VANCOUVER, BC / ACCESSWIRE / March 28, 2019 / EastWest Bioscience Inc. (the "Company" or "EastWest") (TSX-V: EAST) President and CEO Rodney Gelineau gives a corporate update.
Dear Shareholders,
The path to the Canadian and US Hemp and CBD markets is nothing short of exhilarating. We have made key strategic decisions for driving our future vision of the market and in 2019 we are focused on executing on our strategy, carefully adjusting where we recognize the need to and exploring and developing new opportunities as they arise.
Executing our Strategy
We believe our strategy to develop a strong line of well branded consumer products sold through mainstream stores in Canada is paying off. It is paving the way to accelerated CBD product releases into domestic and international markets. Our execution on this continues strongly. We are on target to produce several new products in all four of our mainstream product lines in 2019. Those products are being introduced into an ever-growing list of stores across Canada and being distributed by a growing stable of large distribution networks. These products are strategically placed to allow for rapid adoption of CBD enhanced versions as soon as Canadian law allows. Sales to these networks are already ramping well and we expect revenues through these channels to grow significantly through 2019.
Another area of concentration is the Sangster's network of stores: rebuilding the Sangster's brand and increasing revenues. While Sangster's came with revenues, we are improving cost efficiencies throughout the Sangster's ecosystem as well as rebuilding the marketing, product development and merchandising strategies to increase the revenues and build it into a modern household name. Sangster's also provides the unique ability to pilot and test EastWest's product development, marketing and merchandising internally, in real-time.
Leveraging our Manufacturing Facility
The Penticton facility is municipally zoned M1 which explicitly allows for Marijuana Production. EastWest is currently in negotiations with a BC based licensed cannabis company for a joint venture to conduct laboratory analysis, cannabis cultivation and CBD extraction. The 31,000sf Penticton facility is ideally suited for this potential JV's needs, which will leverage existing infrastructure such as the site's organic materials laboratory, previously in operation by Planet Organic for consumer products testing.
The facility also houses Orchard Vale Naturals ("OVN") EastWest's nutraceutical manufacturing and is our western Canadian warehousing. EastWest is growing revenues by increasing the volume of OEM manufacturing OVN does, as well as negotiating to add 3rd party warehousing. We have identified a market gap and are heavily targeting sellers of products who require short production runs as well as ancillary warehousing and delivery fulfilment services.
Leveraging CBD and the US Markets
We are anticipating the regulatory environment on both sides of the 49th parallel. In Canada, we are monitoring the legislation that will determine if CBD will be legal to sell as natural health products or as pharmacy products, and we continue with parallel strategies for both those scenarios. For US markets, we are awaiting TSX permission to begin sales of CBD products in the USA and hope to have the decision soon.
We are also currently negotiating with manufacturers in the USA for both CBD and non-CBD products and intend to implement our mainstream consumer products strategy for both CBD and non-CBD hemp products in the USA as soon as we have the regulatory authorization to do so.
The future opportunity of the CBD market in the US is understood to be very significant. According to sources published on Bloomberg, estimates suggest that US markets will push sales upwards of US$16B by 20261, with some opinions suggesting as high as US$130B by 20292.
While mass-market retailers (like Target, CVS or Walmart) are more likely to introduce cutting-edge natural and organic brands than they were a decade ago, CBD sales are not yet expected to materialize in a big way until all issues of domestic supply and dietary supplement vs. pharmaceutical regulatory reconciliation are resolved, and brands establish a proven track record of consumer interest in the natural and specialty retail channel. EastWest is currently building these channels through its four brands of consumer products. Interestingly, giant retailer CVS announced last week they were going to be introducing CBD in 800 stores in 8 states3, likewise Walgreens announced they will begin selling CBD in 1500 stores4. With those mainstream retailer announcements, it is likely the markets will begin to develop quickly, and once CBD products gain mass-market acceptance sales are expected to grow rapidly.
We intend to pursue rapid development of our products in the aforementioned channels and take full advantage of the current assets, channels, partners, and opportunities we've developed over the past 3 years and to execute the vision to develop, produce and expend to every major market in Canada and the USA.
I view this update as a step toward improving our communication with our shareholders and on behalf of the Board of Directors, the leadership team, the wider organization, I thank you for your continued support as we continue to elevate EastWest through the year ahead.
About EastWest BioScience Group
EastWest Bioscience is a vertically integrated wellness company with the infrastructure to become a global giant in the Hemp & CBD consumer health market. Since it was founded in 2016, EastWest continues to grow as a high-quality producer, manufacturer and distributor of multiple lines of premium hemp products. EastWest is strategically positioned in mainstream consumer markets with wholistic natural products and has developed distribution channels into mainstream stores and markets in Canada. The Company has a Health Canada licensed, GMP (Good Manufacturing Practices) certified manufacturing facility and produces premium brands offering natural products for a preventive care lifestyle. EastWest consumer product lines are divided into four distinct brands: 1) Natural Advancement – natural biopharmaceutical health supplements; 2) Earth's Menu – all-natural hemp superfoods; 3) Natural Pet Science – pet food and pet supplements; and 4) Chanvre Hemp – all-natural health and beauty products. The organization will continue to focus on ongoing development of innovative, hemp-based consumer products through advanced science with clean, natural ingredients to complement its current product offerings.
ON BEHALF OF THE BOARD OF DIRECTORS
EASTWEST BIOSCIENCE GROUP
"Rodney Gelineau"
Co-Founder, Chief Executive Officer and Director
For further information, please visit www.eastwestbioscience.com or contact EastWest Bioscience Investor Relations at 1-647-394-7383 or email us at [email protected].
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the terms and conditions of the Acquisition. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and delay or failure to receive board, shareholder or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
1Bloomberg: https://www.bloomberg.com/news/articles/2019-02-25/much-hyped-u-s-cbd-market-may-reach-16b-by-2025-cowen-says
2Bloomberg: https://www.bloomberg.com/news/terminal/PNHJDBSYF01T
3Adweek: https://www.adweek.com/brand-marketing/cvs-is-partnering-with-brands-like-medterra-to-sell-cbd-products-in-stores/
4CNBC: Walgreens to sell CBD products in 1,500 stores
SOURCE: EastWest Bioscience Inc.