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Another Near Billion-Dollar Cannabis Acquisition Signals More Hyper Valuations to Come

VANCOUVER – Fly On Wall Street – As a part of its current hashish M&A spree, HEXO Corp. (NYSE:HEXO) (TSX:HEXO) spent almost one other billion {dollars}, buying Canada’s largest privately-owned licensed hashish producer Redecan for C$925 million. By including Redecan, HEXO continues to develop its massive portfolio of manufacturers and manufacturing operations, in addition to new hashish 2.0 extraction-based merchandise. Because of the dimensions of the deal, the potential values of different Canadian hashish manufacturers, producers and extractors might be on the rise as extra M&A exercise begins to swell within the leadup to potential legalization within the USA. Other Canadian firms which were positioning themselves on this subject embody Pure Extracts Technologies Corp. (OTC:PRXTF) (CSE:PULL)(XFRA: A2QJAJ), The Valens Company (OTC:VLNCF) (TSX:VLNS), Medipharm Labs Corp. (TSX:LABS) (OTC:MEDIF) and Neptune Wellness Solutions Inc.(NASDAQ:NEPT) (TSX:NEPT).

The Redecan deal adopted HEXO’s earlier bulletins of taking on Zenabis Global for C$235 million, and 48North Cannabis Corp. for about C$50 million. Upon completion, the mixed firm would probably maintain a primary market-share in Canadian leisure hashish, whereas additionally holding primary positions in 4 of Canada’s largest markets: Alberta, British Columbia, Quebec and Ontario.

Much like Redecan, Pure Extracts Technologies Corp.(OTC:PRXTF) (CSE:PULL) (XFRA: A2QJAJ) has constructed a longtime model (‘Pure Pulls’ and ‘Pure Chews’) throughout three of Canada’s largest markets (Alberta, BC, and Ontario).

Most just lately, the corporate announced it had shipped its preliminary vape cartridge order through its distribution associate to Alberta Gaming, Liquor & Cannabis (AGLC).

“We’re excited to have shipped our first vape cart order to the Province of Alberta and are looking forward to a successful long-term relationship with AGLC that leads to a satisfied customer base and a significant contribution to our annual revenue,” Pure Extracts CEO, Ben Nikolaevsky, remarked. “We’ve created the high quality FSO vape products that consumers now demand and believe that we will quickly build brand loyalty with both legacy and new entrants in the vape space.”

Alberta is presently the second-largest province by cannabis sales in Canada. And the addition of vape gross sales has been an enormous increase for the province as effectively.

“Q1 year-over-year vape sales increased in every market that we looked at, with increases ranging from just over 18% in Nevada to nearly 300% in Alberta,” mentioned David Abernathy, Principal of Arcview Management Consulting who performed a recent report on the vape industry. “Results from the study will be especially valuable for brands in emerging markets and for companies starting up in areas that are on the verge of being legalized.”

Pure Extracts’ earlier gray market merchandise efficiently legitimized its Pure Pulls and Pure Chews manufacturers which had been acquired with a strong popularity amongst its buyer base.

Soon, the corporate can have a complete of 24 SKUs in the marketplace, together with quickly to be launched gummies in Alberta and British Columbia underneath the Pure Chews label.

”We have had a really sturdy response from the provinces to each our proprietary Pure Chews blister packaging and our ultra-high efficiency CBD gummies,” famous Mr. Nikolaevsky.

However, as of June 23, 2021, Pure Extracts was buying and selling at solely C$25.29 million, regardless of its vast market publicity throughout a number of provinces and a JV deal lined as much as produce products in Michigan as effectively.

“We are really excited about launching our first US initiative into the dynamic Michigan market, especially with experienced and entrenched partners,” added Mr. Nikolaevsky. 

“There is strong demand throughout the state for the products we know best: full spectrum oil (FSO) vapes, live resin concentrates, and edibles.”

Other firms with extraction and branded merchandise of their portfolios which are presently buying and selling at a lot larger valuations are The Valens Company (OTC:VLNCF) (TSX:VLNS), Medipharm Labs Corp. (TSX:LABS) (OTC:MEDIF) and Neptune Wellness Solutions Inc. (NASDAQ:NEPT) (TSX:NEPT).

Medipharm Labs Corp. (TSX:LABS) (OTC:MEDIF) recently launched a line of High-CBD wellness oils in Quebec, delivery its first order of CBD 25 and CBD 50 formulation for retail sale by the province’s sole authorized retailer for hashish based mostly merchandise.

“As our domestic Canadian market starts to recover and the Government works towards re-opening the economy, we remain excited about our growth prospects in Quebec as we launch new products and increase our local presence,” mentioned Keith Strachan, President and Interim CEO, MediPharm Labs. “Quebec, one of the largest consumer markets in Canada, marks our seventh provincial distribution agreement. With our expanded footprint, we are now bringing our quality products to 95% of the retail market in Canada.”

In Canada, along with Quebec, MediPharm Labs’ hashish merchandise can be found in Ontario, Nova Scotia, Alberta, British Columbia, Manitoba and Saskatchewan, with extra provinces anticipated to be added in 2021. As of June 23, 2021, MediPharm was valued at almost C$120 million.

The Valens Company (OTC:VLNCF) (TSX:VLNS) made one other step in the direction of the US market, announcing it had accomplished the acquisition of main US CBD firm, Green Roads for US$40 million. If all of the Milestones are met in 2022, the transaction represents roughly 4.5x fiscal 2022 EBITDA. As of June 23, 2021, The Valens Company was valued at ~C$555 million.

“With the closing of this Acquisition, Valens now has a significant presence in the largest cannabinoid market in the world, representing a monumental step in our international expansion strategy and furthering our vision of becoming a global manufacturer of cannabis consumer packaged goods,” Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company. “The combination of Valens and Green Roads makes for an unbeatable team, diversified distribution network, and unparalleled product development and manufacturing platform, which we expect will provide us the footprint to become one of the biggest players in the global cannabis health and wellness market.”

Neptune Wellness Solutions Inc. (NASDAQ:NEPT) (TSX:NEPT) recently launched three new Mood Ring branded hashish merchandise, together with THC capsules, THC oil, and Florida Citrus Kush Flower the primary branded flower product within the province of British Columbia. The launch got here shortly after the announcement of the launch of the model PanHash, which incorporates two merchandise with a excessive focus of CBD (a hashish oil and capsules) for the province of Quebec. The merchandise are produced utilizing Neptune’s proprietary chilly ethanol extraction course of, which consumes considerably much less vitality than conventional CO2 extraction, preserving a excessive focus of the plant’s terpenes. Neptune hashish merchandise can be found for adult-use in Alberta, British Columbia and Ontario. As of June 23, 2021, Neptune Wellness was valued at C$198.6 million.

“Entrance into Quebec, one in all Canada’s most populated provinces, is a crucial milestone within the enlargement of our hashish client packaged items product strains,” mentioned Michael Cammarata, Neptune’s President and Chief Executive Officer.

According the corporate’s press launch: “With the launch of PanHash in Quebec, Neptune’s PanHash™ and Mood Ring™ products may be sold in up to 1,600 locationsthroughout Canada and broadens distribution to more than 80% of Canada’s total addressable market for legal cannabis.”

HEXO Corp. (NYSE:HEXO) (TSX:HEXO) accomplished the acquisition of Redecan, which got here with main market share throughout numerous classes, for a purchase order worth of C$925 million payable in money and thru the issuance of widespread shares of HEXO and topic to sure customary changes.

“We articulated a plan to become a top three cannabis player in the Canadian adult-use market,” mentioned HEXO CEO and co-founder Sebastien St-Louis. “With today’s announcement, we believe that we are on the verge of surpassing that objective to become the no.1 licensed producer by recreational market share. Building on our strong market momentum, the combination of HEXO and Redecan reinforces our position as an industry leader and creates a robust foundation for growth, efficiency at scale and improved financial results.”

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