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The Most Sophisticated Cannabis Cigarettes You Have Seen

Stockhouse Editorial
1 Comment| February 25, 2022

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(Images via WestCann Holdings Ltd.)

Imagine cannabis pre-rolls produced with all the benefits of tobacco cigarettes, minus the tobacco itself, just a consistent product that doesn’t necessarily smell or taste like cannabis. A private company intending to trade on the Canadian Securities Exchange early this year has just such a unique product that is both distinct, yet familiar ….

Click to enlarge

WestCann Holdings Ltd. (P.WCH, Forum) is bringing industrial tobacco solutions to the emerging cannabis and hemp markets in North America. Its aim is to invigorate and grow the cannabis market by introducing new ways of thinking with an eye firmly fixed on the future.

Proven tobacco business models and technologies:

There are many commercial benefits behind modern tobacco processes and technologies. What the WestCann team does, is essentially reconstructing cannabis material through the same processes that creates cigarettes.

It is more than just putting cannabis into cylindrical tubes. The key component to be able to do this is on the upstream side, is what's called the reconstitution of the material, a process dating back decades in the tobacco industry that WestCann’s Chief Executive Andreas Gedeon explained to Stockhouse Editorial as like a “Chicken McNugget” ….

“You create a cellulose base material, you homogenize the material, and then you apply all the active ingredients at the perfect dosage in an always standardized, consistent way. In tobacco, that’s what makes the Marlboro taste the same no matter where or when you buy it.”

You can’t necessarily say the same about cannabis, though many companies have made great strides in achieving consistency, the perfect set-up has been in operation right in front of us all this time.

If you’re thinking that putting cannabis into conventional cigarette formats is unnatural – CEO Gedeon has encountered this sentiment before.

Click to enlarge“My response to that is, look, there's nothing really new, with tobacco this has been done for 40 years. But it's also probably not your $60 bottle of wine you bring to your dinner party. It's your $20 bottle of wine you buy for your Wednesday night dinner. That’s my comparison. Having said that, it is a really, really attractive and pleasant product. It is giving consumers what, what data supports, that they want most, and that is consistency. So, you can buy one pack one day and you can buy another pack, six months later at the other side of the country and it will be exactly the same. That is almost impossible to achieve in conventional cannabis.”

On a commercial level, the WestCann product essentially renders “the pre-rolled joint” as you know it, obsolete.

Those are still manufactured manually. Where even companies who have been scaling up have dozens, or even hundreds of people with rather crude technology, filling cones, as this is the only way to fill them, using an incredibly inefficient and expensive format. One would think it leads to an inferior product most of the time.


Scalable state-of-the-art automated high-speed cigarette manufacturing facility:

To achieve this marriage for its Laika brand cannabis products, WestCann utilizes its own unique technology unlike anything else in Canada.

“What that process does for tobacco, where cost savings were probably the most important criteria, it does much more than that for us. It homogenizes the material in a way that it makes its material characteristics suitable that we then can use the high-speed processing down the road for the fully automated stick making and packaging.”

CEO Gedeon went on to say that this isn’t something you have seen in cannabis production yet, which has been rather inconsistent, even since becoming a legal business in Canada. It isn’t just a matter of taking cannabis and putting it into a rapid-fire precision cigarette machine.

“Every agricultural cannabis crop is different. The margin of reconstituted material we put in is completely consistent and allows for that high-speed processing down the road. That creates a lot of efficiencies where we can go to the full swing of tobacco automatization from there. But what it also does, is it completely commoditizes our supply chain. Every ingredient we use is a readily available commodity, we don’t depend on any specific cultivator’s crop.”

Click to enlargeHe added that the company can easily and quickly scale its production by simply adding additional shifts. And literally with the dial of a button, the company can create different flavours and different cannabinoid combinations in each batch.

“So that gives us an incredible flexibility on the product, that gives us an ability to scale very quickly, very easily, and the efficiencies out of all of those things, the automatization, the homogenization, the detachment from the supply chain will allow us to go into the market with absolute cost leadership over the competition.”

This represents a strong commercial advantage – the cost of goods and cost of production being a fraction of what the nearest competition can possibly achieve.

The benefits of tobacco production without the tobacco are many. It has allowed WestCann to hold complete control over how it produces its cannabis products. The company is already planning a line of cannabis with very little THC, as well as another line with only CBD and one with Delta-8-THC, something with a little “kick” that CEO Gedeon said gives a mild, pleasant physical sensation.

“Conventional pre-rolls are mostly tied to the natural cannabinoid content and ratio, where we can really play with the dosage and make it anything we like, including very little, gentle dosages. We can combine terpenes and cannabinoids in combinations that yield a whole range of sensations that, I believe will attract people who are, right now, not a typical smoker, who will not go and smoke ‘a big fat doobie’ that you can smell down the road. One of the most interesting features of our product is we can create all sorts of tastes.”

The company’s proprietary patent-pending packaging is also very distinct and adheres to European and Canadian child safety certification standards. All components of the product and its pack are 100% biodegradable, including the organic filters and the inner and outer foils. The packaging system, which was engineered by WestCann, forms part of the fully automated production line.



Outlook:

Ahead of its public listing on the Canadian Securities Exchange, WestCann’s Canadian facility is expected to be operational by mid-March 2022, which includes all machines installed and producing.

The company is currently in negotiation with several parties for white labeling and expects to have the first products available to Canadian consumers by Labour Day 2022.

In the US, LAIKA brand tobacco substitute cigarettes without THC are already for sale online under TryLaika.com since the beginning of the year, and will soon be released in over 500 retail stores across the United States.

Further down the road, the company plans to aggressively expand its production capacity by installing its manufacturing lines in other regulatory environments that allow for recreational THC use, including Nevada, California, Washington, Oregon, and soon Germany.

Meet the team:

Click to enlargeCEO Gedeon’s history in the cannabis industry dates back to 2011. On the listed company side of things, he served as Managing Director of MMJ Phytotech (ASX: MMJ, now MMJ Group Holdings), the first medical, global, vertically integrated company on the Australian Stock Exchange at the time and was also the founding CEO of Harvest One Cannabis (TSX-V: HVT).

“I've seen the cannabis industry from all angles and through all ups and downs, with all the jurisdictional changes from pharmaceutical to medical to recreational.”

He added that already back in 2015, he was discussing with WestCann’s COO, Nicholas Muellem (pictured below left), how they can bring tobacco technology to cannabis.


Click to enlargeCOO Muellem also has a deep background from his days with big tobacco, with extensive network connections and operational experience. He joined WestCann after his most recent position as Managing Director of Decoufle SARL, a subsidiary of HAUNI Maschinenbau GmbH, which services multinational tobacco groups’ supply chains.

Click to enlargeThe company’s General Manager, Kelly Godlien (pictured right), has more than 20 years of senior and executive management experience in finance and accounting. His previous roles include General Manager of Tweed Grasslands Cannabis Inc. as well as Financial Analyst / Manager of Cost Accounting for Western Canadian Operations at Canopy Growth Corp. (TSX: WEED).

When CEO Gedeon left Harvest One in 2018, he thought the business that WestCann intended to accomplish was where they could have a lot of impact because, like so many things in cannabis, new methods and ideologies need to be employed to evolve the industry, especially if those methods originate from existing other industries. It took nearly three years for all the developments, the engineering, with the machines being custom designed and manufactured in India, Brazil and Hong Kong to get to this point.

“Our strength is the combination of my understanding of the cannabis markets and [COO Muellem] having this deep, deep network in the tobacco industry. I think this focus and combined experience is something that will very quickly set us apart from the competition. We're not aiming to be the next vertically integrated global cannabis player. We are doing something very specific. We’re going to manufacture the most sophisticated cannabis cigarettes that the industry has seen so far, with a solid first mover opportunity over everybody else,” CEO Gedeon commented.

Investment summary:

WestCann Holdings Ltd. represents an exciting and highly distinct opportunity for investors. Given its patented cigarette manufacturing solutions for North American cannabis and hemp markets, the company already has solid expansion plans in place, with US retail distribution soon starting in over 500 stores. The company is a clear leader in this field before it even entered the race, thanks to its scalable, state-of-the-art, automated high-speed cigarette manufacturing technology. The team is led by management who boasts extensive experience with proven tobacco business models and technologies, the company is ready to start production with near term revenue and cash flow in Q2 2022.

For more information on the company and to keep up with the latest updates, visit westcann.com.



FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.

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