Hemp Stocks Making Big Moves with Partnerships with Big Tobacco - (OTCQB: $SING) (NYSE: $XXII) (TSX: $CRON.TO) (NASDAQ: $CRON) (TSX.V: $XLY.V)
Point Roberts, WA and Delta, BC - December 13, 2019 (Investorideas.com Newswire) Investorideas.com, a leading investor news resource covering cannabis and hemp stocks releases a special report looking at some of the recent developments between the tobacco and CBD/hemp industry, including the recent deal with SinglePoint Inc. (OTCQB:SING) and global tobacco company, JTI USA. https://www.jti.com/about-us.
As the CBD/hemp industry continues to grow and expand into new markets, new partnerships are emerging with big tobacco companies as companies look to establish a cost effective way of expanding their retail footprint and improve their production infrastructure. And looking at the industry, there are a lot of believers that tobacco is a better fit and a more logical partner than the beverage industry.
Looking at the growth of hemp cigarettes, Greenstate.com reports, "Hemp cigarettes, CBD pre-rolls spreading like wildflower. Something interesting is happening: a new smokeable is being born."
Advance Market Analytics agrees saying, "CBD Cigarette Market Is Likely to Experience a Tremendous Growth in Near Future."
Always a company looking ahead towards the hottest trends, SinglePoint Inc. (OTCQB:SING) recently announced a new distribution agreement that allows for the expanded footprint of PrimeTime Little Cigars in North America, and will also be attending the 2019 MJBIZCON Show in Las Vegas, December 11-13, Booth number C9132. The company recently signed on as a distributor for JTI USA, part of the JT Group of companies, a multibillion-dollar organization with an international presence in 130 countries. Initially, SinglePoint will start out by supporting to further drive the distribution and sales of PrimeTime Little Cigars.
Distributors and Retailers interested in carrying these innovative products are invited to call the Company at 855-203-3318
"We are excited to be working with SinglePoint. SinglePoint CEO, Mr. Lambrechts' prior experience in distribution of premium cigars, we believe will lead to continued growth of JTI USA products and the PrimeTime™ brand," stated Renee Duszynski, Director of Sales, JTI.
SinglePoint will commence sales and take orders for JTI's "PrimeTime Little Cigars" at the 2019 MJBIZCON being held at the Las Vegas Convention Center, December 11, 12 and 13.
"I'm excited and honored to be working with JTI to distribute PrimeTime Little Cigars... The opportunity to work with a global leader in this category is exciting and we are ready to expand Primetime's U.S. market share with our unique experience in alternative markets. Having placed premium cigars in over 30,000 accounts, we expect this opportunity to be one of our major revenue sources in the coming years, and to distribute additional JTI products as we grow this category," said Greg Lambrecht, CEO SinglePoint.
PrimeTime Little Cigars are known as "The best flavored little cigars on the market" available in many flavors such as: Cherry, Grape, Vanilla, Peach and more. This tobacco product line offers a great alternative to cost conscious adult smokers, looking for a quality product.
"Innovation has always been central to what JTI does... For example, PrimeTime has the only encapsulation machine that can manufacture and package individual PrimeTime Little Cigars," Lambrecht says.
A long-standing staple in the tobacco industry, PrimeTime has been in major accounts such as Circle K and 7/11 for over 20 years and continues to be a leading consumer brand, continuously gaining retailer and adult consumer traction. SinglePoint will be representing the product in its debut at MJBIZCON and will be taking orders at the show leading to additional distribution and alternative markets.
According to Mordor Intelligence, the global cigar market is forecasted to grow at a CAGR of 4.23% during the forecast period (2019-2024). The Cigar market is currently a $10 Billion market and growing.
22nd Century Group, Inc. (NYSE: XXII), a plant biotechnology company that is a leader in tobacco harm reduction, Very Low Nicotine Content (VLNC) tobacco and hemp/cannabis plant research, recently announced the initial closing of an investment in Panacea Life Sciences, Inc. (Panacea), a rapidly-growing, vertically-integrated, consumer-facing company operating exclusively in the legal, hemp-derived, CBD product space. 22nd Century's investments in Panacea over the next twelve to eighteen months are expected to total $24 million, in a combination of cash and 22nd Century stock in exchange for Panacea-issued debt and preferred equity. 22nd Century has also received a warrant to purchase preferred stock of Panacea, which upon full exercise will provide 22nd Century with a controlling equity position in Panacea.
"After a disciplined and thorough review of the opportunities available to 22nd Century to maximize shareholder value creation, we are pleased to announce the Company's first investment into the legal, hemp/cannabis consumer packaged goods space," said Cliff Fleet, President and Chief Executive Officer of 22nd Century Group. "This investment is a major milestone in 22nd Century's on-going execution of our hemp/cannabis strategic growth plan and offers the opportunity for strong projected shareholder returns."
"Our objective is to build a leading, profitable business in the fast-growing, emerging, legal hemp/cannabis space, and Panacea is a rapidly-growing, vertically-integrated, consumer-facing business with a very strong management team. We plan for Panacea to be a platform operating company in the hemp/cannabis space that is able to leverage our leadership in cannabis-plant research, our comprehensive expertise in FDA-regulated spaces, and our leadership team's deep experience in consumer packaged goods," Fleet explained.
"We are pleased to enter into this long-term strategic partnership with 22nd Century," said Leslie Buttorff, Chief Executive Officer of Panacea Life Sciences, Inc. "With a strong team and seed-to-sale operations in place, Panacea is on track to deliver sales growth of over 1,000 percent in 2019, with gross margins over 50%. Our success has been possible because of our focus from day one on producing and marketing the highest-quality, hemp-derived, premium CBD products."
"Our supply chain is complete with track-and-trace capabilities and stringent quality control and testing at every step from seed-to-sale, including at our plant nursery and farm on the western slope of Colorado, as well as in our comprehensive extraction, distillation, testing and manufacturing operations located in a former Environmental Protection Agency (EPA) facility in Golden, Colorado. With state-of-the-art CO2 extraction, chromatography equipment to produce THC-free distillate oil, and product manufacturing lines, we can produce over $1 billion of product per year. We have also invested heavily in the development of a full, medically relevant, product portfolio for humans and animals. This is all driven by our talented, dedicated team and supported by a world-class, custom-developed, SAP-based, Cannabis ERP system that tracks the full chain of custody for every product we sell, which we believe clearly sets us apart from most other companies in the space. 22nd Century's investment will allow us to continue to scale our business - including the acceleration of our online and retail sales and marketing efforts focused on the Panacea brand," Buttorff explained.
Tobacco giant Altria Group Inc., who has been diversifying into tobacco alternatives, invested $1.8 billion into Cronos Group Inc. (TSX: CRON) (NASDAQ: CRON) earlier in the year, marking one of the more significant tobacco/cannabis deals so far.
In recent news, Altria Chairman and CEO Howard Willard commented on the changes occurring within the tobacco industry during the company's third-quarter earnings call on Oct. 31, saying "We are in the midst of a remarkable transformation within the tobacco industry. Once predictable, the industry has become increasingly dynamic and complex and while this evolution may pose short-term challenges, we believe tobacco harm reduction is a significant opportunity for the industry and adult tobacco consumers."
"We believe that in the next decade, non-combustible products can surpass combustibles as the preferred choice among adult tobacco consumers," he continued. "We intend to lead this historic transformation with our unmatched portfolio of non-combustible products and investments."
To that end, Altria made several investments in the alternative tobacco segment over the past year, taking a $12.8 billion stake in Juul Labs Inc., and entered the oral nicotine category with a definitive agreement to acquire 80 percent of certain companies of Burger Söhne Holding AG that will commercialize on! products worldwide and its $1.8 billion minority stake in Cronos Group Inc.
Cronos recently announced their financial results and business highlights for the three- and nine-months ending September 30, 2019.
"As demonstrated by our progress in the third quarter, we are making great strides to advance the development and diversity of our portfolio and to expand our manufacturing capabilities," said Mike Gorenstein, CEO of Cronos Group. "We are confident that our platform strategy and focus on consumer driven innovation will continue to differentiate Cronos Group and drive growth and value creation over the long-term."
In September 2019, Cronos Group completed the acquisition of four operating subsidiaries of Redwood Holding Group, LLC. The acquisition expands Cronos Group's market reach in the US with an innovative hemp-derived cannabidiol ("CBD") consumer products portfolio sold under the premier Lord Jones™ brand.
Cronos Group also announced the introduction of PEACE+™, a new hemp-derived CBD brand in the US. PEACE+™ is about more than making a better, high-quality hemp-derived CBD product; it stems from the belief that well-being can lead to a better world, full of positivity and possibility. It's a belief that extends beyond the products and into everything the brand seeks to do and stand for. PEACE+™ will sell hemp-derived CBD tincture products through a test market of approximately 1,000 retail stores in the US. The Company intends to utilize Altria Group, Inc.'s sales and distribution network to access the US convenience store retail channel in order to gain consumer insights prior to expanding distribution more broadly.
Auxly Cannabis Group Inc. (TSX.V: XLY) (OTCQX: CBWTF) announced the closing of its transaction with Imperial Brands PLC back in September. As announced on July 25, 2019, Imperial Brands invested C$123 million by way of a debenture pursuant to the Transaction, which is convertible into 19.9% ownership of Auxly. Imperial Brands grants Auxly global licenses to its vaping technology, access to its vapor innovation business, Nerudia, and will use Auxly as its exclusive partner for the future development, manufacture, commercialization, sale and distribution of cannabis products of any kind anywhere in the world.
"We are delighted to announce the closing of this transaction to formally mark the start of our strategic partnership with Imperial Brands," said Hugo Alves, Chief Executive Officer of Auxly. "We believe there is considerable opportunity for growth and value creation for both companies. We are looking forward to working with the incredibly strong team at Imperial Brands as we prepare to launch our portfolio of branded derivative products, formulated and manufactured at our subsidiary, Dosecann, later this year. We welcome Imperial Brands' experience and expertise on our Board and on our Safety Committee to help ensure that all of our branded products are produced to Dosecann's exacting standards of quality, safety and efficacy and earn the trust of Canadian consumers."
In connection with the closing of the Transaction, Auxly's Board has added Conrad Tate as a new director and John Downing as a non-voting observer. They join Auxly's existing directors: Chuck Rifici, Hugo Alves, Troy Grant, and Genevieve Young.
Conrad joined Imperial Brands in 1998 having previously worked for a large regional law firm. He has held a number of senior legal and commercial roles in the business and was appointed Corporate Development Director in 2010. Conrad has played a key role in a number of significant transactions over the years, including the acquisition of Altadis, Commonwealth Brands, assets purchased by Imperial as part of the Reynolds American takeover of Lorillard and Nerudia. He has led Imperial Brands' investigation, analysis and entry into the legal cannabis sector and is currently leading a major divestment program for Imperial Brands, which will realize proceeds of up to £2 billion.
John, a qualified solicitor, joined Imperial Brands in 2005 having previously worked for the law firm Linklaters. He has had a number of senior legal roles in Imperial Brands including playing a leading role in the Altadis acquisition and becoming Head of Group Legal in 2010. He has considerable experience in managing key corporate projects related to financing, business development and other commercial matters. In addition to his Group Company Secretary role at Imperial Brands, John also has responsibility for the Group's governance, Code of Conduct, security and information security.
"I'm thrilled to be closing this transaction with Auxly, a dynamic, highly skilled organization that has all the ingredients required for delivering success in the branded derivatives market and beyond," said Conrad Tate, Corporate Development Director, Imperial Brands. "We're excited by the opportunities this partnership offers and look forward to working with Auxly to build its business and realize its significant future growth potential."
As both tobacco and CBD/hemp industries continue to evolve and share crossover production and vape technologies, we can expect to see more partnerships announced and a marriage between these two mega industries as the success of one is becoming more linked to the success of the other.
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