- North American medical marijuana market estimated at $9-10 billion
- Over one million square feet of cannabis greenhouse space planned
- Signed take or pay supply agreement with world’s largest pure play cannabis company
Sunniva Inc. (CSE: SNN) (OTCQX: SNNVF) seems destined for a future as bright as its name. According to a recent article, titled ‘Who will Dominate California — the World’s Largest Cannabis Market?’ (http://nnw.fm/H252r), “Sunniva’s once-in-a-lifetime opportunity to become one of California’s dominant cannabis companies cannot be over-emphasized.” The vertically integrated medical cannabis producer is constructing purpose built, large-scale current good manufacturing practices (cGMP) compliant greenhouse facilities in North America’s two largest markets, California and Canada.
As if that isn’t enough to signal success, the Vancouver, B.C. headquartered company has inked a take or pay deal with the largest medical marijuana company for 45,000 kg (100,000 lbs.) of cannabis annually, in Canada. Sunniva recently secured equity financing to the tune of C$27.8 million. The company plans to release its results for the fourth quarter and year ended December 31, 2017, after market close on Tuesday, April 24, 2018. That release will be the focal point of discussion during a conference call set for Wednesday, April 25, 2018 at 11:30 AM Eastern Time/8:30 am Pacific Time. Investors who wish to participate can find further details here: (http://nnw.fm/DLYc3).
There’s no doubt that Sunniva has a lot going for it. By positioning itself in California and Canada, the company is gaining access to a market that’s approximately valued at $9-10 billion. In California, Sunniva has a significant first mover advantage, and sales of medical marijuana were $2.7 billion in 2016, according to Arcview Market Research (http://nnw.fm/kP3TH). In Canada, MMJ sales reached $5.7 billion in 2017, according to data released by Statistics Canada (http://nnw.fm/uDm5Z).
The company’s supply agreement with Canopy Growth Corporation is a big deal in more ways than one. By committing to such a large take or pay contract, Canopy Growth Corporation, probably the world’s largest and most sophisticated cannabis company, is giving a big thumb up to Sunniva’s business model. Under a take or pay agreement, the buyer must accept the contracted volume of supply after testing. The agreement also includes the distribution of Sunniva branded products, substantially reduces Sunniva’s enterprise risk level and gives the producer a large bite of the North American MMJ market.
Sunniva’s management has already been there and done that. Dr. Anthony Holler, the company’s current chairman and CEO, a co-founder, started and led the very successful ID Biomedical. Dr. Holler not only drove ID Biomedical to become the world’s largest flu vaccine manufacturer, pre-selling its production, but finally sold the company to GlaxoSmithKline for total consideration of $2.0 billion. In addition, Sunniva’s Lead Director, Todd Patrick, served as president of ID Biomedical for over a decade.
Endorsement of Sunniva’s strategy has come in the form of additional equity. The company recently completed a bought deal public offering for gross proceeds of C$27.8 million. The funds will be used to commence development, in the next 30 days, on the Sunniva Canada Campus, a 700,000 square foot greenhouse facility in British Columbia that is anticipated to be financed by bank and subordinate debt lending; to purchase additional equipment for the operational extraction facility in California owned by A1 Perez, LLC, a wholly-owned subsidiary of Sunniva; for the additional development of the company’s SPARK enterprise platform to support continued Natural Health Services Ltd. (another wholly-owned subsidiary) patient expansion; and to boost working capital.
Sunniva also continues the build-out of its facilities in Cathedral City, California. The fully funded state-of-the-art greenhouse will be cGMP compliant, which assures 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 kg per year of dry cannabis at capacity with operations commencing in Q3 2018. Approximately 50 percent of initial total production is earmarked for conversion to oils and extracts. Phase 2 is expected to increase the greenhouse by 165,000 square feet and increase production by some 40,000 kg per year. This is a company that seems to have lined up many bank shots and is well on its way to becoming a leading cannabis company in California and Canada.
For more information, visit the company’s website at www.sunniva.com
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