By AgraFlora Organics International Inc. on Friday, 24 January 2020
Category: Vertically Integrated

AgraFlora Organics intends to be a top cannabis player in Canada and Europe

Targets Canadian recreational and European medical cannabis markets Owns two greenhouses and an edibles-manufacturing plant Recently closed on $28.7 million non-brokered private placement

AgraFlora Organics International Inc () (OCTMKTS:AGFAF) grows, distributes and markets premium cannabis and cannabis-infused products. 

Its strategy is two-pronged - supply the Canadian recreational market with high-potency flower and edible products, while serving the European medical cannabis market. 

“These are the areas where AgraFlora intends to be a top-tier player in 2020,” the company says.

AgraFlora, based in Vancouver, owns an 8,000-square-foot indoor cultivation (AAA Heidelberg) facility in London, Ontario that grows premium cannabis. 

The company is in a joint venture with Propagation Services Canada Inc, which operates a 2.2 million-square-foot greenhouse complex in Delta, British Columbia. The company has an industrial hemp license but is seeking to upgrade to a cultivation license. 

AgraFlora also owns a 51,500-square foot edibles-manufacturing facility and research lab in Winnipeg, Manitoba that is GMP-certified. The facility is currently being retrofitted. It also has a licensed cannabis campus in New Brunswick to formulate and synthesize its infused topicals products.

As for its products, the company has seven brands that reflect the wide diversity of uses among consumers: Canutra Naturals (skincare), Edibles and Infusions (gummies), Howlbrands (CBD sports performance), Whole Hemp Health (lotions and oils), Eurasia Infused Cosmetics (CBD), True Focus (THC spray bottle), Potluck (cannabinoid-infused carbonated beverages) and Sports Cap (dispensing-cap technology). 

2019 was a transformative year for AgraFlora as it laid the groundwork to become a top player among the heavyweights like Aurora Cannabis Inc (TSE:ACB) (NYSE:ACB) and () (NYSE:CGC).

Throughout the year, by way of direct capital disbursement and/or acquisition, the company deployed over $125 million in associated plant property and equipment expenditures.

In November it closed on a $28.7 million non-brokered private placement -- which the company said was “indicative of our pole position throughout the next phase of cannabis normalization.” The money is being used for general working capital and for projects at the Delta Greenhouse complex and Winnipeg Edibles facility. 

The company recently upped its stake in the joint venture with Propagation Services to 70%. The Delta Greenhouse, when fully licensed by Health Canada to cultivate, will be the world’s second-largest cannabis cultivation operation under glass next to Canopy Growth’s plant in Smith Falls - and is larger than anything Aurora operates. Once the company obtains the cultivation license, it will become the fourth-largest licensed producer in Canada.

AgraFlora’s GMP-certified Winnipeg edibles facility, at the heart of the company’s manufacturing strategy, is undergoing a retrofit which should be completed in early 2020. Once activated, the Winnipeg edibles facility will be operated by chocolatiers and confectioners producing an assortment of cannabinoid and terpene-infused products for medicinal and adult use.

In the fall, AgraFlora acquired The Good Company, the parent of German medical cannabis distributor, Farmako GmbH, a leading European medical cannabis distributor with a network of 19,800 pharmacies covering 100,000 patients throughout the continent and the UK. It posted nearly C$3.1 million in gross revenue during fiscal 2019 and intends to start wholesaling medical cannabis in the UK by mid-year 2020 after securing a license. 

As AgraFlora seeks further penetration into the German medical cannabis market, the company recently signed a letter of intent with EuroLine Brands Inc () (OTCMKTS:EURPF) to collaborate. AgraFlora will integrate Eurolife’s physician-sanctioned German cannabis education platform, Cannvas.de, into its German operations.

And in December 2019, AgraFlora entered into an interim agreement to acquire 100% of Sanna Health Corp, a cannabis company based in the Greater Toronto Area. 

Sanna’s flagship asset is the Sustainable Growth Strategic Facility, which is situated on 16 acres and includes 27,000 square feet of licensed cultivation and processing space, with an option to expand to triple in size. There are plans to add farm-gate retail outlets (dispensaries) at the Sana facility as well as the AAA Heidelberg plant for direct-to-consumer distribution.  

As a plank of its partnership strategy, the company has launched two initiatives to market its CBD-performance HowlBrands line of creams and sports supplements to athletes.

In what may be a first for a CDB brand and professional sports, the HowlBrand will feature prominently on the Canadian rugby club Toronto Wolfpack’s jerseys throughout the 2020 season and the products will be placed in players’ home and away kits. Also, AgraFlora’s jointly owned subsidiary Eurasia Infused Cosmetics Inc is preparing to import the athlete-focused CBD products into Japan and Hong Kong. 

Awaiting approval for a Health Canada cultivation license for the Delta Greenhouse  Projecting 2020 output of dried cannabis flower at roughly 170,000 kilograms Complete GMP-certified Winnipeg edibles facility retrofit in 1Q 2020 Integrate EU-GMP compliant cannabis products from Delta into its European distribution channels

AgraFlora CEO Brandon Boddy said: “2019 was a transformative year for AgraFlora bookended by accretive acquisitions and commercial arrangements for the company as well as securing the company’s balance sheet for 2020 activities culminating with the recent closing of its previously announced private placement of convertible debentures for gross proceeds of $30 million."

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