The pandemic accelerated a number of obvious trends such as increased digitization, and another perhaps lesser known trend which has gained momentum is the interest and adoption of legal medical cannabis.
Looking to take advantage of this ever-growing double-digit billion dollar opportunity is investment company Botanical Holdings.
Here we discuss the prospects for the industry and Botanical Holdings with CEO Carl Esprey who reveals why he believes that the company is well placed to cater to the requirements of an ever-growing European market.
Firstly, tell us a bit about Botanical Holdings and its value proposition?
Botanical Holdings is an investment company with an involvement across the entire value chain of the legal medicinal cannabis industry. The industry is split into 5 verticals: cultivation, extraction, formulation, distribution and retail. Botanical Holding’s philosophy is to establish or invest in businesses across all of these sectors.
Our primary operating division, Eurocan, was established in 2018 as a low-cost medicinal cannabis cultivator for the European market. Europe is set to overtake the US and Canada to become the world’s largest legal cannabis market over the next five years. This expected development reflects the increasing number of European countries responding positively to scientific research on the therapeutic benefits of medicinal cannabis. Through local subsidiary companies, Eurocan holds a cultivation license for cannabis for medical purposes in Lesotho and a cultivation production pre-licence in Portugal.
Eurocan has established its operational footprint through the construction of its own world-class growing facilities in Lesotho and Portugal. Construction at the Lesotho facilities has now been completed, and growing test cycles are currently underway. The Portuguese facilities are due to be operational during 2022.
Eurocan is focussed on becoming a global leader in the production of high quality, cannabis products and extracts for medical use. It will achieve this through its vertically integrated, operationally segmented supply chain, and in particular by having northern and southern hemisphere growing operations to maximise year-round yields.
Southern African Hemp Products is Botanical Holdings’ low-cost hemp growing operation, located in Zimbabwe. Southern African Hemp Products has recently achieved certification of registration as an industrial hemp cultivator in Zimbabwe, with the Agricultural Marketing Authority of Zimbabwe. Subject to obtaining investment approval, which process is in progress, Southern African Hemp Products’ operations will be run from an established 400 hectares farm (with 150 hectares under existing irrigation). A trial grow of 30 hectares is scheduled for H2 2021, with planned CBD extraction to be conducted onsite. Southern African Hemp Products will serve the growing international demand for hemp seed.
Unearthed Brands is Botanical Holdings’ retail division, having developed and formulated a range of wellness tincture, comprising 300mg of broad-spectrum CBD and a range of high-quality, ethically sourced botanical ingredients. This range has been developed in collaboration with clinical aromatherapists. Unearthed plans a US based launch of the Unearthed range before the end of the year. Le’Sutu by Unearthed is the division’s second consumer range and is a CBD powered skincare product designed for those who wish to incorporate fewer yet higher-quality products into their skincare regimens.
The current climate is presenting challenge and opportunity – how has this applied to your business?
Botanical Holding’s divisions have continued to deliver on their business strategies in spite of the global pandemic.
In 2020, Eurocan completed the construction of its Lesotho facilities as planned. This was achieved despite the additional challenges posed by local lockdowns due to COVID-19 and the need to prioritise the health of workers and local communities, as part of our commitment to safe and responsible cultivation. We then completed our first test growing cycle in early 2021 and have since conducted a second test grow, with plans for a further enlarged growing later this year.
Despite COVID-19 we received our cultivation pre-licence in Portugal in 2020 and have since commenced groundworks and civil engineering for our Portuguese facility.
Our biggest opportunity is the increasing global interest in, and demand for, medical cannabis products. In the US, it is anticipated that the Biden administration will remove barriers to access medicinal cannabis products in the US. In Europe, Spain has recently legalised cultivation, while France is due to begin a two-year medicinal pilot project. Without a doubt, medicinal cannabis is a burgeoning industry, and Eurocan will be ready to meet the demand for high-quality low-cost cannabis products.
Growth catalysts are crucial to business growth – what do you believe yours are?
We have recently achieved a number of significant major milestone including:
- Completion of the construction of our Lesotho operation
- Commencement of growing operations in our Lesotho operation
- Receiving a EUR 4.3m grant from the Portugal 2020 fund.
The major milestones we expect to achieve in the next 12 months are:
- Commencement of construction of the Portugal operation
- Enlarged growing cycles and first sales from Lesotho
- Completion of the Portugal construction & commencement of trial-growing
What are the biggest headwinds you foresee to achieving growth in the coming months and years? How will you tackle them?
The biggest barriers to growth in the medical cannabis space remain regulation. Cannabis has a record of demand and growth. This has existed largely out of the regulated medical space. We now have a much greater understanding, and appreciation of, medical benefits to be gained from cannabis plants. As a result, demand for medicinal products continues to grow. As the market undergoes substantial steps of growth as new permissive legislation is passed throughout the world there can be times when supply will overtake demand in, which will then in turn lead to price pressure. Eurocan’s strategy to tackle these challenges is to concentrate our investment into low cost production to ensure profitability regardless of price pressure.
Imagine you find yourself in a lift with Warren Buffett. What would be your ‘elevator pitch’ to summarise why he should invest in your business?
- Science – There is now significant scientific evidence demonstrating the efficacy of medicinal cannabis in treating a range of health conditions and diseases. Clinical trials from across the globe have demonstrated the therapeutic potential of cannabis in treating conditions such as Alzheimer’s, cancer and chronic pain associated with a range of conditions. Given the world’s rapidly ageing population, and the opioid crisis it is more important than ever that we’re able to develop effective, cost-effective and non-addictive treatments and medications.
- Market size and demand – In 2018, the US medicinal cannabis market was worth $316 million dollars. By 2023, the market is projected to be worth $8 billion. Within 5 years, Europe is projected to overtake the US in market size, and when it does, there will be a significant need for experienced, high-quality low-cost producers.
Please note: this interview is part of the ShareBuyers’ going for growth series. This series enables listed and pre-listing companies with strong growth potential to share their story with retail investors.