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Concurrent with these significant retail transactions, Westleaf acquired a 50% Interest in the Delta West Extraction Facility (Jan. 28, 2019), a major research, development and production facility under construction in Calgary, and in doing so consolidated Westleaf’s interest in the project to 100%.
With many predicting the commoditization of cannabis, being vertically integrated may be more important than ever to ensure reliable, consistent and high quality supply. Until that time, supply shortages are expected to persist, and some expect these shortages to persist for years rather than months. Again emphasizing the importance of vertical integration as the company can maximize margins from seed to sale. Perhaps the most important benefit from the retail investor’s perspective.
A consistently reliable supply of quality cannabis typically results in greater customer satisfaction and brand loyalty. And in an an industry with strict limitations on marketing, including branding, Westleaf is counting on developing a rapport with the customer through inviting atmosphere of their Prairie Records concept.
Moving to another concern often raised by investors revolves around dilutive financing. Not only does dilution typically reduce existing shareholders proportional ownership but it also increases the supply of shares outstanding. You know from our past content that the laws of supply and demand cannot be defied for long. An increase in supply of outstanding shares available on the secondary market places downward pressure on share price. Westleaf is approaching this challenge by ensuring that low-cost non-dilutive financing is used where possible. Westleaf’s cultivation plant, named The Thunderchild faciltiy is currently under construction in Saskatchewan and is funded through this low-cost non-dilutive capital through two tranches of financing from ATB Financial. The Alberta based crown corporation did its due diligence on the company and determined this was the right place for its money. As did the namesake Thunderchild First Nation, an indigenous community near the facility that was one of Westleaf’s first and largest investors.
Because the purpose of our case studies is for awareness, discussion, and education and not as financial or investment advice, it is comforting to see some top companies in the space investing in Westleaf. Banking insitutions like ATB and leading cannabis companies such as Tilray and VIVO (formally AbCann), have not only made strategic investments in Westleaf, but have also forged strong synergistic value-added partnerships to support the retail and branding opportunities as well as providing access to their high-quality cannabis products.
Third party attestation or validation is a strong level of comfort afforded to the typical retail investor because of the tendency for confirmation bias to creep into decisions. Tilray and VIVO have done their due diligence as has ATB Financial, based on a thorough due diligence have invested in Westleaf.