Last week, Pure Extracts Technologies Corp. (CSE: PULL) published a corporate update and we wanted to highlight some of the most important aspects of the release. Earlier this month, the Company commenced trading on the Canadian Stock Exchange (CSE) and we have been closely following the opportunity.
Pure Extracts represents a differentiated opportunity and is a plant-based extraction company that specializes in cannabis, hemp and mushroom products. The Company operates out of a state-of-the-art facility that was constructed to meet European Union Good Manufacturing Practice (EU-GMP) standards.
A Company with Catalysts for Growth
An important catalyst for Pure Extracts will be the granting of a EU-GMP certificate for the facility. Once the Company receives this certification, it can start to export products to be sold in Europe (where-ever such products are legal). We are favorable on the opportunity in the EU and believe that Pure Extracts is focused on a region that is not saturated and has attractive economics (cannabis and hemp is much more expensive in the EU than in Canada).
On September 25, 2020, Pure Extracts’ wholly owned subsidiary was granted a Standard Processing license by Health Canada and we considered this to be an important milestone for the business. With the license, Pure Extracts can purchase bulk amounts of cannabis and hemp from Canadian Licensed Producers (LPs) on the wholesale market. The Company is not focused on the cultivation of cannabis or hemp and we are favorable on the decision to avoid this aspect of the industry.
Another potential growth catalyst for Pure Extracts is related to the work the management team is doing under its Pure Pulls brand. Prior to cannabis becoming legal in Canada, Pure Pulls was one of the best-known brands on the gray market and we are favorable on the awareness that is already associated with the product line. The Pure Pulls brand will incorporate its full spectrum THC and CBD based extracted oils (FSO) and we will monitor how the product line gains traction with consumers.
Currently, Pure Extracts is providing toll processing and white labelling services for Canadian LPs that do not have the necessary equipment, licenses, or extraction expertise. We are favorable on the multi-faceted nature of the business and will monitor how the management team is able to execute on the contracts that it has with LPs and on the Pure Pulls brand.
Late in the first quarter of 2021, Pure Extracts plans to launch the Pure Pulls brand and we are bullish on the amount of value that can be created through this initiative. The product line will include vape pens and edibles which are two attractive segments of Canada’s cannabis 2.0 market. We believe that Pure Extracts has attractive leverage to some of the most exciting aspects of the cannabis value chain and we are favorable on this.
Expands its Focus to Include Mushroom Extracts
One of the ways that Pure Extracts was able to further differentiate itself from other cannabis oil processers is through its focus on mushroom extracts. The Company believes that it has the opportunity to become a leader in the mushroom extraction market and is expanding the business to include mushroom extracts by developing a functional mushroom extraction process that is compatible with its existing infrastructure. We are favorable on how the management team has expanded its focus and will monitor how it executes on this. The Company plans to first commercialize functional mushroom products and then enter the psychedelic mushroom market when the time is right and the legislative framework is in place.
From a timing standpoint, we believe the psychedelic mushroom market is quickly reaching an inflection point and believe that Pure Extracts will have a significant opportunity in this sector. Recently, several leading psychedelic therapy companies have completed go-public transactions and we expect this trend to continue. These companies are focused on developing therapies that are derived from psychedelic substances (i.e., psilocybin, lysergic acid diethylamide, and dimethyltryptamine) and we are favorable on the opportunity that this will create for Pure Extracts. This focus enhances the Company’s extraction market penetration strategy, and we will monitor how this focus benefits the business over the long-term.
By the end of the first quarter of 2021, Pure Extracts expects to launch its line of branded functional mushroom products. As it relates to the growth of the Company, we expect the focus on the functional mushroom opportunity to benefit the business in the back half of 2021 and will monitor how the management team is able to bring these products to market. The Company plans to utilize a direct-to-consumer sales strategy that is centered around its capital efficient e-Commerce platform for the functional mushroom product line and we will monitor how this focus helps the business from cash flow standpoint.
A Multi-Faceted Growth Story to be Aware of
According to a report from Grand View Research, the global cannabis extract market is expected to be a $28.5 billion (USD) market by 2027. The firm also expects the global functional mushroom market to reach $34.3 billion (USD) by 2024. We are bullish on the leverage that Pure Extracts has to these burgeoning markets and are favorable on the direction that the management team is bringing the business.
Pure Extracts’ management team has experience in all facets of the cannabis industry e.g. volatile plant extraction, new product development, large-scale facility operations, licensing of US brands, international markets, in-house branding, marketing, and national sales). We are favorable on the collective experience of the management team and consider this to be a key aspect of the story.
When compared to operators that have a similar business model, we believe that Pure Extracts has a compelling valuation (on a comparative basis) and are favorable on the structure of the operation. Pure Extracts has a proven track record of success as it relates to brining cannabis formulations to market and we are favorable on the direction the management team is taking the business. By not focusing on cultivation, the Company is able to keep costs low and we find this to be significant.
If you are interested in learning more about how Pure Extracts plans to disrupt the mushroom extract industry, please send an email to email@example.com with the subject “Pure Extracts” to be added to our distribution list.
Pursuant to an agreement between StoneBridge Partners LLC and Pure Extracts Technologies Corp. we have been hired for a period of 180 days beginning November 1, 2020 and ending May 1, 2020 to publicly disseminate information about (PULL) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month (PULL) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own one hundred seventy six thousand eight hundred and twenty nine (176,829) shares of (PULL), which we purchased via private placement. We plan to sell the “ZERO” shares of (PULL) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (PULL) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.
Published at Thu, 26 Nov 2020 12:46:10 +0000