“Why investing in David, not Goliath Should be your Next Cannabis Investment”
Editorial Feature | Aug 2, 2022 | Cannabis
This small-cap, undervalued company with one of the largest cannabis patent portfolios in the United States, a prohibition-era brand that is outselling industry giants and was JUST approved for sale in the largest federally legal market in the world, could be your next BIG portfolio win.
“In markets like technology, intellectual property (IP) is pretty well understood. Create a unique invention, patent it, and then enforce it against anyone who tries to copy you. In the nascent cannabis industry, IP is critical for creating true differentiation between companies.”– Kevin Murphy, Founder of Acreage Holdings
Big Tobacco and Big Alcohol are pouring Big Money into the federally legal, Canadian cannabis industry focusing on licensed producers developing intellectual property.
2022 – British American Tobacco (LON: BAT, NYSE: BTI) the world’s largest tobacco company, announced a strategic investment of $180 million USD into Atlantic Canada-based Organigram (TSX: OGI, NASDAQ: OGI). The companies created a Center of Excellence focused on creating and sharing IP around cannabis products.
2021: Jazz Pharmaceuticals (Nasdaq: JAZZ) acquired GW Pharmaceuticals (Nasdaq: GWPH) for $7.2 billion USD. GW Pharma owns 57 U.S. patents and is one of the largest global cannabis patent holders.
2019 – U.S. tobacco giant, Altria Group (NYSE: MO), invested $1.8 billion USD in Canadian cannabis producer, Cronos Group (NASDAQ: CRON, TSX: CRON).
2019 – UK tobacco giant, Imperial Brands (LON: IMB), invested $93 million USD in Canadian cannabis company, Auxly Cannabis Group (TSX.V: XLY, OTCQX: CBWTF).
2018 – International alcohol giant, Constellation Brands (NYSE: STZ), invested $4 billion USD in Canadian cannabis producer, Canopy Growth (TSX: WEED, NYSE: CGC).
For the cannabis industry, these examples illustrate that Big Tobacco, Big Pharmaceutical, and Big Alcohol are investing in cannabis operations within federally legal jurisdictions to jointly develop intellectual property.
Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS) is a federally regulated manufacturer and distributor of cannabis vapes and oils under its award-winning prohibition-era brand, Glacial Gold™. The Company’s multi-patented ingredient processing technology transforms cannabis and hemp biomass into high-purity distillate at an industrial scale. Nextleaf has been issued 17 U.S. patents, and over 90 patents globally, on cannabinoid processing including extraction, distillation and acetylation.
The largest cannabis companies in the world include Canadian operators like Tilray, Aurora, and Canopy Growth that have each raised billions of dollars over the last 5 years while Nextleaf has raised just over $20M Canadian. Armed with a large war-chest of money, most large producers raced to build massive cultivation and production facilities, resulting in glutinous overhead expenses and a bloated corporate structure. Nextleaf understood its strengths and decided to not grow weed, instead leaving the farming to farmers. Nextleaf built the industry’s most efficient cannabis oil refinery and has an IP heavy, asset light model with sustainable operating costs and a scalable gross profit margin.
The industry is evolving from the vertically integrated business model to a specialized and focused model, like most established industries. Example: Coca-Cola does not grow its own sugarcane; it purchases the ingredient from a supplier.
In September 2021, Nextleaf launched Glacial Gold branded vapes and oils. The result?
Within the first 120 days in market Nextleaf sold more vapes and oils in British Columbia (B.C.) than Canopy Growth ($CGC), Aurora, Organigram, Sundial, and TerrAscend ($TER). Glacial Gold is the #1 selling CBD focused vape and Nextleaf is a top-10 supplier of vapes and oils in B.C.
Nextleaf has validated the power of its patented technology by outselling its well-funded competition in British Columbia and is rolling out its Glacial Gold vapes and CBD oils nationally in 2022.
A critical catalyst for IP focused cannabis companies arrived in dramatic fashion during the last days of 2020.
On December 22, 2020 Canopy Growth (TSX: WEED, NYSE: CGC) filed the industry’s first cannabis patent infringement lawsuit, against GW Pharmaceuticals (NASDAQ: GWPH) pertaining to its patented C02 extraction process.
The lawsuit demonstrates the value of IP in cannabis. With the U.S. inching towards federal legalization, experts believe U.S. patents will become essential to cannabis companies, as they are to the pharma and bio-tech industries. The lawsuit is a positive development for Nextleaf (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS), which owns one of the largest portfolios of cannabis patents after companies like Canopy Growth and GW Pharma.
How is Nextleaf able to compete and outsell the Goliaths of the industry with their investments from big tobacco and big alcohol? Simple, Nextleaf’s patented technology.
Nextleaf’s multi-patented automated, closed loop extraction refinery
Nextleaf has been issued 10 U.S. patents pertaining to its technology for efficiently producing high-purity cannabinoid oil in a regulated market.
Nextleaf’s automated, closed loop extraction plant is 8-10 times as efficient as traditional Co2 extractors.
Nextleaf’s patented technology and economies of scale rely on automation that is simply nonexistent in off the shelf technology like Co2 or other alcohol extraction methods. This advantage enables the production of a truly standardized, high purity distillate at a fraction of the cost. By leveraging its competitive advantage Nextleaf produces low-cost, high-purity distillate on an industrial scale. This enables the company to offer Glacial Gold CBD and THC vapes and oils to consumers at disruptive price points.
Nextleaf owns the most efficient technology and one of the most recognizable legacy brands from before weed was legal. With its Glacial Gold branded vapes and oils, Nextleaf has its sights on competing in the world’s largest federally legal market, the Province of Ontario.
There, Nextleaf will compete with established brands and operators including Canopy Growth and Auxly Cannabis Group, who has the backing of UK big-tobacco giant, Imperial Brands. Auxly is the current national leader in vape sales and Nextleaf aims to disrupt that by eating away at their market share in the vape segment.
Why the interest for Big Tobacco? Big Tobacco companies are all working on safer alternatives to burned tobacco products. A recent research report on Phillip Morris from Owen Bennett, Equity Analyst for Jefferies, may offer some clues to how cannabis will change future tobacco companies.
Opportunities beyond recreational nicotine: This is an area where PM made a number of notable investments last year. They highlighted that they will be targeting innovation in the method of delivery of existing approved and permitted molecules beyond just nicotine. They also said they see promising opportunities for the pain management treatment with medical cannabis. For consumer and OTC wellness products, they have several initiatives looking at focus, sleep, energy, pain, and calm, and are also evaluating applications for CBD. They target new revenues from the pipeline by 2024 and think this could be a multi-billion dollar contributor to sales by 2030.– Owen Bennet on Opportunities beyond recreational nicotine
Skate to Where the Puck is Going - Invest in IP & Upside
As Big Tobacco, Big Alcohol, and Big Pharma continue to make their intentions known regarding regulated cannabis, Big Tech and professional sports are now lining up to support U.S. legalization. Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Uber (NYSE: UBER), and the NFL all made major headlines in support of a positively changing attitude towards cannabis.
The 2021 global cannabis market was estimated at $28.26 billion USD and is expected to grow to $197.74 billion USD by 2028. Make no mistake about it, the cannabis industry is only in its infancy, and it’s here to stay.
Large cannabis producers in Canada and the United States got too big, too fast, and as a result are “rightsizing” their operations through facility closures and layoffs. As a result, their share prices have plummeted, dragging down the sector, and many sophisticated investors are starting to evolve their focus from large and bloated operators towards mid and small-cap cannabis companies with focus.
“We view the Canadian market not only supporting the valuations of small and mid-cap companies but also offering attractive upside for names that execute well. In addition, international expansion can be viewed as an option not priced into some of these small/mid-cap stocks.”
– Frederico Gomes, VP Institutional Research Analyst, ATB Capital Markets
Nextleaf Solutions has outperformed the world’s largest companies when it comes to innovation, developing intellectual property, and is now poised to take the lead nationally in branded product sales. Nextleaf is doing something right in the highly competitive Canadian market, gaining material share of key categories such as THC vapes, CBD focused vapes, and CBD oils. Nextleaf and its award-winning prohibition-era brand, Glacial Gold, have gone head-to-head against established brands, carving out material market share with R&D-driven differentiation as its engine.
| Company | US Ticker | Vape Market Share in BC | Issued Global Patents | Market Cap USD* |
|---|---|---|---|---|
| Auxly | OTCQX: CBWTF | 16.1% | 0 | $96.2M |
| Canopy Growth | NYSE: CGC | 0.9% | 130 | $2.8B |
| Organigram | NASDAQ: OGI | 1.0% | 0 | $488M |
| Sundial | NASDAQ: SNDL | 0.4% | 0 | $1.2B |
| Nextleaf Solutions | OTCQB: OILFF | 3.6% | 96 | $14.6M |
*As of March 22, 2022
When comparing Nextleaf Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS) to its industry peers and considering its technology, the success of Glacial Gold in British Columbia, and the national roll-out of its vapes and CBD oils this summer, including Ontario, Canada’s largest cannabis market, its obvious that Nextleaf offers the best upside for investment opportunity in cannabis. That’s before even thinking about the United States.
Once the U.S. regulates CBD and legalizes and regulates THC, Nextleaf will bring its product development and market learnings from Canada, and its accumulated investments in IP (17 issued U.S. patents and validated products) to the U.S. market. Nextleaf, a federally regulated cannabis oil producer, has quietly developed one of the largest collections of U.S. patents that we believe will have massive value to Big Pharma and Big Tobacco interested in developing and marketing cannabinoid-based products.
Securing U.S. patents and validating the IP under Canada’s federally regulated framework before the U.S. legalizes and regulates cannabis is an advantageous strategy by Nextleaf to attract large multinational corporations waiting for U.S. cannabis reform. Nextleaf’s U.S. patents and popularity of its Glacial Gold™ branded vapes and oils are key drivers of market cap in the next oil boom!
Register and download the company’s special investor kit to learn more about the world’s most innovative cannabis extraction technology company, Nextleaf Solutions (OTCQB: OILFF | CSE: OILSOTCQB: OILFF | CSE: OILS).
Visit nextleafsolutions.com to keep up to date on corporate news and follow OILS across social media platforms: Twitter, LinkedIn, Facebook, and Instagram.
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This document contains forward-looking information and forward-looking statements, within the meaning of applicable Canadian securities legislation, (collectively, “forward-looking statements”), which reflect expectations regarding Nextleaf Solutions future growth, future business plans and opportunities, expected activities, and other statements about future events, results or performance. Wherever possible, words such as “predicts”, “projects”, “targets”, “plans”, “expects”, “does not expect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative or grammatical variation thereof or other variations thereof, or comparable terminology have been used to identify forward-looking statements. These forward-looking statements include, among other things, statements relating to: (a) revenue generating potential with respect to Nextleaf Solutions industry; (b) market opportunity; (c) Nextleaf Solutions business plans and strategies; (d) services that Nextleaf Solutions intends to offer; (e) Nextleaf Solutions milestone projections and targets; (f) Nextleaf Solutions expectations regarding receipt of approval for regulatory applications; (g) Nextleaf Solutions intentions to expand into other jurisdictions including the timeline expectations relating to those expansion plans; and (h) Nextleaf Solutions expectations with regarding its ability to deliver shareholder value. Forward-looking statements are not a guarantee of future performance and are based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this document including, without limitation, assumptions about: (a) the ability to raise any necessary additional capital on reasonable terms to execute Nextleaf Solutions business plan; (b) that general business and economic conditions will not change in a material adverse manner; (c) Nextleaf Solutions ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; (d) Nextleaf Solutions ability to enter into contractual arrangements; (e) the accuracy of budgeted costs and expenditures; (f) Nextleaf Solutions ability to attract and retain skilled personnel; (g) political and regulatory stability; (h) the receipt of governmental, regulatory and third-party approvals, licenses and permits on favorable terms; (i) changes in applicable legislation; (j) stability in financial and capital markets; and (k) expectations regarding the level of disruption as a result of COVID-19. Such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of Nextleaf Solutions to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking statements. Such risks include, without limitation: (a) Nextleaf Solutions operations could be adversely affected by possible future government legislation, policies and controls or by changes in applicable laws and regulations; (b) public health crises such as the COVID-19 pandemic may adversely impact Nextleaf Solutions business; (c) the volatility of global capital markets; (d) political instability and changes to the regulations governing Nextleaf Solutions business operations (e) Nextleaf Solutions may be unable to implement its growth strategy; and (f) increased competition. Except as required by law, the Website Host undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future event or otherwise.
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