Dear investors:
I recently sat down with the editors at Stockhouse to discuss Phivida’s business outlook – what we’ve been up to with the launch of our new Oki lifestyle brand and what’s in store for our company in the near term – as well as the opportunity we have to disrupt the active hemp extract-infused (CBD) beverage space in the U.S.
The article also highlights why CBD is special, the economic potential for hemp in the United States (once the pending legislation is passed in all 50 states) and what we’re most excited about for the Canadian market.
I’ve included a copy of the Q&A article below. Please connect with us if you have any feedback – we look forward to hearing from you.
Thank you,
Jim Bailey
President and CEO, Phivida
Hemp Infusion Targets New U.S. Opportunities As the cannabis sector heats up again, perhaps the one sub-sector currently attracting the most interest (and investor dollars) is active hemp extract (known most commonly as CBD or hemp-CBD)-infused beverages. This is a part of the forward-looking orientation of cannabis companies – and the investors acquiring their shares.
Adult-use recreational cannabis becomes legal in Canada on October 17, 2018, via Bill C-45, the Cannabis Act. Infused cannabis and active hemp extract products will not officially become legal in Canada on this date. However, a clause legalizing infused products is included in the enabling legislation, scheduled to come into effect at some point next year.
Meanwhile, in the United States, cannabis normalization is occurring state-by-state rather than at the national level. Even so, there is already a larger consumer base in the U.S. with access to cannabis and CBD-infused beverages than the entire population of Canada. Federally, CBD is only legal in the U.S. if it is hemp-derived – not cannabis-derived.
Accordingly, only CBD derived from industrial hemp (“Hemp” or “Hemp-CBD”) is allowed in the formulation of CBD-infused alcoholic and non-alcoholic beverages.
Then there is the game-changer. A final vote is nearing in the U.S. to legalize hemp (and hemp products) at the national level. A preliminary vote in the U.S. Senate received overwhelming support. Once passed, this will open up the world’s 4th largest population and largest economy to a wide assortment of hemp-based consumer products.
One Company already seeking to position itself for this looming opportunity is Phivida Holdings Inc. (CSE: VIDA, OTCQB: PHVAF, Forum). Its new “Oki” line of beverages infused with active hemp extract has just been launched for North American distribution. Coupled with this, Phivida has also announced a national distribution agreement with a number of major U.S. retailers in the health-and-wellness space.
image: https://www.youtube.com/embed/t5F8p0kAKvI
Stockhouse recently approached Phivida’s President and CEO, Jim Bailey, for more information on the general potential of active hemp extract-infused (CBD) beverages and the opportunity in the United States in particular.
1. Please briefly outline the Phivida business model for newer investors.
Phivida strives to provide the world with a natural path to health and wellness. From our professional partners to the ingredients used and sourced in our products, Phivida never takes shortcuts and is committed to making a positive difference in everything we do. As part of our vision, Phivida is looking to become a leader in whole-plant solutions by providing holistic remedies for a more natural alternative to pharmaceuticals, and guiding people towards a vibrant, healthy life.
Our diverse business model includes:
Vida+, --our premium clinical grade strength, full spectrum hemp oil extracts and capsules designed to help people feel their best. The products are sourced from the best organically grown hemp and natural ingredients on the market and are third-party lab tested for quality, purity and potency at world-class facilities.
Oki – our lifestyle brand which recently launched a line of functional beverages and supplements infused with Active Hemp Extract and will be available to consumers in up to 2,400 natural specialty store locations within the United States. Oki beverages are infused with 10 mg of active hemp extract per bottle and come in two different formulations: iced teas and flavour-infused water, each ranging in four different 16oz flavours. Oki supplements are available in tinctures or capsules that range in doses from 600-1800 total mg of Active Hemp Extract. All products contain non-GMO, natural and organic ingredients and are plant-based and Vegan-friendly and packaged in sleek 100% recyclable glass containers.
2. Oki has established itself as a manufacturer and distributor of “CBD-infused wellness beverages.” Please differentiate these products from the other category of cannabis-infused beverages currently in the marketplace.
It can be quite confusing, and currently, there is a common misconception on the street that CBD (cannabidiol) and THC (tetrahydrocannabinol) are the same – when in fact, they are quite different. The main difference is that THC will get you high while CBD will not. This is because THC is the main component that makes cannabis psychoactive, which makes you feel high. CBD has the same chemical makeup of THC, but its molecules are arranged differently. In the beverage space, it’s the same: You won’t get high from consuming our CBD-infused beverages, rather our products help you restore balance and focus to your everyday lives when needed most.
3. CBD is the acronym for the cannabinoid known as cannabidiol. What makes cannabidiol so special?
Cannabidiol is a chemical in the Cannabis sativa plant. Over 80 chemicals, known as cannabinoids, have been identified in the Cannabis sativa plant. Although THC is the major active ingredient, cannabidiol makes up only about 40% of cannabis extracts and has been studied for a number of different uses and health benefits and can labeled as dietary supplements. Some of the uses and potential benefits include anxiety, insomnia joint pain and inflammation, depression, muscle tension, pain, migraines, nausea, arthritis and PTSD.
4. Cannabidiol can be obtained from both sub-species of the cannabis plant: marijuana and hemp. Why had the Company already chosen to produce its CBD-infused beverages from hemp oil extracts?
Using hemp oil enables the distribution of our product throughout the United States. The Farm Bill, passed in 2014, authorized the cultivation of hemp (defined as containing less than 0.3% THC) and protected its transport, processing and sale. This will be further ratified in the 2018 Farm Bill when passed later this year. Hemp oil extract contains a range of cannabinoids and terpenes, including CBD, making it the best solution for getting our products to market.
5. In recent announcements, VIDA+ has altered its branding focus from CBD-infused beverages to “beverages infused with active hemp extract.” Why this subtle change?
This change was made to align with recent U.S. labelling regulations. Hemp is a completely legal commodity, and there are no restrictions on its production and inclusion in consumer products. This is less clear for CBD which can be sourced from cannabis as well as hemp, and restrictions around cannabis remain. “Active hemp extract” clearly states that we are using hemp and increasingly informed consumers are learning that hemp oil derived from the full plant contains CBD and other phytocannabinoids.
6. Let’s talk about the U.S. market. What is the economic potential for hemp in the United States if (when) this legislation is passed?
The growing legalization of products across the U.S. is one of the major trends seen today which presents strong economic potential and strong returns for investors. According to cannabis industry analysts The Brightfield Group, the hemp-CBD market could explode to $22 billion by 2022.
7. In Canada, many investors are very excited about the potential for THC-infused cannabis beverages and Phivida isn’t ignoring this market. Please briefly discuss your joint venture with WeedMD for the Canadian marketplace.
WeedMD, which is a federally-licensed producer and distributor of medical cannabis, earlier this year announced a joint venture company, Cannabis Beverages Inc. (“CanBev”).
CanBev will operate one of the first cannabis-infused beverage production facilities in Canada. The joint venture partnership will focus on manufacturing, marketing and distribution of cannabinoid-infused beverages for the medical and future adult-use cannabis markets.
WeedMD will be the exclusive cannabis supplier and distributor for CanBev cannabis-infused beverages.
8. Since the start of the New Cannabis Rally, Phivida has roughly doubled its share price. However, some of your peers have generated even larger gains. Does management have any concerns here?
We, of course, would like our stock price to reflect its full valuation, we don’t believe it does at present. We are addressing that in two ways, first remaining focused on the business and launching the best line of hemp-based products available in the market today. Second, we are committed to staying active with the market to inform it of our progress, including presenting at conferences and meeting with investors. | |