TORONTO, Sept. 13, 2018 /CNW/ - Newstrike Brands
Ltd. (TSX-V:HIP) ("Newstrike" or the
"Company") is pleased to announce an update to shareholders
from Jay Wilgar, CEO:
In a little over a month from now, on October 17th, 2018, Canadians will
lead the world by being the first G7 country to legalize cannabis.
We are setting the pace for global change, influencing the
introduction of this product into mainstream society in a careful
and constructive manner.
At Newstrike Brands, we have been preparing for this moment by
putting tremendous work into developing Canada's Cannabis Company and always ascribing
to our core values. One of which, is "to keep it real." It seems to
us, while many in our emerging industry are aspiring towards some
form of global domination set against a backdrop of aspirational
but likely unattainable goals, we have a far more realistic and
humble approach with a focused strategy to achieve value for our
shareholders.
If you recall earlier in the year, our message to the street was
to focus on our recreational strategy therefore creating a
prominent Cannabis brand in Canada
once full legalization was launched. This vision hasn't changed and
here's what we have done to ensure we stay firm to this plan. We've
established four strategic pillars, and our goal is to execute as
aggressively as we can against these four pillars:
- Well run grow operations that yield the highest quality
PRODUCTION
- A trusted and recognizable BRAND known for pioneering the
normalization of Cannabis
- Established DISTRIBUTION networks throughout Canada and abroad
- INNOVATION with new products that challenge the status quo
Production
Nearly every licensed producer in Canada with capital is now in the process of
managing a massive increase in production capacity and scale.
Within this context, our capacity estimates across our two
facilities in Brantford and
Niagara may seem modest but will prove to be very achievable
projects that provide for significant growth and an impressive
return on investment.
The retrofit and expansion at Niagara continues to progress on
schedule. We were conservative when we set initial production
targets at Niagara and as work has progressed we've increased our
production estimate to 30,000 kg per year, as per our MD&A
disclosure for the three months ended June
30, 2018.
Given early indications from our product yields, it's not
unrealistic to expect our Niagara facility to produce over 40,000
kg in cannabis annually once fully developed. To recap:
- Niagara is a modern, state-of-the-art greenhouse facility with
highly controlled and monitored capabilities across all key growth
factors, such as humidity, light and nutrients. A fully automated
Dutch Tray system maximizes the available real estate for plant
production.
- We are in the final stages of getting our sales licence
amendment to permit the packaging and sale of Brantford produced product from the Niagara
Facility.
- We have submitted an application to Health Canada for a sales
licence amendment for Niagara grown product to be sold from the
Niagara Facility.
- Construction to expand the existing 200,000 square feet
greenhouse facility is underway that will increase it to
approximately 455,000 square feet in Q2 2019. This state-of-the-art
facility will include the following areas upon completion of
approximately
-
- 350,000 square feet dedicated to growing;
- 80,000 square feet dedicated to processing, packaging
and extraction; and
- 25,000 square feet dedicated to a research and development lab
and innovation.
Branding
Early on we made the decision to invest in our brand
development. It's actually been a lot of fun defining and designing
our identity. Our main brand is named Up Cannabis. It signals our
intent to lighten up the world by virtue of more good times and
less dullness. It's a promise to fully enjoy life in the moment,
and everything our brand touches builds upon this premise. It is
implicitly Canadian, an expression of our roots by promoting
diversity, acceptance, and friendliness in our actions, rather than
through the use of explicit Canadiana.
Our Up Cannabis Brand was officially launched over the summer
and we've been proud to host several events that have garnered
significant mainstream media attention with some examples in the
clickable links below:
New Farm Event:
- Toronto Star
- Toronto Sun
- ET Canada
- etalk
Bathouse Studio Event:
- Globe and Mail
- Toronto Sun
The goal of our Brand Launch was to record impression metrics to
ensure Up Cannabis established our share of voice in this very busy
sector. We are proud to report that our two main events alone
garnered over 62 million trackable media impressions. Needless
to say, we are very excited and consider our Brand Launch a
resounding success.
In line with our ethos of keeping things simple, Up Cannabis
will start by offering five dried cannabis strains with names
inspired by Tragically Hip experiences – Grace, 50, Moon, Meridian
and Gems. By sticking with a smaller focused product portfolio, we
can better manage the initial experience consumers have with Up
Cannabis and position ourselves as a premium producer. These five
strains are inspired by the most popular varieties that account for
the majority of cannabis sales in established adult-use markets
like Colorado, Washington and California.
As many of you are well aware, the Tragically Hip are a critical
part of Newstrike. As we know from their careers and music, they
are passionate about this country, and believe strongly in this
once-in-a-lifetime opportunity to positively impact the Canadian
landscape. They are shareholders, creative partners, product
advisors and, like all 110 of us in the company, just part of the
team.
Distribution
Along with production capacity and strong branding, we've
secured distribution with five provinces to date that will make Up
Cannabis available to Canadians from coast to coast. This includes
supply for the Nova Scotia Liquor Corporation, Alberta Gaming,
Liquor & Cannabis Commission, Ontario Cannabis Store, British
Columbia Liquor Distribution Branch and Saskatchewan Liquor and
Gaming Authority.
At the end of the second quarter, we reported $8.2 million in dried and finished goods cannabis
inventory and work in progress biological assets that will yield
approximately 1,000 kg of additional cannabis. This will allow us
to fulfill initial orders that have already been received from the
provinces.
Our strategy extends beyond distribution as having a presence in
retail is important to connecting with the consumer. Through our
strategic alliance with Inner Spirit Holdings Ltd., we will help
create and operate Up Cannabis Experiential Hubs within Spirit Leaf
stores across Western Canada.
In Ontario, the Province's
decision to move to a private retail model for cannabis sales in
2019 presents a tremendous opportunity to further connect with our
customers and establish a channel for safe, regulated product that
will help eliminate the black market. We are actively exploring
several different options to further solidify our position in
Ontario as we fully support the
new provincial legislation surrounding private retail and the
opportunities it brings.
Innovation and New Product Development
The long-term opportunity for Newstrike and Up Cannabis extends
well beyond domestic cultivation and dried cannabis. The most
exciting developments in our industry are yet to come when
concentrates, vape pens, edibles and beverages are permitted. With
a cash balance of nearly $125 million
at the end of the second quarter, Newstrike is in a strong position
to take an active role in the evolution of our industry as we look
to mergers and acquisitions, partnerships, joint ventures and
licensing agreements to build out our offering. We are exploring
several opportunities to add innovative products to our portfolio
that will create new revenue streams and leverage the brand
investment that we have made, and continue to make, in Up Cannabis.
We believe strategic investments and partnerships will allow us to
develop innovative mainstream products that extend far beyond the
typical or what may be considered industry norm.
While the approach I have stated might be interpreted as humble,
in fact, our aim is high. By building a strong domestic presence in
a large market that is now just around the corner, we will also
look to leverage the strengths of our platform into emerging
cannabis markets beyond Canadian borders.
Our decision to focus on our strategic pillars in Production,
Branding, Distribution and Innovation will enable us to fill our
estimated capacity with the market opportunities available to us
right now. Once we do, then we will strategically add additional
capacity where required to continue our growth trajectory. Setting
reasonable targets, preserving our balance sheet and deploying
capital wisely might seem like a quintessentially Canadian approach
but we also think it's good business and the best way to create
long-term shareholder value.
Lastly, our recent graduation to a Tier 1 listing on the TSX
Venture Exchange is further testament to the progress we've made in
our business and I am excited for the progress to come. To our
shareholders, thank you for your continued support and I look
forward to sharing our perspective on future developments as we
execute our growth strategy.
Jay Wilgar
Chairman and CEO
Newstrike Brands Ltd.
About Newstrike and Up Cannabis
Newstrike is the parent company of Up Cannabis, a licensed
producer of cannabis that is licensed to both cultivate and sell
cannabis in all acceptable forms. Newstrike, through Up Cannabis
and together with select strategic partners, including Canada's iconic musicians The Tragically Hip,
is developing a diverse network of high quality cannabis brands.
For more information, visit http://www.up.ca
or http://www.newstrike.ca
Forward-Looking Information
This news release contains forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Newstrike to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Often, but not always,
forward-looking statements can be identified by the use of words
such as "plans", "expects" or "does not expect", "is expected",
"estimates", "intends", "forecasts", "projections", "anticipates"
or "does not anticipate", or "believes", or variations of such
words and phrases or state that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved. Accordingly, readers should not place undue reliance on
the forward-looking statements and information contained in this
press release. Since forward-looking statements and information
address future events and conditions, by their very nature they
involve inherent risks and uncertainties.
Actual results could differ materially from those currently
anticipated due to a number of factors and risks. Readers are
cautioned that the foregoing list of factors is not exhaustive. The
forward-looking statements contained in this news release are made
as of the date of this release and, accordingly, are subject to
change after such date.
Newstrike does not assume any obligation to update or revise any
forward-looking statements, whether written or oral, that may be
made from time to time by us or on our behalf, except as required
by applicable law.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Newstrike Brands Ltd.