [email protected]

Story by ProactiveInvestors