AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) and Hempco Food along with Fiber Inc. (HEMP) are pleased to announce that ACBFF will be making a strategic investment in Hempco for an ownership stake of up to 19.9% on a fully diluted basis. Additionally, subject to customary conditions, ACBFF will obtain an option to acquire shares from the majority owners of Hempco that, upon exercise of the option, will bring Aurora’s total ownership interest in Hempco to 50.1% on a fully diluted basis.
Hempco is one of the world’s largest industrial producers of hemp and hemp products, and currently offers three primary product lines: (1) bulk and packaged food products (e.g. hemp protein powder, hemp seeds or hearts, hemp oil etc.); (2) hemp fibre; and (3) nutraceuticals. Hempco’s line of packaged foods are sold under the brand “Planet Hemp” and are distributed globally in seven countries.
AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) and anticipates, based on recommendation by the Federal Task Force on Cannabis Legalization, that the regulations preventing industrial hemp producers from harvesting leaves, flowers and buds, which contain CBDs will be revised to allow for the processing of CBDs. Cannabidiol does not have any intoxicating effects such as those caused by tetrahydrocannabinol (THC).
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The target market for Hempco’s products includes, but is not limited to, health conscious consumers, including vegetarians seeking to supplement protein and reduce or eliminate animal product intake, as well as an increasing number of consumers focused on managing and preventing a variety of health issues through a healthy diet, known as “LOHAS”, Lifestyles of Health and Sustainability, and “Millennials” looking for clean and “green” products.
Industrial hemp grown under contract to Hempco contains efficient extractable quantities of cannabidiol, (CBD) a compound shown through a growing body of anecdotal and scientific evidence to have considerable medical benefits in symptom management. The market for CBDs in the form of capsules, oils, and topicals is expected to show significant growth. Aurora considers the proposed transaction with Hempco to be a strategic initiative to enable market share dominance in this attractive segment.
Through its relationship with Radient Technologies Inc, (TSXV: RTI), ACBFF has access to an efficient, cost-effective, high-throughput methodology of producing CBD-based products at large scale, thus providing ACBFF with a considerable competitive advantage in addressing this growing market when CBD extraction from hemp is allowed.
Additionally, the FFNHP (Functional Foods and Natural Health Products) is a rapidly developing segment of the nutritional industry, with global demand for these products growing at a substantially higher rate than the traditional processed food market. Hempco’s strong position within the hemp based nutrition space makes the company an attractive synergistic partner, irrespective of potential changes in legislation that would allow the harvest of CBD containing plant materials.
“Hempco is a rapidly expanding company with a strong and broadly diversified product offering, across a variety of health-related markets,” said Terry Booth, ACBFF CEO. “Leveraging our relationship with extraction leaders, the potential to develop a high-volume, low-cost source for CBD-based products creates significant upside potential, making this transaction particularly attractive. The proposed transaction would further strengthen the foundation on which we are building our high-margin concentrates business, as well as bring further diversification to our expanding product offering.”
Charles Holmes, CEO of Hempco, added, “The transaction with Aurora provides us with the resources to accelerate our commercial development. Additionally, it provides us with a very highly visible partner, whose strong brand recognition we can leverage to grow our market share. The strategic location of both our new facilities by the Edmonton International Airport, and within close proximity of world class extraction processing facilities, provides further important logistical advantages as we expand our international reach. Hempco is delighted to be working with the world class Aurora team who share our vision and intentions to play a leading role in shaping the future of the global hemp industry.”
Additionally, as one of AURORA CANNABIS IN COM NPV (OTCMKTS:ACBFF) conditions to participate in Hempco’s private placement, Aurora will obtain a call option. This was agreed upon with the two majority owners of Hempco to purchase additional shares of Hempco from the majority owners, such that upon exercising the call option, Aurora will own 50.1% of the shares of Hempco. For continuing coverage on shares of ACBFF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!