The Supreme Cannabis Company Inc. is looking beyond the flower market, with the $48-million, all-share acquisition of Blissco Cannabis Corp., announced Thursday.
Langley, B.C.-based Blissco is an early-stage LP, with limited cultivation capacity and a short sales history. What it has, however, is extraction capacity and a plan to focus on manufacturing oils and topicals.
"There's a massive market in terms of smoked flower, and we have a business for that. But we also see the emergence of a massive global market, that's wellness focused, maybe more of a new consumer, maybe not. And these consumers are likely going to want other types of products," said Supreme CEO Navdeep Dhaliwal.
“Blissco we see as a very distinct brand focused on a wellness consumer, that will provide wellness products, oils, topicals," he added.
The two companies already have close ties. Supreme acquired 10 per cent of Blissco for $3-million when the company went public last March, and Mr. Dhaliwal sits on the company’s board. Blissco also sources most of its product from Supreme’s 7ACRES facility in Kincardine, Ont.
Currently, BlissCo is only licensed to sell dry flower; it made its first sales, to The BC Liquor Distribution Branch, in the past quarter. Flower, however, appears to mostly be a placeholder while Blissco waits for an oil sales licence from Health Canada.
“It’s very much a 100 per cent extraction-focused company. But we’re not like MediPharm or Valens: we have our own brands, and we’re focused with the Supreme partnership on growing our brand internationally,” said Damian Kettlewell, CEO of Blissco.
“We can currently produce a few hundred thousand 30 mL cannabidiol tincture bottles a year, and we’re working through an expansion on that right now," he added, although he would not offer a more specific production number.
Supreme already uses MediPharm for contract concentrate manufacturing. But bringing more extraction capacity in-house diversifies supply, Mr. Dhaliwal said: “There’s not many extractors out in the country, so they’re getting full. What if they get acquired?"
Supreme’s push towards wellness products comes as advocacy groups, both in the cannabis industry and outside of it, up their efforts to convince the federal government to reclassify CBD as a natural health product. If CBD was regulated as an NHP, it could be sold through more legal sales channels, including health food stores.
The Supreme/Blissco deal still needs to be approved by two-thirds of Blissco shareholders. With Mr. Kettlewell’s support approval seems likely. Mr. Kettlewell, a former deputy leader of B.C.’s Green Party and partner in his family’s chain of liquor stores, owns roughly 53 per cent of the company.
While Mr. Kettlewell highlighted the increased liquidity the deal gives to Blissco shareholders, he has agreed to hold on to 75 per cent the Supreme shares he gets from the transaction for at least two years. He’ll also stay on as a Supreme employee for at least two years.
Mark Rendell