- Operating
in world’s two largest cannabis markets – California and Canada
- Vertically
integrated structure extracts value along the supply chain
- Pre-production
sales strategy mitigates risk
What can you give a company, like Vancouver, British
Columbia-based Sunniva Inc. (CSE: SNN) (OTCQX: SNNVF), that seems to have
everything? For starters, this vertically-integrated producer of medical and
recreational cannabis has a presence in California and Canada, the world’s two
largest cannabis markets. Through several wholly-owned subsidiaries, it has
operations in cannabis grow facilities, cannabis extraction facilities, medical
cannabis clinics and the cannabis white label business. Moreover, a large part
of its estimated total output for the next two years has already been sold as
pre-production, even before the completion of grow facilities – a sure signal
of customer trust. Even though its grow activities are yet to make a
contribution, Sunniva is already generating revenue. With all that in place,
this is a company whose future looks as bright as its name, which is derived
from an old English word meaning ‘gift of the sun’.
Sunniva is into large-scale low-cost production. Through
subsidiary CP Logistics, the company is close to completing a cGMP-compliant
greenhouse facility in Cathedral City, California, that will have an estimated
annual output cannabis capacity of 100,000 kilos. cGMP (current Good
Manufacturing Practice) regulations are mandated by the U.S. Food and Drug
Administration (FDA) to ensure proper design, monitoring and control of
manufacturing processes and facilities. Phase 1 of the project involves the
development of a 325,000 square foot greenhouse capable of producing 60,000
kilos per year of dry cannabis at capacity with operations commencing in Q4
2018. Approximately 30 percent of initial production has been committed for
conversion to oils and extracts. Phase 2 is expected to increase the greenhouse
space by 164,000 square feet and increase output capacity by some 40,000 kilos
per year.
The location and design choices were made with a focus on
low-cost production in mind. The abundant sunlight in California will reduce
energy costs, while the highly automated operations will ensure the most
efficient production processes are employed. In California also, close to its
Cathedral City Campus, Sunniva is operating an extraction facility, through
subsidiary CP Logistics. The Sun Oil extraction facility, which has an oils and
extracts manufacturing license, is currently being upgraded with additional
equipment (http://ibn.fm/6xBjq).
Furthermore, Sunniva recently broke ground at a recently
acquired facility, in Canada, with similar production capacity, and work is now
continuing at that 126-acre site in Okanagan Falls, British Columbia. The
740,000 square foot facility will have an estimated output capacity of 100,000
kilos annually and is expected to become operational in Q1 2019. About 75
percent of its output will be pre-sold on a wholesale basis (http://ibn.fm/sPYMJ).
Natural Health Services Ltd. is a network of medical
cannabis clinics in Canada that offers patients access to medical practitioners
specializing in the endocannabinoid system. This Sunniva subsidiary also
connects patients with licensed producers through its SPARK proprietary
software system, allowing Sunniva to capture revenue from patient purchases. As
soon as the facilities become operational, Sunniva intends to start marketing
its own produced cannabis The network currently has over 95,000 patients
(over one-third of all Canadian medical cannabis patients), and it has
agreements in place with 27 licensed producers.
Sunniva’s seed-to-sale, vertically integrated structure is
also bolstered by its Full Scale Distributers (FSD) subsidiary, which markets
vaporizers and accessories under the Vapor Connoisseur brand. FSD also provides
white label packaging and labelling services to over 80 brands in North
America, making it a clear leader in the space. It will design custom vapor
hardware for any specification of cannabis oil or concentrate. Now, with the
addition of the Sun Oil Facility, customers can also have their extraction and
processing done; cartridges can be filled, assembled, labeled and packaged
according to their own standards and branding, as well as shipped to their
final destinations.
The company recently announced voting results of the Annual
General and Special Meeting of Shareholders held on June 27, 2018 (http://ibn.fm/H5KoB).
For more information, visit the company’s website at www.sunniva.com
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