Harvest One Executing on Brands and Distribution Strategy
March 27th, 2019
Exclusive, News, Top News
The nature of the compelling stories in the cannabis industry has changed over the last few years. Remember when a late-stage ACMPR applicant was all the rage? Then it was production expansion and funded capacity. Now, all of that potential is turning to the reality of any market – who can sell product and generate revenue?
One company that is making that turn in fine form is Harvest One Cannabis Inc. (TSX-V: HVT) (OTCQX: HRVOF). After building the foundation of a diverse cannabis company with capabilities, both domestically and internationally, in medical, recreational, and nutraceutical markets, Harvest One has launched into the execution phase of its plan. Appointed in July 2018, CEO Grant Froese is utilizing his extensive retail and business management expertise gained over a 30+ year career at Loblaw Companies Ltd. to lead the company with a comprehensive brand and distribution strategy.
Harvest One History
Harvest One’s Licensed Producer subsidiary, United Greeneries, was awarded its first license, to cultivate, in Canada in 2016. The company focuses on indoor cannabis production, featuring two premium brands: Captain’s Choice and Royal High. United Greeneries has distribution agreements in place with four provinces and anticipates reaching supply levels of 20,000 kg/yr by the end of 2019 through its fully funded expansions. The company does not intend to scale up in an attempt to compete with larger producers, focusing instead on the premium niche and on more profitable development of derivative products for medical, recreational, and nutraceutical markets.
Still, it’s worth mentioning that Harvest One’s Q2 2019 financials reflect the success of United Greeneries’ brands. Net revenue came in at $3.7 million for the quarter, reflecting a 123% increase over the previous quarter due in large part to initial shipments of premium cannabis under the supply agreements with British Columbia, Saskatchewan, Manitoba, and Ontario. Gross margins came in at a healthy 53% for United Greeneries’ products. These revenues are in line with some of the larger Canadian LP’s.
Another Harvest One subsidiary, Satipharm, was established in 2015 as the medicinal and wellness division of the company. Headquartered in Dublin, Ireland, Satipharm develops and sells cannabinoid-based products which are currently manufactured in a GMP-certified facility in Switzerland. Utilizing its Gelpell® technology to boost bioavailability and ensure consistent dosage, the company is now distributing CBD 10mg Gelpell® capsules in many European countries. Satipharm products are also sold in Australia, one of the first brands to be approved in that emerging medical cannabis market.
In a sure sign of Harvest One’s comprehensive approach to the medical and nutraceutical markets, Satipharm’s Gelpell® formulations have been tested in two clinical trials by another of the company’s subsidiaries, Israeli-based Phytotech Therapeutics. One trial proved that Gelpell® technology increased the bioavailability of CBD, and the other showed promising results in the treatment of pediatric epilepsy.
In 2018, Harvest One acquired Dream Water, another major subsidiary. Dream Water is distributed widely to large retailers throughout North America, offering sleep and beauty aids in the form of all-natural liquid shots and powders.
Executing the Plan
With the foundation described above, Mr. Froese was brought on to unify and execute a comprehensive international brand and distribution strategy. A review of recent developments shows Harvest One doing just that.
For the medical market, regardless of jurisdiction, Harvest One is uniting all products under the Satipharm brand. The company’s recent supply agreement with Shoppers Drug Mart is a prime example of how it works. United Greeneries provides the flower product in a number of varieties, and those varieties are marketed using Satipharm’s color-coded system indicating THC/CBD content levels.
Three days after the initial announcement, the first shipment was completed, and the first two varieties are already available through Shoppers’ cannabis web portal.
In November, 2018, Harvest One entered into an agreement with Valens GroWorks, a leader in cannabis extraction and derivative product development. United Greeneries supplies the flower, Valens extracts the resin and oils, and Valens helps Harvest One develop products like beverages, vape pens, nutraceuticals, and personal care products based on the extracted oils.
With Canada set to legalize derivative products later in 2019, and many US markets already showing that derived products are extremely popular with a diverse set of consumers, Harvest One is positioned to capitalize on the highest value segments of the cannabis market. The company already has plans to introduce a CBD version of Dream Water where legal, and with more than 30,000 storefronts throughout North America currently carrying Dream Water it is easy to imagine a broad and successful rollout for the new product lines.
In another move that anticipates Canada’s legalization of cannabis-infused products, Harvest One recently agreed to acquire Delivra Corp., makers and distributors of LivRelief™ branded topicals and creams designed to help control pain. Those products feature delivra™ transdermal delivery technology designed to effectively transport active ingredients in a controlled manner through the skin. Harvest One anticipates leveraging both the extensive distribution network and the delivery technology for the successful launch of its own cannabis-derived products once legal.
The Sum of the Parts
Harvest One is an international cannabis house of brands, backed by scientific product development that adheres to the strictest production standards in the world. It has established distribution networks throughout North America, Europe, and Australia. These networks cover not only medical cannabis but consumer-oriented outlets like Walmart, Kroger, and Loblaws, just to name just a few. New management has demonstrated retail sales, marketing, and management experience, and the developments are coming fast and furious.
Investors may come to the Harvest One party for the company’s solid financial footing. They will likely stay for the tremendous upside represented by the execution, currently underway, of its comprehensive international brand and product marketing strategy.
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