February 5, 2019 MJ Shareholders
February 5th, 2019
Exclusive, News, Top Story
As the first month of the new year came to a close, Calgary-based Westleaf Inc. (TSX-V: WL) announced three acquisitions which place the company as one of Canada’s largest cannabis retailers, reinforce the company’s vertical integration strategy, and position it for impressive growth in the year ahead.
Candarra Acquisition Expands Retail Footprint
At the end of December, Westleaf announced the purchase of a 21.4% stake in Canndara Canada Inc, with the option to purchase the company outright. On February 1st, it announced that it has exercised that option, and as a result, now owns Canndara’s fifty-plus premium retail locations throughout Western Canada and Ontario, all at varying stages of development, seventeen of which have development permits.
At the time of the initial announcement, Scott Hurd, President and CEO of Westleaf said, “This acquisition will position Westleaf to become one of the largest premium cannabis retailers in Western Canada. Cannabis retail is the cornerstone of our vertically integrated strategy as the unique Prairie Records concept enables Westleaf to engage with consumers and build brand equity and loyalty for its stores and produced product brands.”
Prairie Records premium retail stores mimic the design and feel of record stores, injecting some much-needed flavour into the increasingly homogeneous Canadian cannabis retail market. Customers will be immersed in music as they peruse branded material resembling album covers, but containing information about products, branding, strains, and THC/CBD content, giving them a tactile experience as they learn about Westleaf’s product offering.
The Canndara locations complement Westleaf’s existing real estate portfolio and reinforces Westleaf’s strategy of focusing only on tier-1 locations, including the only approved development permits adjacent to the University of Alberta and retail spaces currently under development in Calgary and Banff, including a flagship Prairie Records store in Calgary’s iconic Palace Theatre.
Canndara’s founders will join Westleaf’s senior management team, and up to 50 locations are expected to be operational by the end of 2020, subject to licensing and regulations, under the Prairie Records banner.
Expanded Footprint in Saskatchewan’s Largest City
Westleaf has also entered into an option to purchase two premium retail spaces in Saskatoon, SK, once retail permits are issued and subject to regulatory approval, which would also open under the Prairie Records banner.
Commenting on the agreement, Hurd said, “These additional premium cannabis retail locations will provide Westleaf with significant scale in Saskatchewan and will be opened under the Prairie Records brand which provide customers with a unique and engaging cannabis retail experience. We believe that Saskatchewan provides for one of the most attractive privatized cannabis markets given the limited number of licenses and the ability to sell online to the entire province. This is especially true in the province’s largest city, Saskatoon.”
The first Prairie Records retail outlet, located in Warman, Saskatchewan, will hold its grand opening within the coming weeks marking the official rollout of Westleaf’s highly-anticipated retail concept throughout Western Canada. The company hopes to open Prairie Records stores in Ontario, pending provincial approval, and pre-qualified for the Manitoba government’s lottery for cannabis retail licenses. Customers will also be able to purchase Westleaf products through its e-commerce site.
Delta West Purchase Enables Expanded Product Offering
On January 28th, Westleaf announced that it had signed a definitive agreement to purchase Delta 9 Cannabis Inc’s (TSXV: NINE) (OTC: VRNDF) 50% interest in the Delta West extraction facility, currently under construction in Calgary, Alberta, bringing its ownership to 100%.
The Delta West facility, which is scheduled to open in the summer of 2019, is approximately 60,000 square feet with Phase I (~15,000 sq. ft.) designed to house R&D, processing, extraction, manufacturing and order fulfillment, all built to EU GMP specifications to enable exports to international markets. Phase II is being readied for the production of Westleaf’s derivative product lines ahead of Health Canada’s legalization of derivative products, expected in October 2019.
“This transaction is another step in the direction of becoming a significant vertically integrated player in the Canadian cannabis industry,” said Hurd. “It is our view that over time, a diversified offering of derivative cannabis products will account for the majority of consumer demand. We are positioning to formulate unique, high quality derivative products and leverage our expertise in building and running these types of facilities.”
Market analysts expect the sale of derivative products – vape cartridges, edibles, beverages, and topicals – to overtake the sale of flower as consumers look for alternative THC/CBD delivery options.
Westleaf is one of Canada’s truly vertically integrated cannabis companies, with assets in all areas of the industry including cultivation, extraction, processing and manufacturing, distribution, and an innovative concept in wholly-owned retail, positioning it as an early leader in the burgeoning Canadian cannabis industry.
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About Tony Deyes
MJShareholders.com is the largest dedicated financial network and leading corporate communications firm serving the legal cannabis industry. Our network aims to connect public marijuana companies with these focused cannabis audiences across the US and Canada that are critical for growth: Short and long term cannabis investors Active funding sources Mainstream media Business leaders Cannabis consumers