BRNT and Valens Deal Provides Vote of Confidence in Vaping

Extraction specialist Valens Groworks [stock_market_widget type="inline" template="generic" color="default" assets="VGW.V" markup="(TSXV: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] gained a boost this week when it secured a $50 million deal to supply BRNT Group with vape pens.

It will produce a minimum of 2.2 million vape pens for cannabis design house BRNT over the next two years. The deal represents the biggest publicly announced multi-year white label agreement to date for a branded finished product in the Canadian cannabis industry, according to the firm.

It has a gross revenue potential for Valens of more than $50 million and there is the potential to increase it in future. BRNT already has listings in more than 170 stores across Canada for its vaporizers and it is now targeting international expansion.

Valens will ship the first batch to the company in Q1 2020. “As Valens begins official production of next generation products for Cannabis 2.0, we are excited to be collaborating with BRNT to bring to market a line of differentiated, high quality, concentrate vape products for Canadian consumers,” said Valens chief executive Tyler Robinson.

The deal is a sign of confidence in the potential for cannabis vapes to thrive in Canada. They were officially legalized last month and the first products will hit shelves before the end of 2019 after Health Canada processes licence applications.

Many industry commentators hoped this would significantly bolster the performance of the legal cannabis sector. However, doubt has been cast on the potential of vaporizers to flourish after widespread negative publicity in the wake of a lung illness outbreak that has gripped North America.

The death toll now stands at 37 in the United States and 1,888 people have developed the illness, according to the U.S. Centers for Disease Control and Prevention. There have also been illnesses in Canada, and the illicit THC vape devices have largely been blamed, although legally obtained THC vaporizers have been mentioned in at least one case.

Yet BRNT clearly feels there is strong potential for this product category in future, and it has committed to a deal that eclipses the order for 2 million vape pens that Ace Valley placed with rival extraction specialist MediPharm Labs [stock_market_widget type="inline" template="generic" color="default" assets="LABS.V" markup="(TSXV: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] in June.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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