A Vertically Integrated Cannabis Company in the Making. Leveraging Quebec’s Market.
This profile is part of a paid investor education campaign.*
Cannara Biotech Inc. (CSE:LOVE, FRA:8CB)(OTCQB:CNBTF) is building a vertically-integrated cannabis company focused on cultivating and developing cannabis-infused products at their 625,000-square-foot indoor, multi-purpose cultivation facility – one of the largest in Canada and largest to date in Quebec. Once operational, the facility will contain 500,000 square feet of production space, 100,000 square feet of processing space and will be capable of producing over 100,000 kilograms of cannabis annually.
Through Cannara’s collaborative corridor initiative, the company intends to lease space at the facility to product manufacturers to produce cannabis-infused products and expedite them to the market. Cannara is currently in discussions with partners to produce edibles, pet-products, cosmetics, beverages and other products within the facility when the regulations relating to edibles and beverages come into effect in Canada next October.
In addition to their facility in Quebec, Cannara has entered the US hemp and cannabidiol (CBD) market through the e-commerce platform, shopCBD.com, which will showcase hemp and CBD manufacturers throughout the US. The site will offer tinctures, oils, capsules, body care, vape cartridges and pet-related products to US consumers. shopCBD.com recently closed $8.8 million in financing, showing the interest in the growing hemp and CBD market in the US.
To date, Cannara has developed seven cannabis brands that will target cannabis consumers in the recreational, cosmeceutical, edible and beverage sectors. To this aim, the company has signed an LOI with a leading Quebec microbrewery to develop cannabinoid-infused beverages. Their product lines will include flower, oils, vapes, topicals, tinctures, creams, gummies and confectionaries, among others. Cannara has also developed an intellectual property (IP) portfolio that includes 19 filed patents and 40 granted domain names and trademarks.
- Canadian cannabis sales expected to reach $7.17 billion in 2019.
- Quebec’s recreational cannabis market expected to generate between $420 million and $1 billion in sales in 2019.
- Quebec has lowest cost per gram and electricity rates in Canada.
- 625,000-square-foot indoor, multi-purpose cultivation facility under construction in Farnham, Quebec.
- Phase one construction fully-funded. Phases two and three to be funded through tenants.
- Construction on Phase Two and Three is anticipated to begin in 2020.
- IP portfolio with 19 filed patents and 40 granted domain names and trademarks.
- Seven brands across medical, recreational, pet care, cosmeceutical, beverage and edible markets.
- Ongoing R&D to develop new products and formulations to address consumer demand.
- Holds a 61 percent interest in US e-commerce platform shopCBD.com.
- shopCBD.com recently closed $8.8 million in financing.
- US hemp-derived CBD market is expected to reach $22 billion by 2022.
The Quebec Advantage
Canadian cannabis sales are expected to generate up to $7.17 billion in sales in 2019. In Quebec alone, the recreational cannabis market is expected to generate between $420 million and $1 billion in sales, making it the second largest cannabis market in Canada.
When compared to other provinces and territories, Quebec provides cannabis companies with a competitive advantage. To date, Health Canada has issued licenses to only 14 companies in Quebec and the province has expressed an interest in supporting local growers and producers. Additionally, Quebec offers some of the lowest energy costs in the country and a strong pool of land, labor and technical expertise.
Farnham, Quebec Facility
Cannara has secured a 625,000-square-foot facility in Farnham, Quebec, which is 45 minutes away from Montreal. The company has applied for a cultivation license which they expect to receive in the fall.
The indoor, multi-purpose facility will include 500,000 square feet of production space, with capabilities such as cultivation, trimming, curing and extraction, and 100,000 square feet of processing space.
The company is building out the facility in three phases. Phase one construction, which will consist of 170 square feet, is fully-funded and expected to be completed this summer. Phase Two and Phase Three construction is anticipated to begin in 2020. Until then, Cannara will be leasing 300 square feet to two non-cannabis tenants, which will provide the company with $2 million per year in rental income and covers the carrying cost of the facility.
Once operational, the facility is expected to produce over 100,000 kilograms of cannabis per annum.
Credits: Tour de Force Média
The advantages of indoor growing
Cannara is focused on growing cannabis indoors because it offers numerous advantages over outdoor or greenhouse growing operations. The company believes that growing in a pharma-grade GMP facility offers superior yield and less risk.
Cannara’s Collaborative Corridor
Cannara is in discussions with product manufacturers to form joint-venture partnerships for the development of cannabis products. Its Farnham facility will be used by joint venture partners to produce cannabis-infused products onsite to facilitate manufacturing processes, formulation and speed to market.
FV Pharma Agreement
In April 2018, Cannara and FV Pharma, a subsidiary of FSD Pharma, signed an agreement for FV Pharma to open a second production site at Cannara’s Farnham facility. FV Pharma has applied for a site B license to grow cannabis at the Farnham facility until Cannara receives its cultivation license from Health Canada.
Since legalization in October 2018, the demand for cannabis products has been high, and many companies are looking towards the legalization of cannabis-infused edibles and beverages. In the meantime, Cannara has been curating numerous brands and formulations to prepare for the “second wave of cannabis legalization,” which is expected to take place on or before October 17, 2019. To this aim, the company has signed an LOI with a leading Quebec microbrewery to develop cannabinoid-infused beverages.
Cannara is developing seven cannabis brands that will target all cannabis consumers across Canada and offer recreational, cosmeceutical, edible and beverage products. The company is also conducting R&D activities targeting a variety of other products and formulations to ensure that its product portfolio and brands appeal to a vast selection of consumers.
Nativa is Cannara’s flower and oils brand for cannabis consumers with a high tolerance. Products under the brand include flower, oil, concentrates, pre-rolls, vapes, vape accessories and cartridges.
Edible and beverage brands
Cannabar will feature a wellness line centered around snacks such as chocolate, granola and protein bars, brownies and cookies, all in snack-sized and regular-sized formats.
Gummyz, as the name suggests, will offer consumers cannabis-infused candies, chewables and gummy candies.
Liquid CBD will offer a line of CBD-infused water, vitamin water and other hydration beverages. The brand will offer four flavors.
Earth Magic is Cannara’s line of cosmeceutical products. The line will include topicals, lip balms and dermal creams. The company has developed two formulations for their products, one with soothing properties and the other for pain relief.
Floragel will be Cannara’s line of CBD softgels and tinctures for those looking to self-medicate and find relief for anxiety, stress and sleeplessness, among others.
Pet Leaf will be marketed to pet owners looking to take care of their furry companions with natural ingredients. The product line will include pet treats, wellness oils and other care products.
Entering the US Hemp and CBD Market
In January 2019, Cannara entered the US hemp market through a subsidiary with an e-commerce platform called shopCBD.com. The platform showcases hemp and CBD manufacturers throughout the US. shopCBD.com will offer a variety of products including tinctures, oils, capsules, body care, vape cartridges and pet-related products. shopCBD.com recently closed $8.8 million in financing, showing the interest in the growing hemp and CBD market in the US.
“We are taking a leadership role by creating a hub for vendors to showcase their products and consumers to purchase Hemp-CBD products in a fast and easy way. We want to become the Amazon of CBD”, said Krivorot.
With the passing of the 2018 US Farm Bill, CBD has been rising in popularity among cannabis companies and consumers looking for natural-based health and wellness solutions for various ailments. As a result, the US hemp-derived CBD market is expected to reach $22 billion by 2022, according to the Brightfield Group.
Zohar Krivorot — CEO and Founder
As a successful entrepreneur, Zohar Krivorot has founded, advised, invested and sold numerous companies, including voice-over IP application platform 911ENABLE™, which he led from start-up to its acquisition by West Telecom in 2014. Krivorot is recognized as a top leader and innovator by a number of sources, including Deloitte Technology Fast 50™ fastest growing technology companies in Canada. He is actively involved with early-stage companies as an advisor and board member.
Lennie Ryer, CPA, CA — CFO
Lennie Ryer was the CFO and Vice-President of Finance at ConjuChem Biotechnologies Inc., a publicly traded biotechnology company developing peptide-based drugs to improve the treatment of human diseases. He has also worked at Paladin Labs Inc., a specialty pharmaceutical firm, in the position of CFO and VP Finance. At Paladin, Ryer transitioned the company to the TSX and led the company’s most significant financing initiative.
Evan Morris — COO
Before joining Cannara, Evan Morris was President at Traidal, a firm specializing in helping growth-stage companies scale their organizations. Previously, he has held roles in strategy, business development and operations. Most notably at The Stars Group, he helped transform a fledgling casino technology start-up with a handful of employees, into the largest online gambling company on the planet in just over four years. He has participated in multiple mergers & acquisitions, including direct purchases in excess of $5 billion.
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