Receipt of Standard Processing License Helps Westleaf Gear Up for Cannabis 2.0


Tony Deyes

October 16th, 2019

Exclusive, News, Top Story


Canadian cannabis companies have been anxiously awaiting the national Canadian legalization of cannabis derivative products such as edibles, vapes, and other oil products, dubbed Cannabis 2.0, which is expected to begin on October 17, 2019.

While Canada’s legalization of cannabis was truly historic, Cannabis 2.0 is perhaps even more exciting. Cannabis 2.0 will open the sale of a vastly-expanded product mix, which in turn is expected to attract a larger and much more diverse consumer base along with a vastly expanded market with far greater economic opportunities. Legalization has helped to break down the stigma surrounding cannabis, enabling more frank and informed discussions and creating a new “cannabis curious” demographic which is typically older, better educated, more affluent and typically more health-conscious. These are people who would likely have never considered smoking flower, much less looking to the black market.

Click here to see the company’s corporate presentation.

But they feel differently about derivative products, which allow them to enjoy cannabis without smoking, and are discreet and accessible. 60% of those surveyed say they intend to try edibles once they’re legalized, and almost half of these potential edibles customers plan to consume gummies, baked goods, or infused chocolates at least every three months. They’re also interested in the medicinal benefits of derivatives such as topicals for joint pain.

According to a June report on Cannabis 2.0 produced by Deloitte, the Canadian market alone for derivative products is expected to be worth more than C$2.5 billion annually while generating higher profits for retailers than flower and other already legal products. In states like California, the largest single recreational adult use market in the world, the legalization of derivatives has depressed the price of flower, a boon for vertically-integrated companies who saw their inputs drop while the price for branded products either held steady or saw considerable increases.

Westleaf Already in the Starting Blocks

Calgary-based Westleaf Inc. (TSX-V:WL) (OTCQB:WSLFF) has been actively preparing for Cannabis 2.0. Construction of the company’s large scale cannabis extraction, processing and product formulation facility, The Plant by Westleaf Labs, was just granted its Standard Processing license from Health Canada. The license clears Westleaf to begin processing bulk cannabis to create and market derivative products through a variety of commercial arrangements, including its own innovative retail outlets and online store, augmenting its vertical integration.

Phase I of the 15,000 square foot facility located in Calgary, Alberta has been built to European Union good manufacturing practice (GMP) specifications and is designed to process up to 65,000 kgs of dried cannabis annually, putting it in the top five of Canada’s largest pure processing plants per kilo of input. The oils created using supercritical CO2 extraction will be used to produce high quality edibles, concentrates, vape and oil products, including Westleaf’s first in-house product, a line of vape pens under the brand General Admission, as well as its other house brands, Backstage and wellness brand Loon.

Click here to see the company’s corporate presentation.

Scott Hurd, President and CEO of Westleaf said, “This is a major catalyst for Westleaf to generate material revenue through the sale of derivative cannabis products and by offering contract manufacturing services. The issuance of the Standard Processing Licence is timely as Westleaf prepares to launch its cannabis 2.0 products upon legalization which is expected on October 17, 2019“.

The Plant has an additional 45,000 square feet of space to expand extraction capacity as well as add additional product lines based on consumer preferences once the additional products are licensed post October, 2019.

Westleaf anticipates strong industry-wide demand for efficient extraction, processing and formulation capacity, and the scalability of The Plant ensures the company is well positioned to capitalize on the expected demand growth for contract manufacturing, tolling arrangements, white labeling, and in-house product formulation. In July 2019, Westleaf signed its first extraction contract with Delta 9 for white label derivative products worth at minimum $4 million per year with an option to increase up to $16 million.

Hurd added, “The Delta 9 contract is the first of what we hope to be a number of similar arrangements between licensed producers, product developers and others who are preparing for the coming legalization of derivative cannabis products such as vapes, edibles, topicals and beverages, or what is called Cannabis 2.0. We are preparing Westleaf to be in a strong position to capitalize on the expected spike in consumer demand for these products later this year and into 2020 and beyond.”

The 80,000 square foot Phase I of Westleaf’s large-scale Thunderchild Cultivation facility in Battleford, Saskatchewan is also fully-funded and on track for completion and submission of its Health Canada evidence package for a cannabis Standard Cultivation license by the end of 2019.

Prairie Records Also Expanding

Westleaf is best known for its Prairie Records retail outlets, which are designed to mimic the look and feel of record stores, a unique buying experience that leverages the instinctual connection between music and cannabis.

Click here to see the company’s corporate presentation.

Named the Top Retailer in Canada by the Grow UP Conference and Expo, Prairie Records is already generating revenue through three existing stores in the Saskatoon region and one in Calgary, with up to 20 more locations under development including downtown Calgary and Edmonton and a flagship store in Banff, Alberta, in the heart of Canada’s most-visited national park. Cannabis 2.0 enables Prairie Records to offer an expanded product mix and cater to a larger and more diverse customer base.

 

 

Prairie Records also gives Westleaf the opportunity to interact with consumers, allowing it to gather valuable insight on consumer preferences to more effectively develop new products.

Cannabis 2.0 is right around the corner, another milestone for Canada, and a wonderful opportunity for vertically-integrated companies like Westleaf which are poised to capitalize.

To keep up with Westleaf, keep watching this page, and visit https://www.westleaf.com/

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