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B2C revenue lines of provincial sales and Green Roads accounted for ~50.0% of net revenue in Q3 2021
The really bad part of this statement is on the B2B extractor and B2B white labeling sides of the business, it doesn't appear that Valens is doing much better than MediPharm.
Valens is 50% reliant on organically growing through company owned brand/product line growth and acquisitions.
That means top line growth is going to be a long slow slog.
Provincial sales net revenue increased 20.0% quarter over quarter supported by a 76.5% quarter over quarter increase in consumption-level retail sales according to Hifyre1
Canada-wide provincial listings increased 37.1% to 181 at the end of Q3 2021, compared to 132 at the end of Q2 2021 with an additional 27 accepted subsequent to quarter end
Beverage market share increased to 9.0% in Q3 2021 vs 8.0% in Q2 20211
Gross margin increased to 26.8% in Q3 2021 from 22.0% in Q2 2021 B2C revenue lines of provincial sales and Green Roads accounted for ~50.0% of net revenue in Q3 2021, which is expected to increase following the close of the Citizen Stash acquisition
KELOWNA, BC, Oct. 13, 2021 /CNW/ - The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the "Company", "The Valens Company" or "Valens"), a leading manufacturer of cannabis products, is pleased to report its third quarter financial results for the period ended August 31, 2021.
Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company, said: "We are very pleased with the progress we have made on our strategic initiatives to transform Valens into a leading cannabis consumer packaged goods company. Our innovative product launches have driven growth in provincial listings and we are only just beginning to see the resulting financial impact with provincial sales net revenue growing 20% quarter over quarter. More importantly, consumer demand for our products is very strong, leading to even greater growth in consumption-level retail sales for Valens products which were up 76.5% quarter over quarter. The combination of net revenue from provincial sales and the partial quarter of revenue contribution from Green Roads represented 50% of total net revenue in Q3 2021, further illustrating the early progress on our strategic initiatives. We expect these B2C revenue lines to continue growing in future quarters as previously announced new listings are launched in market and gain commercial traction and the successful closing of the Citizen Stash acquisition adds dried flower revenue to our portfolio. Valens is now present in seven provinces and will span nine provinces and territories across Canada assuming the successful closing of the Citizen Stash acquisition."
Robson continued, "With our operational platform largely built and a critical mass of provincial listings now in place, our focus has shifted to operational efficiencies, implementation of automation initiatives and volume growth to drive margin improvement and positive EBITDA in future quarters. During the third quarter, we strategically transitioned away from smaller, underperforming B2B partners resulting in a 29% decrease in B2B LP sales revenue quarter over quarter. We have instead taken a fewer, bigger, better approach and focused on building deeper relationships with larger licensed producer partners to drive efficiencies and profitable growth. This is illustrated by the addition and expansion of six custom manufacturing agreements, three of which are with the top seven licensed producers by market share. We expect these agreements to begin generating revenue over the next two quarters with further growth expected to follow. We remain customer focused and are looking for consistent and higher volume partnerships that drive profitability for all parties."
Key Highlights • Gross revenue increased 32.7% in Q3 2021 to $24.6 million, compared to $18.5 million in Q3 2020
• Net revenue increased 15.8% in Q3 2021 to $21.0 million, compared to $18.1 million in Q3 2020
• Green Roads contributed $4.7 million in its revenue in first partial quarter of consolidation
• Provincial listings increased by 37.1% to 181 at the end of August compared to 132 at the end of Q2 2021, making Valens one of the fastest growing licensed producers in Canada over the quarter and trailing year
• In Q3 2021, Valens and Citizen Stash combined were ranked 11th by overall estimated market share across all categories in Alberta, British Columbia and Ontario based on Hifyre data
• Verse BC God Bud was a top 5 best-selling flower SKU in Alberta, Ontario and British Columbia during September 2021 based on Hifyre data
• Estimated share of the cannabis-infused beverage category from Summit and Basecamp beverages increased to 9.0% in Q3 2021 from 8.0% in Q2 2021 in Alberta, British Columbia, and Ontario, based on Hifyre data with only one customer in this category to date
• Provincial sales increased 20.0% compared to Q2 2021
• Strategic acquisition of Citizen Stash expected to propel Valens' asset-light entry into the flower and pre-roll segments, the two largest categories in the Canadian cannabis market currently accounting for over 70% of retail sales
• Ended the quarter with a strong cash position of ~$31 million
*The term "Provincial listings" refers to the total number of provincial and territorial listings in Canada of products manufactured and/or distributed by The Valens Company
Corporate and Operational Highlights:
In the third quarter, The Valens Company continued to execute on its corporate strategy and advanced its global manufacturing platform, as illustrated by the following milestones and initiatives:
• Accelerated entry into the $2.7 billion flower-based market through the agreement to acquire Citizen Stash Cannabis Corp., valued at approximately $54.3 million on an enterprise value basis, boasting an attractive multiple of approximately 4.3x first half fiscal 2021 annualized revenue. Valens expects the acquisition to be accretive, specifically due to Citizen Stash's asset-light model which leverages a robust network of craft contract growing partners. Their award-winning brand portfolio offers more than 40 provincial listings and is complementary to Valens' growing house of brands which now spans across seven provinces and territories. The Citizen Stash acquisition is expected to close in the fourth quarter of 2021.
• Created top tier Licensed Producer in Canada through the acquisition of Verse Cannabis, announced in early September and expected to be further bolstered by the acquisition of Citizen Stash when it closes. Verse's current and expanding portfolio of products will amplify provincial listings and drive category market share. Similar to Citizen Stash, the acquisition of Verse is expected to be accretive to the Company before synergies. The two acquisitions will provide Valens with over 248 current and pending listings across nine provinces and territories.
• Achieved significant steps toward entry into Québec, the third largest cannabis market in Canada. During the third quarter, Valens became authorized to contract or subcontract with a public body from the Autorité des marchés publics (AMP).
• Expanded international product manufacturing and distribution through new and evolving partnerships. Through an agreement with Epsilon, a diversified global healthcare and pharmaceuticals company, Valens expects to be able to offer its innovative suite of cannabis products to Australia and New Zealand through the use of Epsilon's Southport GMP manufacturing facility. This will also allow Valens the potential to deliver GMP-grade manufactured products in Latin America, Europe, the UK and Asia-Pacific.
• Strengthened custom manufacturing partnership network with the addition and expansion of six manufacturing agreements since the end of Q2 2021. The agreements cover the production of a variety of cannabis products including pre-rolls, innovative edibles, vapes, hydrocarbon concentrates, as well as expert extraction services. Three of the agreements are with the top seven Canadian licensed producers by market share, showcasing a strategic transition to a smaller set of larger licensed producer clients. The agreements are expected to commence over the next two quarters, with anticipated revenue generation during the same period.
• Launched a range of innovative products in the edibles, concentrates, and cartridges categories.
Edibles: In partnership with Verse Cannabis, Valens introduced a 1-unit x 10mg double chocolate brownie, the third edible product under the Verse Originals line and one of the first confectionery products of its kind available in the Ontario recreational market. Additionally, Valens manufacturing and formulation technology supported the creation of Rapid Tropical Rush, the first cannabis-infused beverage introduced by the Verse brand, and currently available in Alberta, British Columbia, and Ontario. Valens has also partnered with A1 Cannabis to create the Summit 10 Raspberry Lemonade and Summit 10 Peach Lemonade, two additional Summit 10 beverage flavours already available in British Columbia and Alberta.
Cartridges & Concentrates: Formulated using Valens' proprietary, ultra-refined extraction processes, the Mango Nectar vape cartridge is comprised of ultra-pure distillate and represents the newest addition to the top-selling line of vape cartridges from the Verse brand. In addition to the Mango Nectar vape cartridge, Valens, via the Verse brand, has also launched a new addition to the Live Terp series under the Verse Concentrates line, the Live Terp Guava x BC Blueberry 510 Vape Cartridge (1g), now available in Alberta and expected to be available soon in British Columbia and Ontario.
Financial Summary
• Net revenue increased 15.8% to $21.0 million in Q3 2021 compared to $18.1 million in Q3 2020, and increased by 11.9% compared to $18.8 million in Q2 2021
Net Revenue Breakdown Three months ended August 31, 2021 Three months ended August 31, 2020 (in thousands of Canadian dollars) $ (in thousands of Canadian dollars) $ Product Sales 19,525 15,059 Toll Processing and Co-Packing 624 2,644 Analytical Testing 346 425 Other Revenue 495 - Total Net Revenue 20,990 18,128
• Product sales revenue, including both provincial sales and B2B/B2C sales of finished goods, distillate, isolate, and oils:
• Gross profit was $5.6 million, or 26.8% of net revenue in Q3 2021 compared to $7.3 million, or 40.3% of net revenue, in Q3 2020
• Adjusted EBITDA(1) was $(6.2) million, or (29.5)% of net revenue in Q3 2021, compared to $1.4 million, or 7.9% of net revenue in Q3 2020
Jeff Fallows, President of The Valens Company, said: "We are now at the tail end of what's proven to be a highly successful launch phase in our business transition strategy having achieved industry leading growth in provincial listings, surpassing 248 current and pending listings including Citizen Stash, and operationalizing the broadest product manufacturing platform in the industry. We now look to enter the growth phase of our business plan which will focus on maximizing sell-through and driving higher utilization at our facilities. With continued growth of provincials sales and increased utilization through our repositioned B2B partnerships we are setup to achieve scale that is expected to enhance our margin profile in the coming quarters."
Fallows continued, "With our recently announced agreement to acquire Citizen Stash and acquisition of Verse, we have gained exposure to a much larger share of the market, operating in the two best segments for profitable growth: Cannabis 2.0 products and premium dried flower. We have consistently messaged since the beginning of the year that Valens would exit 2021 as a very different company than when we entered. Implicit in that assertion was our belief that at the end of year we would be best positioned to service both our customers and consumers, grow market share, drive towards profitability and be a leader in the industry. Looking back over the last three quarters I am incredibly proud of what we have achieved in a tough global environment and believe we are well on our way to achieving our goal. The future prospects for Valens have never been better and we are excited about the opportunities that lie ahead both for the Company and our shareholders."
The following table of financial highlights is presented in thousands of Canadian dollars, except per share, biomass extracted amounts, and number of provincial listings.
Three months ended August 31, 2021; Three months ended May 31, 2021; Three months ended February 28, 2021; Three months ended November 30, 2020; Three months ended August 31, 2020; Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Gross Revenue $ 24,569 20,469 21,774 17,932 18,517 Net Revenue $ 20,990 18,764 20,014 16,044 18,128 Gross Profit (loss) $ 5,629 4,136 4,768 (5,993) 7,313 Gross Profit % 26.8% 22.0% 23.8% N/A 40.3% Adjusted EBITDA $(1) (6,183) (4,960) (2,241) (4,280) 1,440 Adjusted EBITDA %(1) N/A N/A N/A N/A 7.9% Net income (loss) $ (12,799) (8,659) (6,153) (16,634) (3,064) Net income % N/A N/A NA N/A N/A Basic / diluted income (loss) per share $ (0.08) (0.05) (0.05) (0.13) (0.02) Cash and marketable securities $ 30,958 23,926 49,300 21,376 30,257 Biomass extracted (Kilograms) (2) 21,816 24,569 17,813 10,311 8,054 Provincial Listings 181 132 75 49 20
1. Adjusted EBITDA is a non-GAAP measure used by management that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Management defines adjusted EBITDA as income (loss) and comprehensive income (loss) from operations, as reported, before interest, tax, depreciation, and amortization, and adjusted for removing share-based payments, realized gains and losses from short term investments and liabilities, and other non-cash items including impairment losses. Management believes this measure provides useful information as it is a commonly used measure in the capital markets to approximate operating performance on an adjusted basis as described above. See reconciliation of "Adjusted EBITDA (non-GAAP measure)" in the Company's Management's Discussion and Analysis for the period ended August 31, 2021, for additional information.
2. Biomass extracted includes input from Licensed Producer partners for toll processing, in addition to the Company's biomass inventory for 2.0 products.
The management's discussion and analysis for the period and the accompanying financial statements and notes are available under the Company's profile on SEDAR at www.sedar.com.
Q3 2021 Conference Call Details
The Company will host a conference call on Thursday, October 14, 2021, at 11:00 am Eastern Time / 8:00 am Pacific Time to discuss the financial results and business outlook.
Participant Dial-in Numbers: Toll-Free: 1-877-407-0792 Toll / International: 1-201-689-8263 *Participants should request The Valens Company Earnings Call or provide confirmation code 13723378.
The call will be available via webcast on the Valens investor page of the Company website at https://thevalenscompany.com/investors/ or at this link. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the call will be available on the Valens investor page approximately two hours after the conference call has ended.
Tyler Robson, Chief Executive Officer, Sunil Gandhi, Chief Financial Officer, Jeff Fallows, President, and Everett Knight, Executive Vice President of Corporate Development and Capital Markets, will be conducting a question-and-answer session following the prepared remarks.
At Valens, it's Personal.
Sources: 1Based on Hifyre data for Alberta, Ontario and British Columbia
I wonder if Valens' mgmt remembers that today is the day?
I understand the angst about the analyst forecast and your ambitious hope for a bold very high $20's million revenue number.
Without predicting the top line, I'm just hoping to see a strong financial performance from the top line down through the bottom line.
I would like to see sound financial fundamentals that starts to illuminate near term hopes of profitability. I am very hopeful that their asset light strategy doesn't generate $40M and show they are still losing money.
Asset light means profits should come more quickly, otherwise it's just a really neat phrase.
Sens. Warren, Booker pressure AG Garland to decriminalize marijuana Oct. 11, 2021 9:21 AM ETAurora Cannabis Inc. (ACB), TLRY,CRON,SNDLTCNNF, HRVSF, CURLF,ACRHF,CRLBF,GTBIF,MMNFF,HEXO,OGIBy: Jonathan M Block, SA News Editor70 Comments President Biden And Attorney General Garland Deliver Remarks On Gun Crime Prevention Kevin Dietsch/Getty Images News
Sens. Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.) have asked Merrick Garland to use his authority as U.S. Attorney General to remove marijuana as a controlled substance. The letter to the Department of Justice was first reported by The News Station. It was also carbon copied to HHS Secretary Xavier Becerra. “We urge the DOJ to initiate the process to decriminalize cannabis,” the letter says. The letter goes on to argue that "decriminalizing cannabis is also a critical first step in addressing the racial inequities in cannabis law enforcement. You can begin to repair the harm that the criminalization of cannabis has wrought on communities of color by using your statutory and regulatory authority to deschedule this drug."
Kelowna, B.C., October 7, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a leading manufacturer of cannabis products, is pleased to announce it will issue its third quarter 2021 financial results, for the period ended August 31, 2021, on Wednesday, October 13, 2021, after markets close.
CONFERENCE CALL DETAILS
The Company will host a conference call the following day, Thursday, October 14, 2021, at 11:00 am Eastern Time / 8:00 am Pacific Time to discuss the financial results and business outlook.
Participant Dial-In Numbers:
Toll-Free: 1-877-407-0792 Toll / International: 1-201-689-8263 *Participants should request The Valens Company Earnings Call or provide confirmation code 13723378.
The call will be available via webcast on the Valens investor page of the Company website at https://thevalenscompany.com/investors/ or at this link. Please visit the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the call will be available on the Valens investor page approximately two hours after the conference call has ended.
Tyler Robson, Chief Executive Officer, Sunil Gandhi, Chief Financial Officer, Jeff Fallows, President, and Everett Knight, Executive Vice President of Corporate Development and Capital Markets, will be conducting a question-and-answer session following the prepared remarks.
ABOUT THE VALENS COMPANY The Valens Company is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. The Valens Company is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. The Valens Company currently offers a wide range of product formats, including tinctures, two-piece caps, soft gels, oral sprays and vape pens as well as beverages, concentrates, topicals, edibles, injectables, natural health products and has a strong pipeline of next-generation products in development for future release. Finally, The Valens Company’s wholly-owned subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. For more information, please visit https://thevalenscompany.com. The Valens Company’s investor deck can be found specifically at https://thevalenscompany.com/investors/.
FOR FURTHER INFORMATION, PLEASE CONTACT: Jeff Fallows President The Valens Company
KCSA Strategic Communications Phil Carlson / Elizabeth Barker VLNS@kcsa.com 1 212.896.1233 / 1 212.896.1203
Media KCSA Strategic Communications Anne Donohoe adonohoe@kcsa.com 1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, economic conditions and anticipated courses of action.
The risks and uncertainties that may affect forward-looking statements include, among others, regulatory risk, United States border crossing and travel bans, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, reliance on a single facility, limited operating history, vulnerability to rising energy costs, unfavourable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
I can see $30 in Q1 too with Q3 around $25M and Q4 close to $27.5M.
The revenue numbers should improve going forward and the margins will improve in time with production volume.
I believe that the gross margin for next FY (excluding all the non-related item) should improve to the 55-60% range and should close the year strong.
Nasdaq is good for liquidity but it could be very tricky getting there and once uplisted. And it could easily take longer to uplist. Normally the stocks that uplist are either pumped up to historic highs or run down for many weeks to shake the weak hands and kind of purge and rinse the stock. It all depends on the general sentiment on the stock, sector and industry at the time of the uplisting.
The stock price average plays an important role but I think that the price should correct itself upwards with the next couple of financials reports. So I see Nasdaq as a Spring or Summer event next year. The company doesn't need to rush into this really. It's even better to do that after a couple of good Q reports to go in showing strength to have a good welcome treatment..
The only reason to rush into the Nasdaq or any big board is when you want to be the first in your trade or business model. Or if you are seeking to raise a good amount of cash for expansion. Other than that, good timing should be part of the strategy. If the company has in mind more foreign acquisitions like they are implying lately then they need to get to the Nasdaq soon, now that all the prices are depressed and the market conditions are great for consolidation.
Nice write up. One of my take-aways is NASDAQ by 11-30-21!!! They made note of by the end of their fiscal year.
Not mentioned was Toronto which it was previously note is just waiting upon licensing finalization.
So IMO I'm thinking about a 2022 Q1 revenue run rate that's north of $30M. That's about a 50% bump from 5-31-21.
That may also coincide with some USA legalization movement.
2022 is shaping up to be very good for Valens.
jefra1965 Tuesday, 10/05/21 01:19:53 PM Re: FUNMAN post# 3922 Post # 3923 of 3923
Lots of great takeaways in this PR
"The majority of the agreements were signed in the last three weeks, indicative of the significant interest in the capabilities provided by the Valens platform. "
“These agreements, which encompass some of our largest Canadian Licensed Producer partners, represent the vast range of our manufacturing capabilities, reinforcing that we are an ally to our customers and consumers,” said Tyler Robson, Chief Executive Officer, Chair, Co-Founder of The Valens Company."
“Notably, the size of these agreements align with our promise of fewer, bigger, better in terms of relationships and products, ensuring we remain focused on providing the highest shareholder value. Additionally, this marks the largest third-party edible agreement to date for LYF Food Technologies. We are excited to have these partners on board and will continue to focus on adding partners that align with our values.” ----------------------------------------------- 1. Being very selective: Means they know they can keep the ship full and down going forward so any new partner/client needs to have the cash to play with them.
2. A lot of interest in their capabilities is a no brainer & great growth indicator. And the growth will be in two very material and important aspects: Economic growth and also as a company brand, name & platform. If the company performs well with all these contracts and manages to grow and run the platform to it's full capacity in the next couple of years, this will serve as a learning experience for when they need to move south of the border with these services and globally. It's a win-win experience.
3. Being selective when choosing their clients and partners also means that they are not afraid of the market conditions going forward. They see growth ahead and maximum utilize¡ration of their services either buy clients, partners or by themselves.
4. By imposing initial 100% down payments to some shows strength and filters the few operations that they want to work with. This measure also secures a positive cash flow right away and prevents compromising production capabilities and resources with weak players. Again a win -win takeaway. It seems like they see their platform operating to full capacity in the near future .
A great PR over all. All the green signs are there well lit up.
"The majority of the agreements were signed in the last three weeks, indicative of the significant interest in the capabilities provided by the Valens platform. "
“These agreements, which encompass some of our largest Canadian Licensed Producer partners, represent the vast range of our manufacturing capabilities, reinforcing that we are an ally to our customers and consumers,” said Tyler Robson, Chief Executive Officer, Chair, Co-Founder of The Valens Company."
“Notably, the size of these agreements align with our promise of fewer, bigger, better in terms of relationships and products, ensuring we remain focused on providing the highest shareholder value. Additionally, this marks the largest third-party edible agreement to date for LYF Food Technologies. We are excited to have these partners on board and will continue to focus on adding partners that align with our values.” ----------------------------------------------- 1. Being very selective: Means they know they can keep the ship full and down going forward so any new partner/client needs to have the cash to play with them.
2. A lot of interest in their capabilities is a no brainer & great growth indicator. And the growth will be in two very material and important aspects: Economic growth and also as a company brand, name & platform. If the company performs well with all these contracts and manages to grow and run the platform to it's full capacity in the next couple of years, this will serve as a learning experience for when they need to move south of the border with these services and globally. It's a win-win experience.
3. Being selective when choosing their clients and partners also means that they are not afraid of the market conditions going forward. They see growth ahead and maximum utilize¡ration of their services either buy clients, partners or by themselves.
4. By imposing initial 100% down payments to some shows strength and filters the few operations that they want to work with. This measure also secures a positive cash flow right away and prevents compromising production capabilities and resources with weak players. Again a win -win takeaway. It seems like they see their platform operating to full capacity in the near future .
A great PR over all. All the green signs are there well lit up.
Kelowna, B.C., October 5, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a leading manufacturer of cannabis products, today announced that it has entered into six manufacturing partnerships to produce a variety of cannabis products including pre-rolls, innovative edibles, vape, hydrocarbon concentrates, and to provide expert extraction services including the production of high-quality winterized and full-spectrum oils and distillate.
The six agreements include three of the top seven Canadian licensed producers by market share and showcase the vast manufacturing capabilities that Valens offers to its customers. The majority of the agreements were signed in the last three weeks, indicative of the significant interest in the capabilities provided by the Valens platform. The collective agreements are expected to commence over the next two quarters, with anticipated revenue generation during the same period. In addition, four of the agreements require deposits that are up to 100% of initial purchase orders.
“These agreements, which encompass some of our largest Canadian Licensed Producer partners, represent the vast range of our manufacturing capabilities, reinforcing that we are an ally to our customers and consumers,” said Tyler Robson, Chief Executive Officer, Chair, Co-Founder of The Valens Company. “Notably, the size of these agreements align with our promise of fewer, bigger, better in terms of relationships and products, ensuring we remain focused on providing the highest shareholder value. Additionally, this marks the largest third-party edible agreement to date for LYF Food Technologies. We are excited to have these partners on board and will continue to focus on adding partners that align with our values.”
Relative to the Company’s application to list its common shares on the Nasdaq Capital Market (“Nasdaq”), the listing process has progressed at a slower pace than originally anticipated.
However, the Company continues to make this a top priority and expects to commence trading on Nasdaq by the end of fiscal 2021. The common shares will continue to be listed on the Toronto Stock Exchange (“TSX”) under the symbol “VLNS”. In addition, the common shares will continue to be quoted on the OTCQX until such time as the common shares may be listed on Nasdaq, subject to approval of the Company’s listing application.
Valens has retained Stikeman Elliott LLP in Canada and Foley Hoag LLP in the US as legal counsel to advise the Company throughout the Nasdaq listing application process.
At Valens, it’s Personal.
ABOUT THE VALENS COMPANY The Valens Company is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. The Valens Company is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. The Valens Company currently offers a wide range of product formats, including tinctures, two-piece caps, soft gels, oral sprays and vape pens as well as beverages, concentrates, topicals, edibles, injectables, natural health products and has a strong pipeline of next-generation products in development for future release. Finally, The Valens Company’s wholly-owned subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. For more information, please visit https://thevalenscompany.com. The Valens Company’s investor deck can be found specifically at https://thevalenscompany.com/investors/.
FOR FURTHER INFORMATION, PLEASE CONTACT: Jeff Fallows The Valens Company
KCSA Strategic Communications Phil Carlson / Elizabeth Barker VLNS@kcsa.com 1 212.896.1233 / 1 212.896.1203
Media KCSA Strategic Communications Anne Donohoe adonohoe@kcsa.com 1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, economic conditions and anticipated courses of action.
The risks and uncertainties that may affect forward-looking statements include, among others, regulatory risk, United States border crossing and travel bans, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, reliance on a single facility, limited operating history, vulnerability to rising energy costs, unfavourable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
Many great takeaways in the past year or so. The way I see Valens is that they have been a middle man for a few years and that gave them the chance to learn about this industry from the inside without exposing themselves to too much risk. Now they know what they want (and they took) and how to get there. So much so that they managed to reinvent themselves during the pandemic.
I am very prone to LOW capital intensive businesses and that’s what Valens wants in all their branches so I am onboard to stay this time around. They know that their strength is in the platform to add value to the products at low costs. This means great margins when the production volume increase.
Valens owns the science (The Platform) for adding value to the distillates and they are pursuing the global cannabis markets.
This company could become a cannabis powerhouse in a few years. Slowly but surely. A solid business.
A high percentage of the business will produce recurring - like revenue.
This is what I am seeing. They have a lot of room to grow production volumes and efficiencies with all the new businesses acquired.
It will be interesting to see all of these develop in the next 3 years.
the oz. — From the investment side, one of the challenges for investors over the last few years has been volatility in the market. Are you starting to see cannabis investing becoming a safer bet? Fallows — Yes, I think we are. A lot of that was driven by the messaging that many of the players were putting in the market. Big promises, underdelivering. That creates uncertainty of expectation. It creates the volatility that you’re talking about. In many cases cannabis companies were the makers of that problem for themselves. From a Valens perspective, our challenge has been liquidity, our challenge has been getting the flow of volumes. “In the noise of the false promises, the conservative and direct message gets lost.”— Jeff Fallows, President of The Valens Company Because our message hasn’t been as flashy, it hasn’t caught that much attention from that perspective. As we continue to make announcements and build the company that we were always intending to build, investors are starting to see that. In the general market, I think it will settle down as people are forced to stop with these big promises and talk really about what they can deliver. From Valens we’re putting the building blocks in place to make sure that our consistent message, which we’ve been discussing for quite some time now, gets the proper ears. the oz. — It’s hard to ignore those flashing neon signs sometimes. Fallows — We struggle a lot internally about is that a pathway, is that not a pathway, but we’ve always taken the view that we’re going to be transparent, we’re going to be clear, and we’re going to be direct about what we deliver and what our shareholders can expect because over time it will be that consistency that wins, at least in our view.
The Valens Company will leave 2021 looking much different than when the year began.
It’s now grown to more than 370 employees. Most work at the Kelowna campus, which encompasses its headquarters and the LYF Edibles facility. There are about 40 working in Toronto and more at Green Roads in the US.
The company has also announced acquisitions of Citizen Stash and Verse.
We spoke recently to the president of The Valens Company, Jeff Fallows.
Q&A
the oz. — Can you offer a glimpse into how all of these recent announcements are fitting together into the overall strategy at Valens?
Fallows — Ultimately, all of these pieces were many, many months in the works. There’s been lots of work behind the scenes that we’ve been doing to make sure that we’re ready for these announcements and ready for these changes in our business.
From a strategic perspective, Valens has been very clear that we don’t like cultivation. The big infrastructure that others in the industry have put in place, we do not believe it is the best way to earn a return for our shareholders. We’ve been focused on the 2.0 and the oil-based, extract-based products and we’ve been making our mark in the market with that.
But there was always a view that there may be select flower segments that we could play in as a company, and that first came to fruition through, interestingly enough, Verse cannabis. They came to us and asked us—based on our ability to procure biomass (we are the largest buyer of biomass in the Canadian market)—whether we could source some quality but inexpensive product that they could put in at the value-price point into the market. We were very successful at doing that through them and they’ve got a couple SKUs out on the market doing well in that regard. That sort of opened the door to us and we started entertaining a number of conversations and came across Citizen Stash.
citizen stash product
Acquiring Citizen Stash
We say buying Citizen Stash was entering the flower space the Valens way. First and foremost they don’t have the big growing infrastructure. They control the genetics and they control the quality in the agreements they have with their contract growers to say that if it doesn’t meet the specs then there’s no requirement to buy. So they get really the best of both worlds—they get quality products from quality craft growers and there’s none of the infrastructure costs of the risk associated with that. We like that model a lot. That really aligns with how we view the space and the opportunity.
The second thing was if Valens was going to do it, we really liked the premium end of the flower market. That’s where there’s margin and opportunity, that’s where the brands seem to be developing first. We think over the long term, if you look at markets in the US, that’s really the way to maintain that margin, maintain that presence in the market going forward. Citizen Stash is well positioned in the premium space. They are the No. 1 performing SKU above $13 (per gram) in Canada. So it’s a very attractive acquisition opportunity and the last step for us in that regard was: Are they really likeminded? Are they cannabis individuals that are interested in delivering quality cannabis and growing a cannabis business that we, at Valens, see as the right way to do it? And they are. We like the team there, we like the vision, we think it’s going to be a very seamless integration.
From a strategy perspective, we saw the opportunity to go out and get a larger market opportunity for our shareholders. We saw it in the premium flower space. And we found what we believe to be the ideal puzzle piece to fill that hole.
We’ve also been very clear that as we’ve we were going through as a contract manufacturer, that was our primary focus. We do that better than anybody. You’ll start to see a number of announcements as things start to get more and more in the LP space leveraging us for all the work that we’ve done in the contract custom manufacturing arena. As we were looking at the Canadian space, we’ve always been clear that if there’s select opportunities for us where we believe that Valens can play that we would not be shy about putting a brand into the market.
Acquiring Verse Cannabis
What happened with us with Verse cannabis was they came to us very early on, right in the early days of planning their strategy as a company, and came to us with a value-oriented pitch that they thought they could establish a brand position at the value end of the market. They said with your infrastructure, you can provide us the broadest segment of products at that lower price-point. They’ve been very successful at penetrating on that strategy. At Valens, when we saw that happening, we started to keep a close eye on it because it really fits in with Valens as well. We’ve only just scratched the surface of our low-cost infrastructure with this brand. What could we do if we were to bring that brand in-house and manage from soup to nuts everything about where that brand plays, what product portfolio it has, how that plays off against Citizen Stash in this context, and how we can really manage those two brands against each other. We really wanted that opportunity for our shareholders and made the decision to bring it in-house.
With those two we overnight jumpstart our strategy of being very selective and picking our spots with brands, but doing it in ways that are fully aligned with everything that our shareholders should be expecting with Valens: that’s flexible infrastructure, focused on return on investment, focused on margin, and focused where we believe we are best to come in.
A large majority of our LP partners would play in the core, which would be in between the premium and value segment. An ancillary benefit for us is minimizing the overlap. Again, we’re not trying to boil the ocean here, we’re not trying to take over all segments. What we’re trying to do is target the areas where we think we think we can add the most value.
the oz. — Valens balances being a global player in cannabis and yet still continues to uphold its reputation in the community as a large and growing employer in the region. How do you continue to maintain those local connections?
Fallows — This is a very big focus of Tyler’s. He believes in the Kelowna culture. He believes in the West Coast culture and what that means for cannabis and what that’s done for cannabis. That really is core in the Valens brand. We spend a lot of time in terms of our strategy in terms of how we’re bringing our products to market and those sorts of things—even with respect to our hiring and who we’re hiring and what mentality and focus they bring to make sure we are a Kelowna-first culture even as we open an office here in Toronto and even as we made and acquisition in the US and as we look into Australia and other markets, that we approach that as much as possible with that Kelowna mentality, which is ‘we love cannabis, we take passion in providing the high-quality products, and we’re only bringing people on board who would share that same kind of passion.’
The Valens Company logo on a wall
the oz. — What part does Toronto have to play in the strategy?
Fallows — It’s about efficiency and it’s about making sure we are getting access to the kind of talent and resources that we need. Obviously from an employment pool and an opportunity perspective, as our needs change internally and we start to get more international exposure it’s not expected that you’d be able to pull all the resource pool from Kelowna, for example. If you think about it, when we start to go more global, a more centralized location, easy fly-in, easy fly-out, time zone differences, all those sorts of things, having a team here in Toronto just made sense.
the oz. — Are we going to see some of the Green Roads products come up to Canada?
Fallows — Absolutely. As we are looking to integrate them, we are looking at the products portfolio they have, which ones are suitable for the Canadian market. As we’re looking at bringing on Citizen Stash and the Verse brand and how that all fits together, we’re not just about throwing any products in the market. We want to make sure it’s a carefully curated portfolio with specific purpose and targeting specific consumers. Our commercialization team is going through that process right now, working with the Green Roads team and crafting that portfolio. We’ll start to expand that brand internationally through the Valens channels as well.
the oz. — Valens is pretty diversified now with LYF Edibles, Green Roads, Citizen Stash, Verse. Do you feel there are any areas in the cannabis market that you’re still trying to develop?
Fallows — No, we’re very happy with our platform and how it’s come together. I think we’ve got a lot of executing to do. We’ve got to bring these pieces together. We’ve got to make sure they’re operating efficiently and cohesively. There’s always a period of adjustment when you’re making an acquisition, so we’re very focused on that. As the space continues to move at light speed on a day-to-day basis, making sure that we’re keeping up with that and staying ahead of that and have the assets we need to get to where we want to get to as a company, there may be other acquisitions, there may be other opportunities that we need to bring on board. We won’t be shy to do that if we think it’s appropriate for our shareholders. In the Canadian context, we’re largely done. We think we’ve got the platform we need to compete and to win in Canada.
From a US perspective, Green Roads was a first step for us. We’re busy integrating, aligning, getting that company on the trajectory we know it can get to and then ultimately we believe there will be some additional opportunities in the US that would make sense from that perspective.
the oz. — What are some of the trends you see on the horizon in the Canadian market?
Fallows — I think there’s a lot of exciting and innovative products to come. I think the health and wellness area is largely untapped at this point. Recreationally focused, we’ve got some new and exciting products coming, particularly coming out of LYF and some of the work we’ve been doing with them. You also start to see some Cannabis 3.0 products, that we’re calling them, which is really consumer focused, delivering targeted benefits to users from the health and wellness side. We’re very excited and we think that’s the next big leg of opportunity in the Canadian market.
the oz. — From the investment side, one of the challenges for investors over the last few years has been volatility in the market. Are you starting to see cannabis investing becoming a safer bet?
Fallows — Yes, I think we are. A lot of that was driven by the messaging that many of the players were putting in the market. Big promises, underdelivering. That creates uncertainty of expectation. It creates the volatility that you’re talking about. In many cases cannabis companies were the makers of that problem for themselves. From a Valens perspective, our challenge has been liquidity, our challenge has been getting the flow of volumes.
“In the noise of the false promises, the conservative and direct message gets lost.”— Jeff Fallows, President of The Valens Company Because our message hasn’t been as flashy, it hasn’t caught that much attention from that perspective. As we continue to make announcements and build the company that we were always intending to build, investors are starting to see that.
In the general market, I think it will settle down as people are forced to stop with these big promises and talk really about what they can deliver. From Valens we’re putting the building blocks in place to make sure that our consistent message, which we’ve been discussing for quite some time now, gets the proper ears.
the oz. — It’s hard to ignore those flashing neon signs sometimes.
Fallows — We struggle a lot internally about is that a pathway, is that not a pathway, but we’ve always taken the view that we’re going to be transparent, we’re going to be clear, and we’re going to be direct about what we deliver and what our shareholders can expect because over time it will be that consistency that wins, at least in our view.
Parliament Hill; cannabis is ignored by politicians
the oz. — What would Valens like to see from the incoming federal government?
Fallows — We’ve had cannabis legal for several years now. I think we’ve shown it’s not only an entertaining and exciting products, but it’s also a safe one. We’re only scratching the surface of what we can do from a health and wellness perspective. If there was an opportunity to release some of the reigns a bit and give us an opportunity to show a little bit more of what we can do, clearly we think that would be a benefit to the Canadian consumer and quite frankly society in general as we show there’s lot and lots of benefit out of the cannabis plant that’s yet to be fully ingrained into mainstream society. A little bit more runway, a little bit more room to make things a little bit more efficient on our side, to get products to people, that would clearly be a step in the right direction.
I think we’ve almost earned the right now to say that maybe a little less scrutiny is warranted as we move forward.
Even bifurcating CBD and THC, CBD and the ability to get that into more mainstream channels and various product forms could have a lot of advantages for the consumer.
the oz. — Valens was working with Shopper’s Drug Mart on studies. What’s happening with that?
Fallows — We continue to work with Shopper’s. We have products on their medical cannabis platform. We participated in the traceability study, UHN, delivered on that result, showing that from a medical perspective we could offer, and industry itself was capable of providing, traceability quality consistency in its products.
the oz. — Is there anything else you’d like to talk about?
Fallows — As we entered 2021, we were very clear that we were going to leave 2021 a different company than when we entered. I think we’re well on our way to delivering that to investors and I think we delivered it with high marks. The capabilities that we’ve added and will continue to add for the rest of the year are exactly what our shareholders should be expecting us to do and we’re excited about delivering on the promises we made to them.
Well unless I am incorrect, I don’t believe VLNCF can be up listed to the Nasdaq under 5505. Initial Listing of Primary Equity Securities 1{B2} which, again in my opinion is the one they could have used. I guess we’ll find out at the CC coming up, but we failed to hold the 2.00 mark. I believe they will have to be over that for 60 days to re-apply or requalify. IMO
In regards to the volume, no idea why the lack of interest. I see the TSX in CA had over 100k more shares traded than the US market.
The whole sector is out of favor right now. They will have their qt earnings report in a couple of weeks, well less than that, they still have the NAS upload that could cause some volume the congress rulings will happen at some point, but for right now were in a rut.
A bill to federally legalize marijuana will be voted on by the House Judiciary Committee next week, the panel announced on Friday.
The development comes one day after the House voted in favor of a defense spending bill that includes an amendment that would protect banks that service state-legal cannabis businesses from being penalized by federal regulators.
Judiciary Committee Chairman Jerrold Nadler’s (D-NY) Marijuana Opportunity, Reinvestment and Expungement (MORE) Act will receive a markup on Wednesday. The panel will consider a dozen pieces of legislation during the meeting, according to a press release. That includes his bill to “decriminalize marijuana federally and invest in communities that have been disproportionately harmed by the War on Drugs,” Nadler said.
“Many of these bills were reported out of the committee and passed by the full House of Representatives last Congress, and I look forward to working with all my colleagues once again to get these bills through Congress and on to the president’s desk,” the chairman said.
Nadler’s cannabis legislation passed the House last year but did not advance in the Senate under GOP control. This time around, advocates are optimistic that something like the chairman’s bill could be enacted now that Democrats run both chambers and the White House, and as more states are moving to enact legalization.
The legislation would remove marijuana from the Controlled Substances Act (CSA), allow people with cannabis convictions to have their records expunged and create a federal tax on marijuana with the revenue going to support community reinvestment and other programs.
It also contains language to create a pathway for resentencing for those incarcerated for cannabis offenses, protect immigrants from being denied citizenship over marijuana and prevent federal agencies from denying public benefits or security clearance due to its use.
“We are excited to see Chairman Nadler and House leadership move forward once again with passing the MORE Act,” Justin Strekal, political director of NORML, said. “Public support and state-policy demand for repealing federal marijuana criminalization has never been higher and Congressional action on this legislation is long overdue. The days of federal marijuana prohibition are numbered.”
There’s been some contention between advocates and stakeholders on which reform should come first: the bipartisan banking legislation that’s cleared the House in some form five times now or the comprehensive legalization bill that passed the chamber for the first time late last year.
Legalization advocates do want to see legislation from Rep. Ed Perlmutter (D-CO) become enacted, as there are public safety problems caused by all-cash businesses and it would take an important step toward normalizing the growing industry. But social equity-minded activists argue that advancing the incremental reform first would mainly benefit large marijuana businesses without addressing the harms of cannabis criminalization.
The fate of the banking proposal will likely be decided in conference with the Senate, which has not included the policy change in its National Defense Authorization Act (NDAA) and where key lawmakers have insisted that they will push for broader reform before allowing the incremental change to be enacted.
Separately, Senate Majority Leader Chuck Schumer (D-NY), Finance Committee Chairman Ron Wyden (R-OR) and Sen. Cory Booker (D-NJ) are also leading the charge on a legalization bill in their chamber. But weeks after a public comment period on a draft version of the proposal closed, finalized text has yet to be formally filed—and it’s far from certain that Schumer will be able to find enough votes to advance the comprehensive reform through his chamber.
It should be noted that President Joe Biden remains firmly opposed to adult-use marijuana legalization. While he supports more modest reforms such as decriminalizing cannabis, expunging prior records and letting states set their own marijuana policies, there’s an open question about whether he would be moved to sign a broad bill like the MORE Act or the Senate legalization legislation should such a proposal reach his desk.
With respect to the MORE Act, the latest version does not include language that was added just before last year’s House floor vote that would have prevented people with previous cannabis convictions from obtaining federal permits to operate marijuana businesses. That was a contentious provision that appeared at the last minute and which advocates strongly opposed.
And whereas the the prior version of the legislation contained language to help economically disadvantaged people enter the legal marijuana market, that language was revised to extend Small Business Administration (SBA) aid—such as loans, financial literacy programs and job training—to help people who have been harmed by the war on drugs pursue business opportunities in any industry, not just cannabis.
Advocates are encouraged by the new revisions to the bill, but there are still additional components they hope to see changed as it goes through the legislative process. For example, they also took issue with provisions added to the MORE Act prior to last year’s vote that would have stipulated that cannabis can still be included in drug testing programs for federal workers.
The current version of the MORE Act has 66 cosponsors, including seven lawmakers that signed on this week. All are Democrats.
Separately, a proposal to federally deschedule marijuana that does not include social equity components was filed by a pair of Republican congressmen in May.
Kelowna cannabis company Valens is on an acquisitions jag.
So far this year, the diversified cannabis products manufacturer has purchased LYF Food Technologies of Kelowna for CDN$24.9 million, Green Roads CBD of Florida for US$40 million, Citizen Stash of Mission, BC for CDN $54.3 million and Verse in an undisclosed private transaction.
"These acquisitions fit our strategy of becoming an international leading cannabis company," said Valens president Jeff Fallows.
"It's also a way for us to bring Canadian quality to the world."
Jeff Fallows is the president of Kelowna-based cannabis company Valens.
In the past, Valens has primarily been a contract manufacturer of cannabis oil-based products for other brands.
The purchase of Citizen Stash will allow Valens to get into the highly lucrative premium cannabis dried flower market.
"We'll keep the Citizen Stash name because it's well-known and well-respected," said Fallows.
"And we'll keep Citizen Stash's facility in Mission, BC as a research-and-development centre. It's a good acquisition because Citizen Stash uses craft contract growers for its flower, so it doesn't have the grow-op infrastructure cost itself."
Citizen Stash products also include pre-rolled joints and dried cannabis.
Valens will also keep the Verse name and make all of its brand-name products at Valens' main manufacturing facility on Carion Road in Kelowna.
"Verse is a value brand with high quality and a low price point in all market segments from flower and pre-roll (joints) to tinctures and edibles," said Fallows.
"It's nice to have control of the brand and use our facility to make and distribute the products."
LYF Food Technologies is a cannabis edibles company and Green Roads focuses on CBD (cannabidiol) therapeutic products that don't cause the high that THC (tetrahydrocannabinol) products do.
Valens stock trades on the TSX and coming soon, NASDAQ.
On Thursday, stock was trading at around $2.50.
Over the past year, it’s been as high (pardon the pun) as $4 and as low as $1.44.
Valens is a big contributor to the Okanagan's status as a cannabis hotspot.
The Valley has more than 30 cannabis stores and is a hub for production and distribution.
52% jump in segment revenues for Valens based on the population numbers 'jefra1965' is posting. It's predictive based upon the population numbers of the central American countries involved in Valens new deal vs the Canadian market.
Dominican Rep.....11.02 Costa Rica.............5.17 Panama.................4.40
vs
Canada.................38.25
IMO I think jefra1965 is being too blindly enthusiastic, maybe too in love with Valens, but maybe he is right.
jefra1965 Thursday, 09/16/21 07:39:46 PM Re: FUNMAN post# 3900 0 Post # 3901 of 3902 Population of: (In Millions)
Australia...............26.04 New Zeland...........4.86
Dominican Rep.....11.02 Costa Rica.............5.17 Panama.................4.40
------------------------------------------ Increased global exposure, achieving one of the Company's major strategic initiatives for fiscal 2021. Valens' entry into the US market is anticipated to open global distribution opportunities, with Green Roads and Valens-manufactured products collectively already sold in over 11 countries in several formats. The Company is currently engaged in late-stage discussions regarding various international distribution opportunities in Latin America, Asia-Pacific, and Europe. https://www.prnewswire.com/news-releases/the-valens-company-completes-acquisition-of-leading-us-cbd-company-green-roads-301316091.html
Stifel GMP has issued a "positive" buy rating and target price of $5.75 on The Valens Company (TSX:VLNS, OTCQX:VLNCF) a day after the cannabis manufacturer announced the completion of its acquisition of Verse Cannabis.
The deal for the Canadian cannabis retailer will see Valens take ownership of all of the Verse intellectual property. Just a few weeks earlier Valens also reported that it was purchasing Citizen Stash Cannabis Corp, a Canadian premium craft cannabis company, in an all-stock transaction valued at about C$54.3 million. Both deals were cited in the analyst coverage from Stifel.
“With these two transactions, VLNS captures the Verse royalty payment, reduces execution risk and provides for greater control over brand positioning at both extreme price segments in the industry, potentially balancing margin profiles,” Stifel analysts said in their note.
The Valens Company (TSX:VLNS, OTCQX:VLNCF) Inc. has announced an exclusive partnership with Epsilon Healthcare Limited, a diversified global healthcare and pharmaceuticals company, for access to Epsilon's Good Manufacturing Practices (GMP) facility in Australia for manufacturing products.
In a statement, Valens said the partnership furthers its international expansion to GMP's markets in Latin America, Europe, UK, and the Asia-Pacific regions.
Australia...............26.04 New Zeland...........4.86
Dominican Rep.....11.02 Costa Rica.............5.17 Panama.................4.40
------------------------------------------ Increased global exposure, achieving one of the Company's major strategic initiatives for fiscal 2021. Valens' entry into the US market is anticipated to open global distribution opportunities, with Green Roads and Valens-manufactured products collectively already sold in over 11 countries in several formats. The Company is currently engaged in late-stage discussions regarding various international distribution opportunities in Latin America, Asia-Pacific, and Europe. https://www.prnewswire.com/news-releases/the-valens-company-completes-acquisition-of-leading-us-cbd-company-green-roads-301316091.html
THE VALENS COMPANY ANNOUNCES STRATEGIC DISTRIBUTION AGREEMENT WITH APOTEKA SRL, PART OF GFI COSTA RICA & PROVIDES AUSTRALIA UPDATE
APOTEKA partnership provides strategic entry for Valens’ brands across Central America — Company secures AUS$540,000 order from Cannvalate to manufacture GMP products for Australian and New Zealand Markets
More good news for the company that keeps on executing it's 2.0 Business Plan - FUNMAN
Kelowna, B.C., September 16, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company,” “The Valens Company” or “Valens”), a leading manufacturer of cannabis products, today announced it has signed a regional distribution agreement with APOTEKA SRL (“APOTEKA”), a part of Grupo Farmanova Intermed “GFI Costa Rica”, a pharmaceutical holding company based in Costa Rica with operations throughout Central America and the Caribbean. Under the agreement, APOTEKA will bring Valens’ nuance brand, with future plans to include the Green Roads brand, into three core Central American markets: Costa Rica, the Dominican Republic and Panama.
Valens has developed two CBD tinctures for APOTEKA that combine known wellness ingredients with CBD. The products will be manufactured by Green Roads and are made with coconut MCT oil. They come in coconut and peppermint flavor, with added terpenes, and will be available in two concentrations: 900 and 1500 milligrams of CBD. Both tinctures have been carefully developed to match the tastes of local markets.
Tyler Robson, Chief Executive Officer and Chair of The Valens Company, said, “This partnership with APOTEKA, part of GFI Costa Rica a multiregional conglomerate with a 45-year track record, is consistent with our distribution first, asset light, growth model in international markets. The partnership represents a strategic expansion into Central America where APOTEKA will be distributing these products into regions including: Costa Rica, the Dominican Republic and Panama. With limited competition currently in these markets, and a reputable distribution partner in APOTEKA, we see a compelling opportunity to further develop an innovative product portfolio, establish a foothold in the region and expand our strategy across other Central American countries in the future as more countries liberalize their cannabis laws.”
Australia Market Update
The Company also announced it has secured AUS$540,000 of initial orders for GMP product from its Australian distribution partner, Cannvalate PTY Ltd (“Cannvalate”). This follows the Company’s recent announcement that it had secured access to GMP Manufacturing in Australia through an exclusive partnership with Epsilon Healthcare, furthering its international expansion to GMP markets in Latin America, Europe, UK and the Asia-Pacific regions.
Jeff Fallows, President of The Valens Company, said, “We are excited to report our first GMP production through the Southport facility, marking our further expansion into the Australian market. The order represents Valens taking advantage of Epsilon’s large scale GMP manufacturing capability, with the capacity and means to provide further accelerated access to Europe through their TGA and EU GMP capabilities. Through Cannvalate’s significant local market presence and leading distribution platform, Valens is well placed with strategic access to a market we see through recent trends being poised for dramatic growth.”
Valens expects to continue to receive purchase orders of a similar or greater value under this arrangement on an ongoing basis, which is representative of the global shift to GMP and EU GMP production standards that the Company is now able to deliver through its partnership with Epsilon Healthcare.
At Valens, it’s Personal.
ABOUT THE VALENS COMPANY The Valens Company is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. The Valens Company is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. The Valens Company currently offers a wide range of product formats, including tinctures, two-piece caps, soft gels, oral sprays and vape pens as well as beverages, concentrates, topicals, edibles, injectables, natural health products and has a strong pipeline of next-generation products in development for future release. Finally, The Valens Company’s wholly-owned subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. For more information, please visit https://thevalenscompany.com. The Valens Company’s investor deck can be found specifically at https://thevalenscompany.com/investors/.
FOR FURTHER INFORMATION, PLEASE CONTACT: Jeff Fallows The Valens Company
KCSA Strategic Communications Phil Carlson / Elizabeth Barker VLNS@kcsa.com 1 212.896.1233 / 1 212.896.1203
Media KCSA Strategic Communications Anne Donohoe adonohoe@kcsa.com 1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, economic conditions and anticipated courses of action.
The risks and uncertainties that may affect forward-looking statements include, among others, regulatory risk, United States border crossing and travel bans, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, reliance on a single facility, limited operating history, vulnerability to rising energy costs, unfavourable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
This is part of the stimulus we have been looking for. It's freaking "HIDDEN" Fantastic --->>> H.R. 4350 - National Defense Authorization Act for Fiscal Year 2022 --->>> The SAFE Banking Act my pass in a ho hum way.
HEARING INFORMATION Amendment Deadline Tuesday, September 14, 2021 - 1:00pm
Submitted
Adds the bipartisan SAFE Banking Act which allows state-legal cannabis businesses to access the banking system and help improve public safety by reducing the amount of cash at these businesses.
# ... Version # ... Sponsor(s) ... Party ... Summary ... Status
Cannabis Industry Investor Presentations Now Available for On-Demand Viewing Today 7:32 AM ET (PR NewsWire)Print
Virtual Investor Conferences(R) and KCSA Strategic Communications today announced that the presentations from the September 8th & 9th Cannabis Industry Virtual lnvestor Conference are now available for on-demand viewing at VirtualInvestorConferences.com.
All presentations will be available for 24/7 on-demand replay for 90 days. Investors, advisors and analysts may also download shareholder materials from the "virtual trade booth" for the next three weeks.
Presentations:
Presenting Company Ticker(s) Innocan Pharma Corp. (OTCQX: INNPF | CSE: INNO) MariMed Inc. OTCQX: MRMD The Valens Company Inc. (OTCQX: VLNCF | TSX: VLNS) Nova Cannabis Inc. (OTCQB: NVACF | TSX: NOVC) InMed Pharmaceuticals Inc. Nasdaq: INM Vibe Growth Corp. (Pink: VIBEF | CSE: VIBE) 1933 Industries Inc. OTCQB: TGIFF | CSE: TGIF MediPharm Labs Corp. (OTCQX: MEDIF | TSX: LABS) IM Cannabis Corp. (NASDAQ: IMCC | CSE: IMCC) NewLake Capital Partners, Inc. OTCQX: NLCP Aleafia Health Inc. (OTCQX: ALEAF | TSX: AH) InterCure Ltd. (NASDAQ: INCR | TSX: INCR.U) Verano Holdings Corp. (OTCQX: VRNOF | CSE: VRNO) Fire & Flower Holdings Corp. (OTCQX: FFLWF | TSX: FAF) Delta 9 Cannabis Inc, (OTCQX: DLTNF | TSX: DN) Clever Leaves Holdings Inc. (NASDAQ: CLVR, CLVRW) Australis Capital Inc. (OTCQB: AUSAF | CSE: AUSA) Lowell Farms Inc. (OTCQX: LOWLF | CSE: LOWL) Flower One Holdings Inc. (OTCQX: FLOOF | CSE: FONE) Sugarbud Craft Growers Corp. (OTCQB: SBUDF | TSX-V: SUGR) Greenrose Acquisition Corp. (OTCQX: GNRS, GNRSU, GNRSW)
To facilitate investor relations scheduling, for more information about the program and to view a complete calendar of Virtual Investor Conferences, please visit www.virtualinvestorconferences.com.
About Virtual Investor ConferencesSMVirtual Investor Conferences (VIC) is the leading proprietary investor conference series that provides an interactive forum for publicly-traded companies to meet and present directly with investors.
A real-time solution for investor engagement, Virtual Investor Conferences is part of OTC Market Group's suite of investor relations services specifically designed for more efficient Investor Access. Replicating the look and feel of on-site investor conferences, Virtual Investor Conferences combine leading-edge conferencing and investor communications capabilities with a comprehensive global investor audience network.
How low you say, hmmm. Well from the charts we have it closing right at the 200-day avg. From the Fibonacci retracement we just lost the 38 percent at 2.14. The rsi is at 35. One thing of note is it has been a low volume retracement. So, to your point on how low, well it could go to 1.75 and if that fails to hold 1.43. So, from the charts a person could say it may hold right at the 2.05 200 days or go all the way down to 1.43 Ok, away from the charts, we are almost into an oversold at low volume as mention. Not a lot of interest here to buy or sell in volume. All of this drop is not because of the company is doing poorly, but the sector in general is selling off. Much FUD in this sector with many having the same questions, should I buy, sell or hold. All I can do is speak for me, I bought more today of this one and I’m already holding a large position. I buy when a see good value, I believe in 3mo, 6 mo. and 1 year the price will be higher than it is now. I don’t try and time the bottom, close is fine and all the rest is just ebb and flow. There is a reasonableness to how low or high it can go within reason. IMO we are getting close to that time with this stock and the sector.
Thanks for the Valens PR find GE-Jim. I like the hook-up with another of my cannabis holdings. FFLWF is adding more proprietary products to their SKU line-up. That's a good thing. - FUNMAN
THE VALENS COMPANY ENTERS WHITE LABEL PARTNERSHIP WITH FIRE & FLOWER, LEADING CANADIAN CANNABIS RETAILER
Valens will manufacture and distribute CBD oil for Fire & Flower’s wellness focused CBD private label brand, Revity CBD™
Kelowna, B.C., September 9, 2021 – The Valens Company Inc. (TSX: VLNS) (OTCQX: VLNCF) (the “Company” or “The Valens Company”), a leading manufacturer of cannabis products, today announced a white label partnership with Fire & Flower Holdings Corp. (“Fire & Flower”) (TSX: FAF) (OTCQX: FFLWF), a leading, technology-powered, cannabis retailer with over 90 corporate-owned stores in Alberta, British Columbia, Manitoba, Ontario, Saskatchewan, and Yukon Territory. Under the terms of the agreement, Valens will manufacture Fire & Flower’s Revity CBD oil for distribution in Ontario, Manitoba, and Saskatchewan with the potential to expand into additional provincial and territorial markets where permitted and agreed.
Tyler Robson, Chief Executive Officer, Co-Founder and Chair of The Valens Company, said, “Fire & Flower is one of the leading cannabis retailers in Canada with a wide reach in this rapidly growing market. We admire their focus on consumer education and best-in-class retailing and are proud to partner with them for the first time to get high-quality wellness-focused products in the hands of Canadian consumers. This strategic relationship allows us to strengthen and expand our wellness-focused manufacturing portfolio and provides the opportunity to further our partnership with one of the largest cannabis retailers in the country.”
Revity CBD oil will be formulated with Valens’ proprietary processing methods to remove impurities and bring distinct cannabinoids to the forefront of the consumer experience. Each product includes an integrated dispenser to ensure consistency with each use. The product focus of the Revity CBD line has been derived from key consumer insights in product formulation, target consumer segments, price and format in the Hifyre™ Digital Retail and Analytics Platform.
Trevor Fencott, Chief Executive Officer and President of Fire & Flower, added, “We are proud to introduce our Revity CBD Oil in partnership with Valens and are confident that they will meet the experience and quality expectations of Canadian consumers. Valens’ proven manufacturing excellence and experience producing high-quality wellness products made them a clear choice to help us continue to supply the evolving CBD market in Canada.”
At Valens, it’s Personal.
ABOUT THE VALENS COMPANY The Valens Company is a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. The Valens Company is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including CO2, ethanol, hydrocarbon, solvent-less and terpene extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada with an annual capacity of 425,000 kg of dried cannabis and hemp biomass at our purpose-built facility in Kelowna, British Columbia which is in the process of becoming European Union (EU) Good Manufacturing Practices (GMP) compliant. The Valens Company currently offers a wide range of product formats, including tinctures, two-piece caps, soft gels, oral sprays and vape pens as well as beverages, concentrates, topicals, edibles, injectables, natural health products and has a strong pipeline of next-generation products in development for future release. Finally, The Valens Company’s wholly-owned subsidiary Valens Labs is a Health Canada licensed ISO 17025 accredited cannabis testing lab providing sector-leading analytical services and has partnered with Thermo Fisher Scientific to develop a Centre of Excellence in Plant-Based Science. For more information, please visit https://thevalenscompany.com. The Valens Company’s investor deck can be found specifically at https://thevalenscompany.com/investors/.
FOR FURTHER INFORMATION, PLEASE CONTACT: Jeff Fallows The Valens Company
KCSA Strategic Communications Phil Carlson / Elizabeth Barker VLNS@kcsa.com 1 212.896.1233 / 1 212.896.1203
Media KCSA Strategic Communications Anne Donohoe adonohoe@kcsa.com 1 212.896.1265
NOTICE REGARDING FORWARD LOOKING STATEMENTS All information included in this press release, including any information as to the future financial or operating performance and other statements of The Valens Company that express management’s expectations or estimates of future performance, other than statements of historical fact, constitute forward-looking information or forward-looking statements within the meaning of applicable securities laws and are based on expectations, estimates and projections as of the date hereof. Forward-looking statements are included for the purpose of providing information about management’s current expectations and plans relating to the future. Wherever possible, words such as “plans”, “expects”, “scheduled”, “trends”, “indications”, “potential”, “estimates”, “predicts”, “anticipate”, “to establish”, “believe”, “intend”, “ability to”, or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or the negative of these words or other variations thereof, have been used to identify such forward-looking information. Specific forward-looking statements include, without limitation, all disclosure regarding future results of operations, economic conditions and anticipated courses of action.
The risks and uncertainties that may affect forward-looking statements include, among others, regulatory risk, United States border crossing and travel bans, reliance on licenses, expansion of facilities, competition, dependence on supply of cannabis and reliance on other key inputs, dependence on senior management and key personnel, general business risk and liability, regulation of the cannabis industry, change in laws, regulations and guidelines, compliance with laws, reliance on a single facility, limited operating history, vulnerability to rising energy costs, unfavourable publicity or consumer perception, product liability, risks related to intellectual property, product recalls, difficulties with forecasts, management of growth and litigation, many of which are beyond the control of The Valens Company. For a more comprehensive discussion of the risks faced by The Valens Company, and which may cause the actual financial results, performance or achievements of The Valens Company to be materially different from estimated future results, performance or achievements expressed or implied by forward-looking information or forward-looking statements, please refer to The Valens Company’s latest Annual Information Form filed with Canadian securities regulatory authorities at www.sedar.com or on The Valens Company’s website at www.thevalenscompany.com. The risks described in such Annual Information Form are hereby incorporated by reference herein. Although the forward-looking statements contained herein reflect management’s current beliefs and reasonable assumptions based upon information available to management as of the date hereof, The Valens Company cannot be certain that actual results will be consistent with such forward-looking information. The Valens Company cautions you not to place undue reliance upon any such forward-looking statements. The Valens Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. Nothing herein should be construed as either an offer to sell or a solicitation to buy or sell securities of The Valens Company.
The type of federal influence might help with Valens USA ambitions.
Top Federal Financial Regulator Slams Congress Over Marijuana Inaction And Calls For Interagency Banking Workgroup
Published 5 hours ago on September 9, 2021 By Kyle Jaeger
A board member and former chairman of the federal National Credit Union Administration (NCUA) is sharply criticizing Congress for failing to reform marijuana laws, and he announced on Thursday that he will be taking steps to push lawmakers to enact policy changes to help financial institutions and stakeholders caught in the federal-state cannabis conundrum.
NCUA’s Rodney Hood said at the PBC Conference that he’s “concerned that the legal and regulatory infrastructure surrounding the cannabis industry is not evolving quickly enough,” and congressional inaction is largely to blame. He also said that he feels legalization at the federal level is an inevitability.
To help fill the policy gap, the regulator is calling for the creation of an interagency working group of federal financial regulatory agencies to develop a “principles-based approach to cannabis banking” and “deliver a preliminary regulatory framework that we can share with other regulators and members of Congress who share our concern about addressing these problems.”
“Let me be clear about where I stand,” he said, according to his remarks as prepared for delivery that were obtained by Marijuana Moment. “It is time for federal action to clarify and harmonize the laws and regulations surrounding the state-legal cannabis industry and marijuana-related businesses, so that this industry can take part in the legitimate financial services industry.”
Hood is a longtime regulator at NCUA, an independent federal agency that provides deposit insurance to credit unions. He served from 2005 to 2009 under the Bush administration, was named chairman by President Donald Trump in 2019 and served for two years before transitioning to a board position.
That long-term service under multiple administrations makes Hood’s comments on marijuana policy all the more noteworthy. Rarely do regulators openly take such forceful policy positions, especially those that aren’t necessarily shared by the administrations with which they work.
Hood didn’t endorse any particular pieces of legislation, though his remarks do specifically mention the Secure and Fair Enforcement (SAFE) Banking Act, and he said Congress needs to effectively “harmonize” federal and state cannabis laws so that the industry is no longer kneecapped and financial institutions don’t have to fear being penalized for servicing marijuana businesses.
He also spoke more broadly about the prospect of federal legalization and characterized it as an inevitability.
“I’ve heard a variety of perspectives, but there’s one common refrain: they all agree that legalization is a matter of when, not if—and they urge federal action to get it done,” he told attendees at the conference on cannabis banking, payments and compliance. “Legalization in some form is going to happen, and the abdication of responsibility to address these issues in Washington is simply ludicrous. This is precisely the time we need leadership at the federal level to steer this ship in the right direction.”
“It’s simply a remarkable social and cultural change that has taken place right before our eyes,” Hood said, referring to the growing number of states changing their laws, “and it’s only going to continue to develop over the coming years.”
“Yet while this revolution has unfolded, federal law surrounding marijuana and cannabis-derived products has barely changed. There have been some welcome changes at the federal level, like delisting hemp from the list of controlled substances in the 2018 Farm Bill, but even those changes have been slow to arrive and relatively marginal. And there’s been no meaningful legal change on the federal level when it comes to marijuana, despite all the rhetoric around marijuana legalization federally.”
One key consequence of the federal cannabis stalemate is that this explosive industry is currently left without traditional financial tools or access to the banking system, Hood said, pointing out that federal data indicates fewer than 200 credit unions report servicing state-legal marijuana businesses despite NCUA representing more than 5,000 financial institutions.
He said that disconnect “can only be described as a serious market failure.” And Hood intends to do what he can both internally at NCUA and on an interagency level to promote solutions.
NCUA has its own cannabis banking workgroup, the regulator said, and he will be working with them to “determine what we might do next to better address the challenges to cannabis banking on our side.”
But a broader effort that brings in multiple federal financial agencies is necessary, he argued. And helpfully, there’s an existing infrastructure for that coordination through the Federal Financial Institutions Examination Council. Hoods wants the agencies that are part of the council to “take the lead on this issue and to start developing a principles-based approach to cannabis banking.”
Further, the official said he will be personally lobbying Congress in his capacity as an NCUA board member to enact reform, while also pushing credit union trade associations to similarly pressure lawmakers to take up the issue.
“The problem is not with the financial institutions themselves; many of them would be happy to provide services to the industry, but they’re unsure of how to proceed given the limited FinCEN guidance,” Hood said, referring to an Obama-era memo that laid out how banks can serve cannabis businesses. “We have this promising industry that’s developing and growing rapidly—yet no way for the people who work in this industry to conduct the most fundamental business operations through legitimate financial channels. That is, frankly, an untenable situation.”
“Here’s a basic reality: as a rule, regulators really don’t like to get out too far ahead of the policy process. We always seek to respect the existing statutes, and to defer to Congress as the policy-making arm of the government. However, there are times when an independent regulator in the executive branch needs to step forward to provide leadership, or at least nudge things along. I believe that’s the case today with marijuana and the financial services industry.”
Advocates are largely pushing for legislation that would comprehensively reform federal marijuana laws, but there are some who feel Congress should first advance bipartisan cannabis banking legislation because it stands a stronger chances of passage and could help resolve critical public safety issue.
Hood said the SAFE Banking Act is an example of a proposal that he’s heard could improve the situation for financial institutions and clients. That legislation has passed the House on multiple occasions, most recently in April, but it’s so far languished in the Senate as leading lawmakers prioritize broader reform.
Hood also mentioned that, last year, NCUA separately issued a memo explaining issues related to providing financial services to hemp businesses after the crop was federally legalized.
Other panelists who are set to participate in the PBC Conference include Congressional Cannabis Caucus Co-chair Rep. Barbara Lee (D-CA), Rep. Eleanor Holmes Norton (D-DC) and several current and former Internal Revenue Service officials.
Read Hood’s full remarks as prepared for delivery below:
Rodney E. Hood
National Credit Union Administration
PBC Conference 2021:
Payments, Banking, Compliance in the Cannabis Industry
September 9, 2021
Thank you very much, and it’s a pleasure to join you today.
I was sworn in as the chairman of the NCUA board in 2019, but this is actually my second term of service on the board. I was appointed to the NCUA in 2005 under President Bush; I served a four-year term that ended in 2009. I can tell you that serving two appointments at the same agency, separated by a decade, is one way to gain a unique vantage point on how rapidly things can change.
For example, when I first served on the NCUA board, I don’t know that I would have attended this type of conference. Of course, that’s assuming I would have been invited in the first place.
At that time, several states had already allowed qualified patients to access and use marijuana for medicinal purposes, but as a regulator I would not have considered the banking challenges of the cannabis industry to be at the top of my list of concerns. Of course, during that time we were also facing the housing crisis, the financial industry meltdown, and the subsequent recession and recovery – so we were focused on some particularly compelling priorities.
Well, here we are today, which is a testament to how fast things can evolve in a relatively short time. I take that idea of change and evolution as my theme today, because as a regulator, I’m concerned that the legal and regulatory infrastructure surrounding the cannabis industry is not evolving quickly enough.
And so as not to leave you in suspense, let me be clear about where I stand: it is time for federal action to clarify and harmonize the laws and regulations surrounding the state-legal cannabis industry and marijuana-related businesses (MRB), so that this industry can take part in the legitimate financial services industry.
Growth of an industry, and new challenges
For our purposes here today, I don’t need to recount all of the statistics about the number of states that have legalized cannabis in one form or another, or the explosive growth of the state-legal cannabis industry over the last decade. If you weren’t already familiar with those facts and statistics, you wouldn’t be here. It’s simply a remarkable social and cultural change that has taken place right before our eyes, and it’s only going to continue to develop over the coming years.
Yet while this revolution has unfolded, federal law surrounding marijuana and cannabis-derived products has barely changed. There have been some welcome changes at the federal level, like delisting hemp from the list of controlled substances in the 2018 Farm Bill, but even those changes have been slow to arrive and relatively marginal. And there’s been no meaningful legal change on the federal level when it comes to marijuana, despite all the rhetoric around marijuana legalization federally.
As a result, we’ve seen only limited development of the basic commercial banking infrastructure needed to provide financial services to this rapidly growing industry. Looking at the data from the Treasury Department’s Financial Crimes Enforcement Network, or FinCen, as of the end of last year there were only 515 U.S. banks and 169 credit unions providing banking services to MRBs in accordance with the 2014 FinCEN guidelines, which as you all know is currently the only legitimate way for cannabis businesses to secure depository accounts with financial institutions.
Let’s think about those numbers. My agency, the NCUA, regulates the system of federally insured credit unions, which includes more than 5,000 institutions. Yet only 169 of those are providing services to one of the fastest growing industries in the nation? That can only be described as a serious market failure.
The problem is not with the financial institutions themselves; many of them would be happy to provide services to the industry, but they’re unsure of how to proceed given the limited FinCEN guidance. The guidance from FinCen, along with the Justice Department’s guidance in the 2013 Cole memo, which that Cole memo was rescinded anyway, was at least a start. But those were published in 2014 and 2013, respectively—almost a decade ago—and are too vague in any event to give financial institutions the clarity and confidence they need to move forward with cannabis banking beyond providing basic bank account services.
Which means we have this promising industry that’s developing and growing rapidly – yet no way for the people who work in this industry to conduct the most fundamental business operations through legitimate financial channels. That is, frankly, an untenable situation. In stating these facts, I’m not telling you anything you don’t know – again, it’s why we’re here today. The more critical question centers around what needs to happen next.
Here’s a basic reality: as a rule, regulators really don’t like to get out too far ahead of the policy process. We always seek to respect the existing statutes, and to defer to Congress as the policy-making arm of the government. However, there are times when an independent regulator in the executive branch needs to step forward to provide leadership, or at least nudge things along. I believe that’s the case today with marijuana and the financial services industry.
The hemp precedent
I have some relevant experience here based on the work we did at NCUA two years ago to normalize banking services for hemp-related businesses. One of the first regulatory reforms I undertook at the request of Senator McConnell was to push for interim regulatory guidance on providing financial services to hemp-related businesses. Many credit union industry leaders were focused on this issue, and we knew we needed to take action.
After Congress legalized hemp as an agricultural commodity, removing it from the list of controlled substances and allowing its cultivation in accordance with applicable State Plans, there remained a lack of clarity about the industry’s regulatory status while we awaited new rules from the U.S. Department of Agriculture. Keep in mind that the 2018 Farm Bill only addresses the cultivation of hemp — it is silent regarding the production and processing of hemp-derived products like CBD, which represents a huge slice of the hemp market in the United States.
And so a lot of hemp entrepreneurs found themselves stuck in a regulatory limbo – and as a result, financial services providers were unsure of how to work with them, especially since FinCEN guidelines only addressed state-licensed marijuana businesses and bank accounts. This new industry needed access to financial services to get off the ground – these entrepreneurs needed access to capital to invest in facilities and equipment; they needed to be able to meet payroll; they needed access to bank accounts so they didn’t have to rely on cash transactions; and so forth. Does that sound familiar?
So I wanted the NCUA to take a leadership role in providing some clarity while we worked through that transition. In our initial interim guidance, we sought to keep it fairly simple, and to give credit unions the flexibility they needed to work with lawfully operating hemp-related businesses. As long as they did their due diligence and managed their risks accordingly, we wanted credit unions to be able to experiment with the best way to work with these businesses. Based upon feedback to our initial guidance, we followed that up with additional advisory guidance in June 2020, to address unforeseen issues and to provide additional clarity.
Our approach was not overly prescriptive or heavy-handed. We wanted to provide credit unions the room to experiment and to decide for themselves how best to serve this burgeoning industry while we awaited the definitive regulatory guidance from the USDA, which finally took effect this year.
Now, there are still some significant challenges in the hemp space, and things haven’t progressed as quickly there as we might like, in part because they still don’t have a clear regulatory direction from the Food and Drug Administration. But I’m proud that, at least when it came to credit unions, we were able to take a leading role in setting standards and clarifying a forward direction.
Next steps
I’d like to see something similar happen for cannabis and marijuana-related businesses, which is why I’d like to outline three steps that I would like to take now, as a regulator, to move this issue forward:
• First, we already have a working group at the NCUA devoted to cannabis banking, and I’ve been in communication with them and will be working with them to determine what we might do next to better address the challenges to cannabis banking on our side. At this point, we may be somewhat limited in what we can achieve, but I’m urging the agency to think hard about taking those next steps.
• Second, and this might be the most significant action item we can achieve right now, I am calling for the establishment of a formal working group on the part of financial regulators to take the lead on this issue and to start developing a principles-based approach to cannabis banking. The good news is that we already have a vehicle through which this could be accomplished: the Federal Financial Institutions Examination Council, or FFIEC. Most of you have never heard of FFIEC, which is fine, but it’s an interagency body that develops uniform principles, standards, and report forms for the federal examination of financial institutions. The NCUA is a member, and I’ve done a lot of work with the council over the years, so I know it’s a natural place for this working group to reside and to deliver a preliminary regulatory framework that we can share with other regulators and members of Congress who share our concern about addressing these problems.
• Third, I will urge Congress, in my capacity as an individual Board member, to take action to address cannabis banking as the 2014 FinCEN guidelines are simply not enough to support what hemp and cannabis businesses need to grow and sustain. You’re probably aware there are various legislative proposals dealing with these challenges. I’m told the SAFE Banking Act, for example, includes a number of promising proposals that would go a long way toward providing the clarity we need, but for now I don’t plan to endorse any particular piece of legislation. Congress should make that determination, but I will be happy to provide any advice or guidance from the regulators’ perspective that will be of assistance. In fact, just next week I’ll be talking to one of the credit union trade associations on their annual visit to meet with members of Congress, and I’ll be encouraging them to help us make the case to their representatives and senators. I certainly appreciate the members of Congress who are taking part in this conference today, and I look forward to working with them to make progress on this issue.
A caveat here: I’m a financial services industry regulator, and I can only speak to issues related to that area. I recognize there are a host of other regulatory issues that will need to be considered to address consumer protection issues, environmental issues, and other concerns.
The good news is that the banking issues should be relatively straightforward, compared to some of those challenges. We’re talking here primarily about taking deposits; opening up lending at reasonable rates of interest; and opening increased access to payment systems so you don’t have to handle massive piles of cash. If we can address those needs in a straightforward manner, we create an on-ramp to legitimize the cannabis industry while ensuring the safety and soundness of the financial system. Really, these should not be such difficult issues to address, should they? The 2014 FinCEN guidelines laid the groundwork for depository accounts, but it’s time now to build on those guidelines to accommodate the rapid growth of the industry.
Conclusion
I’ve spent a good deal of time and energy on this issue over the last couple of years, talking to experts on the legal side, on the industry side, in the financial services industry. I’ve heard a variety of perspectives, but there’s one common refrain: they all agree that legalization is a matter of when, not if – and they urge federal action to get it done.
The bottom line is this: Legalization in some form is going to happen, and the abdication of responsibility to address these issues in Washington is simply ludicrous. This is precisely the time we need leadership at the federal level to steer this ship in the right direction. In one of my discussions with an attorney who works on these issues, he noted that this is a unique opportunity to create a completely new industry – but that will require rethinking an outdated approach to marijuana that centers around the prohibition mindset.
As the great management thinker Peter Drucker noted, “The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic.” Or perhaps in this case, to fail to act based on yesterday’s logic. It’s time to get past yesterday’s logic and focus on the future.
Moreover, as I look at this promising, growing industry, I can’t help but notice that it sits comfortably at the intersection of several of my top priorities: regulatory reform; support for entrepreneurialism and innovation; and financial inclusion. That’s a tremendous opportunity that brings tremendous challenges – but it requires leadership to get it done. And continued inaction, just allowing a patchwork of ad hoc state solutions to take effect, is not my idea of leadership.
The fact that we haven’t had adequate federal leadership on cannabis banking to date doesn’t mean that we can’t have leadership now, so I’m happy to take what actions I can to create forward momentum. For those of you in the industry, I can’t promise you that you’ll get everything you want—but certainly if we can address key needs like commercial lending and opening access to electronic payments for this industry, we’ll have made a significant step forward. And my pledge to you is that I’ll be working with you to get it done. Thank you.
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