MediPharm locks up $35M extraction deal
If specialization is the future of Canadian cannabis, then MediPharm Labs Corp. appears to be locking up the extraction side of the business. The Barrie, Ont.-based extraction firm announced a one-year $35-million cannabis oil supply deal with an unnamed Licensed Producer. This includes an initial purchase of $7.66-million worth of oil in February.
The announcement comes two months after MediPharm announced a similar white label deal with Canopy Growth Corp., to provide between 450 and 900 kilos of cannabis oil to Canopy over the next 18 months. It didn’t disclose pricing for that deal. The firm has also signed two smaller white label deals with unnamed companies, although it has not disclosed quantities or pricing for these deals.
MediPharm doesn’t grow cannabis. It builds inventory by sourcing trim and small buds from LPs, either buying it wholesale or getting it as a fee for contract extraction services. It then extracts cannabis oil and sells it wholesale as a white label product. Its main customers so far have been LPs. But with vape, edible and topical products expected to become legal in the next 12 months, the company plans to start bypassing LPs and selling directly to finished goods companies, said Laura Lepore, MediPharm’s vice-president, investor relations and communications.
“If I’m a vape pen manufacturer, as an example, or a granola bar manufacturer, why would I go to a company to get a formulate oil or distillate or isolate to put into my product, when they’ve got products that they’re competing against me," said Ms. Lepore. The company’s stock rose more than 30 per cent on Tuesday.
- Mark Rendell
Molson offers few details on HEXO deal in earnings
Six months after the Molson Coors Brewing Co. made a splash in the cannabis space by announcing a joint venture with HEXO Corp., details of the partnership remain scarce. Molson added little on Tuesday, with the release of its quarterly earnings.
“They’re working on the portfolio, the operational side of the business. And I think… I can say we’re on track to be ready on day one,” said Frederic Landtmeters, CEO of Molson Coors Canada, on a call with analysts. He would not comment on how much Molson had invested into the joint venture, called Truss LP, of which it owns 57.5 per cent.
Tucked into the company’s management discussion and analysis are a few more details, including a warning about the potential risks that accompany Molson’s entrance into the cannabis market. “The emerging cannabis industry in Canada and in other jurisdictions is evolving rapidly and subjects us to a high degree of political, legal and regulatory uncertainty, including when and if regulations in Canada will ultimately be adopted that would allow the sale of the non-alcoholic beverages contemplated by the joint venture,” the MD&A notes.
The MD&A also offers an interesting tidbit on Molson’s expectations about volatility in the cannabis market. When pricing its HEXO options, Molson estimates a price volatility of 88.71 per cent, “based on a blend of implied volatility along with historical volatility levels of peer companies.” This is considerably higher than Constellation Brands Inc.’s recent volatility estimates for Canopy Growth Corp. In November, Constellation was pricing its Canopy options based on an estimated volatility of 75.2 per cent over the next three years.
- Mark Rendell
High Tide to work with a second Ontario retail lottery winner
High Tide Inc. said yesterday it is working with a second winner of the Ontario retail lottery to assist with the opening of a store in Hamilton. The Calgary-based parent of the Canna Cabana retail chain announced its first agreement last week, but that deal did not specify a location. Similar to the first announcement, no financial terms were disclosed. As CanPro’s Jameson Berkow wrote last week, High Tide CEO Raj Grover said his company had made multimillion-dollar offers to several winners of Ontario’s Expression of Interest Application Lottery conducted on Jan. 11, 2019. The 25 Ontario stores are expected to open on April 1.
Sundial secures supply agreement with OCS
Sundial Growers Inc. of Calgary said it has become the latest grower to secure a cannabis supply agreement with the Ontario Cannabis Store (OCS). The agreement will give Sundial access to Canada’s largest cannabis consumer market. The OCS last week added five licensed producers to its list of wholesale suppliers. With the addition of Sundial, the OCS now has supply agreements with at least 36 LPs.
Canapar selects Precision extractor for Sicilian facility
Precision Extraction Solutions of Detroit said Tuesday it will be the exclusive equipment supplier of Canapar S.r.L.'s flagship industrial-scale hemp extraction facility in Sicily. Canapar’s facility in Ragusa, Sicily, is expected to produce CBD extracts and isolate, which will then be used for a wide range of health and beauty, cosmetics, pharmaceutical and veterinary products. Precision will supply the facility with a KPD series extraction plant, which can be scaled to process between 1,000 kg and 45,000 kg of cannabis or hemp a day. Earlier this month, Canopy Rivers Inc. completed a $17.4-million equity investment in Canapar Corp., the Canadian parent corporation of Canapar SrL, increasing its ownership position from 35 per cent to 49 per cent. Canapar says the cGMP-compliant Ragusa facility is initially expected to be able to process more than 600 tons of hemp biomass per year, making it the largest extraction facility in the European Union.