Palm Beach, FL – October 21, 2019 — Earlier this year, analysts at Jefferies said the cannabis industry could become a $130 billion industry over the next 10 years. “This assumes full U.S. federal legalization, full recreational and medical legalization across Europe, full medical and recreational legalization across Lat Am, and cannabis disruption of a number of other industries,” noted the analysts, as quoted by Yahoo Finance. Other big contributors to global cannabis growth include Thailand, where medicinal cannabis was approved in December 2018. According to Arcview Market Research and BDS Analytics, global spending on cannabis could reach $57 billion by 2027. In addition, Canada will legalize cannabis-based edibles, beverages, and topicals later this week. That’s opening a wide range of opportunity for companies such as Nutritional High International Inc. (CSE:EAT) (OTCQB:SPLIF), Aphria Inc. (NYSE:APHA)(TSX:APHA), Tilray Inc. (NASDAQ:TLRY), and HEXO Corporation (NYSE:HEXO) (TSX:HEXO).
Nutritional High International Inc. (CSE:EAT) (OTCQB:SPLIF) BREAKING NEWS: Nutritional High International Inc. just announced it entered into a five-year binding framework agreement with Golden Triangle Health Company Ltd. to manufacture and distribute branded products in North America, effective immediately. To begin, Golden Triangle clients will import products to the US to be infused and packaged. Golden Triangle is a Thailand-based health and wellness company with a strong family of brands including Smooth-E, P80 Natural Essence, Siang Pure Oil, SLC Clinic and the Traditional Thai Herbal Association. Golden Triangle is actively soliciting additional brands from Asia to its portfolio specifically with the purpose of manufacturing and distributing CBD and Cannabis infused products in North America and once permitted, in Asia and Europe. Nutritional High will be responsible for providing North American market assessments for the Clients’ products, and for those products selected will be responsible for infusion, packaging, marketing, distribution and sales of those products in jurisdictions where they are legal.
Products targeted for import already have a strong following in Asia and will initially include: P80 Natural Essence, an all-natural Longan juice clinically proven to improve sleep and made using an exclusive manufacturing process; Siang Pure Oil Red, a topical oil derived from 100% natural herbal ingredients and designed to relieve various bodily discomforts such as aches and insect bites; and Smooth-E Facial Cream, recommended by dermatologists and pharmacists to diminish scars, heal chapped skin and smooth away wrinkles. Nutritional High will also work closely with SLC Clinic and the Traditional Thai Herbal Association to bring additional brands and product lines to North America. SLC Clinic is the leading provider of skin care solutions in Thailand and the Traditional Thai Herbal Association has proprietary formulations for an array of organic herbal products including food, drinks, bath and body, cosmetics, and skin care.
As per the Agreement, the Company will receive a sales fee totaling 35% of gross sales, as well as a fee for each initial product assessment plus applicable expenses. The Company will receive 75% of the sales fee and Golden Triangle will receive 25%. As consideration for entering into the Agreement, Nutritional High has issued 1,050,000 common shares of the Company to Golden Triangle.
“We are proud to have attracted Golden Triangle as a key strategic partner to allow us to be a first mover in Asian focused products, and eventually in Asia,” commented Nutritional High CEO, Adam Szweras. “Golden Triangle is licensing successful products throughout Asia and this partnership allows us to leverage our extensive distribution network and robust manufacturing footprint for a brand-new emerging category with limited risk.” The partnership between Golden Triangle and Nutritional High is a result of the collaborative efforts between the Company and Tom Kruesopon. Based in Thailand, Mr. Kruesopon is a political operator and businessman who played a major role in advocating for cannabis legalization in his home country. Cannabis was legalized for medical use in Thailand in December 2018.
“The cannabis industry in Thailand is still in its infancy but there are a plethora of opportunities in North America,” added Mr. Kruesopon. “Nutritional High is building a strong brand offering and combined with their existing infrastructure, is the perfect partner for Golden Triangle’s foray into North America. The reverse is true as well. As we see the cannabis industry mature in Thailand and the rest of Asia, Nutritional High will have a dedicated partner on the other side of the Pacific ready to expand into Asian markets as regulations permit.”
Other cannabis-related developments from around the markets include:
Aphria Inc. (NYSE:APHA)(TSX:APHA) reported its results for the first quarter ended August 31, 2019. All amounts are expressed in thousands of Canadian dollars, unless otherwise noted and except for per gram, kilogram, kilogram equivalents, and per share amounts. “We are pleased to report a second consecutive quarter of profitable growth with strong contribution from our Canadian cannabis operations. Our success was also driven by our international business and the strength and growth of our brands, particularly Broken Coast, despite a small fire at our British Columbia facility at the end of the quarter. This solid start to the year keeps us on track to achieve our fiscal year 2020 financial outlook,” stated Irwin D. Simon. “Going forward, we remain focused on our highest-return priorities both in Canada and internationally as our team furthers the development of our medical and adult-use cannabis brands to drive growth through innovation and return value to shareholders.” Net revenue of $126.1 million in the first quarter, an increase of 849% from prior year quarter and decrease of 2% from prior quarter. Revenue for adult-use cannabis of $20.0 million in the first quarter, an increase of 8% from prior quarter. Net income of $16.4 million and adjusted EBITDA of $1.0 million in the first quarter. Adjusted EBITDA from cannabis operations of $1.3 million in the first quarter.
Tilray Inc. (NASDAQ:TLRY) announced it has entered into a definitive agreement pursuant to which Tilray, through a wholly-owned subsidiary of High Park Holdings Ltd., will acquire all of the issued and outstanding securities of 420 Investments Ltd., an adult-use cannabis retail operator headquartered in Calgary, Alberta. FOUR20 provides adult-use cannabis consumers with a premium retail experience focused on high quality product selection, education and community. FOUR20 currently operates six licensed retail locations and has 16 additional high-traffic locations secured in desirable locations in Alberta, including Canmore, Calgary and Edmonton. Tilray and High Park will leverage FOUR20’s retail expertise and brand and market knowledge to expand into other Canadian provincial markets where Licensed Producer retail ownership will be permitted in the future. “FOUR20 offers a premium retail experience for the mainstream cannabis consumer and builds on our broader retail strategy, which includes several minority investments in other leading cannabis retailers,” says Tilray Chief Corporate Development Officer Andrew Pucher. “With FOUR20, we will elevate the retail experience for consumers by offering the best quality-tested products while preparing for the next wave of legalized product launches taking place by year’s end.”
HEXO Corporation (NYSE:HEXO)(TSX:HEXO) provided preliminary revenue for its fiscal fourth quarter and year ended July 31, 2019 and is also withdrawing its previously issued financial outlook for fiscal 2020. Based on preliminary financial information and subject to year-end closing adjustments, HEXO expects net revenue for the fourth quarter to be approximately $14.5 million to $16.5 million and net revenue for the year to be approximately $46.5 million to $48.5 million. “Fourth quarter revenue is below our expectation and guidance, primarily due to lower than expected product sell through,” commented Sebastien St-Louis, CEO and co-founder of HEXO Corp. “While we are disappointed with these results, we are making significant changes to our sales and operations strategy to drive future results. Over the past quarter, we began re-configuring our operations to focus on high-selling strains and initiated a new sales strategy that we believe will meaningfully improve performance. We plan to discuss these in more detail on our upcoming earnings call.”
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