Zenabis Global Inc. (TSX:ZENA) (“Zenabis” or the “Company“) today announced details of its cannabis derivative product (“Cannabis 2.0“) strategy and execution, including entering into an agreement with a Canadian beverage manufacturer to produce a range of cannabis-infused beverages.
In December 2019, Zenabis signed a definitive agreement (the “Agreement“) with HYTN Beverages Inc. (“HYTN“) to produce a range of cannabis-infused beverages at Zenabis Stellarton.
The initial launch of cannabis-infused sparkling water beverages under the HYTN brand are listed with all Zenabis’ Provincial counterparties, with strong indicative demand. First shipment of the initial four flavours of the cannabis-infused sparkling water beverages expected in Q2 2020.
Zenabis executed its first production run of vape cartridges for the PAX Labs Inc. (“PAX“) Era vaporizer device range. The initial run was immediately sold to three provincial partners. The first provincial shipments commenced on 5 February, 2020.
Zenabis Atholville’s extraction lab is currently operating at 400 kg of biomass per month, and is expected to reach steady state in March 2020. The intent is to use cannabis extracts from Zenabis Atholville in Zenabis’ cannabis derivative products once extraction reaches steady state.
HYTN is in the process of installing its own beverage production line in Zenabis Stellarton, with commission expected to be completed by March 2020. Zenabis will supply the requisite cannabis extracts and provide coast to coast distribution with the company’s provincial counterparties. The intent is to launch a series of cannabis-infused sparkling water beverages under the HYTN brand with future beverage products planned to the extent that is justified by market conditions and demand.
“We are happy to announce a new addition to the Canadian cannabis 2.0 market. We are working with a partner that has experience successfully formulating new beverage options in the Canadian market. The combination of HYTN’s beverage manufacturing expertise with our high-quality cannabis extracts allows Zenabis to provide consumers with a new line of high-quality cannabis-infused beverages,” commented Kevin Coft, Chief Executive Officer of Zenabis. “Initial indicative demand from our provincial partners is strong and we hope to have these products into their supply chains in Q2 2020. This will make Zenabis one of the first licensed producers to bring cannabis-infused beverages to the Canadian market.”
As a further update to the Zenabis Cannabis 2.0 strategy, Zenabis recently shipped its first shipment of PAX Era Pods to provincial counterparties, as part of the supply agreement signed in 2019 with PAX. Zenabis is one of 5 licensed producers producing vape cartridges in the form of PAX Era Pods for the PAX Era vaporizer device range.
“We believe vaporizers are the centrepiece product line in this first phase of Cannabis 2.0,” continued Mr. Coft. “That is why we are pleased to have immediately sold out our initial production run. The Namaste-branded Citrique, Ultra Sour and D.Bubba PAX Era Pods have already left our state-of-the-art facility in Atholville, and are in-market across Canada. With our Atholville extraction lab up and running, we are gearing up for more orders and production.”
“We believe our partnership-driven approach to the initial phase of Cannabis 2.0 product development, as evidenced by the relationships with PAX and HYTN, is both prudent and scalable. We are able to take advantage of industry-leading expertise, respond to market sentiment quickly, and get to market with capital-light investment,” concluded Mr. Coft.
PAX Era Pods
Officially launched in week of 3 February 2020
Initial production run immediately sold to provincial partners
Listings currently in 8 provinces
Installation of third-party beverage line underway in Zenabis Stellarton
Initial beverage line capacity of 4,400 cans per day
First products a 355 ml sparkling water with 10 mg of THC, with flavours to include:
Expected shipments to commence in Q2 2020
Currently listed in 9 provinces and 1 territory
Zenabis is currently ramping up its extraction capacity at Zenabis Atholville with current extraction capacity of approximately 400 kg of biomass (“Inputs“) per month. At full design capacity, Zenabis expects Zenabis Atholville to have an extraction design capacity of 15,000 kg1 annually. Zenabis intends to utilize biomass which may include trim, dried flower, and hemp produced at Zenabis’ three cannabis-focused facilities in order to supply sufficient cannabis extracts for its cannabis derivative products. Additionally, Zenabis, after meeting its existing contractual obligations, may utilize any excess extraction capacity for third party extraction purposes.
Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 96,400 kg of licensed cannabis cultivation space and four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its non-cannabis propagation and floral business.
Zenabis expects its Zenabis Atholville, Zenabis Stellarton and Zenabis Langley facilities to be in steady state production in 2020. The Zenabis brand name is used in the cannabis medical market, the Namaste, Blazery, and Re-Up brand names are used in the cannabis adult-use recreational market, and the True Büch brand name is used for Zenabis’ kombucha products.
Forward Looking Information
This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Zenabis, or the assumptions underlying any of the foregoing. In this news release, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the licensing of our facilities and projected timing thereof; our expectations for our extraction projects, equipment and capacity; our expectations for processing output; our expectations regarding and specific characteristics and availability of our cannabis derivative products. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur. Forward-looking information is based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Zenabis’ control. These risks, uncertainties and assumptions include, but are not limited to, those described in the shelf prospectus dated April 9, 2019, a copy of which is available on SEDAR at www.sedar.com and could cause actual events or results to differ materially from those projected in any forward-looking statements. Furthermore, any forward-looking information with respect to available space for cannabis production is subject to the qualification that management of Zenabis may decide not to use all available space for cannabis production, and the assumptions that any construction or conversion would not be cost prohibitive, required permits will be obtained and the labour, materials and equipment necessary to complete such construction or conversion will be available. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Zenabis does not intend, nor undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws