Hiku Archives - Green Market Report

Debra BorchardtDebra BorchardtJuly 11, 2018
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7min15111

Canopy Growth Corporation (CGC) is acquiring Hiku Brands Company Ltd.  (HIKU.CN) and paying a premium for the shares. Canopy is paying C$1.91 per share, which is a 33% premium based on the average price over a 20-day period. Hiku shareholders will receive 0.046 each of a Canopy Growth share.

Consequently, WeedMD has terminated its plans to merge with Hiku and will receive a $10 million termination fee. The companies had announced an “Arrangement Agreement” back in April. That deal was more a merger than an acquisition.

“This Transaction represents an incredible step in the Hiku journey that both realizes immediate benefits for our shareholders and at the same time provides an unparalleled opportunity to join forces with a preeminent global cannabis player,” said Alan Gertner, Chief Executive Officer of Hiku. “Ultimately, together we will continue to build one of the world’s most engaging and successful cannabis retail and brand business. Canopy is a truly special cannabis company that is well positioned to lead both in Canada and around the world.”

Hiku has been building a stable of cannabis brands including retail outlet Tokyo Smoke which has been conditionally awarded one of four master retail licenses in ManitobaVan der Pop’s female-focused educational platforms, and Maïtri, our Quebec based cannabis brand featuring high-quality handmade accessories. Hiku’s wholly-owned subsidiary, DOJA Cannabis Ltd., is federally licensed to cultivate and sell cannabis pursuant to the ACMPR, owning two production facilities in the heart of British Columbia’s Okanagan Valley.

“Hiku equals brands. Canopy is built on brands. So we combined them,” said Bruce Linton, Chairman & CEO, Canopy Growth, in haiku.

Stock Performance

Hiku stock (DJACF) jumped over 1% on the OTC Markets and was lately trading $1.12, down from its 52-week high of $3.87, but above its year low of $0.20. Canopy Growth stock fell over 1% to lately trade at $28.75, down from its year high of $36.55. WeedMD was falling over 1% to lately trade at $1.56 on the OTC Markets.

Transaction Details

According to the company statement transaction highlights include:

  • Secures an Immediate Attractive Premium for Hiku Shareholders:  The Transaction provides Hiku shareholders with a premium of 33% based on the 20-day volume weighted average prices of the Canopy Shares and the Hiku Shares as of July 9, 2018, and a premium of 21% based on the closing prices of the Canopy Shares on the TSX and the Hiku Shares on the CSE on July 9, 2018.
  • Strengthening a Leading Vertically Integrated Global Cannabis Company: Canopy Growth is a leading diversified global cannabis company and market leader with distinct brands and an award-winning product portfolio that spans federally legal markets around the globe in both medical and recreational segments. This transaction strengthens the diversity and range of brands in the portfolio and improves access to multiple demographic segments
  • Integration of Retail Operations: The Transaction provides Canopy Growth and Hiku with an integration and expansion opportunity with respect to retail stores in provinces where direct consumer sales will be permitted pursuant to the Cannabis Act, including a pipeline of growth opportunities.
  • Complimentary Portfolio of Brands: The Transaction provides Canopy Growth and Hiku with the opportunity to leverage a combined portfolio of established brands through their respective retail stores across the country and thereby generate incremental opportunities with distributors.
  • Alignment with Strong Management Team: Hiku’s strong management team brings best-in-class retail, design and marketing experience, which are well aligned with and further supplements Canopy’s existing strategy and operations.
  • Strong Access to and Immediate Availability of Capital: Canopy Growth recently closed the issuance of convertible notes amounting to $600 million in gross proceeds. This capital and liquidity will support both Companies continued expansion efforts
  • Continued Participation in Expanded Platform for Future Growth: Hiku shareholders, through their ownership of Canopy Shares, will have the opportunity to participate in the growth of Canopy Growth and will benefit from the enhanced growth prospects of the combined company. The Transaction will provide substantial infrastructure and operational support to accelerate Hiku’s growth strategy, future product development and innovation, together with Canopy Growth and its global partners.
  • Enhanced Liquidity and Capital Markets Profile: Canopy Growth is listed on both the New York Stock Exchange (“NYSE”) and the TSX. Canopy Shares are highly liquid with an average daily trading volume of approximately 5.4 million shares, representing approximately C$197 million on a daily basis over the last three months.

Debra BorchardtDebra BorchardtJune 25, 2018
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5min8670

It’s time for your Daily Hit of financial cannabis news for June 25, 2018.

On The Site

GW Pharmaceuticals

If any other company released any news today, then it went basically unnoticed because the FDA approved GW Pharmaceutical’s (GWPH) cannabidiol drug Epidiolex. The news was expected sometime this week, so it was nice of the FDA to just get it out of the way on Monday. According to the press release, this is the first FDA-approved drug that contains a purified drug substance derived from marijuana and it is also the first FDA approval of a drug for the treatment of patients with the Dravet syndrome.

Even though the FDA has now approved the use of Epidiolex as a real treatment for these diseases, it doesn’t immediately change the status of cannabis as a controlled substance. The FDA did not say in its release whether it had delivered a recommendation to the DEA regarding Epidiolex and its schedule status.

However, in GW Pharmaceutical’s statement, the company said it would have to be rescheduled before it could be made available to patients. “Rescheduling is expected to occur within 90 days. Access is expected to be similar to other branded AEDs and EPIDIOLEX is expected to be available to appropriate patients by Fall 2018.

Marapharm Ventures

Marapharm Ventures Inc.  (MRPHF)  announced that it has entered into a Letter of Intent dated June 21, 2018 to purchase all the shares of  Full Spectrum Medicinal Inc. Marapharm will have until September 30, 2018, to conduct due diligence on Full Spectrum, with a view to negotiating the terms of a definitive agreement in order to complete the transaction. The company did not provide a valuation for the proposed transaction.

In Other News

Harvest One Cannabis Inc.

Harvest One Cannabis Inc. (TSXV: HVT) has signed a binding Share Sale Agreement with Australian-based MMJ PhytoTech Limited for the purchase of 100% of Israeli-based PhytoTech Therapeutics Ltd. The transaction will be a combination of cash and shares. Upon completion, $1 million in cash and $7 million in Harvest One common shares issued at the then 10-day volume weighted average closing price, will be paid to MMJ.

Cronos Group Inc.

Cronos Group Inc. (CRON)  announced that it entered into a strategic distribution partnership with privately owned pharmaceutical wholesaler Delfarma Sp. Zo.o. Founded in 2004, Delfarma was the first company in Poland to introduce international parallel import of medicinal products from European Economic Area countries. Delfarma distributes directly to over 5,000 pharmacies and more than 200 hospitals, a distribution network that reaches approximately 40% of the Polish domestic market.

Hiku Brands

Hiku Brands (HIKU.CN) announced that it has been granted permission for ten stores by the Province of Manitoba. Four of the stores will be located in Winnipeg and one in Brandon, all of which will be opened under our award-winning cannabis retail brand Tokyo Smoke, winner of Cannabis Brand of the Year at the 2017 Canadian Cannabis Awards.

Hiku is actively working with various regulators, provincial and municipal governments in the Province of Manitoba to obtain the necessary permits for our proposed Tokyo Smoke stores and will ensure location specific permission prior to announcing our chosen locations. This announcement is in addition to Hiku’s announcement on June 22, 2018 on the update for Alberta retail storefronts which detailed how Hiku has filed applications for more than a dozen storefronts in Calgary and are at the top of the list to be considered in each of those locations following Calgary’s first come, first serve approach to licensing.  As previously announced, Hiku has also entered into a letter of intent with Oceanic Releaf Inc., a late-stage applicant under the ACMPR in Newfoundland & Labrador, pursuant to which Oceanic and Hiku are working with the government on the approval for Oceanic of up to 5 additional stores in that province.

 

 


William SumnerWilliam SumnerMay 31, 2018
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3min13390

The luxury cannabis company Hiku Brands Ltd. (HIKU) announced the filing of its financial results for the quarter ending on March 31, 2018.

“The first quarter of 2018 was one that focused on solidifying our vertically integrated cannabis company and positioning us to win in the legal adult-use market in Canada.” said Alan Gertner, CEO of Hiku. “With our solid foundation of Tokyo Smoke and its existing retail footprint, our artisanal handcrafted cannabis grown at DOJA’s state of the art facility in British Columbia, and our iconic brands like Van der Pop and Maïtri, we believe that Hiku is very well positioned to usher in the adult-use cannabis sector in Canada.”

The company’s revenue for the quarter was relatively small, totaling C$246,143. The vast majority of that revenue was gobbled up by the retail cost of sales, which totaled C$202,431. The company managed to squeak out a gross profit of C$15,554. Overall, Hiku posted a net loss of $9.1 million for a loss per share of eight cents versus last year’s loss per share of one cent.

Although the numbers on paper are less than favorable, it is important to note that this is still a relatively new company that hasn’t even begun to sell dried cannabis. Since launching in January 2018, the company has been busy obtaining retail licenses and forging partnerships.

Most recently the company announced that it would merge with the medical cannabis brand WeedMD, which also filed their financial results today. The company reported a 33% quarter over quarter increase in sales and a revenue of $1.14 million.

Although WeedMD also reported a net loss of $1.4 million, the company should be able to absorb the loss with a cash balance of approximately $48 million; most of which was raised in the last quarter. Should the merger between the two companies go through, both parties stand to benefit.

WeedMD will be able to supply that cannabis production infrastructure that is currently lacking in Hiku. Merging with Hiku, which specializes in high end cannabis brands, will allow WeedMD to sell its cannabis at a higher price and increase its profit margin. At the moment both companies are burning through their budget, but once recreational cannabis sales go live in Canada that may not be the case.


StaffStaffMarch 7, 2018
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5min17240

This is your quick hit of news for March 7, 2018.

Marapharm Ventures Inc.

Marapharm Ventures (MRPHF)  gave a progress report on its Washington facility. The copany said that the rehabilitation of the cultivation site will be completed by the end of March.

“During the renovation, we have worked closely with our architect and engineering partners to design one of the most advanced and environmentally friendly cannabis cultivation sites in North America. To operate in the Pacific Northwest climate the 28,000 sq. ft building has a new silicone membrane roof and the interior has been insulated with expanding, closed cell foam. Our flagship tenant AlphaPheno Inc., a tier 3 producer and processor will be able to cultivate 30,000 sq. ft of plant canopy, the maximum allowed by the license, in just 28,000 sq. ft of floor space with minimal water, power, and waste.”

“These engineered solutions will produce higher quality cannabis with the lowest cost of production compared to conventional indoor cultivators and shorten our return on investment timeline.” Kurt Keating, Director of Operations.

Future Farm Technologies Inc.

Future Farm Technologies (FFRMF) announced that its Puerto Rico subsidiary has signed the first of five planned leases for its Clinica Verde branded Puerto Rico dispensaries. Future Farm expects to sign two more leases in the next thirty days with the additional two leases to follow soon after. The Future Farm Clinica Verde branded dispensary is located in the Condado neighborhood of San Juan, one of the island’s most highly trafficked areas.

EVIO, Inc.

EVIO (EVIO), reported that it had recently invested $800,000 in new equipment upgrades at its EVIO Labs Massachusetts facility and its EVIO Labs Colorado licensee. According to senior management, these equipment upgrades will significantly increase testing volumes to meet increased demand and testing requirements, leading to improved operating efficiencies and revenue growth.

EVIO currently operates 9 cannabis testing laboratories in five states, a coast-to-coast footprint that continues to keep pace with the cannabis testing market, one of the most attractive and investment-friendly segments of the overall legal marijuana industry- a space that has exploded onto the investment scene over the last few years, and continues on a rapid growth trajectory.

Hiku Brands Company Ltd.

Hiku Brands Company  (CSE:HIKU) gave an update on the its recent corporate development initiatives. Hiku’s wholly-owned subsidiary DOJA Cannabis Ltd. submitted its application to Health Canada for the production of medical cannabis oils at its second site facility located in Kelowna, British Columbia. Hiku also announced it signed a strategic partnership agreement with Vitalis Extraction Technology Inc.  where Vitalis will advise on the build-out of DOJA’s extraction lab, partner on certain research and development initiatives, and supply the FUTURE LAB with Vitalis’ Q-90 supercritical CO2 extraction system – which is capable of processing up to 80 kg of cannabis flower per day into ultra-pure, exceptionally-clean, high-quality cannabis oils without the use of any toxic solvents.

Sugarmade Inc.

Hydroponic company Sugarmade (SGMD) announced the completion of internal financial system enhancements in order to begin recognizing revenues from its master marketing agreement with BizRight Hydroponics, Inc. Additionally, Sugarmade announced the completion of its year-end audit in preparation for its year-end, and other, financial filings and its intent to soon offer formal revenue growth guidance for year-end 2018 and 2019.

For the past few months, the staff at Sugarmade has been implementing a plan to significantly increase corporate accounting and financial resources to manage the over 400% revenue growth planned for the next few years. With these functions largely completed, the company’s staff is now beginning testing on live orders and revenue flows from BizRight products, in order to begin recognizing these new revenue streams.



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