Some have called it “cannabis congestion” – a bumper-to-bumper traffic jam of both private and public companies that got onboard the cannabis train before and after Canadian adult-use legalization nearly three years ago. Since then, many companies have fallen by the wayside from a series of poorly planned business models, a lack of retail, institutional and private equity funding, or just plain bad luck.
But from the ashes of many business failures, have risen new companies that have a clear and concise focus on how to prepare and prosper in the still nascent cannabis space. Case in point is soon to be publicly listed,
XEBRA Brands Ltd. (
P.XBRA,
Forum) – a unique, vertically-integrated company that is taking on the exploding Cannabis 2.0 space with a foot in the door in Holland, which gives it access to a quickly opening marketplace with close to 750 million potential consumers – Europe.
And the company is already operating in some of the lowest cost, yet highest yield areas of the world – such as Colombia; however, as a first mover in Mexico, XEBRA has the additional advantage of future access to the U.S. market…….tax and duty free! Not to mention, until the U.S. does federally legalize (just a matter of time), Mexico is poised to become the largest consumer cannabis country market on the globe. It’s a “first mover” recipe for success that has been, pardon the pun, carefully cultivated by some of the industry’s most experienced and innovative minds.
And for savvy Stockhouse investors, this is a ground floor investment opportunity that doesn’t come around often.
Bottoms Up. The Cannabis Beverage Boom!
When Stockhouse first began reporting on the Cannabis 2.0 in
November and
December 2019, it had already become apparent through the JV’s between Molson and HEXO Corp., along with the strategic Canopy Growth / Constellation Brands’ partnership, that the cannabis-infused beverage market would be globally massive. According to
Eight Capital – a 100% principal-owned Canadian, full-service investment dealer – the relative market for infused beverages could be 14% of the overall alcohol beverage market.
This could provide XEBRA Brands with incredible exposure to a potential $1 trillion ready-to-drink and packaged beer market, a $225 billion U.S. market, and a potential $19 billion Canadian market.
XEBRA’s second largest shareholder is a founding family of one of the largest beverage companies in Mexico, and they’re in a number of countries, including the U.S. XEBRA has licensed exclusive intellectual property to render cannabis water-compatible (necessary for making cannabis beverages), and it is the only water compatible process that has undergone human trials.
Coming soon, XEBRA is launching its THC lemonade – “Vicious Citrus” in Canada in the spring in partnership with Bevcanna – one of the industry’s most established and trusted co-packers. XEBRA has filed trademarks in over 40 countries for its cannabis- infused beverages, including MadCap seltzers & soft drinks, HighJack energy drinks, HolaHi iced teas, Vicious Citrus lemonades, HighCastle waters, and Conquer – its CBD sports beverage.
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Mexico: The Cultivation Advantage
In June 2021, Mexico’s Supreme Court
decriminalized the recreational use of cannabis, calling prohibition “unconstitutional”. With that landmark ruling, Mexico is in the process of legalizing cannabis, which would easily make it the largest cannabis consumer country market in the world, until such time as the U.S. federally legalizes.
XEBRA is soon expecting a decision by the Supreme Court of Mexico, in which it may be granted an injunction authorizing it to be the
first in Mexico to legally commercialize hemp derived cannabinoids such as CBD and CBG. The injunction requested aims to include the right for the importation of seeds, cultivation anywhere in Mexico without a limitation on size, harvesting, processing, the creation of products, and the right to sell those products domestically or by export.
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Why Mexico?
• optimal growing conditions
• established agricultural industry
• free trade advantages
• stable, corporate-friendly governments
• low cost skilled labor
• and low cost cultivation
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In conversation with Stockhouse Editorial, Company Director Robert Giustra explained that while recreational cannabis legalization in Mexico is no longer a matter of if, but when, XEBRA has a leg up on the competition by initiating a challenge to the Mexican constitution, that could allow XEBRA to have an outright monopoly on CBD and CBG in Mexico for some years. A first mover advantage is vital in any industry, not just in cannabis.
SH: In Canada before October 2018 (B
ill C-45), a big thing that the Liberal government was selling was the idea that federal cannabis legalization was going to put an end to the illicit drug trade. And that within five years, we'd wipe them out. What about Mexico? And do you expect violence from drug traffickers?
RG: Great question. It comes up every single time. Simply put, the Mexican drug trade is about cocaine not cannabis. When we look at the biggest player in cocaine, which is Colombia, it’s comforting to note that there was zero violence in Colombia when they legalized cannabis. Having said that, when considering where to cultivate, in most countries the number one box to check is the quality of the soil or climate, however in Mexico it’s security.
The Dutch Connection: A Unique Opportunity and Large Position in Holland
As a fully-integrated company with global reach, XEBRA has also been selected by the Government of the Netherlands – out of a large and competitive pool of applicants – as one of only five companies to compete for two exclusive licenses to cultivate medicinal cannabis in Holland, with an initial six-year guaranteed government contract for each successful party.
Thus, XEBRA is one-upping a number of larger and more established companies, proof that it can play in the big leagues.
The five companies are competing for one of two exclusive licenses:
- Two THC cannabis varieties will be grown.
- The two successful companies will be granted a duopoly on pharma-grade cannabis and will have guaranteed contracts to sell to the Dutch government, who will in turn distribute product to consumers through pharmacies.
- Product will be sold at a fixed price of Euro 2,350/kilograms. Annual volume per license holder will be 5,000 kilograms, and guaranteed sales for the term of the six-year contract are estimated at USD$82 million for each company.
Director Robert Giustra commented:
“Our largest shareholder is a successful operating company based in Holland with food products on shelves in 12 European countries, and our cultivation and breeding team is very experienced. Partly for these reasons, we were successfully selected by the Dutch Government from many applicants to be one of five companies to engage in medicinal cannabis cultivation trials.”
The final decision by the Dutch government is expected in 2023.
Meet the Team
Experience. Knowhow. Street cred. XEBRA’s international C-Suite team brings decades of involvement in cannabis science, agriculture & technology, and venture capital founding & funding.
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In the News
On
August 25th, XEBRA Brands announced that it licensed a clinically-backed, patent pending delivery technology for cannabinoids, Solutech™. Solutech, is a water-soluble patented cannabinoid delivery platform, enabling the turn-key creation of beverages, edibles, topicals, etc. with distinct advantages in shelf-stability, clarity, taste, absorption, and dosing.
Solutech™ is one of the fastest-acting, most bioavailable and comprehensively studied delivery systems for cannabinoids – including THC and CBD – and is uniquely differentiated for relative oral bioavailability and absorption by a Phase 1 human clinical trial. XEBRA’s license is fully satisfied with no further consideration payable, and is exclusive in Mexico and Colombia, and non-exclusive in Europe and the rest of the Americas – including Canada – but limited to only California in the U.S.
On the financial ledger,
XEBRA Brands announced in early March that it had launched a private placement for gross proceeds of up to CDN$5 million – a significant objective for a yet-to-be publicly listed company.
Major XEBRA Catalysts: The Next Six Months
- XEBRA goes public in September/October 2021.
- Supreme Court of Mexico voting on grant of an injunction to XEBRA to be the first to commercialize hemp derived cannabinoids.
- Cannabis cultivation commences at XEBRA’s Dutch facility.
- XEBRA launches THC Lemonade – Vicious Citrus in Canada.
- Completion of agronomic evaluations in Colombia in preparation for commercial operations.
The Bottom Line
This is a real company ready to achieve real growth potential. XEBRA Brands – and a likely takeover target if the Supreme Court of Mexico rules in its favor.
Candidly, if Aurora, Canopy and Aphria paid between $96 million and $300 million to be first movers in the smallish Colombia market, what would the big cannabis players pay for an outright CBD and CBG monopoly in Mexico?!
With the company’s soon-to-be-announced listing date, and the company’s “ducks all in a row”, Stockhouse investors should stay closely tuned in for upcoming announcements from this vertically-integrated, well-positioned, first mover cannabis company.
(Click image to play video)
https://xebrabrands.com/-/mp4/Xebra-Video-XBRA.mp4
For more information, visit
xebrabrands.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.