Westleaf Inc. Announces Rebrand, Corporate and Operations Update

Published: February 19, 2020

Westleaf Inc. Announces Rebrand, Corporate and Operations Update

Westleaf Inc. provided the following corporate and operations update with respect to its ongoing cost reduction initiatives, financial position, corporate rebranding, and operations.

“The Qwest brand was built on our commitment to quality cannabis.  Despite the headwinds the industry currently faces, consumer demand for quality cannabis products is strong and we are optimistic about the future of the industry” said Ben Sze, President and CEO of Westleaf.  “We will continue to be fiscally disciplined and uncompromising in our quest to forge a meaningful relationship with consumers.   The synergies of pairing We Grow BC with Westleaf are already being realized and I am excited about 2020 as we bring The Plant and Thunderchild facilities online.”

Corporate Update

Corporate Rebrand

The combination of Westleaf and We Grow BC Ltd. resulted in an opportunity to create a market leading integrated producer of ultra-premium cannabis.  In recognition of this new chapter in our history, on March 1st, 2020, Westleaf is expected to close a series of internal transactions to effect a corporate rebrand and commencing March 2nd, 2020 will carry on business under the name Decibel Cannabis Company Inc., and expects to commence trading under the symbol “DB” on the TSX-V thereafter. The Company will announce its OTCQB trading symbol on or before March 2nd, 2020 or as soon as such symbol has been made available to the Company. The Company will also make available its new corporate website and related corporate materials on March 2nd, 2020.

New Strain Launches

Qwest and Qwest Reserve brands continue to deliver on the promise to introduce unique strains to the market with the introduction of eleven new strains through January 31, 2020, including stand-outs Wedding Cake, Gelato 33, and MAC 1 among others. The new cultivars are offered in flower and pre-roll form and registered across AlbertaBritish ColumbiaOntario and Saskatchewan. The new strains have maintained or increased wholesale pricing levels in comparison to previous Qwest and Qwest Reserve cultivars which is reflective of the demand for the cannabis product produced at the Qwest Estate and the sustained consumer demand for rare cultivars of high-quality flower.

Launch of New Product Brand

In the coming weeks, The Company is expected to launch “Blendcraft by Qwest” as a complement to the existing Qwest and Qwest Reserve brands.  With an offering of high-quality blended pre-rolls, the Company expects the launch of “Blendcraft by Qwest” to reinforce its strong premium portfolio and more fully monetize the commercial value of its harvests.

Operational Update

Cultivation Operations Update

The Company is pleased to announce that modifications have been made to the construction of the Thunderchild facility to align with existing design and SOPs from We Grow’s Creston cultivation facility. These modifications will allow the Thunderchild facility to match the craft, ultra-premium product being produced from the We Grow facility in Creston, BC. Construction is expected to be completed April 2020.

Extraction Operations Update

The Plant continues its commissioning and qualification activities on its extraction, filtration and distillation processes to optimize its technical and regulatory efficiencies, as it awaits its sales license amendment.

Retail Operations Update

Following the launch of Cannabis 2.0 products, the Company’s four Prairie Records stores achieved record revenue in the month of January, with combined sales of approximately $930 thousand for the month, reflecting month over month sales growth of approximately 8%. Additionally, the operating Prairie Records stores have achieved positive EBITDA from its retail operations inclusive of retail-related corporate overhead.

Construction began in late January on the Company’s University of Alberta and Palace Theatre cannabis retail locations and both locations are expected to open May 2020. Furthermore, The Company has completed demolition on its Banff location and is currently evaluating designs for the potential flagship retail location.

Synergies Capture

As a part of opportunity created by the integration of Westleaf and We Grow BC Ltd. (“We Grow“), the Company has executed several cost-reduction measures to improve profitability and cashflow. These initiatives include the elimination of 11 positions at Westleaf resulting in projected annualized savings of approximately $1.4 million exclusive of one-time severance costs. Additionally, the Company has rationalized its retail portfolio significantly, from twenty-two (22) non-active retail locations to eleven (11) to reduce related carrying costs and lease obligations.  With the execution of this phase of our integration programs, the Company is applying a disciplined and growth orientated approach to profitability.

Liquidity Position

As of January 31, 2020, the Company had access to $12.3 million of capital, comprised of $8.3 million of cash and the ability to draw up to $4.0 million of undrawn, low cost, non-dilutive capital under its non-revolving credit facilities with ATB Financial. The Company’s capital projects are fully funded with existing capital on hand.