WeedMD Inc., a federally-licensed producer and distributor of medical-grade cannabis, announced today that newly-appointed Chief Executive Officer Angelo Tsebelis issued an open letter to shareholders to provide a corporate update and overview of WeedMD.
“Dear Valued Shareholder,
It has been just over 30 days since my appointment as CEO and during that time, I have had the pleasure of meeting with employees, business partners and key customers, as well as experience first-hand our vast operational presence. We have successfully integrated our Toronto offices, bringing many of the Starseed and WeedMD professional teams together for more efficient collaboration and to streamline costs.
During this time we also announced the addition of four strategic partners and their benefits providers. To recap, we welcomed:
- LiUNA Local 1059 (London, Ontario)
- The International Union of Painters and Allied Workers
- The Insulators Local 95 Health and Welfare Trust Fund
Likewise, our production facilities in Aylmer, Bowmanville and Strathroy completed their integration during this time to better support the increasing product demand that we have been experiencing with this uptick in new patient registrations.
Over the last couple of weeks, we have also established a number of protocols and risk mitigation strategies to ensure the health and safety of our employees and communities as a result of the COVID-19 global pandemic. Our top priority is ensuring our employees have the information they need to remain healthy so they can continue providing our customers with the outstanding products and service upon which we have built our reputation. I wish you and your families stay safe and healthy during this period.
Barring the global volatility created by the coronavirus, it is clear that the cannabis market in Canada has experienced growing pains for several other reasons: pricing inconsistencies, retail outlet constraints in some provinces, and limited quality supply in certain consumer product segments. While these factors have tempered short-term market expectations – creating pressure on equity valuations across the board, longer term we are confident that WeedMD will emerge as a formidable leader in Canada’s ever-evolving cannabis space.
How will we get there? WeedMD is widely lauded for its focus on high-quality cultivation, processing and product development, which remains intact today. Our infrastructure and operations are some of the most impressive operations I have seen. Since legalization, WeedMD’s business model has mainly centered on wholesale or “LP to LP” product distribution, while this is a great way to move inventory, it generally carries a lower margin. With the addition of Starseed, we have now integrated a critical element of the value chain – new and direct channels to a patient base with insurance coverage for medical cannabis.
This access to a substantial and direct consumer audience of over 350,000 individuals will drive growth, margin expansion and set us on a path to profitability. WeedMD is now expanding its best-in-class sales and marketing strategy and distribution channels by commercializing a cultivation platform that is the benchmark in Canada.
2020 is about executing our commercial plan:
- Scaling our unique medical distribution business model via paid benefits;
- Delivering quality cannabis to the adult-use market via Color and Saturday brands; and
- Launching quality, customer-focused cannabis products in traditional and new formats to drive greater revenue across all markets.
We are trending towards profitability as follows:
- Sustaining and operating a lean and efficient business across each of our sites;
- Capturing higher-margin products rooted in our low-cost quality cultivation platform; and
- Securing an estimated $10 million in SG&A cost reduction run-rate by the end of 2020.
At this time, I would also like to more formally welcome the LiUNA Pension Fund of Central and Eastern Canada (“LPF”) as our largest shareholder. Liquidity and capital constraints have put the cannabis market under pressure and LPF’s investment strengthens our balance sheet to further support our growth.
I am truly honoured by this opportunity to serve as WeedMD’s CEO. As both the CEO and as a shareholder, I look forward to working with our talented team in leading the Company through our next phase of growth. I am very excited about WeedMD’s strong prospects and the many opportunities ahead to build further value for our shareholders. In the coming months my team and I will be making a dedicated effort to share our evolving WeedMD story with new and prospective investors.
I’m pleased to provide a more detailed corporate update below. Thank you all for your trust and support.
Chief Executive Officer
WeedMD Inc. is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer of cannabis products for both the medical and adult-use markets. The Company owns and operates a 158-acre state-of-the-art greenhouse, outdoor and processing facility located in Strathroy, Ontario as well as CX Industries Inc., a wholly-owned subsidiary which specializes in cannabis extraction from the Company’s fully-licensed 26,000 sq. ft. Aylmer, Ontario processing facility. With the addition of Starseed Medicinal Inc., a medical-centric licensed holder with operations in Bowmanville, Ontario, WeedMD has expanded its multi-channeled distribution strategy.