Valens Groworks Buys Ontario-Based Beverage Company

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"] plans to become a leading white-label supplier of cannabis-infused beverages after purchasing Pommies Cider Co. for $7.5 million.

Pommies produces a range of ciders and perries at its 32,000 sq. ft. facility in Caledon, Ontario, while it also has a canning line, bottling line, and commercial shipping bay. In December 2018, it submitted its Health Canada application for a micro-processing licence.

Nick and Lindsay Sutcliffe set up Pommies in 2010 and they will now join Valens’ beverage division. The plan is to use their expertise and the facility in Caledon to capitalize on increasing demand for cannabis infused beverages as the Canadian market opens up for Cannabis 2.0 in the coming weeks.

Valens already has a white-label agreement with the cannabis division of Iconic Brewing in Toronto and it is in “multiple ongoing discussions” with other potential partners. It currently has the capacity to produce beverages at a “pilot scale”, but it said it will be ready for mass scale in the first half of 2020.

It paid the Sutcliffes $3.5 million in cash and $2.5 million in shares to tie up the deal for Pommies. It has placed a further $1.5 million in escrow – $1 million in shares and $500,000 in cash – and it will be released if certain milestones are met.

Valens plans to invest $10 million in the facility over the next 12 months, by which time it should have the capacity to produce 40 million beverage units. It said the $10 million will come from cash on hand and projected cash flow from operations at the site.

“In Canada, alcoholic beverages generated nearly C$24 billion of retail sales in 2018, and we expect that extract-based cannabis products – and infused beverages in particular – could disrupt beverage alcohol sales where monthly per capita spend is roughly 16 times higher compared to legal cannabis,” said Valens chief executive Tyler Robson.

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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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