Zenabis Global Stock Rallies After Securing Alberta Supply Deal

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Zenabis Global Inc. (CDNX: ) has seen its stock price increase after tying up a deal to enter the Alberta recreational cannabis market.

The firm has tied up a supply deal with the Alberta Gaming, Liquor & Cannabis Commission that will begin in the next few weeks. It will sell seven strains of its Namaste brand, which comprises Daytime CBD, Durga Mata 2, MK Ultra, Ultra Sour, Sensi Star, Shishkaberry, and Wappa. Each of those products contains a different blend of sativa and indica, with varying levels of CBD and THC designed to create a number of different experiences.

Zenabis has operations in New Brunswick, British Columbia and Nova Scotia, and it owns 3.5 million sq. ft. of facility space that can be converted to cannabis production as demand rises. It has the capacity to produce 479,300 kg of dried cannabis each year for distribution in Canada and to international markets. Alberta marks the eighth Canadian province that Zenabis will supply.

It has also secured purchase orders from government and third-party retailers and distributors in New Brunswick, Nova Scotia, British Columbia, Saskatchewan, and the Yukon Territory.

Rapid Expansion Planned for Zenabis Global

Chief executive Andrew Grieve said the firm looks forward “to continuing the rapid expansion of our distribution relationships in Canada and abroad”. Grieve was only appointed to the role on January 21, 2019, but he has been very busy over the past month.

The day after his appointment he signed on the dotted line to complete the $12 million purchase of Topfro Holdings Ltd., which has operations in Aldergrove, British Colombia. On January 29 it completed the acquisition of 51% of True Buch Kombucha producer Hillsboro Corp Inc. The idea is to produce cannabis drinks under this brand, capitalizing on twin trends for wellness drinks like Kombucha and cannabis.

Zenabis has the option to buy the remaining shares of True Buch at eight times the EBITDA over the previous 12 months.

On February 4th, the firm entered into a supply agreement with Shoppers Drug Mart, adding a major new retail channel to serve medical marijuana patients across Canada. It is seeking a license to sell cannabis oil, and it will offer that to the retailer’s e-commerce arm if successful.

Military Man Grieve Looking to Whip Firm into Shape

“With Zenabis becoming a public company, Andrew has the experience necessary to translate financial understanding, leadership, and organizational design into world-class execution,” said Brar.

Zenabis was formed when Sun Pharm Investments completed a reverse takeover of Bevo Agro and it commenced trading two days later, on January 10th, 2019. The business was founded by Rik Brar and Mark Catroppa. Brar had previously served as chief executive, but he stepped aside to make way for Grieve, while he and Catroppa are now special advisors.

Grieve is a co-founder of Agentis Captial and he has advised on more than $20 billion of completed acquisitions and transactions across a number of sectors. He is also a Major in the Canadian Army Reserve, where he commands 68 Battery, 15th Field Artillery Regiment, The Royal Regiment of Canadian Artillery.

“With Zenabis becoming a public company, Andrew has the experience necessary to translate financial understanding, leadership, and organizational design into world-class execution,” said Brar. “Andrew is a champion of the Zenabis culture and has proven his complete commitment to supporting Zenabis’ values.”

The Zenabis share price stood at $5.85 when it launched, but it has steadily decreased over the ensuing six weeks. It reached a low of $3.30 on February 20th, before increasing to $3.65 on February 22nd following news of the Alberta deal. Most cannabis stocks have been on a tear during January and February, rallying after a tough end of 2018 for the sector, but Zenabis has defied that bullish market by suffering decreases, so shareholders will hope this marks the start of a stronger spell for the stock.

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
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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