Harvest One Cannabis Inc., a uniquely positioned cannabis-infused CPG leader, confirmed that it has completed its previously announced strategic review process. The Company also provided an updated Corporate Overview on its strategic growth initiatives to advance the Company’s business in 2021.
Gord Davey, President and Chief Executive Officer of Harvest One, said, “Following the recent sale of Satipharm and the closing of an upsized bought-deal financing, the Company has formally concluded the previously-announced Strategic Review process. The past 12 months have been transformative for Harvest One, as we have substantially reshaped the Company and its financial position, and are now in a strong position to execute on our CPG strategic plan.”
Mr. Davey continued, “Management is now acutely focused on an expanded channel strategy within different markets and regions, as well as a robust product development and commercial roll-out plan. We will continue to build on our improved financial position and pursue additional improvements to our cost structure in order to achieve the right balance of top line growth and profitability. Our recent dispositions of non-core assets and bought-deal financing give Harvest One the financial resources to execute on its unique hybrid business model, whereby it is commercializing both infused and non-infused CPG products through our established Dream Water and LivRelief consumer brands.”
Key achievements from the Strategic Review include:
- Asset light and streamlined business model – repositioned the Company from cultivation and processing to a lean, non-capital-intensive cannabis-infused and non-infused CPG operation focusing on innovation, sales, marketing and distribution channels. Management is keenly focused on its core competencies, as well as market trends and consumer needs, while utilizing strategic manufacturing partners to advance the Company’s CPG business model.
- Improved financial position and liquidity – completed the strategic divestiture of five non-core assets, materially improving the Company’s balance sheet and liquidity with non-dilutive capital reducing both short and long-term liabilities. The recent closing of an upsized bought-deal financing significantly improved the working capital position of the Company and its ability to invest in branding and marketing activities.
- Improved cost structure – a significant reduction in operating and overhead costs, creating a leaner, more efficient organization, as shown in the Company’s most recent interim financial results for the six months ended December 31, 2020.
- Corporate Structure – significant changes with the Company’s management team and leadership model, thereby creating a flatter corporate structure with a strong CPG-focused management team. This corporate structure was stress tested over the last 12 months resulting in the ability of the Company to navigate the capital markets and close of an upsized bought-deal financing.
A Unique Hybrid Business Model
The Company operates a unique hybrid business model, capturing market share with established non-infused wellness-based CPG products and then expanding the product line with cannabis-infused formulas. The Company then incorporates these products into its already established distribution network with major retail and pharmacy chains across North America. Utilizing this strategy, the Company has exposure to both traditional CPG channels, as well as the high growth cannabis industry. This approach also provides the commercial benefit of leveraging the brand recognition of its proven consumer products, within the newly-established cannabis industry.
The Company has a strong foundation of well-established consumer brands that are well-positioned for growth. For a more detailed description of our consumer brands, we encourage you to visit the portfolio pages our website: https://www.harvestone.com/portfolio/dream-water/, and review the Company’s Annual Information Form for the year ended June 30, 2020 (the “AIF”), which is available under the Company’s profile on www.sedar.com.
Key growth initiatives for 2021 include:
US launch of LivRelief non-infused OTC products
One of the Company’s main initiatives for 2021 is to leverage Dream Water’s robust distribution network with major retailers to launch LivRelief’s current over-the-counter (“OTC”) offering into the United States. The Company currently has two US Food and Drug Administration approved LivRelief topical pain relief SKUs.
US launch of cannabis-infused Dream Water and LivRelief products
In light of pending regulatory changes in the United States, the Company is currently evaluating commercial opportunities to launch cannabis-infused versions of both its Dream Water and LivRelief brands. The Company’s established distribution network with major retail and pharmacy chains, ensures it is well-positioned to capitalize on any regulatory changes concerning CBD-infused topical and ingestibles in the US. The Company has completed the necessary formulation and development work to advance the distribution of such products in the US, once regulations allow.
Expand international distribution agreements
The Company intends to leverage its existing distribution networks to launch its consumer brands Dream Water and LivRelief into Europe and Asia. The Company has recently signed broker agreements in several international countries and will look to initiate further licensing agreements for both its OTC and cannabis-infused products.
Expand distribution network and E-commerce strategies
The Company will be expanding its broker coverage throughout North America to broaden the distribution base for its consumer brands. The Company will leverage broker relationships within the US market to focus on entry into drug, mass, and grocery channels, as well as new emerging channels. The Company will also be making further investment to support the growth of a variety of e-commerce platforms such as Amazon, Coupang, TMall, Walmart, CVS, Walgreens and Shoppers Drug Mart.
Product development and innovation
Pipeline development and product innovation are key growth components for any CPG Company. The Company remains committed to research and development to ensure a consistent rollout of differentiated product offerings to market. The Company plans to expand its OTC consumer offering of Dream Water and LivRelief with new functional and format line extensions, globally. Additionally, the Company intends to further develop its cannabis-infused topicals to bolster its leadership position in the market by expanding its offerings in Canada.
Branding and awareness
The Company intends to make further investments to support the Company’s commercial initiatives and drive awareness and advocacy of its core consumer brands. The Company will use holistic campaigns to drive awareness of both consumer brands through a variety of mediums including digital and traditional media together with sampling and instore activations.
Launch B2B licencing program
The Company is launching a new initiative focused on B2B licensing agreements for the Company’s proprietary delivery technologies, specifically LivRelief’s transdermal technology. This is expected to be a significant revenue generator for the Company as LivRelief’s transdermal base is highly sought after by multiple brands in a variety of regions.
About Harvest One
Harvest One is a global cannabis-infused CPG company that develops and distributes premium health, wellness and selfcare products with a market focus on sleep, pain, and anxiety. Harvest One is a uniquely positioned company in the cannabis space with a focus on cannabis-infused and non-infused consumer packaged goods. Harvest One owns and operates two subsidiaries: Dream Water Global and LivRelief. For more information, please visit www.harvestone.com.